AT SYSTEMATIZATION BERHAD Annual Report 2014€¦ · AT SYSTEMATIZATION BERHAD (644800-X) (Design...

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AT Systematization Berhad (644800-X)

Plot 82, Lintang Bayan Lepas, Bayan Lepas Industrial Park,Phase IV, 11900 Bayan Lepas, Penang, Malaysia.http://www.atsys.com.my

A n nu a l R e p or t 2 0 1 4A T S Y S T E M A T I Z A T I O N B E R H A D

( 6 4 4 8 0 0 - X )

1AT SySTemATizATion BerhAd (644800-X)AnnuAl reporT 2014

contents 02 corporate Information

03 corporate structure

04 Group Financial Highlights

05-06 chairman’s statement

07-08 Profile of Directors

09-14 corporate Governance statement

15-18 Audit committee Report

19-21 statement on Risk Management and Internal control

22-25 other Disclosure Requirements

26-93 Financial statements

94 supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses

95 List of Landed Properties

96-97 Analysis of shareholdings

98-99 Analysis of Warrant Holdings

100-101 notice of Annual General Meeting

102 statement Accompanying notice of Annual General Meeting

Proxy Form

2 AT SySTemATizATion BerhAd (644800-X)AnnuAl reporT 2014

coRPoRAte InFoRMAtIon

BOARD OF DIRECTORS

Dato’ Sri Ahmad Said Bin HamdanIndependent Non-Executive Chairman

Ir. Auniah Binti AliExecutive Director

Dr. Ch’ng Huck KhoonIndependent Non-Executive Director

Chang Vun LungIndependent Non-Executive Director

Mak Siew WeiExecutive Director

Cham Owi Tong (Retired on 26 August 2013)Executive Director

Ronnie Lee Rong Yao (Resigned on 1 July 2013)Executive Director

AUDIT COMMITTEE

Dato’ sri Ahmad said Bin Hamdan (chairman)Dr. ch’ng Huck Khoonchang Vun Lung

REMUNERATION COMMITTEE

Dr. ch’ng Huck Khoon (chairman)Dato’ sri Ahmad said Bin Hamdanchang Vun Lung

NOMINATION COMMITTEE

Dr. ch’ng Huck Khoon (chairman)Dato’ sri Ahmad said Bin Hamdanchang Vun Lung

COMPANY SECRETARIES

Angelina cheah Gaik suan (MAIcsA 7035272)Lee Mei Mei (MAIcsA 7062284)

REGISTERED OFFICE

suite s-21-H, 21st Floor, Menara northam,55, Jalan sultan Ahmad shah,10050 Penang.tel : (604)-210 7118Fax : (604)-210 7111

HEAD OFFICE

Plot 82, Lintang Bayan Lepas,Bayan Lepas Industrial Park, Phase IV,11900 Penang.tel : (604)-644 7771Fax : (604)-643 6207Website: www.atsys.com.my

PJ ADMINISTRATIVE OFFICE

Lot 11.2, 11th Floor, Menara Lien Hoe,no. 8, Persiaran tropicana,tropicana Golf & country Resort,47410 Petaling Jaya, selangor.tel : (603)-7887 8330Fax : (603)-7887 8331

SHARE REGISTRAR

tricor Investor services sdn BhdLevel 17, the Gardens north tower,Mid Valley city, Lingkaran syed Putra,59200 Kuala Lumpur, Malaysia.tel : (603)-2264 3883Fax : (603)-2282 1886

AUDITORS

Baker tilly Monteiro Heng (AF 0117)chartered AccountantsBaker tilly MH tower, Level 10, tower 1, Avenue 5, Bangsar south city, 59200 Kuala Lumpur, Malaysia.tel : (603)-2297 1000Fax : (603)-2282 9980

PRINCIPAL BANKERS

cIMB Bank BerhadPublic Bank Berhad

STOCK EXCHANGE LISTING

Bursa Malaysia securities BerhadAce Marketstock name : Atstock code : 0072


coRPoRAte stRUctUReAs At 14 JULy 2014

A T S Y S T E M A T I Z A T I O N B E R H A D( 6 4 4 8 0 0 - X )

(Design andmanufacture of

industrial automationsystems and machinery)

100% 100% 100% 81%

(Fabrication of industrialand engineering parts)

(Dormant)

ATS BiotechSdn Bhd

(1040158-K)

(Dormant)

5%

AT EngineeringSolution Sdn Bhd

(631531-X)

AT Precision ToolingSdn Bhd

(627975-M)

Goodmatrix ResourcesSdn Bhd

(988408-D)

Yellow ChoiceSdn Bhd

(1027635-W)

(Dormant)


GRoUP FInAncIAL HIGHLIGHts

2014 2013 2012 2011 2010

Revenue (RM’000) 21,757 23,186 37,217 37,215 27,509

Profit/(Loss) before tax (RM’000) 2,282 (4,194) 967 1,254 (1,687)

Profit/(Loss) for the year

attributable to owners of the parent (RM’000) 1,110 (10,841) 231 302 (1,795)

Basic earnings/(loss) per share (sen) 0.53 (5.84) 0.13 0.17 (1.00)

Weighted average number

of shares in issue (‘000) 209,040 185,613 178,951 178,951 178,951

total assets (RM’000) 53,754 34,634 45,026 45,750 50,497

equity attributable to owners

of the parent (RM’000) 34,212 13,467 22,311 22,109 21,834

net asset per share attributable to

owners of the parent (sen) 8.69 7.02 11.64 12.35 12.20

number of shares in issue (‘000) 393,692 191,751 191,751 178,951 178,951

-

10,000

20,000

30,000

40,000

2010 2011 2012 2013 2014 (8.00)

(6.00)

(4.00)

(2.00)

-

2.00

4.00

6.00

8.00

-

10,000

20,000

30,000

40,000

2010 2011 2012 2013 2014 -

2.00

4.00

6.00

8.00

10.00

12.00

2010 2011 2012 2013 2014

Net asset per share attributable to owners of the parent

21,7

57

0.53

8.69

34,2

12

(sen)

Equity attributable to owners of the parent

(RM'000)

Revenue(RM'000)

Earnings/(Loss) per share(sen)

2010 2011 2012 2013 2014


on behalf of the Board of Directors of At systematization Berhad, I am pleased to present the Annual Report and Audited Financial statements of the Group and of the company for the financial year ended 28 February 2014 (“Fy 2014”).

OVERVIEW

Fy 2014 has been a challenging year for the Group. Value-added manufacturing sector expanded at a slower pace of 1.9% during the first six (6) months of 2013 (January – June 2012: 5.1%) while output of the sector increased by 2.7% during the first eight (8) months of 2013, which was lower than 4.6% achieved during the corresponding period in 2012. In the electrical and electronic (“e&e”) subsector, output sustained at 1.9% during the first eight (8) months of 2013 (January – August 2012: 1%).

REVIEW OF RESULTS

the Group further streamlined its non performing business unit by disposing At engineering sdn. Bhd. (“Ate”) in Fy 2014. Following the completion of the disposal, the financial results of Ate and Ate’s wholly-owned subsidiaries (“Ate Group”) are represented under discontinued operations for both current and preceding financial years, so as to be in accordance with the disclosure requirements under MFRs 5.

For both continuing and discontinued operations, the Group had achieved revenue of RM22.97 million in Fy 2014 against RM25.13 million in the preceding year ended 28 February 2013 (“Fy 2013”), representing a drop of about 8.59%. the decrease in revenue for Fy 2014 was mainly due to revenue loss from its overseas subsidiaries after these subsidiaries have ceased operations in Fy 2013. this was however, mitigated by 7% increase in revenue from the fabrication of industrial and engineering parts division. Despite the drop in the revenue, the Group recorded profit after tax of RM1.11 million for Fy 2014, a significant improvement from loss after tax of RM10.84 million in Fy 2013. the improved results were mainly due to reversal of impairment loss on loan & receivables of RM1.54 million, better cost controls arising from organisational and headcount management under continuing operations; and gain of RM1.09 million arising from the disposal of Ate Group under discontinued operations. Loss after tax in Fy 2013 mainly consisted of impairment losses on loan and receivables of RM1.79 million, inventories written down of RM2.5 million under discontinued operations as well as property, plant & equipment written off of RM0.14 million under continuing operations.

the profit attributable to owners of the parent have surged to RM1.11 million from a loss attributable to owners of the parent of RM10.84 million in previous financial year. this translates to earnings per share of 0.53 sen, up significantly from a loss per share of 5.84 sen in previous financial year. the increase in the Group’s earnings, coupled with the completion of Rights Issue exercise have contributed to an increase in equity attributable to owners of the parent, which strengthened by RM20.74 million to RM34.21 million from RM13.47 million at 28 February 2013. net assets per share was up by 24% to 8.69 sen from 7.02 sen a year ago.

CORPORATE DEVELOPMENT

the Group has successfully undertook and completed the Rights Issue with Free Warrants on 5 February 2014 following the listing of and quotation for 196,845,765 Rights shares together with 196,845,765 Warrants in the Ace Market of Bursa Malaysia securities Berhad. the Rights Issue with Free Warrants has raised new capital of RM19.69 million, providing additional funding to the Group. now, we are in a better position to embark on potential new businesses and capitalise on the improving medical equipment industry as well as ride on the high growth of the oil and gas sector.

OUTLOOK AND PROSPECTS

Growth of the Malaysian economy gained traction to record 6.2% during the first quarter of 2014 (Q4 2013: 5.1%) amid improving global economic conditions and strong domestic activity. the manufacturing and trade-related services sectors recorded buoyant growth boosted by improved external demands. Meanwhile, the manufacturing activity strengthened and grew 6.8% spurred by stronger output of export-oriented industries, particularly the e&e subsector, reflecting improving global market demand. overall, the Malaysian economy is expected to expand by 5% - 5.5% in 2014 (2013: 4.5% - 5%), supported by favourable domestic demand and an improving external environment.

cHAIRMAn’s stAteMent


OUTLOOK AND PROSPECTS (CONT’D)

We will continue to build up on our core business in the design and manufacture of industrial automation system and machinery and fabrication of industrial and engineering parts. For our industrial automation system and machinery business, we will continue to implement effective cost control measures to contain the operating expenses and to achieve operational efficiency. In addition, we will constantly review our manufacturing processes in order to deliver quality products at competitive price. With the fund available from the Rights Issue with Free Warrants, we are in a better position to commence our food waste conversion system project for further growth. Having said this, the Group will cautiously and continuously reassess the viability of this project as well as to monitor closely on the project’s implementation. We shall perform detailed analysis on the potential target clientele together with the risks and return to improve the rate of success of this venture.

As for our fabrication of industrial and engineering parts, our strategy is to diversify the target group of customers in order to mitigate the risk of depending on single/few industries. During the financial year under review, we have successfully increased the revenue from fabricating medical parts and equipment by RM1.1 million as compared to preceding year. the Group has signed a Memorandum of Understanding to further collaborate with an oversea partner to expand into fabricating parts & equipment for customers from other industries such as oil & gas, life science, aerospace and etc. the proposed collaboration is currently under negotiation and the Group is confident to finalise the deal which would enable the Group to reach new customers’ base. In addition to this, the Group has kicked off its factory expansion plan at Plot 49, Hilir sungai Keluang 2, Bayan Lepas Industrial Park, Phase IV, 11900 Bayan Lepas, Penang to increase its production capacity so as to meet the increasing demands from customers. thus far, the expansion has been progressing smoothly and is within the planned schedule and it is expected to be completed by March 2015.

Going forward, the Group’s objective is to enhance its revenue and profitability. By capitalising the fund raised from the Rights Issue with Free Warrants as well as the potential fund raising through private placements, the Group will continue to explore and assess other viable business ventures covering new industries. the Group has in mind to diversify its future income streams, for example through participating tender of potential projects with strategic partners on joint venture basis (i.e. tender for the construction of a mass-scale incinerator facility for a “Waste to energy” Public Private Partnership Project). the Group is currently exploring the idea of setting up a solar energy power farm at its factory located in Bayan Lepas, of which the solar energy power farm can potentially offer recurrent income stream during the concession periods. Barring any unforeseen circumstances, the Board is optimistic that the Group can look forward to another profitable year ahead and create value for shareholders.

APPRECIATION

on behalf of the Board of Directors, I would like to express our sincere appreciation to the management and employees at all levels in the Group for their continuous dedication, support and commitment throughout the year.

We would also like to thank our shareholders, as well as our valued customers, suppliers, bankers, business associates, government agencies and regulatory authorities, for the unrelenting support and confidence in the Group.

Dato’ Sri Ahmad Said Bin Hamdanchairman

14 July 2014

cHAIRMAn’s stAteMent


Dato’ Sri Ahmad Said Bin HamdanIndependent Non-Executive Chairman

Dato’ sri Ahmad said Bin Hamdan, aged 62, a Malaysian, is an Independent non-executive chairman of At systematization Berhad (“Ats”). He was appointed to the Board on 26 April 2012. He is also a chairman of the Audit committee and a member of the nomination and Remuneration committees. Besides, he is also an executive Director of sanichi technology Berhad and Independent & non-executive chairman of DGB Asia Berhad (formerly known as Dsc solution Berhad), both of which are listed in Ace Market in Bursa Malaysia securities Berhad.

He graduated from Universiti sains Malaysia with Ba. Hons. in Humanities in 1975. He also holds a Master of science in criminology from the Indiana state of University, United states of America.

He started as an Assistant superintendent of custom, Penang in early 1975. Later, he joined the Anti-corruption Agency of Malaysia (AcA) as superintendent of Investigation. He was with the government service for 34 years under various divisions such as investigation, intelligence, preventions and prosecution and also headed few states in Malaysia as Director of states including sabah, Perak and selangor.

He has been the Director of Investigations of AcA Malaysia since 1992 and was promoted to Deputy Director General in 1998. In 2008, he was promoted to Director General of AcA. He has been the first chief commissioner of Malaysian Anti-corruption commission (MAcc) when it was formed in 2009.

He does not have any family relationship with any director and/or major shareholder of Ats, or any conflict of interest in any business arrangement involving the company.

Ir. Auniah Binti AliExecutive Director

Ir. Auniah Binti Ali, aged 54, a Malaysian, is an executive Director of Ats. she was appointed to the Board on 15 May 2012.

she graduated from Heriot-Watt University in scotland, United Kingdom with a Master of science in Drives and Power engineering. she is also a member of the Institution of engineers in Malaysia as well as a Professional engineer registered with the Board of engineers, and a member of Malaysian Grid code (Department of electricity supply) 1994.

she has many years of working experience with the Malaysian government and is familiar with the formulation of Malaysia’s economic policies and economic planning process. she had worked as an Assistant Director in the economic Planning Unit of the Prime Minister’s Department where she had prepared the demand and supply scenarios for planning and forecasting Malaysia’s electricity supply industry. During that time, she was also responsible for all power generations including tenaga national and independent power producers. she also assisted in the evaluation and assessment of major privatization proposals like the Bakun Project, Prai Power station and the Jimah Power coal station, among others.

As an Assistant Director in the Department of electricity and Gas supply in the Ministry of energy, telecommunications and Posts, she acted as the secretariat for the Grid code committee and was in charge of licensing and monitoring of the independent power producers. she had also worked with the Malaysian Public Works Department where she was involved in the design and monitoring of government hospital projects.

she had received awards for sijil Perkhidmatan cemerlang JKR, sijil Perkhidmatan cemerlang Kementarian tenaga, telekom & Pos, and sijil Penghargaan Bagi Penyediaan Buku Panduan teknik JKR.

she does not have any family relationship with any director and/or major shareholder of Ats, or any conflict of interest in any business arrangement involving the company.

PRoFILe oF DIRectoRs


PRoFILe oF DIRectoRs (cont’D)

Dr. Ch’ng Huck KhoonIndependent Non-Executive Director

Dr. ch’ng Huck Khoon, aged 45, a Malaysian, is an Independent non-executive Director of Ats. He was appointed to the Board on 28 June 2012. He is also the chairman of the nomination and Remuneration committees and a member of the Audit committee. Besides, he is also an Independent non-executive Director of cnI Holdings Berhad and yGL convergence Berhad and also the chairman of the Audit committee of cnI Holdings Berhad.

He pursued his PhD studies in Finance at the Universiti sains Malaysia (UsM) and also holds a Master of Business Administration (Finance) from University of stirling, United Kingdom. He is an Associate Member of the Institute of chartered secretaries and Administrators (IcsA) and a certified Financial Planner.

He was an Assistant Professor at Universiti tunku Abdul Rahman (UtAR) and Wawasan open University (WoU).


Chang Vun LungIndependent Non-Executive Director

chang Vun Lung, aged 38, a Malaysian, is an Independent non-executive Director of Ats. He was appointed as an Independent non-executive Director of the company on 8 January 2013. He is also a member of the nomination, Remuneration and Audit committees.

He received his early education at tunku Abdul Rahman college. He became a member to the Association of chartered certified Accountants (AccA, UK) since year 2004 and a member to the Malaysian Institute of Accountants (MIA) in year 2005. He has been admitted as fellowship member in AccA in year 2009.

Mr. chang had started his career by attaching himself to a chartered Accountant firm, BDo Binder for approximately 4 years. He then spent another 4 years with Isyoda corporation Bhd, a construction company listed on the Main Board of Bursa Malaysia. During his tenure with the company, he was appointed as a Group Accountant where he took charge of accounting and finance functions. Presently, he runs his own professional firm which specialises in consultancy and corporate services. He was appointed as the Independent non-executive Director in Focus Dynamics technologies Berhad on 8 January 2013.


Mak Siew WeiExecutive Director

Mak siew Wei, aged 39, a Malaysian, is an executive Director of Ats. He was appointed to the Board on 1 March 2013. He is also the chairman of the Risk Management committee and Investment committee.

He pursued his education in the United states and graduated with a Bachelor Degree in Management Information system and subsequently worked for Marvic International (ny) Ltd in new york as a Business Development Manager for 3 years.

He currently sits on the Board of Advance Information Marketing Berhad and scan Associates Berhad as an executive Director. He is also a non–executive Director of nakamichi Berhad.


Other Information on Directors

(i) the securities in the company held by Directors are as disclosed on page 96 of this Annual Report.(ii) none of the Directors have any directorship in other public companies in Malaysia, except for Dato’ sri Ahmad

said Bin Hamdan, Dr. ch’ng Huck Khoon, Mr. chang Vun Lung and Mr. Mak siew Wei which have been disclosed in their respective profiles.

(iii) none of the Directors of the company has been convicted of any offences within the past 10 years other than traffic offences, if any.


the Board of Directors (“the Board”) of At systematization Berhad (“Ats” or “the company”) is committed to achieve and maintain high standards of corporate governance within the Group as a fundamental part of its responsibilities in managing the business and affairs of the Group in order to protect and enhance shareholders’ value.

this statement sets out the manner in which the Group has applied and the extent of compliance with the principles and recommendations as set out in the Malaysian code on corporate Governance 2012 (“MccG 2012” or “the code”). these principles are practiced throughout the Group as the underlying principle in discharging the Board’s responsibility and to ensure transparency and corporate accountability.

A. BOARD OF DIRECTORS

Duties and Responsibilities of the Board

the Board of Directors recognizes its responsibility for corporate governance of the Group.

the Board is collectively responsible in establishing the objectives, provides strategic direction to the Group in achieving its business plan and overseeing the conduct, performance and internal controls of the Group’s business activities as well as reviewing of financial and operating performance of the Group. these include determining some of the key strategies, financial and organizational matters such as approval of interim results and annual audited financial statements, significant acquisition and disposal, major capital expenditures and long term strategic planning for the Group.

