White Horse Cover(CTP).pdf 1 4/20/2016 10:25:37 PMof the Company and Bursa Malaysia Securities...

White Horse Cover(CTP).pdf 1 4/20/2016 10:25:37 PM

CONTENTSNOTICE OF ANNUAL GENERAL MEETING_2

CORPORATE INFORMATION_10

PROFILE OF DIRECTORS_11

CHAIRMAN’S STATEMENT_14

FINANCIAL HIGHLIGHTS_18

CORPORATE STRUCTURE_19

AUDIT COMMITTEE REPORT_20

STATEMENT ON CORPORATE GOVERNANCE_27

ADDITIONAL COMPLIANCE INFORMATION_50

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL_52

STATEMENT OF DIRECTOR’S RESPONSIBILITY_54

FINANCIAL STATEMENTS_55

LIST OF LANDED PROPERTIES_127

ANALYSIS OF SHAREHOLDINGS_131

SCHEDULE OF SHARE BUY-BACK_134

FORM OF PROXY_ENCLOSED

WHITE HORSE BERHAD2

NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of WHITE HORSE BERHAD will be held at PLO 464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim on Thursday, 26 May 2016 at 2:00 p.m. for the following purposes:-

AGENDA

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

2. To approve the declaration of the Final Tax-Exempt Dividend of 5 sen per share for the financial year ended 31 December 2015.

3. To re-elect the following Directors who retire pursuant to Article 94 of the Company's Articles

of Association and being eligible, have offered themselves for re-election:-

(a) Mr. Teo Swee Teng(b) Mr. Teo Kim Lap

4. To pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965 :-

“That pursuant to Section 129(6) of the Companies Act, 1965, the following Directors who are over the age of seventy (70) years, be and are hereby re-appointed as Directors of the Company and to hold office until the conclusion of the next Annual General Meeting:-

(a) Mr. Liao Jung Chu(b) Mr. Law Piang Woon(c) Mr. Cheng Soon Mong

5. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to determine their remuneration.

6. As Special Business

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:-

Ordinary Resolution No. 1 - Payment of Directors’ Fees “THAT the Directors' Fees amounting to RM526,000/- (Ringgit Malaysia: Five Hundred

and Twenty-Six Thousand) only for the financial year ended 31 December 2015, be and is hereby approved for payment.”

[Please refer to Explanatory

Note 1]

(Resolution 1)

(Resolution 2)(Resolution 3)

(Resolution 4)(Resolution 5)(Resolution 6)

(Resolution 7)

(Resolution 8)

ANNUAL REPORT 2015 3

notice of annual general meeting (cont’d)

Ordinary Resolution No. 2 - Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT subject to Section 132D of the Companies Act, 1965 and approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Ordinary Resolution No. 3 - Proposed Renewal of Authority for Share Buy-Back “THAT subject to the compliance with Section 67A of the Companies Act, 1965 and all other

applicable laws, rules and regulations, approval be and is hereby given to the Company to utilise from its current and available internal funds from the Company’s retained profits and share premium account of RM3,742,000 and RM6,936,000 respectively, based on the latest audited financial statements of the Company for the financial year ended 31 December 2015, to purchase such amount of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Malaysia Securities Berhad (“Bursa Securities”) upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that the aggregate number of shares to be purchased and held pursuant to this resolution does not exceed 24,000,000 ordinary shares of RM1.00 each representing 10% of the existing issued and paid-up ordinary share capital of the Company including the shares previously purchased and retained as Treasury Shares.

AND THAT such authority shall commence immediately upon the passing of this Ordinary Resolution and until the conclusion of the next Annual General Meeting (“AGM”) of the Company or the expiry of the period within which the next AGM is required by law to be held unless revoked or varied by Ordinary Resolution in the general meeting of the Company but so as not to prejudice the completion of a purchase made before such expiry date, in any event in accordance with the provisions of Bursa Securities Main Market Listing Requirements and any other relevant authorities.

AND THAT authority be and is hereby given to the Directors of the Company to decide in their absolute discretion to retain the ordinary shares in the Company so purchased by the Company as Treasury Shares and/or to cancel them and/or to resell them and/or to distribute them as share dividends; in such manner as may be permitted and prescribed by the provisions of Bursa Securities Main Market Listing Requirements and any other relevant authorities.

AND THAT authority be and is hereby given to the Directors of the Company to take all

such steps as are necessary to implement, finalise and give full effect to the aforesaid with full powers to assent to any conditions, modifications, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the Directors may deem fit and expedient in the interests of the Company. ”

(Resolution 9)

(Resolution 10)

WHITE HORSE BERHAD4

Ordinary Resolution No. 4 - Proposed Renewal of and New Shareholders’ Mandate for Recurrent Related

Party Transactions of a Revenue or Trading Nature

“THAT subject to the Companies Act, 1965, the Memorandum and Articles of Association of the Company and Bursa Malaysia Securities Berhad Main Market Listing Requirements, approval be and is hereby given to the Company and its subsidiaries to enter into any of the category of recurrent transactions of a revenue or trading nature as set out in Paragraph 3.3 of the Company’s Circular to Shareholders dated 29 April 2016 with the related parties mentioned therein which are necessary for White Horse Berhad