In discharging its stewardship, the Board is constantly mindful of safeguarding the interests of the Group’s stakeholders and is ultimately responsible for the performance of the Group. to ensure the effective discharge of its function and duties, the principal responsibilities of the Board include the following specific areas:-

• ReviewingandadoptingstrategicplansfortheGroup; • OverseeingtheconductoftheGroup’sbusinesstoevaluatewhetherthebusinessisbeingproperlymanaged; • Identifyingprincipalrisksandensuringtheimplementationofappropriatesystemstomanagetheserisks;

• Succession planning including appointing, training, fixing the compensation of and, where appropriate,replacing senior management;

• Developingandimplementinganinvestorrelationprogrammeorshareholdercommunicationpolicyforthecompany; and

• Reviewing the adequacy and the integrity of the Group’s internal control systems and managementinformation systems including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

the Board committees are made up of the Audit committee (“Ac”), nomination committee (“nc”), Remuneration committee (“Rc”) and two (2) sub-committees, namely Risk Management committee (“RMc”) and Investment committee (“Ic”) which are entrusted with specific responsibilities to oversee the Group’s affairs, with authority to act on behalf of the Board in accordance with their respective terms of Reference.

the chairman of the relevant Board committees also reports to the Board on key issues deliberated by the Board committees at their respective meetings. In general, the non-executive Directors are independent of management. their roles are to constructively challenge management and monitor the success of management in delivering the approved targets and business plans within the risk appetite set by the Board. they have free and open contact with management at all levels, and they engage with the external and internal auditors to address matters concerning management and the company’s business and operations. Key matters reserved for the Board’s approval include the annual business plan and budget, capital management and investment policies, authority limits / levels, risk management policies, declaration of dividends, business continuity plan, issuance of new securities, business restructuring, expenditure above a certain limit, material acquisitions and disposition of assets.

coRPoRAte GoVeRnAnce stAteMent


Board Balance

the Board currently consists of five (5) members, comprising two (2) executive Directors and three (3) Independent non-executive Directors. the number of Independent Directors is in compliance with the Ace Market Listing Requirements of Bursa securities (“Listing Requirements”) which requires that at least one third (1/3) of the Directors must be independent.

the executive Directors have overall responsibilities over the development of corporate objectives, operational, organizational, business units and implementation of Board decisions and policies. the executive Directors are tasked to implement the Board’s decisions and policies whilst overseeing operations and coordinating business decisions. the decision made by the Board is done collectively without undue influence or dominance by any individual Director or group of Directors, whether executive or non-executive. the role of management is to support the executive Directors and implement the running of the general operations and financial business of the company, in accordance with the delegated authority of the Board.

the Independent non-executive Directors are independent of executive management. they provide balanced, effective and independent views, unbiased judgements, informed opinions to the deliberations and decision making of the Board thus fulfilling an essential and pivotal role in corporate accountability.

An effective and dynamic Board is essential towards enhancing long term shareholder value and the interests of other shareholders. the Group maintains its current Board mix which has the necessary skills, expertise and experience in areas relevant to steering the growth of the Group’s businesses.

Due to the size of the Board, the Board has not appointed a senior independent director to whom shareholders may voice their concerns. this task will be played by the Board as a whole.

the Board is confident that its current size and composition is sufficient and effective in discharging the Board’s responsibilities and in meeting the Group’s current needs and requirements.

A brief profile of each Board member is presented in this Annual Report under Profile of Directors on pages 7 to 8.

Board Meeting

the Board meets at least once every quarter with additional meetings convened as and when necessary. the Board meets within 2 months from the end of every quarter of the financial period, where the Group’s financial results are deliberated and considered prior releasing them to Bursa securities and the securities commission.

there were five (5) Board Meetings held during the financial year ended February 28, 2014. the record of attendance for each Director at those meetings is set out below:-

Directors Number of meetings attended

Dato’ sri Ahmad said Bin Hamdan 3 Ir. Auniah Binti Ali 3 Dr. ch’ng Huck Khoon 5 chang Vun Lung 5 Mak siew Wei 5 cham owi tong (Retired on 26 August 2013) 3 Ronnie Lee Rong yao (Resigned 1 July 2013) 1

In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, Board approvals are sought via circular resolutions, which are attached with sufficient and relevant information required for an informed decision to be made. Where a potential conflict arises in any transactions involving any particular Director’s interest, such Director is required to declare his interest and abstain from discussion and the decision-making process.

coRPoRAte GoVeRnAnce stAteMent (cont’D)


Supply of Information

the Directors have full and timely access to information pertaining to the Group’s business and affairs to enable them to discharge their duties effectively. Prior to each Board meeting, a full set of Board papers together with the agenda were forwarded to the Board members to allow the Directors to study and evaluate the matters to be discussed and subsequently make effective decisions.

the Directors have unrestricted access to the advice and services of the company secretaries and senior management staff of the Group. the Directors may obtain independent professional advice where necessary at the company’s expense in the furtherance of their duties. the Directors are also regularly updated by the company secretaries on new statutory, corporate and regulatory developments relating to Directors’ duties and responsibilities in order to assist them in the discharge of their duties as Directors of the company and ensuring the effective functioning of the Board.

the Directors may seek advice from the management on issues under their respective purview. the Directors may also interact directly with the management, or request further explanation, information or updates on any aspect of the company’s operations or business concerns from them. In addition, the Board may seek independent professional advice at the company’s expense on specific issues to enable it to discharge its duties in relation to matters being deliberated.

Appointment to the Board

Any proposals for new appointments to the Board are reviewed by the nc and presented to the Board for approval. the company secretaries will ensure that all appointments are properly made, and that regulatory obligations are met.

to ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively and in line with the Listing Requirements, a Director of the company must not hold more than five (5) directorships in Public Listed companies and must be able to commit sufficient time to the company. the Directors are required to submit an update on their other directorships from time to time for monitoring of the number of directorships held by the Directors of the company and for notification to companies commission of Malaysia accordingly.

Re-election of the Directors

Pursuant to section 129 of the companies Act, 1965, Directors who are or over the age of seventy (70) shall retire at every Annual General Meeting and may offer themselves for re-appointment to hold office until the next Annual General Meeting.

In accordance with the company’s Articles of Association (“the Articles”), one-third or nearest to one-third (1/3) of the Board is subject to retirement by rotation at each Annual General Meeting. the Directors to retire at each year are the Directors who have been longest in office since their appointment or re-election.

the Articles further provide that the Directors may from time to time appoint one or more of their body to the office of Managing Director and if the appointment is for fixed term, that term shall not exceed three (3) years and such conditions as they think fit and, subject to the terms of any agreement entered into in any particular case, may revoke any such appointment. the said appointment shall be automatically terminated if the Director so appointed ceases from any cause to be a Director.

Any person appointed by the Board either to fill a casual vacancy or as an addition to the existing Directors, shall hold office only until the next Annual General Meeting and shall then be eligible for re-election.

notwithstanding the recommendation of the MccG 2012, the Board is presently of the view that there is no necessity to fix a maximum tenure limit for Directors as there are significant advantages to be gained from the long-serving Directors who possess tremendous insight and knowledge of the company’s businesses and affairs. similarly, the Board does not set a time-frame on how long an Independent Director should serve on the Board, mainly for the following reasons:-

• Theabilityof aDirector to serveeffectively asan IndependentDirector is verymuchdependentonhiscalibre, qualification, experience and personal qualities, particularly his integrity and objectivity, and has no real connection to his tenure as an Independent Director.



• NCconductsanannualassessmentofIndependentDirectorsinrespectofinteraliatheirskills,experienceand contributions, and whether the Independent Directors are able to discharge their duties with unbiased judgement. Furthermore, the nc also reviews the Directors Profile of Independent Directors and assess its family relationship, interest of shareholdings in the company and related party transactions with the Group (if any).

currently, all the Independent Directors of the company served less than nine (9) years in the company.

Directors’ Training

All Directors have attended and completed the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa securities.

the Directors are mindful that they should continue to attend training programmes to enhance their skills and knowledge where relevant, as well as to keep abreast with the changing regulatory and corporate governance developments.

the Directors receive regular briefings and update on the latest changes and developments on the Group business, operation, industries, financial position and changes to the relevant legislations, rules and regulations. During the financial year ended 28 February 2014, the conferences, seminars, courses, briefing and/or trainings attended by the Board encompasses the following topics:-

• BehavioralCorporateFinanceonValuation,CapitalBudgetingandCorporateDecision • BehavioralCorporateFinanceonCapitalStructure,DividendPolicyandM&A

Directors’ Remuneration

the remuneration packages for all the Directors were determined and approved by the Board as a whole based on recommendations by the Rc.

Both the executive and non-executive Directors are paid directors’ fees which are approved annually by the shareholders. the executive Directors are also reimbursed reasonable expenses incurred by them wholly and exclusively incurred in order to carry out their duties on behalf of the company.

the details of the Directors’ remuneration for the financial year ended 28 February 2014 are set out below:-

Category Fees Other emoluments Total RM RM RM

executive Directors 78,000 279,668 357,668 non-executive Directors 132,000 7,500 139,500

the number of Directors whose remuneration fall into the following bands are as follows:- Range of RemuneRation numbeR of DiRectoRs (RM) Executive Non Executive

Less than 200,000 4 3 200,001 - 250,000 - - 250,001 - 300,000 - -

the above Directors’ remuneration and range of remuneration also comprised of the Directors who have resigned from their posts during the financial year ended 28 February 2014.



B. BOARD COMMITTEES

the Board has established three (3) Board committees, namely the Audit committee (“Ac”), nomination committee (“nc”) and Remuneration committee (“Rc”) and two (2) sub-committees, namely Risk Management committee (“RMc”) and Investment committee (“Ic”) as part of its efforts to ensure the effective discharge of its duties. All committees operate within its respective clearly defined terms of reference approved by the Board and may update from time to time to keep abreast with the best practices in corporate Governance. the chairman of the respective committees will report to the Board on the outcome of the committee meetings.

Audit Committee

the terms of reference and the function of the Ac are discussed on pages 15 to 18 of this Annual Report.

Nomination Committee

chairman : Dr. ch’ng Huck Khoon (Independent non-executive Director) Members : Dato’ sri Ahmad said Bin Hamdan (Independent non-executive chairman) : chang Vun Lung (Independent non-executive Director)

the nc was established on 24 January 2006 and comprises entirely of Independent non-executive Directors. the primary function of the nc is to consider and propose new nominees on the Board by considering the required mix of skills, experience, expertise, knowledge, qualification and other core competencies required for the position. the nc also assist the Board to review the adequacy of the committee structures, size and composition of the Board, assess and recommend to the Board the terms of reference of the Board and committees of the Board in order to establish an effective Board and make recommendations with regard to any adjustments that are deemed necessary.

the nc meetings are held as and when required and at least once every year to assess the contribution of each individual Director, the effectiveness of the Board as a whole and the committees of the Board. the nc met once during the financial year ended 28 February 2014.

Remuneration Committee

chairman : Dr. ch’ng Huck Khoon (Independent non-executive Director) Members : Dato’ sri Ahmad said Bin Hamdan (Independent non-executive chairman) : chang Vun Lung (Independent non-executive Director)

the Rc comprises entirely of Independent non-executive Directors. the primary function of the Rc is to recommend to the Board from time to time, the remuneration framework and remuneration package of the executive Directors of the Group in all forms to commensurate with the respective contributions of the executive Directors. the Directors concerned are to abstain from deliberations and voting on the decision in respect of their own remuneration package. the Rc meetings are held as and when required and at least once every year to assess the contribution of each individual Director and the suitable remuneration package for the Dircetor concerned. the Rc met once during the financial year ended 28 February 2014.

C. SHAREHOLDERS

Relationship with Shareholders and Investors

the Board recognizes the importance of effective communication with its shareholders, investors and all other stakeholders. As such, the Board has maintained a high level of disclosure by providing timely, clear and comprehensive information through readily accessible channels to explain the Group’s strategy, performance and major developments. Besides, all shareholders have an opportunity to participate in discussion with the Board on matters relating to the company’s operation and performance at the company’s General Meetings.

the Group’s corporate proposals, quarterly and annual financial results and other required announcements are made on a timely basis and are available for public access on the internet via Bursa Malaysia’s website at http://www.bursamalaysia.com. In addition, the company has also established a website at www.atsys.com.my to provide information on the Group’s business activities and in line with the recent corporate developments.



Annual General Meeting

the Annual General Meeting (“AGM”) is the principal forum or dialogue with shareholders. the shareholders are encouraged to participate in the open question and answer sessions in the AGM pertaining to the resolutions being proposed at the meeting and the financial performance and business operation in general.

D. ACCOUNTABILITY AND AUDIT

Financial Reporting

the Directors are responsible to ensure that the financial statements have been properly drawn up in accordance with the Malaysian Financial Reporting standards, International Financial Reporting standards and the requirements of the companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of their financial performance and cash flows for the financial year under review.

the Board takes responsibility for presenting a balanced and clear assessment of the Group’s operations and prospects each time it releases its quarterly and annual audited financial statements to shareholders. the Audit committee will review the Group’s financial reporting process and the quality of the financial reporting to ensure accuracy, adequacy and compliance with the appropriate accounting standards and approved by the Board prior to the release to the Bursa securities and securities commission.

Leverage on information technology for effective dissemination of information

the company’s website incorporates an Investor Relations (“IR”) section which provides all relevant information on the Group and is accessible by the public. this section enhances the IR function by including all announcements made by the company, annual reports, board charter and the corporate and governance structure of the company. the company will enhance the disclosures on its website for broader and effective dissemination of information to its stakeholders from time to time.

the announcement of the quarterly financial results of the company is also made via Bursa LInK immediately after the Board’s approval. this is important in ensuring equal and fair access to information by the investing public.

Internal Control

the Board recognizes the importance of internal control systems whereby shareholders’ investment and the Group’s assets can be safeguarded. the statement on Risk Management and Internal control on pages 19 to 21 in this Annual Report provides an overview of the state of internal control of the Group.

Relationship with the Auditors

the Board has established a transparent relationship with the external auditors through the Ac, which has been accorded with the power to communicate directly with the external auditors towards ensuring compliance with the accounting standards and other related regulatory requirements.

the Ac undertakes an annual assessment of the suitability and independence of the external auditors. It is the policy of the Ac to meet with the external auditors at least twice a year to discuss their audit plan, audit findings and the company¡¦s financial statements. At least one of these meetings is held without the presence of the executive Directors and the management. the Ac also meets with the external auditors additionally whenever it deems necessary. In addition, the external auditors are invited to attend the AGM of the company and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and contents of their audit report.

the role of the Ac in relation to the external auditors is stated under the Ac Report on pages 15 to 18 in this Annual Report.

Compliance Statement

throughout the financial year ended 28 February 2014, the Group has substantially complied, with the Best Practices in corporate Governance set out in Part 2 of the code, except for the following:-

• Appointment of a Senior Independent Non-Executive Director to whom shareholders may address theirgrievances and concerns. the Board will collectively be responsible to address all grievances and concerns brought up by the shareholders.

this statement was made in accordance with a resolution of the Board of Directors dated 14 July 2014.



Audit Committee

the present members of the Audit committee comprise:-

chairmanDato’ sri Ahmad said Bin HamdanIndependent non-executive chairman

MembersDr. ch’ng Huck KhoonIndependent non-executive Director

chang Vun LungIndependent non-executive Director

TERMS OF REFERENCE

1. OBJECTIVES

the primary objective of the Audit committee is to assist the Board in discharging its responsibilities relating to management of principal risks, internal control, accounting and financial reporting practices of the Group. In addition, the Audit committee shall:-

• Evaluatetheinternalandexternalauditprocesses; • Ensuretransparency,accountabilityandintegrityoftheGroup’sactivities;

• Overseecompliancewiththestatutoryandlegalrequirementsandobservanceofapropercodeofconduct;and• Maintain regular scheduledmeetingsanddirectcommunicationamong theBoard, internalandexternal

auditors, and senior management.

2. MEMBERSHIP AND COMPOSITION

the Audit committee shall be appointed by the Board from amongst the Directors and must be composed of no fewer than three (3) members, all of whom must be non-executive Directors, with a majority of them being Independent Directors. no alternate director shall be appointed as a member of the Audit committee. the chairman of the committee must be an Independent non-executive Director appointed by the Board. If membership for any reason falls below three (3) members, the Board shall within three (3) months of that event, appoint such number of new members as may be required to make up the minimum of three (3) members.

the Board shall at all times ensure that at least one (1) member of the Audit committee:-

• MustbeamemberoftheMalaysianInstituteofAccountants(“MIA”);or• IfheorsheisnotamemberofMIA,heorshemusthaveatleastthree(3)years’workingexperienceand:-

- he or she must have passed the examinations specified in Part I of the First schedule of the Accountants Act 1967; or

- he or she must be a member of one of the associations of accountants specified in Part II of the First schedule of the Accountants Act 1967; or

• FulfilssuchotherrequirementsasprescribedorapprovedbytheBursaMalaysiaSecuritiesBerhad(“Bursasecurities”).

3. AUTHORITY

the Audit committee is granted the authority by the Board to investigate any activity of the Group and the company within its terms of reference, to obtain the resources which it needs, and to have full and unrestricted access to information and all employees are directed to co-operate with any request made by the Audit committee.

Furthermore, the Audit committee shall have direct communication channels with the internal and external auditors as well as with senior management of the Group and shall be able to convene meetings with both the internal and external auditors whenever deemed necessary.

AUDIt coMMIttee RePoRt


Where the committee is of the view that a matter reported to the Board has not been satisfactorily resolved resulting in a breach of the Ace Market Listing Requirements of Bursa securities (“Listing Requirements”), the committee shall promptly report such matter to Bursa securities. the Audit committee is also empowered to obtain independent professional to advice if considered necessary to assist the Audit committee in fulfilling its responsibilities.

4. DUTIES AND RESPONSIBILITIES

the Audit committee acts as the Board’s principal agent to ensure the independence of the company’s external auditor, the integrity of management and the adequacy of disclosures to shareholders.

the duties and responsibilities of the Audit committee include the following:-

• Toreviewwiththeexternalauditors,theauditscopeandplan,evaluationofthesystemofinternalcontrolsand audit report;

• Toreviewtheinternalauditprogramme,processes,theresultsoftheinternalaudit,processesorinvestigationundertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;

• Toreviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunctionsand that it has the necessary authority to carry out its work;

• Toreviewtheexternalandinternalauditreportstoensureappropriateandpromptremedialactionistakenby management on major deficiencies in controls or procedures that are identified;

• Torecommendto theBoardontheappointmentandtheannual re-appointmentofexternaland internalauditors, their audit fees and any question of resignation or dismissal;

• ToreviewtheassistancegivenbytheemployeesoftheGrouptotheexternalandinternalauditors,andanydifficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information;

• ToreviewthequarterlyresultsandyearendfinancialstatementsoftheGroupandtheCompany,beforetheapproval by the Board, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on:-- changes in or implementation of major accounting policies changes;- significant and unusual events;- the going concern assumption; and- compliance with accounting standards and other legal requirements;

• ToreviewanyrelatedpartytransactionandconflictofinterestssituationthatmayarisewithintheGroupor the company including any transaction, procedure or course of conduct that raises questions of management integrity;

• To reviewprocedures inplace toensure that theGroup is incompliancewith theListingRequirements,applicable approved accounting standards issued by Malaysian Accounting standards Board and companies Act, 1965 in Malaysia and other relevant legislative and reporting requirements;

• Toreviewtheexternalauditors’managementletterandmanagement’sresponse;• Toconvenemeetingswiththeexternalauditors,internalauditorsorboth,excludingtheattendanceofother

executive Directors and senior management, wherever deemed necessary;• Toconsiderthemajorfindingofinternalinvestigationsandmanagement’sresponse;and• ToperformanyotherrelevantdutiesasmaybeagreedbytheAuditCommitteeandtheBoard.

5. MEETINGS

the Audit committee is to meet at least four (4) times a year and as many times as the Audit committee deems necessary with written notice of the meeting together with the agenda to be given to the members of the Audit committee and the external auditors, where applicable. executive Directors, members of senior management, internal and external auditors and other professionals may be invited by the Audit committee to attend the Audit committee Meeting to assist in its deliberations if deems necessary by the Audit committee.

the Audit committee shall meet with the external auditors without the presence of any executive Directors or senior management at least twice a year. the internal and external auditors may also request for a meeting when the need arises.

AUDIt coMMIttee RePoRt (cont’D)


6. QUORUM AND REPORTING PROCEDURES

In order to form a quorum for the meeting, the majority of the members present must be Independent Directors. In the absence of the chairman, the members present shall elect a chairman for the meeting from amongst the members present.

the company secretary shall be appointed secretary of the committee (the “secretary”). the secretary, in conjunction with the Audit committee chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least one week prior to each meeting to members of the Audit committee. the minutes shall be circulated to members of the Audit committee.

the Audit committee chairman shall be entitled, where deemed appropriate, to invite any person(s) to meetings of the Audit committee. In addition, the Audit committee may invite the external auditors and senior management of the Group to be in attendance during meetings to assist in its deliberations.

7. MEETINGS HELD DURING THE FINANCIAL YEAR

the information on the attendance of each member at the Audit committee meetings held during the financial year ended 28 February 2014 was as follows:-

Members No. of Meetings Held Attendance

Dato’ sri Ahmad said Bin Hamdan 4 2 Dr. ch’ng Huck Khoon 4 4 chang Vun Long 4 4

8. SUMMARY OF ACTIVITIES

the main activities undertaken by the Audit committee for the financial year ended 28 February 2014 were as follows:-

• Reviewed thequarterlyunaudited financial resultsbefore recommending forapprovalby theBoardandsubsequent announcement to Bursa securities;

• Reviewedwiththeexternalauditorstheresultsofannualaudit,auditreportandmanagementlettertogetherwith management’s response to the findings of the external auditors;

• Reviewedwiththeinternalauditorstheinternalauditreport,whichhighlightedtheauditissuesandfindings,recommendations and management’s response. thereafter, discussed with the management on the likely corrective actions to be taken in order to improve the system of internal control based on improvement opportunities identified;

• Reviewedwiththeinternalandexternalauditorsthescopeoftheirwork,auditplanandtheirevaluationonthe system of internal controls of the Group;

• ReviewedandapprovedtheproposalforengagementofinternalandexternalauditorsfortheGroup;• ReviewedandapprovedtheCommittee’stermsofreference(whereapplicable);and• ReviewedonthecomplianceoftheListingRequirements,applicableapprovedaccountingstandardsissued

by Malaysian Accounting standards Board, companies Act 1965 and any other relevant and statutory requirements, in particular, on the quarterly and year end financial statements of the Group.

• Makeenquiryifthereareanyrelatedpartytransactionsandtoreviewtoensuretherelatedpartytransactions,if any, are on ordinary commercial terms and are not favorable to the related party than is generally available to the public, and that the transactions are not detrimental to the minority party.



9. INTERNAL AUDIT FUNCTION

the Group outsourced its internal audit function to an independent firm of consultants to carry out the internal audit of the Group in order to assist the Audit committee in discharging its duties and responsibilities. the internal audit function is to add value and improve the Group’s operations by providing independent, objective, assurance and consulting activities through its audit of the Group’s key operations and also to ensure consistency in the control environment and the application of policies and procedures. the internal auditors report directly to the Audit committee.

During the financial year ended 28 February 2014, the internal audit activities have been carried out according to the internal audit plan that was reviewed and approved by the Audit committee. the audit plan covers a review of adequacy of operational controls, risk management, compliance with established procedures, laws and regulations, quality of assets, management efficiency, amongst others.

the cost incurred for the internal audit function during the financial year ended February 28, 2014 amounted to RM12,720.

Further details on the internal audit function and its activities are set out in the statement on Risk Management and Internal control on pages 19 to 21 of this Annual Report.

10. STATEMENT ON SHARE ISSUANCE SCHEME

the company has not granted any option under the share Issuance scheme to the Directors and eligible employees of the Group for the financial year ended 28 February 2014.



stAteMent on RIsK MAnAGeMent AnD InteRnAL contRoL

INTRODUCTION

the Board of Directors acknowledges the importance of maintaining a sound system of internal control and effective risk management as part of its ongoing efforts to practice good corporate governance. the Board is pleased to provide the following statement on Risk Management and Internal control for the financial year ended 28 February 2014. this statement is made in compliance with Rule 15.26(b) of the Ace Market Listing Requirements of Bursa securities and the Malaysian code on corporate Governance 2012.

BOARD’S RESPONSIBILITIES

the Board recognizes that a sound framework of risk management and internal control is fundamental to good corporate governance. the Board affirms its overall responsibility for the Group’s system of risk management and internal control, which includes the establishment of appropriate risk management and control framework covering inter-alia, strategic, financial, operational and compliance aspect of the business as well as the review of its effectiveness, adequacy and integrity.

Whilst acknowledging its responsibilities, the Board is aware of the limitations that are inherent in any systems of internal controls and risk management, such systems being designed to manage, rather than eliminate the risk that may impede the achievement of the Group’s business objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatement or loss.

the Board is assisted by the management in the implementation of the Board’s policies and procedures on risk and control by identifying and assessing the risks faced, and in the design, operation and monitoring suitable internal controls to mitigate and control these risks. the Board has received assurances from the executive Directors and chief Financial officer that the Group’s risk management and internal control systems are operating adequately and effectively in all material aspects.

RISK MANAGEMENT FRAMEWORK

the Group has in place processes for the identification, evaluation, reporting, monitoring and reviewing of the major business units within the Group, covering both wholly and partially owned subsidiaries. the senior management, head of department and key personnel from the major business units in the Group are responsible for identifying, managing and reporting on significant risks on an ongoing basis. they have been entrusted to prepare action plans together with the implementation time-scaled to address the risk and control issues identified. the summary of key findings was discussed during the business review meetings and was brought to the attention of the executive Directors. the key findings were also discussed at the Board meeting as and when necessary. During the financial year under review, the Board has engaged a firm of consultant to carry out an update to the Group’s enterprise Risk Management.

SYSTEM OF INTERNAL CONTROL

the Group has an established internal control structure and is committed to maintaining the structure to ensure effective control over the Group’s business operations and to safeguard the value and security of the Group’s assets. there is a clearly defined operating structure with lines of responsibilities and delegation of authority in place to assist the Board to maintain a proper control environment, supported by the following activities:

(i) Accounting policies and operating procedures approved by the Board are applicable to the whole Group. Revisions and additions are made when necessary;

(ii) Adequate insurance is in place to ensure that the assets are sufficiently covered against any mishap that may result in material losses to the Group and its subsidiaries;

(iii) Business review meetings are conducted regularly to review the business development, operational and financial performance of the Group and its subsidiaries;

(iv) Quarterly financial results are reviewed by the Audit committee before approval by the Board for public release, and areas of concerns as well as exceptions or deviation to the Group’s policies and weaknesses on the internal control systems are highlighted and discussed during the meetings;


stAteMent on RIsK MAnAGeMent AnD InteRnAL contRoL (cont’D)

(v) Annual financial statements and Annual Report of the Group are reviewed by Audit committee before approval by the Board for public release;

(vi) Annual budget for each area of business are reviewed and approved by the Board;

(vii) Management accounts and reports are generated on a regular and consistent basis, covering financial and operational performance and key business indicators, for effective monitoring and decision making. A management reporting system is in place to carry out monthly monitoring and review of financial results and forecasts against budgets for all business units, with remedial action taken immediately for major variances and followed up, where necessary;

(viii) Limits of authorities are imposed for revenue and capital expenditure for all operating units to keep potential exposure under control. capital and revenue expenditure, acquisition and disposal of investment interests are all properly approved before they are carried out;

(ix) the effectiveness of the system of internal control is also reviewed through the Iso 9001:2008 Quality Management system certification. the demanding documentation requirements of the certification further ensure a trail of accountability in the Group.

INTERNAL AUDIT FUNCTION

the Group outsourced its internal audit function to an independent professional firm of consultant, which provides the Board with much of the assurance it required regarding the effectiveness as well as the adequacy and integrity of the Group’s systems of internal control. the cost incurred for the internal audit function for the year ended 28 February 2014 amounted to RM12,720.

the responsibilities of the internal auditors include conducting audits, submitting findings and independent report to the Audit committee on the Group’s systems of internal control. Being an independent function, the audit work is conducted with impartiality, proficiency and due professional care. Internal audit plans are reviewed and approved by the Audit committee and the plans include independent appraisal on the compliance, adequacy and effectiveness of the Group’s internal controls and to assess and monitor the effectiveness and implementation of the Group’s risk management policies. the findings of the internal audit function, including its recommendations and management’s responses, were reported to the Audit committee. In addition, the internal audit function followed up on the implementation of recommendations from previous cycles of internal audit and to update the Audit committee on the status of management agreed action plan implementation.

COMMENTARY ON THE ADEQUACY AND EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS

on 30 June 2014 and pursuant to Rule 9.19(38) of the Ace Market Listing Requirements of Bursa Malaysia securities Berhad, the Board of Directors has announced that the company’s external Auditors, Messrs. Baker tilly Monteiro Heng had qualified the company’s Audited Financial statements and Report for the financial year ended 28 February 2014.

the basis for the Qualified opinion relates to the Group’s subsidiaries, namely At Machinery (suzhou) co., Ltd. (“AtMs”) and At Automation technology solutions Phils., Inc.. the financial statements of these subsidiaries have not been audited and the said subsidiaries were disposed of on 28 February 2014. the financial statements of the Group have been consolidated using the unaudited management financial statements of the said subsidiaries prior to the date of disposal. the auditors were unable to obtain sufficient appropriate audit evidence on the completeness of the results of the said subsidiaries for the financial year ended 28 February 2014 that was included in the statement of profit or loss and other comprehensive income of the Group. In addition, the gain on disposal of the subsidiaries amounting to RM1,098,521 was also accounted for using the unaudited management financial statements of the said subsidiaries as at the date of disposal. As a result, the auditors were also unable to obtain sufficient appropriate audit evidence on the said gain on disposal. the financial statements of AtMs that have been consolidated into the previous year’s financial statements of the Group have not been audited. the auditors were unable to satisfy themselves by alternative means concerning the opening balances disclosed in the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows, as comparative figures. Accordingly, the auditors were unable to determine whether any adjustments were necessary and their effects, if any, on the financial position of the Group as at 28 February 2014 and its financial performance and cash flows for the financial year then ended.


CONCLUSION

the Board has reviewed the risk management and internal control systems and is of the view that, apart from the matters highlighted in the preceding paragraph, the system of internal control and risk management in place for the year under review is adequate and effective to safeguard the shareholders’ interests and assets of the Group. no material weaknesses have been identified which would result in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report. this statement is also based on the consideration of the audit work performed by the external auditors on the financial records of the Group.

the Board continues to take appropriate measures and ongoing commitment to strengthen the Group’s control environment and processes. this is a continuous and on-going process and appropriate action plans will be put in place to enhance the Group’s system of internal control as and when necessary.

this statement is made in accordance with a resolution of the Board of Directors dated 14 July 2014.

stAteMent on RIsK MAnAGeMent AnD InteRnAL contRoL (cont’D)


1. Utilisation of Proceeds

1.1 Private Placement completed on 15 March 2013

the company has raised cash proceeds of RM0.51 million from a private placement exercise which was completed on 15 March 2013. the summary of the utilisation of proceeds were as follows:-

Proposed Actual Balance as at Timeframe of Utilisation Utilisation 28 February 2014 utilisation of Utilisation (RM’000) (RM’000) (RM’000) proceeds

to purchase glove counting machines 300 - 300 Within three (3) months

to fund the development and production 189 102 87 Within three of wheel- chair washing machines (3) months

estimated expenses 20 20 - -

total 509 122 387

on 4 June 2014, the company has announced the variation to the utilisation of the above proceeds. the balance amount unutilised of RM387,000 will now be used to fund the factory building extension at Plot 49, Hilir sungai Keluang 2, Bayan Lepas Industrial Park, Phase 4, 11900 Pulau Pinang.

otHeR DIscLosURe ReQUIReMents


1.2 Rights Issue with free Warrants

the company has on 10 February 2014 completed its Rights Issue with free Warrants (“Rights Issue exercise”). Pursuant to the Rights Issue exercise, additional 196,845,765 ordinary shares of RM0.10 each (“Rights shares”) were issued at the issue price of RM0.10 per Rights share and cash proceeds of RM19.685 million were raised.

the summary of the utilisation of proceeds were as follows:-

Proposed Actual Balance as at Timeframe of Utilisation Utilisation 28 February 2014 utilisation of Utilisation (RM’000) (RM’000) (RM’000) proceeds

Repayment of bank borrowings 12,600 215 12,385 Within six (6) months

Working capital expenditures: 3,784 36 3,749 Within twelve (12) months

(a) to set up operation-site for the 2,500 - 2,500 Within twelve Group’s manufacturing of food (12) months waste conversion system machines

(b) Promotion and marketing expenses 1,000 - 1,000 Within twelve for the Group’s food waste (12) months conversion system machines

(c) to replace the wear and tear of the 285 36 249 Within twelve Group’s existing machineries and (12) months equipment

Partially finance the construction of 2,800 # - 2,800 # Within twelve factory building extension (12) months

estimated expenses 500 500 - -

total 19,685 751 18,934

# Pursuant to the variation of the proceeds announced on 4 June 2014, balance amount unutilised of RM387,000 from the previous private placement exercise will now be used to finance the construction of factory building extension as mentioned in note 1.1.

otHeR DIscLosURe ReQUIReMents (cont’D)


1.3 Proposed Private Placement 2014

the Board of Directors had on 4 June 2014 via tA securities Holdings Berhad announced that the company proposed to implement a private placement of up to 59,053,700 new ordinary shares of RM0.10 each in the company, representing not more than ten percent (10%) of the enlarged issued and paid-up capital of the company to independent third party investor(s) to be identified at a later date (hereinafter referred to as “Proposed Private Placement”). the company is expected to raise gross proceeds amounting to RM5.9 million from the Proposed Private Placement. the proceeds raised are expected to be utilised in the following manner:-

Utilisation Minimum Maximum Scenario Scenario Timeframe of (RM’000) (RM’000) utilisation of proceeds

Business expansion 3,500 5,000 Within twelve (12) months and/or investments

Working capital 297 725 Within twelve (12) months

estimated expenses 140 180 -

total 3,937 5,905

2. Share Buy-Backs

the company did not enter into any share buy-backs transactions during the financial year ended 28 February 2014.

3. Warrants, Options or Convertible Securities

Pursuant to the Rights Issue exercise, the company has issued 196,845,765 Warrants which were listed on the Ace Market of Bursa Malaysia securities Berhad on 5 February 2014. As at 28 February 2014, 196,845,765 Warrants remained unexercised. the Warrants carry the rights to subscribe for new shares in the company at an exercise price of RM0.12 per share and expires on 28 January 2019.

there were no other options or convertible securities issued by the company during the financial year.

4. Depository Receipt Programme

there were no Depository Receipt Programme sponsored by the company during the financial year.

5. Imposition of Sanctions and/or Penalties

there were no sanctions and/or penalties imposed on the company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.

6. Non-Audit Fees

the amount of non-audit fee incurred for services rendered by the external auditors and their affiliated companies or firms to the Group for the financial year ended 28 February 2014 was RM7,800.

7. Variation in Results

there were no variances of 10% or more between the audited results for the financial year and the unaudited results announced.



8. Profit Guarantees

there was no profit guarantee given by the company during the financial year.

9. Material Contracts

there were no material contracts entered into by the company and/or its subsidiaries involving Directors’ and/or major shareholders’ interests, either still subsisting at the end of the financial year or entered into since the end of the previous financial year.

10. Corporate Social Responsibilities

the company and its subsidiaries believed that pursuit of business objectives needs to be balanced with the employees, environment and social welfare responsibilities. As such, the Group uses its best endeavour on an ongoing basis to integrate corporate social responsibilities practices into its business operations.

11. Employees

there is no discrimination between genders or among races in the workplaces. the company and its subsidiaries offer insurance benefits to its employees amongst others which include group hospitalization and surgical insurance and group personal accident insurance. other staff appreciation and recognition efforts are inclusive of festive gathering, annual dinner and presentation of memorable gifts to the long-serving employees during the Group’s Annual Dinner.

the Group recognises the importance of ensuring a conducive and safe environment for employees to work in. the Group is actively concerned about the safety, health and welfare of all employees. the Group also believes that human capital development is very important to ensure that the Group has the right and relevant skill sets and knowledge essential for business sustainability and growth. As such, the Group constantly upgrades the employees’ skills, knowledge and experiences which would enhance the individual employee’s competency and further improve their quality of work and workplace.

12. Environment

environment care is one of the Group’s key sustainability interests. We strive to achieve a sustainable balance between development and conservation. our project developments and operations are carefully planned and designed to minimize and protect the impact on the ecosystem. Various eco-friendly initiatives have been implemented by our teams to address environmental issues and challenges. We advocate and encourage the 3R (Reduce, Reuse and Recycle) strategy among our employees.

scrap metals and water mixed with coolants that have been used in the production process are disposed of through an authorized contractor.

13. Community

the Group plays its role as a socially responsible corporate citizen in the community whenever the need arise. the Group is aware of the community welfare by supporting needy social objectives in the communities in which businesses operates and its employees live and work.

14. Recurrent Related Party Transactions of a Revenue Nature

the company does not have any recurrent related party transactions of revenue or trading nature during the financial year ended 28 February 2014.


FINANCIAL STATEMENTS

27 Statement of Directors’ Responsibilities

28-31 Directors’ Report

32 Statement by Directors

32 Statutory Declaration

33-35 Independent Auditors’ Report

36-37 Statements of Profit or Loss and Other Comprehensive Income

38 Statements of Financial Position

39-40 Consolidated Statement of Changes in Equity

41 Statement of Changes in Equity

42-43 Statements of Cash Flows

44-93 Notes to the Financial Statements


The Directors are required by the Companies Act, 1965 to prepare audited financial statements that give a true and fair view of the state of affairs, including the cash flows and results, of the Group and of the Company as at the end of each financial year.

The Directors have considered the following in preparing the financial statements for the financial year ended 28 February 2014 of the Group and of the Company:-

• ThattheGroupandtheCompanyhaveusedappropriateaccountingpolicies,andtheseareconsistentlyapplied;

• Thatreasonableandprudentjudgmentsandestimatesweremade;• ThattheapprovedaccountingstandardsinMalaysiahavebeenadopted;and• Thatthefinancialstatementshavebeenpreparedonagoingconcernbasis.

The Directors are responsible for ensuring that the Company and subsidiary companies maintain proper accounting records which disclose with reasonable accuracy the financial positions of the Group and of the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and of the Company, and to prevent and detect fraud and other irregularities.

This statement was made in accordance with a resolution of the Board of Directors dated 25 June 2014.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES


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 28 February 2014.

PRINCIPAL ACTIVITIES

The principal activities of the Company are those of investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 10 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

RESULTS

Group Company RM RM Profit/(Loss) for the financial year: - continuing operations 1,000,959 (2,965,939)- discontinued operations 109,434 -

1,110,393 (2,965,939)

Attributable to:- Owners of the parent 1,112,106 Non-controlling interests (1,713)

1,110,393

DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividend in respect of the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in Note 16 to the financial statements.

BAD AND DOUBTFUL DEBTS

Before the statements of profit or loss and other comprehensive income and the statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that there were no known bad debts and that adequate provision had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render it necessary to write off any bad debts or render the amount of provision for doubtful debts in the financial statements of the Company inadequate to any substantial extent.

DIRECTORS’ REPORT


CURRENT ASSETS

Before the statements of profit or loss and other comprehensive income and the statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets which were unlikely to realise in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements 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 method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

At the date of this report, there does not exist:-

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

(ii) any contingent liabilities in respect of the Group or of the Company which has arisen since the end of the financial year.

No contingent liabilities or other liabilities 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 affect the ability of the Group or of the Company to meet their 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 which would render any amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATURE

In the opinion of the directors:-

(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

DIRECTORS’ REPORT (CONT’D)


ISSUE OF SHARES OR DEBENTURES

During the financial year, the Company increased its authorised share capital from RM25,000,000 to RM100,000,000 by the creation of 750,000,000 ordinary shares of RM0.10 each.

During the financial year, the Company also increased its issued and paid-up ordinary share capital from RM19,175,077 to RM39,369,153 by way of:-

a) private placement with the listing of 5,095,000 ordinary shares of RM0.10 each at an issue price of RM0.10 each on 15 March 2013; and

b) allotting renounceable right shares of 196,845,765 new ordinary shares of RM0.10 each with free detachable warrants of RM0.10 each at an issue price of RM0.10 per right share.

The newly issued shares rank pari passu in all respects with the existing shares of the Company.

There were no other issue of shares or debentures during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued ordinary shares of the Company during the financial year.

WARRANTS

Details of the warrants are set out in Note 16(b) to the financial statements.

DIRECTORS OF THE COMPANY

The directors in office since the date of the last report are:-

Dato’ Sri Ahmad Said Bin HamdanIr. Auniah Binti AliDr. Ch’ng Huck KhoonChang Vun LungMak Siew WeiRonnie Lee Rong Yao (Resigned on 1 July 2013)Cham Owi Tong (Retired on 26 August 2013)

DIRECTORS’ INTERESTS

The interests of the directors in office as at the end of the financial year in the shares of the Company or of its related corporations during the financial year according to the registers required to be kept under Section 134 of the Companies Act, 1965, are as follows:-

Number of Ordinary Shares of RM0.10 Each At At 1.3.2013 Acquired Disposed 28.2.2014

Direct InterestMak Siew Wei 6,120,000 12,240,000 * - 18,360,000

* Subscription to the Company’s renounceable rights issue.

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



DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than those as disclosed in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any deemed benefits which may arise from transactions as disclosed in Note 23 to the financial statements.

Neitherduringnorattheendofthefinancialyear,wastheCompanyapartytoanyarrangementswhoseobjectisto enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

SIGNIFICANT EVENTS

Details of significant events during the financial year are disclosed in Note 25 to the financial statements.

EVENTS AFTER THE REPORTING DATE

Details of events subsequent to the financial year are disclosed in Note 26 to the financial statements.

AUDITORS

The auditors, Messrs. Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 25 June 2014.

Mak Siew Wei Ir. Auniah Binti Ali



We, the undersigned, being two of the directors of the Company, do hereby state that, in the opinion of the directors, the accompanying financial statements as set out on pages 36 to 93 are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 28 February 2014 and of their financial performance and cash flows for the financial year then ended.

The supplementary information set out on page 94 has been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format as prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 25 June 2014.

Mak Siew Wei Ir. Auniah Binti Ali

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

I, Yong Man Chai, being the officer primarily responsible for the financial management of the Company, do solemnly and sincerely declare that, to the best of my knowledge and belief, the financial statements as set out on pages 36 to 93 and the supplementary information as set out on page 94 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared atPetaling Jaya, Selangor Darul Ehsanon 25 June 2014 Yong Man Chai

Before me

R.HEMALACommissioner for Oath

STATEMENT BY DIRECTORSPursuant to Section 169 (15) of the Companies Act, 1965


Report on the Financial Statements

We have audited the financial statements of AT Systematization Berhad, which comprise the statements of financial position as at 28 February 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 36 to 94.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Basis for Qualified Opinion

1. As disclosed in Note 10 to the financial statements, the financial statements of the subsidiaries, namely AT Machinery (Suzhou) Co., Ltd. (“ATMS”) and AT Automation Technology Solutions Phils., Inc., for the financial year ended 28 February 2014 have not been audited and the said subsidiaries were disposed of on 28 February 2014. The financial statements of the Group have been consolidated using the unaudited management financial statements of the said subsidiaries prior to the date of disposal. We were unable to obtain sufficient appropriate audit evidence on the completeness of the results of the said subsidiaries for the financial year ended 28 February 2014 that was included in the statement of profit or loss and other comprehensive income of the Group. In addition, the gain on disposal of the subsidiaries amounting to RM1,098,521 was also accounted for using the unaudited management financial statements of the said subsidiaries as at the date of disposal. As a result, we were also unable to obtain sufficient appropriate audit evidence on the said gain on disposal of the subsidiaries of RM1,098,521.

2. The financial statements of ATMS that have been consolidated into the previous year’s financial statements of the Group have not been audited. We were unable to satisfy ourselves by alternative means concerning the opening balances disclosed in the statement of profit or loss and other comprehensive income, statement of financial position and statement of cash flows, as comparative figures. Accordingly, we were unable to determinewhetheranyadjustmentswerenecessaryand theireffects, ifany,on the financialpositionof theGroup as at 28 February 2014 and its financial performance and cash flows for the financial year then ended.

INDEPENDENT AUDITOR’S REPORT


Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraphs, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 28 February 2014 and of their financial performance and cash flows for the financial year then ended in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

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

a) In our opinion, the accounting and other records and the registers required by the Companies Act, 1965 in Malaysia 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 Companies Act, 1965 in Malaysia.

b) Other than those subsidiaries without the financial statements and the auditors’ reports as disclosed in Note 10 to the financial statements, we have considered the financial statements and the auditors’ reports of the remaining subsidiaries of which we have not acted as auditors, which are indicated in Note 10 to the financial statements.

c) Other than as disclosed in the Basis of Qualified Opinion paragraph, we are satisfied that the financial statements of the remaining subsidiaries that have been consolidated with the Company’s financial statements are in a 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) Other than those subsidiaries without the auditors’ reports as disclosed in Note 10 to the financial statements, the auditors’ reports on the financial statements of the remaining subsidiaries did not contain any qualification or any adverse comment required to be made under Section 174(3) of the Companies Act, 1965 in Malaysia.

Other Reporting Responsibilities

The supplementary information set out on page 94 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia.

INDEPENDENT AUDITOR’S REPORT (CONT’D)


Other Matters

1. The financial statements of the Group and of the Company for the financial year ended 28 February 2013 were audited by another firm of chartered accountants whose report dated 25 June 2013, had the following basis of qualified opinion and qualified opinion on those financial statements:

Basis for Qualified Opinion

We draw attention to Note 19 to the financial statements. A subsidiary, AT Machinery (Suzhou) Co., Ltd. (“the Component”), ceased its operations during the financial year and is presently in the process of dissolution. The accounts of the Component that have been consolidated into the financial statements of the Group have not been audited. All the financial information attributed to the Component as disclosed in Note 19 was based on its latest unaudited accounts available but without any detailed listings/schedules and supporting source documents. Our responsibilities as part of our audit of the financial statements of the Group should have included obtaining sufficient appropriate audit evidence regarding such financial information of the Component and the consolidation process. As management has not made available to us the relevant accounting and other records of the Component, however, we were unable to carry out any appropriate audit procedures to achieve theseobjectives.Inaddition,wewerealsounabletoascertainwhetherthedissolutionoftheComponentwouldgive rise to any additional liability or contingent liability of the Group. Consequently, we could not determine whetheranyadjustmentstotheComponent’sfinancialinformationasdisclosedinNote19werenecessaryandtheir effects, if any, on the financial position of the Group as at 28 February 2013 and its financial performance and cash flows for the financial year then ended.

Qualified Opinion

In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give a true and fair view of the financial position of the Group and the Company as at 28 February 2013 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

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

BAKER TILLY MONTEIRO HENG HENG FU JOEAF 0117 2966/11/14(J)Chartered Accountants Chartered Accountant

Kuala Lumpur25 June 2014

INDEPENDENT AUDITOR’S REPORT (CONT’D)


Group Company 2014 2013 2014 2013 Note RM RM RM RM Continuing operations Revenue 4 21,757,133 22,062,457 1,338,479 1,120,711 Cost of sales (17,064,213) (15,664,136) - -

Gross profit 4,692,920 6,398,321 1,338,479 1,120,711 Other income 1,796,184 573,223 4,087,573 1,676 Administrative and general expenses (4,363,042) (8,056,385) (8,388,991) (11,329,258) Selling and distribution expenses (110,251) (53,182) - - (4,473,293) (8,109,567) (8,388,991) (11,329,258)

Profit/(Loss) from operations 2,015,811 (1,138,023) (2,962,939) (10,206,871)Finance costs (832,454) (858,205) - -

Profit/(Loss) before tax 5 1,183,357 (1,996,228) (2,962,939) (10,206,871)Tax (expense)/credit 6 (182,398) (251,351) (3,000) 7,000

Profit/(Loss) for the continuing operations 1,000,959 (2,247,579) (2,965,939) (10,199,871) Discontinued operations Profit/(Loss) from discontinued operations, net of tax 7 109,434 (8,593,484) - -

Profit/(Loss) for the financial year 1,110,393 (10,841,063) (2,965,939) (10,199,871)

Attributable to:- Owners of the parent - from continuing operations 1,002,672 (2,247,579) (2,965,939) (10,199,871)- from discontinued operations 109,434 (8,593,484) - -

1,112,106 (10,841,063) (2,965,939) (10,199,871)Non-controlling interests 10 (1,713) - - -

Profit/(Loss) for the financial year 1,110,393 (10,841,063) (2,965,939) (10,199,871)

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014 (CONT’D)

Group Company 2014 2013 2014 2013 Note RM RM RM RM Profit/(Loss) for the financial year 1,110,393 (10,841,063) (2,965,939) (10,199,871) Other comprehensive income Item that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations - (51,342) - -

Total comprehensive income for the financial year 1,110,393 (10,892,405) (2,965,939) (10,199,871)

Total comprehensive income attributable to: Owners of the parent 1,112,106 (10,892,405) (2,965,939) (10,199,871)Non-controlling interests 10 (1,713) - - -

Total comprehensive income for the financial year 1,110,393 (10,892,405) (2,965,939) (10,199,871)

Earnings/(Loss) per share attributable to the owners of the parent (sen) Basic and diluted: - Continuing operation 8 0.48 (1.21) - Discontinued operation 8 0.05 (4.63)

0.53 (5.84)

Theannexednotesformanintegralpartof,andshouldbereadinconjunctionwith,thesefinancialstatements.


Group Company 2014 2013 2014 2013 Note RM RM RM RM ASSETS Non-current assets Property, plant and equipment 9 24,112,952 24,883,387 13,563 21,907 Investment in subsidiaries 10 - - 2,681,003 2,600,001

24,112,952 24,883,387 2,694,566 2,621,908

Current assets Inventories 11 1,981,782 1,916,599 - - Trade and other receivables 12 7,204,323 5,034,855 1,661,580 7,973,942 Prepayments 189,167 959,358 - 85,200 Tax assets 13 309,202 186,243 63,750 - Cash and cash equivalents 14 19,957,056 1,653,384 18,124,382 14,490 29,641,530 9,750,439 19,849,712 8,073,632

TOTAL ASSETS 53,754,482 34,633,826 22,544,278 10,695,540

EQUITY AND LIABILITIES Equity Share capital 15 39,369,153 19,175,077 39,369,153 19,175,077 Share premium 16 10,966,787 11,516,538 10,966,787 11,516,538 Warrant reserve 16 17,125,582 - 17,125,582 - Revaluation reserve 217,500 217,500 - - Currency translation reserve - 11,583 - - Accumulated losses (33,467,236) (17,453,760) (45,010,959) (24,919,438)

Total equity attributable to owners of the parent 34,211,786 13,466,938 22,450,563 5,772,177 Non-controlling interests 10 17,287 - - -

Total equity 34,229,073 13,466,938 22,450,563 5,772,177 Liabilities Non-current liabilities Finance lease payables 17 1,776,953 1,218,355 - - Bank borrowings 18 11,328,334 12,171,856 - - Deferred tax liabilities 19 368,600 401,000 - -

13,473,887 13,791,211 - -

Current liabilities Trade and other payables 20 4,429,792 5,983,954 90,715 4,923,363 Tax liabilities 3,000 - 3,000 - Finance lease payables 17 1,012,785 896,737 - - Bank borrowings 18 605,945 494,986 - -

6,051,522 7,375,677 93,715 4,923,363 Total liabilities 19,525,409 21,166,888 93,715 4,923,363

TOTAL EQUITY AND LIABILITIES 53,754,482 34,633,826 22,544,278 10,695,540


STATEMENTS OF FINANCIAL POSITIONAS AT 28 FEBRUARY 2014


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Non-Distributable Distributable Share Share Warrant Accumulated Total Capital Premium Reserve Losses Equity Note RM RM RM RM RM

At 1 March 2012 17,895,077 10,748,538 - (14,719,567) 13,924,048

Total comprehensive income for the financial year - - - (10,199,871) (10,199,871)Issue of shares, representing total transactions with owners 1,280,000 768,000 - - 2,048,000

At 28 February 2013 19,175,077 11,516,538 - (24,919,438) 5,772,177

Total comprehensive income for the financial year - - - (2,965,939) (2,965,939) Transactions with owners Issue of shares pursuant to private placement 15 509,500 - - - 509,500 Issue of shares pursuant to right issue with warrants 15 19,684,576 (549,751) - - 19,134,825 Total transactions with owners 20,194,076 (549,751) - - 19,644,325

Transfer to warrant reserve 16 - - 17,125,582 (17,125,582) -

At 28 February 2014 39,369,153 10,966,787 17,125,582 (45,010,959) 22,450,563


STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014


Group Company 2014 2013 2014 2013 Note RM RM RM RM Cash flows from operating activities Profit/(Loss) before tax - Continuing operations 1,183,357 (1,996,228) (2,962,939) (10,206,871)- Discontinued operations 7 109,434 (8,593,484) - -

1,292,791 (10,589,712) (2,962,939) (10,206,871)

Adjustmentsfor:- Amount owing by a subsidiary written off - - 5,971,022 - Depreciation of property, plant and equipment 2,097,315 2,301,532 8,344 8,344 Impairment loss on goodwill 5,300 21,918 - - Impairment loss on investment in a subsidiary - - 599,999 613,669 Impairment loss on loans and receivables 94,400 1,917,076 620,862 6,858,751 Interest expense 857,452 898,712 - - Inventories written down - 2,503,193 - - Loss on disposal of property, plant and equipment 22,859 38,082 - - Prepayment written off 297,000 - - - Property, plant and equipment written off 1,665 334,259 - - Interest income (31,787) (67,924) (31,643) - Dividend income - - (255,000) - Gain on disposal of investment in subsidiaries - - (1) - Gain on disposal of subsidiaries 7(c) (1,098,521) - - - Gain on disposal of property, plant and equipment (33,177) - - - Reversal of impairment loss on: - subsidiary - - (2,515,929) - - unrelated parties (1,542,087) - (1,540,000) - Unrealised gain on foreign exchange (44,483) - - -

Operating profit/(loss) before working capital changes 1,918,727 (2,642,864) (105,285) (2,726,107) Increase in inventories (1,099,634) (1,931,106) - - (Increase)/Decrease in receivables (3,512,577) 3,660,374 3,861,607 (2,246,352)Increase/(Decrease) in payables 4,115,454 (1,227,319) (4,832,648) 2,904,441

Cash generated from/(used in) operations carried down 1,421,970 (2,140,915) (1,076,326) (2,068,018)

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014


STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014 (CONT’D)

Group Company 2014 2013 2014 2013 Note RM RM RM RM Cash generated from/(used in) operations brought down 1,421,970 (2,140,915) (1,076,326) (2,068,018) Interest paid (857,452) (898,712) - - Tax refunded 3,420 - - - Tax paid (336,947) (756,074) - -

Net cash from/(used in) operating activities 230,991 (3,795,701) (1,076,326) (2,068,018) Cash flows from investing activities Dividend received - - 191,250 - Interest received 31,787 67,924 31,643 - Acquisition of subsidiaries, net of cash and cash equivalents acquired 10 19,000 (10,230) - - Effect of disposal of subsidiaries, net of cash disposed 7 (109,722) - - - Increase in investment of subsidiaries - - (681,002) - Proceeds from disposal of subsidiaries - - 2 - Proceeds from disposal of property, plant and equipment 497,107 1,013,093 - - Purchase of property, plant and equipment 9 (61,218) (384,095) - - Net cash from/(used in) investing activities 376,954 686,692 (458,107) - Cash flows from financing activities Proceeds from issue of shares 19,644,325 2,048,000 19,644,325 2,048,000 Payments of finance lease payables (1,230,229) (1,201,704) - - Repayments of term loans (732,563) (811,584) - - Term loan raised - 2,980,800 - - Net cash from financing activities 17,681,533 3,015,512 19,644,325 2,048,000

Net increase/(decrease) in cash and cash equivalents 18,289,478 (93,497) 18,109,892 (20,018)

Effects of exchange rate changes on cash and cash equivalents 14,194 (66,252) - - Cash and cash equivalents at beginning of the financial year 1,653,384 1,813,133 14,490 34,508

Cash and cash equivalents at end of the financial year 19,957,056 1,653,384 18,124,382 14,490



1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the ACE Market of Bursa Malaysia Securities Berhad.

The principal place of business is located at Plot 82, Lintang Bayan Lepas, Bayan Lepas Industrial Park, Phase IV, 11900 Bayan Lepas, Penang.

The registered office of the Company is located at Suite S-21-H, 21st Floor, Menara Northam, 55 Jalan Sultan Ahmad Shah, 10050 Penang.

The principal activities of the Company are those of investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are disclosed in Note 10. There have been no significant changes in the nature of these principal activities during the financial year.

The financial statements were authorised for issue in accordance with a resolution of the Board of Directors on 25 June 2014.

2. BASIS OF PREPARATION

(a) Statement of compliance

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

The financial statements of the Group and of the Company have been prepared under the historical cost basis, except as disclosed in the significant accounting policies in Note 3.

The preparation of financial statements in conformity with MFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires directors to exercise their judgementintheprocessofapplyingtheGroup’sandtheCompany’saccountingpolicies.Althoughtheseestimatesandjudgementarebasedonthedirectors’bestknowledgeofcurrenteventsandactions,actualresults may differ.

Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesare significant to the financial statements are disclosed in Note 2(d).

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014


NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 28 FEBRUARY 2014 (CONT’D)

2. BASIS OF PREPARATION (cont’d)

(b) New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations (“IC Int”) and Amendments to IC Int

(i) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int

The Group and the Company had adopted the following new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int that are mandatory for the current financial year:-

New MFRSs MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement

Revised MFRSs MFRS 119 Employee Benefits MFRS 127 Separate Financial Statements MFRS 128 Investments in Associates and Joint Ventures Amendments/Improvements to MFRSs MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards MFRS 7 Financial Instruments: Disclosures MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 101 Presentation of Financial Statements MFRS 116 Property, Plant and Equipment MFRS 132 Financial Instruments: Presentation MFRS 134 Interim Financial Reporting

New IC Int IC Int 20 Stripping Costs in the Production Phase of a Surface Mine Amendments to IC Int IC Int 2 Members’ Shares in Co-operative Entities & Similar Instruments

The adoption of the above new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int do not have any significant effect on the financial statements of the Group and of the Company, except for these as discussed below:

MFRS 10 Consolidated Financial Statements and MFRS 127 Separate Financial Statements (Revised)

MFRS 10 replaces the consolidation part of the former MFRS 127 Consolidated and Separate Financial Statements.TherevisedMFRS127willdealonlywithaccountingforinvestmentinsubsidiaries,jointcontrolled entities and associates in the separate financial statements of an investor and require the entity to account for such investments either at cost, or in accordance with MFRS 139 Financial Instruments: Recognition and Measurement.

MFRS 10 brings about convergence between MFRS 127 and IC Int 12 Consolidation-Special Purpose Entities, which interprets the requirements of MFRS 10 in relation to special purpose entities. MFRS 10 introduces a new single control model to identify a parent-subsidiary relationship by specifying that “an investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee”. It provides guidance on situations when control is difficult to assess such as those involving potential voting rights, or in circumstances involving agency relationships, or where the investor has control over specific assets of the entity, or where the investee entity is designed in such a manner where voting rights are not the dominant factor in determining control.




(b) New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations (“IC Int”) and Amendments to IC Int (cont’d)

(i) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont’d)

MFRS 12 Disclosures of Interests in Other Entities

MFRS 12 is a single disclosure standard for interests in subsidiaries, jointly controlled entities,associates and unconsolidated structured entities. The disclosure requirements in this MFRS are aimed at providing standardised and comparable information that enable users of financial statements to evaluate the nature of, and risks associated with, the entity’s interests in other entities, and the effects of those interests on its financial position, financial performance and cash flows. The requirements in MFRS 12 are more comprehensive than the previously existing disclosure requirements for subsidiaries. MFRS 12 disclosures are provided in Note 10.

MFRS 13 Fair Value Measurement

MFRS 13 defines fair value and sets out a framework for measuring fair value, and the disclosure requirements about fair value. This standard is intended to address the inconsistencies in the requirements for measuring fair value across different accounting standards. As defined in this standard, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a result of the guidance in MFRS 13, the Group reassessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair values measurement of liabilities.

Application of MFRS 13 has not materially impacted the fair value measurements of the Group. MFRS 13 requires more extensive disclosures. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

Amendments to MFRS 7 Financial Instruments: Disclosures

Amendments to MFRS 7 address disclosures to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position.

Amendments to MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosure of Interests in Other Entities

Amendments to MFRS 10 clarify that the date of initial application is the beginning of the annual reporting period for which this MFRS is applied for the first time. Consequently, an entity is not required to make adjustments to the previous accounting if the consolidation conclusion reached upon theapplication of MFRS 10 is the same as previous accounting or the entity had disposed of its interests in investees during a comparative period. When applying MFRS 10, these amendments also limit the requirement to present quantitative information required by Paragraph 28(f) of MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors to the annual period immediately preceding the date of initial application. A similar relief is also provided in MFRS 11 and MFRS 12. Additionally, entities would no longer be required to provide disclosures for unconsolidated structure entities in periods prior to the first annual period that MFRS 12 is applied.

If, upon applying MFRS 10, an entity conclude that it shall consolidate an investee that was not previously consolidated and that control was obtained before the effective date of the revised versions of these standards issued by the Malaysian Accounting Standards Board in November 2011, these amendments also clarify that an entity can apply the earlier versions of MFRS 3 Business Combinations and MFRS 127.

These amendments are not expected to have any significant impact on the financial results and position of the Group and the Company.





(i) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont’d)

Amendment to MFRS 101 Presentation of Financial Statements

The amendment to MFRS 101 introduces a grouping of items presented in other comprehensive income. Items that will be reclassified to profit or loss at future point in time have to be presented separately from items that will not be reclassified.

The amendment also clarifies the difference between voluntary additional comparative information and the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The amendment clarifies that the opening statement of financial position presented as a result of retrospective restatement or reclassification of items in financial statements does not have to be accompanied by comparative information in the related notes. As a result, the Group has not included comparative information in respect of the opening statement of financial position as at 1 March 2012.

The amendment also introduces new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendment, the ‘statement of comprehensive income’ is renamed as the ‘statement of profit or loss and other comprehensive income’.

The above amendment affects presentation only and has no impact on the Group’s and of the Company’s financial position or performance.

Amendment to MFRS 116 Property, Plant and Equipment

Amendment to MFRS 116 clarifies that items such as spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory.

Amendment to MFRS 132 Financial Instruments: Presentation

Amendment to MFRS 132 clarifies that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction shall be accounted for in accordance with MFRS 112 Income Taxes.





(ii) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted

The Group and the Company have not adopted the following new MFRS, amendments/improvements to MFRSs and new IC Int that have been issued by the Malaysian Accounting Standards Board (“MASB”) as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:-

Effective for financial periods beginning on or after

New MFRS MFRS 9 Financial Instruments To be announced by the MASB Amendments/Improvements to MFRSs MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1 July 2014 MFRS 2 Share-based Payment 1 July 2014 MFRS 3 Business Combinations 1 July 2014 MFRS 7 Financial Instruments: Disclosure Applies when MFRS 9 is applied MFRS 8 Operating Segments 1 July 2014 MFRS 9 Financial Instruments To be announced by the MASB MFRS 10 Consolidated Financial Statements 1 January 2014 MFRS 12 Disclosure of Interests in Other Entities 1 January 2014 MFRS 13 Fair Value Measurement 1 July 2014 MFRS 116 Property, Plant and Equipment 1 July 2014 MFRS 119 Employee Benefits 1 July 2014 MFRS 124 Related Party Disclosures 1 July 2014 MFRS 127 Separate Financial Statements 1 January 2014 MFRS 132 Financial Instruments: Presentation 1 January 2014 MFRS 136 Impairment of Assets 1 January 2014 MFRS 138 Intangible Assets 1 July 2014 MFRS 139 Financial Instruments: Recognition and Measurement 1 January 2014 MFRS 139 Financial Instruments: Recognition and Measurement Applies when MFRS 9 is applied MFRS 140 Investment Property 1 July 2014 New IC Int IC Int 21 Levies 1 January 2014

A brief discussion on the above significant new MFRS, amendments/improvements to MFRSs and new IC Int are summarised below. Due to the complexity of these new standards, the financial effects of their adoption are currently still being assessed by the Group and the Company.





(ii) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted (cont’d)

MFRS 9 Financial Instruments

MFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities.

This standard requires all financial assets to be classified based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial asset. Financial assets are to be initially measured at fair value. Subsequent to initial recognition, depending on the business model under which these assets are acquired, they will be measured at either fair value or at amortised cost.

In respect of the financial liabilities, the requirements are generally similar to the former MFRS 139. However, this standard requires that for financial liabilities designated as at fair value through profit or loss, changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income, whereas the remaining amount of the change in fair value will be presented in the profit or loss.

Amendment to MFRS 3 Business Combinations

Amendment to MFRS 3 clarifies that when contingent consideration meets the definition of financial instrument, its classification as a liability or equity is determined by reference to MFRS 132 Financial Instruments: Presentation. It also clarifies that contingent consideration that is classified as an asset or a liability shall be subsequently measured at fair value at each reporting date and changes in fair value shall be recognised in profit or loss.

In addition, amendment to MFRS 3 clarifies that MFRS 3 excludes from its scope the accounting for the formationofalltypesofjointarrangements(asdefinedinMFRS11Joint Arrangements) in the financial statementsofthejointarrangementitself.

Amendments to MFRS 8 Operating Segments

AmendmentstoMFRS8requireanentitytodisclosethejudgementsmadebymanagementinapplyingthe aggregation criteria to operating segments. This includes a brief description of the operating segments that have been aggregated and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics.

The amendments also clarify that an entity shall provide reconciliations of the total of the reportable segments’ assets to the entity’s assets if the segment assets are reported regularly to the chief operating decision maker.

Amendments to MFRS 10 Consolidated Financial Statements, MFRS 12 Disclosure of Interests in Other Entities and MFRS 127 Separate Financial Statements

Amendments to MFRS 10 introduce an exception to the principle that all subsidiaries shall be consolidated. The amendments define an investment entity and require a parent that is an investment entity to measure its investment in particular subsidiaries at fair value through profit or loss in accordance with MFRS 139 Financial Instruments: Recognition and Measurement instead of consolidating those subsidiaries in its consolidated financial statements. Consequently, new disclosure requirements related to investment entities are introduced in amendments to MFRS 12 and MFRS 127.

In addition, amendments to MFRS 127 also clarify that if a parent is required, in accordance with paragraph 31 of MFRS 10, to measure its investment in a subsidiary at fair value through profit or loss in accordance with MFRS 139, it shall also account for its investment in that subsidiary in the same way in its separate financial statements.






Amendment to MFRS 13 Fair Value Measurement

Amendment to MFRS 13 relates to the International Accounting Standards Board’s Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarifies that when IASB issued IFRS 13, it did not remove the practical ability to measure short-term receivables and payables with no stated interest rate at invoice amounts without discounting, if the effect of discounting is immaterial.

The amendment also clarifies that the scope of the portfolio exception of MFRS 13 includes all contracts accounted for within the scope of MFRS 139 Financial Instruments: Recognition and Measurement or MFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in MFRS 132 Financial Instruments: Presentation.

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

Amendments to MFRS 116 and MFRS 138 clarify the accounting for the accumulated depreciation/amortisation when an asset is revalued. It clarifies that:

• thegrosscarryingamount isadjusted inamanner that isconsistentwith the revaluationof thecarrying amount of the asset; and

• the accumulated depreciation/amortisation is calculated as the difference between the grosscarrying amount and the carrying amount of the asset after taking into account accumulated impairment losses.

Amendment to MFRS 124 Related Party Disclosures

Amendment to MFRS 124 clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity.

Amendment to MFRS 132 Financial Instruments: Presentation

Amendment to MFRS 132 does not change the current offsetting model in MFRS 132. The amendment clarifies the meaning of ‘currently has a legally enforceable right of set-off’, that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. The amendment clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.

Amendments to MFRS 136 Impairment of Assets

Amendments to MFRS 136 clarify that disclosure of the recoverable amount (based on fair value less costs of disposal) of an asset or cash generating unit is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

Amendments to MFRS 139 Financial Instruments: Recognition and Measurement

Amendments to MFRS 139 provide relief from discontinuing hedge accounting in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. As a result of the amendments, continuation of hedge accounting is permitted if as a consequence of laws or regulations, the parties to hedging instrument agree to have one or more clearing counterparties replace their original counterparty and the changes to the terms arising from the novation are consistent with the terms that would have existed if the novated derivative were originally cleared with the central counterparty.






IC Int 21 Levies

IC Int 21 addresses the accounting for a liability to pay a government levy (other than income taxes and fine or other penalties that imposed for breaches of the legislation) if that liability is within the scope of MFRS 137 Provisions, Contingent Liabilities and Contingent Assets. This interpretation clarifies that an entity recognises a liability for a levy when the activity that triggers the payment of the levy, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is recognised progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be recognised before the specific minimum threshold is reached.

(c) Functional and presentation currency

The financial statements are prepared in Ringgit Malaysia (“RM”) which is the Group’s and the Company’s functional currency. All financial information presented in RM has been rounded to the nearest RM, unless otherwise stated.

(d) Significant accounting estimates and judgements

Significantareasofestimation,uncertaintyandcriticaljudgementsusedinapplyingaccountingprinciplesthat have significant effect on the amount recognised in the financial statements are as follows:-

(i) Tax expense (Note 6) – Significant judgement is required in determining the capital allowances anddeductibility of certain expenses when estimating the provision for taxation. There were transactions during the ordinary course of business for which the ultimate tax determination of whether additional taxes will be due is uncertain. The Group recognises liabilities for tax based on estimates of assessment of the tax liability due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax in the periods in which the outcome is known.

(ii) Revaluation of leasehold lands and buildings (Note 9) - The Group carries its leasehold lands and buildings at valuation model, with changes in fair values being recognised in other comprehensive income. The Group engages independent valuation specialists to determine the fair value of the leasehold lands and buildings at a regular interval of at least once in every five years with additional valuations in the intervening years where market conditions indicate that the carrying values of the revalued lands and buildings materially differ from the market values.

(iii) Impairment of investments in subsidiaries (Note 10) – The directors review the investments in subsidiaries for impairment when there is an indication of impairment. This involves measuring the recoverable amount which includes fair value less costs to sell and valuation techniques. Valuation techniques include discounted cash flows analysis and in some cases, based on current market indicators and estimates that provide reasonable approximations to the detailed computation.

(iv) Impairment of receivables (Note 12) – The Group assesses at each reporting date whether there is any objectiveevidencethatafinancialassetsisimpaired.Todeterminewhetherthereisobjectiveevidenceof impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.



3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries which are disclosed in Note 10 made up to the end of the financial year. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Specifically, the Group controls an investee if and only if the Group has:-

(a) Power over the investee; (b) Exposure, or rights, to variable returns from its involvement with the investee; and (c) The ability to use its power over the investee to affect its returns.

IftheGrouphaslessthanamajorityofthevotingorsimilarrightsofaninvestee,theGroupconsidersallrelevant facts and circumstances in assessing whether it has power over an investee, including:-

(a) The contractual arrangement with the other vote holders of the investee; (b) Rights arising from other contractual agreements; and (c) The voting rights of the Group and potential voting rights.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The assets, liabilities and contingent liabilities assumed from a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated financial statements. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses, unless the investments are classified as held for sale (or included in a disposal group that is classified as held for sale). Acquisition related costs are recognised as expenses in the period in which the costs are incurred. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in profit or loss.

All intra group balances, transactions and resulting unrealised profits and losses (unless cost cannot be recovered) are eliminated on consolidation and the consolidated financial statements reflect external transactions only.

For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at the acquisition date either at fair value or at the proportionate share of the acquiree’s identifiable net assets.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

Changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiary.Anydifferencebetweentheamountbywhichthenon-controllinginterestisadjustedandthefairvalueoftheconsideration paid or received is recognised directly in equity and attributed to owners of the Company.

The Group has applied the revised MFRS 127 prospectively on 1 March 2011 in accordance with the transitional provisions. Accordingly, transactions with non-controlling interests prior to the respective effective date have not been restated to comply with the Standard.



3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(a) Basis of consolidation (cont’d)

Business combination involving entities under common control are accounted for by applying the pooling-of-interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the acquired entity is reflected within equity as reverse acquisition reserve. The statement of profit or loss and other comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities had always been combined.

(b) Transactions with non-controlling interests

Non-controlling interests represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of profit or loss and other comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributable to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(c) Foreign currencies transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the Company’s functional currency (foreign currencies) are recorded in Ringgit Malaysia using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated to the functional currencies at the exchange rates on the reporting date. Non-monetary items denominated in foreign currencies are not retranslated at the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

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

(d) Revenue recognition

(i) Sale of goods

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised upon delivery of goods when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Revenue from services

Revenue from services is recognised upon rendering of the services are performed.

(iii) Dividend income

Dividend incomes from subsidiaries are recognised when the right to receive payment is established.

(iv) Interest income

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




(d) Revenue recognition (cont’d)

(v) Rental income

Rental income is recognised in profit or loss on the straight-line basis over the term of the lease. Lease incentives granted, if any are recognised as an integral part of the total rental income, over the term of lease.

(e) Employee benefits

(i) Short term employee benefits

Wages, salaries, social security contributions and bonuses are recognised as expenses in the financial year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as expenses in the profit or loss as incurred.

(iii) Termination benefits

Termination benefits are recognised in profit or loss when the Group is demonstrably committed to either terminate the employee’s employment before the normal retirement date or provide termination benefits as a result of an offer made to encourage voluntary redundancy.

(f) Provision

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. Provision 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.

(g) Borrowing costs

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

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




(h) Leases

(i) Finance lease - the Group as lessee

Assets acquired by way of finance leases where the Group assumes substantially all the benefits and risks of ownership are classified as property, plant and equipment.

Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Property, plant and equipment acquired under finance lease is depreciated in accordance with the depreciation policy for property, plant and equipment.

(ii) Operating leases - the Group as lessee

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

(i) Tax expense

Tax expense in profit or loss represents the aggregate amount of current and deferred tax. Current tax is the expected amount payable in respect of taxable income for the financial year, using tax rates enacted or substantiallyenactedbythereportingdate,andanyadjustmentsrecognisedforprioryears’tax.Whenanitem is recognised outside profit or loss, the related tax effect is recognised either in other comprehensive income or directly in equity.

Deferred tax is recognised using the liability method, on all temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction, which is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply in the period in which the assets are realised or the liabilities are settled, based on tax rates and tax laws that have been enacted or substantially enacted by the reporting date.

Deferred tax assets are recognised only to the extent that there are sufficient taxable temporary differences relating to the same taxable entity and the same taxation authority to offset or when it is probable that future taxable profits will be available against which the assets can be utilised.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will be available against which the assets can be utilised.

Deferred tax assets relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive incomeordirectlyinequityanddeferredtaxarisingfrombusinesscombinationisadjustedagainstgoodwillon acquisition or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the acquisition cost.




(j) Discontinued operations

AdiscontinuedoperationisacomponentoftheGroup’sbusinessthatrepresentsaseparatemajorlineofbusiness 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 discounted 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 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.

(k) Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the assets’ carrying amount or recognised as separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

Revaluations of land and buildings are made with sufficient regularity at an interval of not more than five years such that the carrying amounts of the assets do not differ materially from their fair values at the end of the reporting period.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.

Leasehold lands are depreciated on a straight-line basis over the remaining lease terms. Other property, plant and equipment are depreciated on the straight line basis to write off the cost of the property, plant and equipment over their estimated useful lives.

The principal annual rates used for this purpose are:-

Buildings 2% Plant, machinery, tools and equipment 10% - 20% Furniture, fittings and office equipment 10% - 20% Motor vehicles 15% - 20%

The residual values, useful lives and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant andequipment.Theseareadjustedprospectively,ifappropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in profit or loss.

Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these property, plant and equipment.




(l) Impairment of non-financial assets

The carrying amounts of non-financial assets other than deferred tax assets and inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If such an indication exists, the asset’s recoverable amount is estimated. The recoverable amount is the higher of fair value less cost to sell and the value in use, which is measured by reference to discounted future cash flows and is determined on an individual asset basis, unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs to.

An impairment loss is recognised whenever the carrying amount of an item of asset exceeds its recoverable amount. An impairment loss is recognised in profit or loss.

Any subsequent increase in recoverable amount of an asset, other than goodwill, due to a reversal of impairment loss is restricted to the carrying amount that would have been determined (net of accumulated depreciation, where applicable) had no impairment loss been recognised in prior years. The reversal of impairment loss is recognised in profit or loss.

(m) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. Cost includes the actual cost of purchases and incidentals in bringing the inventories into store and for finished goods and work-in-progress, it includes costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing 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.

(n) Financial assets

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

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

The Group and the Company determine the classification of their financial assets at initial recognition, and have categorised the financial assets in loans and receivables.

(i) Loans and receivables

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

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

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

The Group and the Company classify the following financial assets as loans and receivables:-

- Cash and cash equivalents; and - trade and other receivables, including deposits and amount owing by subsidiaries.




(n) Financial assets (cont’d)

(i) Loans and receivables (cont’d)

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

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

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or where appropriate, a shorter period to the net carrying amount on initial recognition.

(o) Impairment of financial assets

TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethatafinancial asset is impaired.

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

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

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

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

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




(p) Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand and demand deposits, term deposits (including those pledged as security) and short-term, highly liquid investments that are readily convertible toknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.

(q) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

(r) Warrant reserve

Amount allocated in relation to the issuance of warrants are credited to a warrant reserve which is non-distributable. Warrant reserve is transferred to the share premium or retained earnings upon the exercise or expiry of warrants respectively.

(s) Financial liabilities

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

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

The Group’s and the Company’s other financial liabilities include trade and other payables, deposits received, accruals, and borrowings.

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

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

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

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




(t) Financial guarantee contracts

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

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

(u) Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

(v) Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by their respective segment managers responsible for the performance of the respective segments under their charge. The segment manager reports directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are disclosed in Note 24, including the factors used to identify the reportable segments and the measurement basis of segment information.

(w) Fair value measurement

The Group adopted MFRS 13, Fair Value Measurement which prescribed that fair value of an asset or a liability, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.



4. OPERATING REVENUE Group Company 2014 2013 2014 2013 RM RM RM RM Continuing operations Sale of goods 21,757,133 22,062,457 - - Rendering of services - - 1,083,479 1,120,711 Dividend income from subsidiary - - 255,000 - 21,757,133 22,062,457 1,338,479 1,120,711 Discontinued operations Sale of goods 1,210,876 3,063,286 - -

22,968,009 25,125,743 1,338,479 1,120,711

5. PROFIT/(LOSS) BEFORE TAX

Profit/(Loss) before tax is arrived at after charging/(crediting):-

Group Company 2014 2013 2014 2013 RM RM RM RM Auditors’ remuneration - current year 58,000 58,000 20,000 20,000 - under provision in prior year 5,000 - - - Amount owing by a subsidiary written off - - 5,971,022 - Depreciation of property, plant and equipment 1,992,669 2,095,020 8,344 8,344 Impairment loss on goodwill 2,174 21,918 - - Impairment loss on investments in subsidiaries - - 599,999 613,669 Impairment loss on loans and receivables: - subsidiaries - - 620,862 6,858,751 - unrelated parties 63,400 124,685 - - Interest expense 832,454 858,205 - - Loss on disposal of property, plant and equipment 22,859 - - - Non-executive directors’ fee 132,000 122,000 132,000 122,000 Personnel expenses (including key management personnel (Note (a)) - salaries and allowances 5,339,672 6,379,502 614,845 1,432,849 - contribution to defined contribution plan 388,244 504,355 41,015 101,453 - termination benefits - 124,932 - - Property, plant and equipment written off 1,665 140,051 - - Rental of premises 87,552 112,680 57,759 - Gain on foreign exchange: - realised (67,404) (77,424) - - - unrealised (44,483) - - - Gain on disposal of investment in subsidiaries - - (1) - Interest income (31,787) (3,754) (31,643) - Rental of premises - (152,400) - - Reversal of impairment loss on: - subsidiary - - (2,515,929) - - unrelated parties (1,542,087) - (1,540,000) -



5. PROFIT/(LOSS) BEFORE TAX (cont’d)

Profit/(Loss) before tax is arrived at after charging/(crediting):- (cont’d)

a) Included in personnel expenses are the aggregate amounts of remuneration received and receivable by the directors of the Group and of the company during the financial year are as follow:-

Group Company 2014 2013 2014 2013 RM RM RM RM Executive directors: - fees 143,000 234,000 78,000 120,000 - other emoluments 797,522 1,615,549 279,668 1,138,472

940,522 1,849,549 357,668 1,258,472

6. TAX EXPENSE/(CREDIT) Group Company 2014 2013 2014 2013 RM RM RM RM Continuing operations Current tax:- Malaysian income tax - Current year 328,400 267,000 3,000 - - (Over)/Under provision in prior financial year (113,602) 9,351 - -

214,798 276,351 3,000 - Deferred tax (Note 19):- Reversal of temporary differences (3,400) (19,000) - (7,000) Relating to changes in tax rate (16,000) - - - Over provision in prior financial year (13,000) (6,000) - -

(32,400) (25,000) - (7,000)

Tax expense/(credit) from continuing operations 182,398 251,351 3,000 (7,000) Discontinued operations Tax expense from discontinued operations (Note 7) - - - -

Total tax expense/(credit) recognised in profit or loss 182,398 251,351 3,000 (7,000)

Domestic income tax is calculated at the Malaysian statutory income tax rate of 25% (2013: 25%) of the

estimated assessable profit for the financial year. The domestic statutory income tax rate will be reduced to 24% from the current year’s rate of 25% with effect from the year of assessment 2016. The computation of deferred tax as at 28 February 2014 has reflected these changes.



6. TAX EXPENSE/(CREDIT) (cont’d)

The reconciliation of the tax amount at statutory income tax rate to the Group’s and the Company’s tax expense are as follows:-

Group Company 2014 2013 2014 2013 RM RM RM RM Profit/(Loss) before tax from continuing operations 1,183,357 (1,996,228) (2,962,939) (10,206,871) Profit/(Loss) before tax from discontinued operations (Note 7) 109,434 (8,593,484) - -

Total profit/(loss) before tax 1,292,791 (10,589,712) (2,962,939) (10,206,871)

Tax at the Malaysian statutory income tax rate of 25% 323,200 (2,645,900) (740,700) (2,552,000) Effect of changes in tax rate on opening balance of deferred tax (16,000) - - - Deferred tax recognised at different tax rates 12,800 - - - Tax effect arising from: - non-deductible expenses 2,682,500 2,335,900 1,864,000 2,327,000 - non-taxable income (2,985,400) (24,000) (1,082,500) - Utilisation of deferred tax assets previously not recognised (36,300) - (37,800) - Deferred tax assets not recognised during the financial year 328,200 582,000 - 218,000 Under/(Over) provision in prior year: - current tax (113,602) 9,351 - - - deferred tax (13,000) (6,000) - -

Total income tax expense recognised in profit or loss 182,398 251,351 3,000 (7,000)

The credit in the Section 108 balance as at 31 December 2013 expired in accordance with the Finance Act

2007. With effect from 1 January 2014, the Company will be able to distribute dividends out of its retained earnings under the single tier system.

The Group has estimated unabsorbed capital allowances and unutilised tax losses of approximately RM1,513,000 (2013: RM2,935,000) and RM3,107,000 (2013: RM7,898,900) respectively carried forward, available for set off against future taxable profits of the Group.

The Company has estimated unabsorbed capital allowances and unutilised tax losses of approximately RM nil (2013: RM6,400) and RM24,200 (2013: RM176,100) respectively carried forward, available for set off against future taxable profits of the Company.



7. DISCONTINUED OPERATIONS

On 28 February 2014, AT Systematization Berhad entered into a Share Sale Agreement with Che Ngah Bin Hussin and Mohd Rofi Bin Ramli for the disposal of 2,600,000 ordinary shares of RM1 each, representing the entire equity interest in AT Engineering Sdn. Bhd. (“ATE”) for a total cash consideration of RM2. ATE has 5 wholly-owned subsidiaries, namely AT Machinery (Suzhou) Co., Ltd., Automation Technology Systematization Industries Limited, ATST Corporation Limited, AT Automation Technology Solution Phils., Inc. and Heroic Lake Holdings Limited. The disposal resulted in a gain of RM1,098,521. The disposal was completed on even date and the above 6 companies ceased to be subsidiaries of the Group.

(a) An analysis of the results of disposal of subsidiaries is as follows:-

Group 2014 2013 Note RM RM Revenue 4 1,210,876 3,063,286 Cost of sales (1,344,161) (7,089,814)

Gross loss (133,285) (4,026,528) Other income 2,319,532 720,408 Administrative and general expenses (1,971,947) (4,946,678) Selling and distribution expenses (79,868) (300,179)

Profit/(Loss) from operations 134,432 (8,552,977) Finance costs (24,998) (40,507) Profit/(Loss) before tax 7(d) 109,434 (8,593,484) Tax expense 6 - -

Profit/(Loss) for the financial year 109,434 (8,593,484)

(b) Effect of disposal of subsidiaries on the financial position of the Group:-

GROUP 2014 Note RM Property, plant and equipment 9 304,783 Inventories 1,034,451 Trade and other receivables 785,857 Tax assets 770 Cash and cash equivalents 109,724 Trade and other payables (5,688,617) Finance lease payables (154,025)

Net liabilities (3,607,057) Cash consideration received 2

(3,607,055) Inter-group balances 2,508,534

Gain on disposal of investment in subsidiaries (1,098,521)



7. DISCONTINUED OPERATIONS (cont’d)

(c) The cash flows attributed to the disposal of subsidiaries are as follows:-

Group 2014 RM

Net cash outflow arising from disposal:- Cash consideration received 2 Cash and cash equivalents (109,724)

(109,722)

(d) The following amounts have been included in arriving at profit/(loss) before tax of the discontinued

operations:-

Group 2014 2013 RM RM

Auditors’ remuneration 8,000 21,651 Depreciation of property, plant and equipment 104,646 206,512 Impairment loss on loan and receivables: - unrelated parties 31,000 1,792,391 Interest expense 24,998 40,507 Inventories written down - 2,503,193 Loss on disposal of property, plant and equipment - 38,082 Personnel expenses: - salaries and allowances 1,478,700 2,506,689 - contribution to defined contribution plan 172,580 167,698 - termination benefits - 207,072 Prepayment written off 297,000 - Property, plant and equipment written off - 194,208 Realised loss on foreign exchange - 50 Rental of premises 83,545 137,974 Gain on disposal of property, plant and equipment (33,177) - Gain on disposal of subsidiaries (1,098,521) - Interest income - (64,170) Realised gain on foreign exchange (44,441) (13,909) Rental income (1,084,076) (580,440)

(e) The cash flows attributable to the disposal of subsidiaries are as follows:-

Group 2014 2013 RM RM Operating activities 98,080 (649,576) Investing activities 36,000 482,937 Financing activities (171,708) (1,186,542)

Net cash used in discontinued operations (37,628) (1,353,181)



8. EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share is calculated by dividing the Group’s profit/(loss) attributable to the owners of the parent by the weighted average number of ordinary shares in issue during the financial year as follows:-

Group 2014 2013 RM RM Profit/(Loss) for the financial year attributable to owners:- - Continuing operations 1,002,672 (2,247,579) - Discontinued operations 109,434 (8,593,484)

1,112,106 (10,841,063)

Number of shares in issue as at 1 March 191,750,765 178,950,765 Effect of shares issued 17,289,596 6,663,014

Weighted average number of shares in issue 209,040,361 185,613,779

The diluted earnings/(loss) per share is equivalent to the basic earnings/(loss) per share as the Company does

not have any dilutive potential ordinary shares during the financial year. The Company’s warrants are anti-dilutive for the financial year under review.

9. PROPERTY, PLANT AND EQUIPMENT

Plant, Furniture, Machinery, Fittings and Leasehold Tools and Office Motor Lands Buildings Equipment Equipment Vehicles Total RM RM RM RM RM RM

Group Cost/Valuation At 1 March 2013 At cost - - 15,704,267 3,192,472 1,501,682 20,398,421 At valuation 4,200,000 14,490,000 - - - 18,690,000 4,200,000 14,490,000 15,704,267 3,192,472 1,501,682 39,088,421 Additions - - 1,957,037 38,233 124,848 2,120,118 Disposals/write-offs - - (1,006,704) (17,576) (208,350) (1,232,630) Disposal of subsidiaries (Note 7(b)) - - (291,268) (901,475) (314,439) (1,507,182) At 28 February 2014 4,200,000 14,490,000 16,363,332 2,311,654 1,103,741 38,468,727 Representing At cost - - 16,363,332 2,311,654 1,103,741 19,778,727 At valuation 4,200,000 14,490,000 - - - 18,690,000 4,200,000 14,490,000 16,363,332 2,311,654 1,103,741 38,468,727



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


Accumulated Depreciation/ Amortisation At 1 March 2013 336,118 1,278,046 9,522,341 2,280,182 788,347 14,205,034 Charge for the financial year 83,941 303,503 1,323,344 202,589 183,938 2,097,315 Disposals/write-offs - - (527,663) (10,985) (205,527) (744,175) Disposal of subsidiaries (Note 7(b)) - - (212,763) (882,383) (107,253) (1,202,399) At 28 February 2014 420,059 1,581,549 10,105,259 1,589,403 659,505 14,355,775 Net Carrying Amount At cost - - 6,258,073 722,251 444,236 7,424,560 At valuation 3,779,941 12,908,451 - - - 16,688,392 At 28 February 2014 3,779,941 12,908,451 6,258,073 722,251 444,236 24,112,952





Group Cost/Valuation At 1 March 2012 At cost - - 18,998,511 6,332,768 2,337,350 27,668,629 At valuation 4,200,000 14,490,000 - - - 18,690,000

4,200,000 14,490,000 18,998,511 6,332,768 2,337,350 46,358,629 Additions - - 295,399 163,583 431,613 890,595 Disposals/write-offs - - (3,607,654) (3,318,807) (1,269,339) (8,195,800) Currency translation difference - - 18,011 14,928 2,058 34,997

At 28 February 2013 4,200,000 14,490,000 15,704,267 3,192,472 1,501,682 39,088,421

Representing At cost - - 15,704,267 3,192,472 1,501,682 20,398,421 At valuation 4,200,000 14,490,000 - - - 18,690,000

4,200,000 14,490,000 15,704,267 3,192,472 1,501,682 39,088,421

Accumulated Depreciation/ Amortisation At 1 March 2012 251,824 958,535 10,731,236 4,957,353 1,794,833 18,693,781 Charge for the financial year 84,294 319,511 1,443,743 260,137 193,847 2,301,532 Disposals/write-offs - - (2,660,582) (2,947,599) (1,202,185) (6,810,366) Currency translation difference - - 7,944 10,291 1,852 20,087

At 28 February 2013 336,118 1,278,046 9,522,341 2,280,182 788,347 14,205,034

Net Carrying Amount At cost - - 6,181,926 912,290 713,335 7,807,551 At valuation 3,863,882 13,211,954 - - - 17,075,836

At 28 February 2013 3,863,882 13,211,954 6,181,926 912,290 713,335 24,883,387




Furniture, fittings and office equipment 2014 2013 RM RM

Company Cost At beginning/end of the financial year 83,443 83,443

Accumulated Depreciation At beginning of the financial year 61,536 53,192 Charge for the financial year 8,344 8,344

At end of the financial year 69,880 61,536

Net Carrying Amount At end of the financial year 13,563 21,907

(a) The leasehold lands and buildings were revalued on 28 February 2009 based on the market values given by independent professional valuers using the comparison method. Had the leasehold lands and buildings been carried at historical cost less accumulated depreciation, the carrying amounts that would have been recognised in the financial statements are as follows:-


Leasehold lands 3,821,409 3,885,985 Buildings 13,074,283 13,380,481

16,895,692 17,266,466

The leasehold lands and buildings have been pledged as security for credit facilities granted to the Group as mentioned in Note 18.

(b) During the financial year, the Group acquired property, plant and equipment with aggregate cost of RM2,120,118 (2013: RM890,595) of which were satisfied as follows:-


Cash payments 61,218 384,095 Finance lease arrangement 2,058,900 506,500

2,120,118 890,595




(c) The carrying amounts of property, plant and equipment acquired under hire purchase financing which remained outstanding as at the end of the reporting period are as follows:-


Plant, machinery, tools and equipment 4,312,327 3,074,916 Motor vehicles 298,606 708,430

4,610,933 3,783,346

10. INVESTMENT IN SUBSIDIARIES

Company 2014 2013 RM RM

Unquoted shares, at cost At beginning of the financial year 17,007,050 17,007,050 Additions 681,002 - Disposal (12,407,050) -

At end of the financial year 5,281,002 17,007,050

Accumulated impairment losses At beginning of the financial year 14,407,049 13,793,380 Additions 599,999 613,669 Disposal (12,407,049) - At end of the financial year (2,599,999) (14,407,049)

2,681,003 2,600,001



10. INVESTMENT IN SUBSIDIARIES (cont’d)

The particulars of subsidiaries are as follows:-

Name of Company Country of Principal Activities Effective Equity Incorporation Interest 2014 2013

AT Engineering Solution Malaysia Design and manufacture 100% 100% Sdn. Bhd. of industrial automation systems and machinery AT Precision Tooling Sdn. Bhd. Malaysia Fabrication of industrial 100% 100% and engineering parts Goodmatrix Resources Sdn. Bhd. Malaysia Dormant 100% - Yellow Choice Sdn. Bhd. Malaysia Dormant 81% - AT Engineering Sdn. Bhd.* Malaysia Design and manufacture - 100% of industrial automation systems and machinery

Subsidiaries of AT Engineering Sdn. Bhd. AT Machinery (Suzhou) Co., The People’s Ceased operations - 100% Ltd.*# Republic of China

Automation Technology Thailand Liquidated - 100% Systematization Industries Limited* ATST Corporation Limited* Thailand Liquidated - 100% AT Automation Technology Philippines Dormant - 100% Solutions Phils., Inc.*# Heroic Lake Holding Limited*^ Hong Kong Investment holding - 100%

* The Company disposed off these subsidiaries during the financial year. The disposal had given rise to a gain on disposal of subsidiaries of RM1,098,521 as disclosed in Note 7 to the financial statements.

# Consolidated using unaudited management financial statements. In view of these subsidiaries have ceased operations and dormant, there were no results consolidated into the Group’s financial statements for the financial year ended 28 February 2014 prior to the disposal.

^ Consolidated using unaudited management financial statements. However, the management financial statements have been reviewed for consolidation purposes.




(a) Acquisition of subsidiaries

2014

(i) Goodmatrix Resources Sdn. Bhd. (“GRSB”) On 6 March 2013, the Company acquired two ordinary shares of RM1 each representing the entire

issued and paid-up share capital of GRSB for a total cash consideration of RM2.

The effect of the acquisition on cash flows is as follows:-

Group 2014 RM

Purchase consideration settled in cash and cash equivalents 2 Cash and cash equivalents acquired (2)

Net cash outflow -

Goodwill on acquisition of subsidiary

Group 2014 RM

Total consideration transferred for 100% equity interest 2 Fair value of identifiable net liabilities 2,172

Goodwill arising from the acquisition 2,174 Less: Impairment loss on goodwill (Note 5) (2,174)

-

(ii) Yellow Choice Sdn. Bhd. (“YCSB”) On 11 November 2013, the Company acquired two ordinary shares of RM1 each representing the entire

issued and paid up share capital of YCSB for a total cash consideration of RM2. On 9 December 2013, the Company further subscribed for an additional 80,998 new ordinary shares of RM1 each in YCSB in cash at par value. Another 19,000 new ordinary shares of RM1 each in YCSB was subscribed by a non-controlling interest in cash at par value. Consequently, the Company’s equity interest in YCSB has changed to 81%.




(a) Acquisition of subsidiaries (cont’d)

2014 (cont’d)

(ii) Yellow Choice Sdn. Bhd. (“YCSB”) (cont’d)

The effect of the acquisition and the additional subscription of shares on cash flows is as follows:-

Group 2014 RM

Purchase consideration settled in cash and cash equivalents 81,000 Cash and cash equivalents acquired (100,000)

Net cash inflow (19,000)

2013

On 20 September 2012, the Group, through AT Engineering Sdn. Bhd., acquired the entire equity interest in Heroic Lake Holding Limited for cash consideration of RM11,781.

The effect of the acquisition on cash flows is as follows:-

Group 2013 RM

Purchase consideration settled in cash and cash equivalents 11,781 Cash and cash equivalents acquired (1,551)

Net cash outflow 10,230

Goodwill on acquisition of subsidiary

Group 2013 RM Total consideration transferred for 100% equity interest 11,781 Fair value of identifiable net liabilities 10,137

Goodwill arising from the acquisition 21,918 Less: Impairment loss on goodwill (Note 5) (21,918)

-




(b) Additional subscription of shares

On 29 November 2013, the Company further subscribed for an additional 600,000 new ordinary shares of RM1 each in AT Engineering Solution Sdn. Bhd. in cash at par value.

(c) The subsidiary of the Group that has material non-controlling interests (“NCI”) is as follows:-

2014 2013 RM RM

Yellow Choice Sdn. Bhd. NCI percentage of ownership interest and voting interest at 28 February 19% - Carrying amount of NCI 17,287 -

Loss allocated to NCI (1,713) -

(d) The summarised financial information before intra-group elimination of the subsidiary that has material NCI

as at the end of each reporting period are as follows:-

2014 2013 RM RM

Assets and liabilities Current assets 91,985 - Current liabilities (1,000) -

Net Assets 90,985 -

Results

Revenue - - Loss for the financial year, representing total comprehensive income for the financial year (9,015) -

Cash flows used in operating activities (8,015) - Cash flows from financing activities 99,998 -

Net increase in cash and cash equivalents 91,983 -

Dividends paid to NCI - -



11. INVENTORIES Group 2014 2013 RM RM

At cost: Raw materials 472,559 660,649 Work-in-progress 737,740 629,412 Finished goods 771,483 626,538

1,981,782 1,916,599

12. TRADE AND OTHER RECEIVABLES

Group Company 2014 2013 2014 2013 RM RM RM RM Trade receivables 5,581,435 5,135,195 - - Allowance for impairment (194,470) (345,935) - -

5,386,965 4,789,260 - - Other receivables: - Subsidiaries - - 2,209,473 15,342,316 - Allowance for impairment - - (2,119,918) (7,377,466) - - 89,555 7,964,850

- Unrelated parties 2,728,705 245,595 2,483,372 9,092 - Allowance for impairment (911,347) - (911,347) - 1,817,358 245,595 1,572,025 9,092

1,817,358 245,595 1,661,580 7,973,942 7,204,323 5,034,855 1,661,580 7,973,942

The foreign currency exposure profiles are as follows:-


Thai Baht - 1,796 United States Dollar 91,330 445,208 Singapore Dollar 677,855 77,840 Others - 199



12. TRADE AND OTHER RECEIVABLES (cont’d)

Trade Receivables

(a) Credit term

The Group’s normal trade credit term extended to customers ranges from 30 to 90 days (2013: 30 to 90 days).

(b) Ageing analysis

The ageing analysis of the trade receivables are as follows:-


Neither past due nor impaired 4,937,425 4,463,544 1 to 30 days past due not impaired 122,971 58,552 31 to 120 days past due not impaired 187,634 197,451 More than 121 days past due not impaired 138,935 69,713 449,540 325,716 Impaired 194,470 345,935

5,581,435 5,135,195

Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with long term relationship

and good payment records with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired Trade receivables that are past due but not impaired are creditworthy debtors who, by past trade practices,

have paid after the expiry of the trade credit terms and the Group is currently still in active trading with the debtors. The Group does not anticipate recovery problems in respect of these debtors.

Receivables that are impaired The trade receivables that are impaired at the reporting date and the movement of allowance accounts

used to record the impairment are as follows:-

Group Individually impaired 2014 2013 RM RM

Trade receivables (nominal amounts) 194,470 345,935 Less: Allowance for impairment loss (194,470) (345,935)

- -

The Group has determined that there are no trade receivables which require collective impairment as

full allowance for impairment have always been made for specific debtors that are in significant financial difficulties.



12. TRADE AND OTHER RECEIVABLES (cont’d)

Trade Receivables (cont’d)

(b) Ageing analysis (cont’d)

Movement in allowance accounts:-


At beginning of the financial year 345,935 2,498,570 Charge for the financial year (Note 5) 63,400 1,917,076 Reversal of impairment loss (Note 5) (2,087) - Written off (12,410) (4,071,055) Currency translation differences 8,472 1,344 Disposal of subsidiaries (208,840) -

At end of the financial year 194,470 345,935

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

Other receivables

(a) Included in other receivables of the Company are amounts owing by subsidiaries which is unsecured, non-interest bearing and repayable on demand in cash.

(b) Included in the amounts owing by unrelated parties are amount owing by a former subsidiary of RM1,540,000 which is unsecured, non-interest bearing and repayable on demand in cash. The amounts owing by unrelated parties also consist of advances and refundable deposits which have no fixed repayment terms.

The movements in allowance for impairment are as follows:-

Group Company 2014 2013 2014 2013 RM RM RM RM At beginning of the financial year - - 7,377,466 1,348,769 Charge for the financial year (Note 5) - - 620,862 6,858,751 Reclassified from former subsidiary 2,451,347 - - - Reversal of impairment loss (Note 5) (1,540,000) - (4,055,929) - Written off - - (911,134) (830,054)

At end of the financial year 911,347 - 3,031,265 7,377,466

Other receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.



13. TAX ASSETS

This is in respect of tax recoverable from the Inland Revenue Board.

14. CASH AND CASH EQUIVALENTS

Group Company 2014 2013 2014 2013 RM RM RM RM Term deposits with a licensed bank - 21,000 - - Fixed income fund with licensed fund management company 17,616,761 - 17,616,761 - Cash and bank balances 2,340,295 1,632,384 507,621 14,490

19,957,056 1,653,384 18,124,382 14,490

The fixed income fund is redeemable upon 1 day notice and bears dividend yield at rates ranging from 2.74%

to 3.69% (2013: nil) per annum as at the financial year end.

The carrying amounts of cash and cash equivalents pledged as security for credit facilities granted to the Group and not freely available for use are as follows:-


Term deposits with a licensed bank - 21,000

The effective interest rate of the term deposits was at 3.15% per annum in the previous financial year.



Renminbi - 497 United States Dollar 170,371 105,580 Others 3,207 6,506



15. SHARE CAPITAL

Group/Company 2014 2013 No. of No. of shares RM shares RM

Ordinary shares of RM0.10 each Authorised: At beginning of the financial year 250,000,000 25,000,000 250,000,000 25,000,000 Created during the financial year 750,000,000 75,000,000 - -

At end of the financial year 1,000,000,000 100,000,000 250,000,000 25,000,000

Issued and fully paid: At beginning of the financial year 191,750,765 19,175,077 178,950,765 17,895,077 Issued during the financial year 201,940,765 20,194,076 12,800,000 1,280,000

At end of the financial year 393,691,530 39,369,153 191,750,765 19,175,077

During the financial year, as disclosed in Note 25 to the financial statements, the issued and paid-up share capital

of the Company increased from RM19,175,077 to RM39,369,153 by way of private placement of 5,095,000 new ordinary shares of RM0.10 each at an issue price of RM0.10 per share and allotting a renounceable rights issue of 196,845,765 new ordinary shares of RM0.10 each with free detachable warrants.

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual interests.

16. RESERVES

a) Share premium

Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the shares.

b) Warrant reserve

On 5 February 2014, the Warrants 2014/2019 were issued for free pursuant to the Company’s renounceable rights issue. Warrants 2014/2019 are listed on the ACE Market of Bursa Malaysia Securities Berhad.

Each new warrant entitles its registered holder, at any time from the date of its issue up to and including 28 January 2019, to subscribe for one new ordinary share of RM0.10 each in the Company at an exercise priceofRM0.12persharewhichissubjecttoadjustmentsunderthetermssetoutintheDeedPolldated11 December 2013 constituting the Warrants 2014/2019.

As at the reporting date, 196,845,765 warrants (2013: nil) remained unexercised.



16. RESERVES (cont’d)

b) Warrant reserve (cont’d)

The warrants reserve is in respect of the allocated fair value of 196,845,765 free warrants issued in conjunctionwithrightsissueduringthefinancialyearended28February2014.Theestimatedfairvalueofthe warrants was calculated by applying the Black-Scholes option pricing model. The assumptions used in the calculation were as follows:

Exercise price RM0.12 Theoretical ex-rights price RM0.09 Borrowing cost Nil Expected dividend yield Nil Tenure of warrants 5 years from date of issuance of warrants Expected volatility 195%

17. FINANCE LEASE PAYABLES


Gross instalment payments 3,101,336 2,297,721 Less: Future finance charges (311,598) (182,629)

Total present value of finance lease payables 2,789,738 2,115,092

Current Payable within 1 year Gross instalment payments 1,157,092 997,120 Less: Future finance charges (144,307) (100,383) Present value of finance lease payables 1,012,785 896,737 Non-current Payable after 1 year but not later than 2 years Gross instalment payments 796,014 722,009 Less: Future finance charges (87,638) (52,609) Present value of finance lease payables 708,376 669,400 Payable after 2 years but not later than 5 years Gross instalment payments 1,116,250 578,592 Less: Future finance charges (78,504) (29,637) Present value of finance lease payables 1,037,746 548,955 Payable later than 5 years Gross instalment payments 31,980 - Less: Future finance charges (1,149) - 30,831 -

Total present value of finance lease payables 2,789,738 2,115,092 Analysed as:- Payable within 1 year 1,012,785 896,737 Payable after 1 year 1,776,953 1,218,355

2,789,738 2,115,092

The finance lease payables of the Group bear effective interest at rates ranging from 4.57% to 6.54% (2013:

4.87% to 6.94%) per annum, and secured by corporate guarantee by the Company.



18. BANK BORROWINGS


Current Term loans - secured 605,945 494,986 Non-current Term loans - secured 11,328,334 12,171,856

11,934,279 12,666,842

The term loans bear interest at rates ranging from 4.33% to 5.85% (2013: 4.46% to 5.55%) per annum.

The bank borrowings are secured by:-

(i) fixed legal charge over the lands and buildings of subsidiaries as mentioned in Note 9; and (ii) corporate guarantee by the Company.

The maturity profile of bank borrowings of the Group is as follows:-

Current Non-current Within 1 More than year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Sub-total Total RM RM RM RM RM RM RM RM

Group 2014 Term loans - secured 605,945 730,421 772,201 816,390 863,128 8,146,194 11,328,334 11,934,279

2013 Term loans - secured 494,986 587,205 704,608 744,645 770,552 9,364,846 12,171,856 12,666,842



19. DEFERRED TAX LIABILTIES

Group Company 2014 2013 2014 2013 RM RM RM RM At beginning of the financial year 401,000 426,000 - 7,000 Recognised in profit or loss (Note 6) - continuing operations (32,400) (25,000) - (7,000)

At end of the financial year 368,600 401,000 - -

This is in respect of estimated deferred tax liabilities/(assets) arising from the following temporary differences:

Group Company 2014 2013 2014 2013 RM RM RM RM Taxable temporary differences of property, plant and equipment 1,002,800 1,533,900 3,000 4,900 Taxable temporary differences in respect of income 10,700 - - - Deductible temporary differences in respect of expenses (21,900) - - - Deductible temporary differences of financial instruments - (55,300) - - Unabsorbed capital allowances (363,100) (653,400) - (1,600) Unutilised tax losses (259,900) (424,200) (3,000) (3,300)

368,600 401,000 - -

The estimated amount of temporary differences for which no deferred tax assets is recognised in the financial

statements is as follows:-

Group Company 2014 2013 2014 2013 RM RM RM RM Unabsorbed capital allowances - 321,500 - - Unutilised tax losses 2,024,100 6,202,100 11,800 162,900

2,024,100 6,523,600 11,800 162,900



20. TRADE AND OTHER PAYABLES Group Company 2014 2013 2014 2013 RM RM RM RM Trade payables 3,666,565 3,445,476 - - Other payables: - Subsidiary - - - 4,579,429 - Director - 305,080 - 300,000 - Unrelated parties 763,227 2,233,398 90,715 43,934 763,227 2,538,478 90,715 4,923,363

4,429,792 5,983,954 90,715 4,923,363



Renminbi - 1,510,086 Thai Baht - 6,902 Others - 14,851

Trade Payables

Trade payables are unsecured, non-interest bearing and the normal trade credit terms granted to the Group and of the Company ranges from 30 to 90 days (2013: 30 to 90 days).

Other Payables

(a) Included in other payables of the Group and of the Company were amounts owing to subsidiary and director which was unsecured, non-interest bearing and repayable on demand in cash.

(b) The amounts owing to unrelated parties mainly consist of sundry payables and accruals for operating expenses which are generally due within 14 to 90 days.

21. FINANCIAL GUARANTEES

The Company has entered into financial guarantee contracts to provide financial guarantees to financial institutions for credit facilities granted to certain subsidiaries up to a total limit of approximately RM20,872,000 (2013: RM22,270,000). The total utilisation of these credit facilities as at 28 February 2014 amounted to approximately RM15,025,000 (2013: RM14,782,000).

The aforementioned financial guarantee contacts should have been recognised in the statements of financial position in accordance with the recognition and measurement policies as stated in Note 3(r). After considering that the probability of the subsidiaries defaulting on the credit lines is remote, the financial guarantee contracts have not been recognised as the fair values on initial recognition are not expected to be material.



22. CAPITAL COMMITMENT Group 2014 2013 RM RM

Purchase of property, plant and equipment:- - Approved but not contracted for - 1,276,000 - Contracted but not provided for - 1,144,000

- 2,420,000

23. RELATED PARTY DISCLOSURES

(a) Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group or to the Company if the Group or the Company has the ability to directly or indirectly control the party or exercise significant influence over the party in making financial and operating decision, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence.Related parties may be individuals or other entities.

The Group and the Company have a related party relationship with its subsidiaries, related parties and key management personnel. Related parties refer to companies/enterprise in which certain directors of the Company or persons connected to them have substantial financial interests.

(b) Compensation of key management personnel

Key management personnel include personnel having authority and responsibility for planning, directing and controlling the activities of the entities, directly or indirectly, including any director of the Group or of the Company.

The remunerations of the key management personnel are as follows:-

Group Company 2014 2013 2014 2013 RM RM RM RM

Directors of the Company:- - Fees 304,750 356,000 210,000 242,000 - Other emoluments 704,402 1,663,022 253,628 1,053,073

Total short-term employee benefits 1,009,152 2,019,022 463,628 1,295,073 Defined contribution plan 93,120 141,049 26,040 85,399

1,102,272 2,160,071 489,668 1,380,472

(c) Related party transactions

Company 2014 2013 RM RM

Management fee charged to subsidiary 1,083,479 1,120,711

(d) Related party balances

Information on the outstanding balances with subsidiaries and related parties are disclosed in Notes 12 and 20.



24. SEGMENT INFORMATION

For management purposes, the Group is organised into operating segments based on a similar basis to that for internal reporting. The Group’s chief operation decision maker reviews the decision on resource allocation and assesses the performance of the reportable segment.

(i) Operating segments

Information about operating segments has not been reported separately as the Group’s revenue, profit or loss, assets and liabilities are mainly confined to a single operating segment, namely the design, manufacturing and fabrication of industrial automation systems, machinery, industrial and engineering parts.

(ii) Geographical information

The Group’s operations, assets and liabilities are in Malaysia hence no geographical segment is presented.

Segment revenue based on geographical location of the Group’s customers is as follows:-

2014 2013 RM RM

Malaysia 21,531,526 21,178,954 Singapore 1,209,207 931,293 People’s Republic of China - 1,469,152 Thailand - 1,197,138 Other countries 227,276 349,206

22,968,009 25,125,743

(iii) Major customer information

Forthefinancialyearended28February2014,therewas1(2013:1)majorcustomerthatcontributed10%ormoreoftheGroup’stotalrevenueandthetotalrevenuegeneratedfromthismajorcustomeramountedto RM12,632,150 (2013: RM11,659,828).

25. SIGNIFICANT EVENTS

(a) On 6 March 2013, the Company acquired a new subsidiary through acquisition of 2 ordinary shares of RM1 each representing 100% of the issued and fully paid-up share capital of Goodmatrix Resources Sdn. Bhd. for a total cash consideration of RM2 as mentioned in Note 10 to the financial statements.

(b) On 15 March 2013, the Company completed a private placement exercise with the listing and quotation of 5,095,000 new ordinary shares of RM0.10 each at an issue price of RM0.10 each.

(c) On 11 March 2013, the Company entered into a Joint Collaboration Agreement with Asia Bioenergy Technologies Berhad (“AsiaBio”) to set out the terms of the intention to collaborate in the supply of biotechnologysolutionstoconvertfoodwastetoorganicfertilizer(“Project“).Theintentionofthepartiesunder the Joint Collaboration Agreement was to work together wherein the Company shall be responsible for the fabrication and manufacture and maintenance of the composting machineries as well as secure the approvaloftherelevantauthoritiesfortheProjectandAsiaBio,viaitssubsidiarycompany,HexaBonanzaSdn. Bhd., shall be responsible for the provision of the microbial solutions necessary for the conversion of the food waste into organic fertilizer as well as identification of the composting machinery design for the fabrication by the Company.



25. SIGNIFICANT EVENTS (cont’d)

(c) On 11 November 2013, the Company extended its collaboration with AsiaBio by executing a Shareholders’ Agreement to regulate the participation and interest of both parties in Yellow Choice Sdn. Bhd. (“YCSB”), a vehicle set up by the Company to venture into the biomass processing and related machineries fabrication business including biomass composting and biomass energy via gasification technologies (“Shareholders’ Agreement”). The Shareholders’ Agreement shall supersede the Joint Collaboration Agreement signed on 11 March 2013.

On even date, the Company acquired 2 ordinary shares of RM1 each representing 100% of the issued and fully paid-up share capital of YCSB for a total cash consideration of RM2. The acquisition has no material financial effect to the Group.

On 9 December 2013, the paid up share capital of YCSB increased from RM2 to RM100,000. The Company further subscribed for 80,998 ordinary shares of YCSB of RM1 each and AsiaBio subscribed for 19,000 ordinary shares of YCSB of RM1 each. Consequently, the Company’s equity interest in YCSB has changed to 81%.

(d) On 10 May 2013, M&A Securities Sdn. Bhd. on behalf of the Board announced that the Company is proposing to undertake the following proposals:-

(i) Proposed renounceable rights issue of up to 196,845,765 new ordinary shares of RM0.10 each in AT (“Right Shares”) together with up to 98,422,882 free detachable warrants (“Warrant(s)”) on basis of two (2) Rights Shares for every two (2) existing ordinary shares of RM0.10 each held in AT (“AT Shares” Or “Shares”) together with one (1) warrant for every two (2) Right Shares subscribed (“Proposed Rights Issue with Free Warrants”);

(ii) Proposed increase in the authorised share capital of the Company from RM25,000,000 comprising 250,000,000 AT Shares to RM100,000,000 comprising 1,000,000,000 AT Shares; and

(iii) Proposed amendment to the Memorandum of Association of AT.

(e) On 5 July 2013, M&A Securities Sdn. Bhd. on behalf of the Board announced that the Company proposes to vary the Proposed Rights Issue with Free Warrants (“Proposed Variation”) to be as follows:

(i) Proposed renounceable rights issue of up to 196,845,765 new ordinary shares of RM0.10 each in AT (“Right Shares”) together with up to 196,845,765 free detachable warrants (“Warrant(s)”) on basis of one (1) Rights Shares for every (1) existing ordinary shares of RM0.10 each held in AT (“AT Shares” Or “Shares”) together with one (1) warrant for every one (1) Right Shares subscribed.

Bursa Malaysia Securities Berhad had, vide its letter dated 23 October 2013 approved the listing and quotation of the new Warrants and new AT Shares. Shareholders’ approval was obtained at an Extraordinary General Meeting held on 3 December 2013.

On 10 February 2014, M&A Securities Sdn. Bhd. on behalf of the Board announced that the Rights Issue with Free Warrants has been completed following the listing of and quotation of the 196,845,765 Rights Shares and 196,845,765 Warrants on the ACE Market of Bursa Malaysia Securities Berhad on 5 February 2014.

(f) On 28 February 2014, the Group disposed off 100% equity interest in AT Engineering Sdn. Bhd. for a total consideration of RM2 as mentioned in Note 7 to the financial statements.



26. EVENTS AFTER THE REPORTING DATE

(a) On 17 April 2014, the Company subscribed for 25,000 ordinary shares of RM1.00 each representing 5% of the issued and fully paid-up share capital of ATS Biotech Sdn. Bhd. (“ATS Biotech”) for a total cash consideration of RM25,000.

On even date, the Company entered into a Joint Venture Agreement with Anhui Shengyun Environment Protection Group Co. Ltd., Promosi Mantap Sdn. Bhd. and Md. Wira Dani Bin Abdul Daim to bid for the construction of a mass-scale incinerator facility under the “Waste to Energy” Public Private Partnership ProjectthroughATSBiotech.

(b) On 4 June 2014, the Company announced that the Board of Directors has approved the variation to the utilisation of proceeds raised from the private placement completed on 15 March 2013.

(c) On 4 June 2014, TA Securities Holdings Berhad, on behalf of the Company had announced that the proposal to undertake a private placement (“Private Placement”) of new ordinary shares of RM0.10 each which representing up to 10% of the issued and paid-up share capital of the Company to investor(s) to be identified and at an issue price to be decided later.

The Private Placement is pending for approval by relevant authorities.

(d) On 18 June 2014, the Company announced that its wholly-owned subsidiary, AT Precision Tooling Sdn. Bhd. has entered into a Memorandum of Understanding with Fong’s Engineering & Manufacturing Pte. Ltd. (“FEM”) with the intention to form a Joint Venture Company (“JVCO”) to collaborate in the area of oil and gas, life science, electronics, aerospace and other industries operations and to position the JVCO as FEM’s manufacturingarmoutsideSingaporetomeetFEM’scustomers’jobordersandrequirements.

27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, foreign currency risk, interest rate risk and liquidity risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst minimising the potential adverse impacts of financial risks on its financial position, performance and cash flows. The Group operates within clearly defined guidelines that are approved by the Board of Directors. It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken. The Group and the Company do not apply hedge accounting.

TheGroup’sandtheCompany’sexposuretothefinancialrisksandtheobjectives,policiesandprocessesputin place to manage these risks are discussed below.

(i) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from deposits placed with financial institutions and receivables. The Company’s exposure to credit risk arises principally from the financial guarantees provided for credit facilities granted to certain subsidiaries.

TheGroup’sobjectiveistoseekcontinualrevenuegrowthwhileminimisinglossesincurredduetoincreasedcredit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policythatallcustomerswhowishtotradeoncredittermsaresubjecttocreditverificationprocedures.Inaddition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

As the Group only deals with reputable financial institutions, the credit risk associated with deposits placed with them is minimal.



27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

(i) Credit risk (cont’d)

Exposure to credit risk At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by

the carrying amount of each class of financial assets recognised in the statements of financial position.

Credit risk concentration profile Management determines credit risk concentrations in terms of counterparties and geographical areas.

Asat28February2014, therewere2 (2013:2)majorcustomersthataccountedfor10%ormoreof theGroup’stradereceivablesandthetotaloutstandingbalancesduefromthesemajorcustomersamountedto RM3,403,814 (2013: RM2,524,444). The credit risk concentration profile by geographical areas of trade receivables is as follows:-


Malaysia 4,659,359 4,675,395 Singapore 677,855 77,840 United States of America 49,751 36,025

5,386,965 4,789,260

Financial guarantees

The Company provides corporate guarantees to banks in respect of banking facilities granted to certain subsidiaries.

The Company monitors on an ongoing basis the repayments made by the subsidiaries and their financial performance.

The maximum credit risk exposure of these financial guarantees is the total utilisation of the credit facilities granted as disclosed in Notes 17 and 18 to the financial statements.

At the reporting date, there was no indication that any subsidiaries would default on repayment.

The financial guarantees have not been recognised as the fair value on initial recognition was immaterial since the financial guarantees provided by the Company did not contribute towards credit enhancement of the subsidiaries’ borrowings in view of the security pledged by the subsidiaries and it is unlikely the subsidiaries will default within the guarantee period.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group’s exposure to currency risk arises mainly from transactions entered into by individual entities withintheGroupincurrenciesotherthantheirfunctionalcurrencies.ThemajorfunctionalcurrencywithintheGroupisRinggitMalaysia(“RM”)whereasthemajorforeigncurrencytransactedisUnitedStatesDollar(“USD”) and Singapore Dollar (“SGD”).




(ii) Foreign currency risk (cont’d)

The Group observes the movements in exchange rates and acts accordingly to minimise its exposure to currency risk. Where necessary, the Group enters into derivative contracts to hedge the exposure. Such exposure is also partly mitigated in the following ways:

(i) The Group’s foreign currency sales and purchases provide a natural hedge against fluctuations in foreign currencies.

(ii) The Group maintains part of its cash and cash equivalents in foreign currency accounts to meet future obligations in foreign currencies.

The Group also holds bank balances denominated in foreign currencies for working capital purposes.

Sensitivity analysis for foreign currency risk If the foreign currencies of USD and SGD had been 10% strengthened/weakened against the functional

currency of the Group and all other variables held constant, the Group’s profit/(loss) net of tax would increase/decrease by RM19,628 and RM50,839 (2013: decrease/increase by RM41,309 and RM5,838) respectively.

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk relates to interest bearing financial liabilities and financial asset. Interest bearing financial liabilities includes finance lease payables and term loans. Interest bearing financial assets includes term deposits with licensed banks.

The term loans totalling RM11,934,279 (2013: RM12,666,842) at floating rates expose the Group to cash flow interest rate risk whilst finance lease payables of RM2,789,738 (2013: RM2,115,092) at fixed rates expose the Group to fair value interest rate risk.

The Group adopts a strategy of mixing fixed and floating rate borrowing to minimise exposure to interest rate risk. The Group also reviews its debt portfolio to ensure favourable rates are obtained.

Sensitivity analysis for interest rate risk If the interest rate had been 50 basis point higher/lower and all other variables held constant, the Group’s

profit/(loss) net of tax would decrease/increase by RM44,750 (2013: increase/decrease by RM47,500) as a result of exposure to floating rate borrowings.

(iv) Liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’sobjectiveistomaintainabalancebetweencontinuityoffundingandflexibilitythroughuseofstand-by credit facilities.

The Group and the Company actively manage their operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group and the Company maintain sufficient levels of cash to meet their working capital requirements.




(iv) Liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the

reporting date based on contractual undiscounted repayment obligations.

On demand Carrying Contractual or within 1 to 2 2 to 5 Over 5 amount cash flows 1 year years years years RM RM RM RM RM RM

2014 Group Financial liabilities: Trade and other payables 4,429,792 4,429,792 4,429,792 - - - Finance lease payables 2,789,738 3,101,336 1,157,092 796,014 1,116,250 31,980 Term loans 11,934,279 16,751,285 1,348,488 1,348,488 4,045,464 10,008,845

19,153,809 24,282,413 6,935,372 2,144,502 5,161,714 10,040,825

Company Financial liabilities: Other payables 90,715 90,715 90,715 - - -

2013 Group Financial liabilities: Trade and other payables 5,983,954 5,983,954 5,983,954 - - - Finance lease payables 2,115,092 2,297,721 997,120 722,009 578,592 - Term loans 12,666,842 18,935,480 1,348,488 1,348,488 4,045,464 12,193,040

20,765,888 27,217,155 8,329,562 2,070,497 4,624,056 12,193,040

Company Financial liabilities: Other payables 4,923,363 4,923,363 4,923,363 - - -



28. FAIR VALUE OF FINANCIAL INSTRUMENTS

The methods and assumptions used to estimate the fair values of the following classes of financial assets and liabilities are as follows:-

(i) Cash and cash equivalents, trade and other receivables and payables

The carrying amounts approximate fair values due to the relatively short term maturity of these financial assets and liabilities.

(ii) Borrowings

The carrying amounts of current portion of borrowings are reasonable approximation of fair values due to the insignificant impact of discounting.

The carrying amounts of floating rate term loan approximate fair values as the loans will be re-priced to market interest rate on or near reporting date.

(iii) Finance lease payables

The fair value of finance lease payables is estimated using discounted cash flow analysis, based on current lending rate for similar type of lease arrangements.

The carrying amounts of the Group’s and of the Company’s financial assets and liabilities at reporting date approximate their fair values except as follows:

Group Carrying Fair Amount Value RM RM

2014 Financial Liabilities Finance lease payables 2,789,738 2,788,792 Term loans 11,934,279 14,504,317

2013 Financial Liabilities Finance lease payables 2,115,092 2,108,936 Term loans 12,666,842 15,919,252



29. FAIR VALUE HIERARCHY

(a) Policy on transfer between levels

The fair value of the asset/liability to be transferred between levels is determined as at the date of the event or change in circumstances that caused the transfer.

(b) The following table provides an analysis of assets and liabilities that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

(i) Level1fairvaluemeasurementsarethosederivedfromquotedprices(unadjusted)inactivemarketsfor identical assets or liabilities.

(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at 28 February 2014, the Group held the following assets and liabilities on the statements of financial position:-

Fair value of assets and liabilities carried at fair value Carrying Level 1 Level 2 Level 3 Total amount RM RM RM RM RM

Group 2014 - Leasehold lands* - 3,779,941 - 3,779,941 3,779,941 - Buildings* - 12,908,451 - 12,908,451 12,908,451

- 16,688,392 - 16,688,392 16,688,392

Fair value of assets and liabilities not carried at fair value Carrying Level 1 Level 2 Level 3 Total amount RM RM RM RM RM

Group 2014 Financial liabilities - Financial lease payables - 2,788,792 - 2,788,792 2,789,738 - Term loans - 14,504,317 - 14,504,317 11,934,279

- 17,293,109 - 17,293,109 14,724,017

* The leasehold lands and buildings were revalued on 28 February 2009 based on the market values given by independent professional valuers using the comparison method that makes reference to recent transactions and sales evidences involving other similar properties in the vicinity. The most significant input to this valuation approach is price per square feet of comparable properties.

Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C3 of MFRS 13.

During the financial year ended 28 February 2014, there was no transfer between fair value measurement hierarchy.



30. CAPITAL MANAGEMENT

TheprimaryobjectiveoftheGroup’scapitalmanagementistoensurethatitmaintainsahealthycapitalratioinorder to support its business and maximise shareholders’ value.

TheGroupmanagesitscapitalstructureandmakesadjustmentstoit,inlightofchangesineconomicconditions.Tomaintainor adjust capital structure, theGroupmayadjust thedividendpayment to shareholders, returncapitaltoshareholdersorissuenewshares.Nochangesweremadeintheobjectives,policiesandprocessesduring the financial years ended 28 February 2014 and 28 February 2013.

TheGroupisnotsubjecttoanyexternallyimposedcapitalrequirements.

The Group monitors capital using a gearing ratio, which is total external borrowings divided by total equity. The gearingratioasat28February2014and28February2013,whicharewithintheGroup’sobjectivesofcapitalmanagement are as follows:-


Total external borrowings 14,724,017 14,781,934 Total equity 34,229,073 13,466,938 Gearing ratio 0.43 1.10


The following analysis of realised and unrealised accumulated losses of the Group and of the Company at 28 February 2014 is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

The accumulated losses of the Group and of the Company as at 28 February 2014 and 28 February 2013 are analysed as follows:-

Group Company 2014 2013 2014 2013 RM RM RM RM Total accumulated losses of the Company and its subsidiaries: - realised (35,666,819) (38,254,113) (45,010,959) (24,919,438)- unrealised (368,600) 716,467 - - (36,035,419) (37,537,646) (45,010,959) (24,919,438)Less:Consolidationadjustments 2,568,183 20,083,886 - -

Total accumulated losses as per statements of financial position (33,467,236) (17,453,760) (45,010,959) (24,919,438)

The disclosure of realised and unrealised losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Securities and should not be applied for any other purpose.

SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFITS OR LOSSES


LIST OF LANDED PROPERTIESAS AT 14 JULY 2014

postal address/ Description/ approximate Land area/ net Carrying year ofLocation of the Existing use age of Building/ Built-up area amount as at Valuation/property Tenure/ Date of (sq. ft.) 28 February acquisition Expiry of Lease 2014

plot 49, Hilir Sungai Double-storey 16 years/ 60 56,057/ 2,930,930 28 FebruaryKeluang 2, Taman factory years lease 17,600 2009 (Dateperindustrian, expiring on of ValuationBayan Lepas Fasa 4, 18 October 2055 11900, pulau pinang.(pN2998,Lot 12340,Mukim 12, Daerah Barat Daya, pulau pinang)

plot 82, Lintang The subject 56 years lease 109,426/ 13,757,462 28 FebruaryBayan Lepas Fasa 4, site is erected expiring on 89,845 2009 (DateTaman perindustrian with: 22 January 2062 of Valuation)Bayan Lepas Mk.12, pulau pinang. (H.S(D) No. 16415, - a double- 13 years p.T.No. 5057, storey factory Mukim 12, Daerah attached to: Barat Daya, pulau pinang) - a 3-storey 8 years office block and a double- storey production building


SHARE CAPITAL AS AT 3 JULY 2014

Authorised Capital : RM100,000,000.00Issued and Paid-up Capital : RM39,369,153.00Class of Shares : Ordinary Shares of RM0.10 eachVoting Rights : One voting right for one ordinary share

DISTRIBUTION OF SHAREHOLDERS AS AT 3 JULY 2014

Size of Holdings No. of Holders No. of Shares %

Less than 100 7 265 0.00

100 – 1,000 202 173,241 0.04

1,001 – 10,000 473 3,069,974 0.78

10,001 – 100,000 1,448 72,402,934 18.39

100,001 – 19,684,575 632 318,045,116 80.79

19,684,576 and above 0 0 0

Total 2,762 393,691,530 100.00

DIRECTORS’ SHAREHOLDING AS AT 3 JULY 2014

Name Direct Shareholding % Indirect Shareholding %

Dato’ Sri Ahmad Said Bin Hamdan - - - -

Ir. Auniah Binti Ali - - - -

Dr. Ch’ng Huck Khoon - - - -

Chang Vun Lung - - - -

Mak Siew Wei 18,360,000* 4.66 - -

* Held through nominee company

ANALYSIS OF SHAREHOLDINGS


THIRTY LARGEST SECURITIES HOLDERS AS AT 3 JULY 2014

No. Name Shareholdings %

1 Kenanga Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Mak Siew Wei 18,360,000 4.66

2 Cartaban Nominees (Asing) Sdn. Bhd.Exempt AN for KGI Asia Ltd 17,370,000 4.41

3 Nor Ashikin Binti Khamis 7,000,000 1.78

4 Cartaban Nominees (Asing) Sdn. Bhd. Standard Chartered Bank

Singapore For Avestra Asset Management Ltd Accelerator Fund (MY011777700027) 5,169,200 1.31

5 HDM Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for

Teh Eng Huat (M01) 5,000,000 1.27

6 Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account

for Kuek Eng Mong 4,800,000 1.22

7 Teo Ah Seng 4,600,100 1.17

8 Teng Pok Sang @ Teng Fook Sang 4,600,000 1.16


Pledged Securities Account for Mohamad Bolhair Bin Reduan 4,000,000 1.02

10 Ng Wei Fong 3,687,800 0.94

11 CIMSEC Nominees (Tempatan) Sdn. Bhd. CIMB For Bu Yaw Seng (MY1361) 3,200,200 0.81

12 Chang Yoke Hee 3,200,000 0.81

13 Ung Eng Huat 3,000,000 0.76

14 Wong Kok Sin 3,000,000 0.76

15 Public Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Kor Peng Chai (E-Tai) 2,914,000 0.74

16 Tan Chin Seoh 2,800,000 0.71

17 Maybank Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Tan Chin Seoh 2,500,000 0.64


Pledged Securities Account for Baba Hadil Bin Baba Zain 2,500,000 0.64

19 Tan Sew Hong 2,500,000 0.64

20 UOBM Nominees (Asing) Sdn. Bhd. Exempt AN for Avestra Asset Management Ltd 2,500,000 0.64

21 CIMSEC Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Tan Beng Beng (Penang-CL) 2,466,000 0.62

22 Tan Beng Beng 2,200,000 0.56

23 Chew Jee Sheng 2,100,000 0.53

24 Lee Soon Tet 2,100,000 0.53

25 Cartaban Nominees (Asing) Sdn. Bhd. Standard Chartered Bank Singapore

For Avestra Asset Management Ltd Maximiser Fund (MY011777700028) 2,000,000 0.51


Pledged Securities Account for Jimmy Kuek Hann Siang 2,000,000 0.51

27 Tan Chun Ming 2,000,000 0.51

28 Ng Wooi Ying 1,950,000 0.50

29 Wong Pow Keong 1,785,422 0.45

30 CIMSEC Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Teh Bee Lan (Penang-CL) 1,687,100 0.43

TOTAL 122,989,822 31.24

ANALYSIS OF SHAREHOLDINGS (CONT’D)


WARRANT AS AT 3 JULY 2014

Number of warrants issued : 196,845,765 Warrants 2014/2019Expiry Date of Warrants : 28 January 2019Exercise price of Warrant : RM0.12Warrant Entitlement : Each warrant entitles the registered holder during the Exercise period to subscribe for one new ordinary share of RM0.10 eachNumber of warrant holders as at 3 July 2014 : 841

DISTRIBUTION OF WARRANT HOLDERS AS AT 3 JULY 2014

Size of Holdings No. of Holders No. of Shares %

Less than 100 0 0 0.00

100 – 1,000 17 15,400 0.01

1,001 – 10,000 94 725,300 0.37

10,001 – 100,000 455 24,485,077 12.43

100,001 – 9,842,287 275 171,619,988 87.19

9,842,288 and above 0 0 0

Total 841 196,845,765 100.00

DIRECTORS’ WARRANT HOLDING AS AT 3 JULY 2014

Name Direct Shareholding % Indirect Shareholding %

Dato’ Sri Ahmad Said Bin Hamdan - - - -

Ir. Auniah Binti Ali - - - -

Dr. Ch’ng Huck Khoon - - - -

Chang Vun Lung - - - -

Mak Siew Wei - - - -

ANALYSIS OF WARRANT HOLDINGS


ANALYSIS OF WARRANT HOLDINGS (CONT’D)

THIRTY LARGEST WARRANT HOLDERS AS AT 3 JULY 2014

No. Name Shareholdings %


Pledged Securities Account for Tan Chin Seoh 9,000,000 4.57

2 Tan Chin Seoh 8,000,000 4.06

3 Lum Yin Mui 7,779,000 3.95

4 Tan Sui Lan 6,000,000 3.05

5 Teo Ah Seng 4,600,100 2.34

6 Yang Keng Boon 3,900,000 1.98

7 Su An Lee 3,500,000 1.78

8 Teng Pok Sang @ Teng Fook Sang 3,500,00 1.78

9 Hoo Choon Soon 3,066,000 1.56

10 Ung Eng Huat 3,000,000 1.52

11 Goh Kim Moi 2,827,100 1.44

12 Tye Sok Cin 2,779,500 1.41


Pledged Securities Account for Kuek Eng Mong 2,400,000 1.22

14 Lee Kok Guan 2,400,000 1.22

15 Liu, Ching-An 2,210,000 1.12


Pledged Securities Account for Mohamad Bolhair Bin Reduan 2,000,000 1.02

17 Lai Tai Loy 2,000,000 1.02

18 Nor Ashikin Binti Khamis 1,900,000 0.97

19 Alliancegroup Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Lee Kok Guan (100317) 1,700,000 0.86

20 Toh Ean Hai 1,685,800 0.86

21 Ng Wei Fong 1,658,900 0.84

22 Chuan Hooi Chai 1,500,000 0.76

23 MeenambalA/PVijayakumar 1,500,000 0.76

24 Low Son Heng 1,400,000 0.71

25 Ng Wooi Ying 1,400,000 0.71

26 RHB Capital Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account for Sew Chooi Lan (CEB) 1,380,000 0.70

27 Yap Kow Chai 1,370,000 0.70

28 Ng Yew Choy 1,121,000 0.57

29 Chang Yoke Hee 1,000,000 0.51

30 Chin Wee Yee 1,000,000 0.51

TOTAL 87,577,400 44.50


NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of the Company will be held at Level 4, Menara Lien Hoe, No. 8 Persiaran Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya, Selangor Darul Ehsan on Friday, August 22, 2014 at 10:30 am for the following purposes :

AGENDA

NOTICE OF TENTH ANNUAL GENERAL MEETING

1. To receive the Audited Financial Statements for the year ended February 28, 2014 together with the Directors’ and Auditors’ Reports thereon.

2. To approve the payment of Directors’ Fees of up to RM252,000.00 for the financial year ending February 28, 2015 and payment of such Fees to the Directors of the Company.

3. To re-elect the following Directors retiring under the provision of Article 132 of the Articles of Association of the Company, and who, being eligible offer themselves for re-election:-

(i) Ir. Auniah Binti Ali (ii) Dr. Ch’ng Huck Khoon

4. To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company and to authorize the Board of Directors to fix their remuneration.

AS SPECIAL BUSINESS

5. ORDINARY RESOLUTION

To consider and, if thought fit, to pass with or without modifications, the following 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, the Articles of Association of the Company and approvals from Bursa Malaysia Securities Berhad (“Bursa Securities”) and other relevant governmental/regulatory authorities where such authority shall be necessary, the Board of Directors be and is hereby authorized to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in its absolute discretion, deem fit provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the issued share capital (excluding treasury shares) of the Company for the time being, and that the Board of Directors be and is also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the ACE Market of Bursa Securities.”

6. To transact any other business for which due notice shall have been given in accordance with the Companies Act, 1965.

By Order of the Board

ANGELINA CHEAH GAIK SUAN (MAICSA 7035272)LEE MEI MEI (MAICSA 7062284)Company Secretaries

Dated : July 31, 2014Penang

(Please refer to Note A)

Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5


NOTICE OF TENTH ANNUAL GENERAL MEETING (CONT’D)

NOTES:

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

Proxy :

A member of the Company entitled to attend and vote at the meeting may appoint more than two (2) proxies to attend and vote on the same occasion. A proxy appointed 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. If a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

If the appointer is a corporation, the form of proxy must be under its common seal or under the hand of an officer or attorney duly authorized in writing.

Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of Central Depositories Act.

The proxy form must be deposited at the registered office of the Company at Suite S-21-H, 21st Floor, Menara Northam, 55 Jalan Sultan Ahmad Shah, 10050 Penang, at least forty-eight (48) hours before the time fixed for holding the meeting or any adjournment thereof.

Explanatory Note On Special Business:

1. Resolution 5

The proposed resolution, if passed, will grant a renewed general mandate (“Renewed Mandate”) and empower the Directors of the Company to issue and allot shares up to an amount not exceeding in total 10% (ten per centum) of the issued share capital of the Company from time to time and for such purposes as the Directors consider would be in the interest of the Company. The Renewed Mandate 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, working capital and/or acquisitions. In order to avoid any delay and costs involved in convening a general meeting, it is thus appropriate to seek shareholders’ approval. This Renewed Mandate unless revoked or varied by the Company in general meeting will expire at the next Annual General Meeting of the Company.

As at the date of this notice, no new shares in the Company have been issued pursuant to the mandate granted to the Directors at the Ninth Annual General Meeting held on August 26, 2013 which will lapse at the conclusion of the Tenth Annual General Meeting.

Kindly note that the date of the General Meeting Record of Depositors for the purpose of determining members’ entitlement to attend, vote and speak at the Tenth Annual General Meeting shall be on August 18, 2014.


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

DETAILS OF INDIVIDUALS WHO ARE STANDING FOR ELECTION AS DIRECTORS (EXCLUDING DIRECTORS STANDING FOR A RE-ELECTION)

Pursuant to Rule 8.29(2) of the Bursa Securities Listing Requirements for ACE Market, no individual is seeking election as a Director at the Tenth Annual General Meeting of the Company.

Resolution For Against

Signed this day of 2014

Signature of Member (s) Number of Ordinary Shares held

or the Chairman of the Meeting as my/our proxy, to vote in my/our name(s) and on my/our behalf at the Tenth Annual General Meeting of the Company to be held at Level 4, Menara Lien Hoe, No. 8 Persiaran Tropicana, Tropi-cana Golf & Country Resort, 47410 Petaling Jaya, Selangor Darul Ehsan on Friday, August 22, 2014 at 10:30 am and at any adjournment thereof.

I/We hereby indicate with an “X” in the spaces provided below on how I/we wish my/our votes to be cast. (Unless otherwise instructed, the proxy may vote as he thinks fit)

Notes:

A member of the Company entitled to attend and vote at the meeting may appoint more than two (2) proxies to attend and vote on the same occasion. A proxy appointed may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Compa-nies Act, 1965 shall not apply to the Company. If a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

If the appointer is a corporation, the form of proxy must be under its common seal or under the hand of an officer or attorney duly autho-rized in writing.

Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of Central Depositories Act.

The proxy form must be deposited at the registered office of the Company at Suite S-21-H, 21st Floor, Menara Northam, 55 Jalan Sultan Ahmad Shah, 10050 Penang, at least forty-eight (48) hours before the time fixed for holding the meeting or any adjournment thereof.

PROXY FORM

A T S Y S T E M A T I Z A T I O N B E R H A D( 6 4 4 8 0 0 - X )

(Incorporated in Malaysia)

I/We,

of

being a member/members of the abovenamed Company hereby appoint

of

or failing him/her,

of

1. To approve the payment of Directors’ Fees of up to RM252,000.00 for the financial year ending February 28, 2015 and payment of such Fees to the Directors of the Company.

To re-elect the following Directors retiring under the provision of Article 132 of the Articles of Association of the Company, and who, being eligible offer themselves for re-election:-

2. Ir. Auniah Binti Ali 3. Dr. Ch’ng Huck Khoon

4. To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company and to authorize the Board of Directors to fix their remuneration.

To pass the following resolution under Special Business :-5. Ordinary Resolution Authority to issue shares pursuant to Section 132D of the Companies

Act, 1965.

The Company Secretaries

Suite S-21-H, 21st Floor,Menara Northham,

55, Jalan Sultan Ahmad Shah,10050 Penang.


Please fold across the line and close

Please fold across the line and close

stamp

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Plot 82, Lintang Bayan Lepas, Bayan Lepas Industrial Park,Phase IV, 11900 Bayan Lepas, Penang, Malaysia.http://www.atsys.com.my

A n nu a l R e p or t 2 0 1 4A T S Y S T E M A T I Z A T I O N B E R H A D

( 6 4 4 8 0 0 - X )

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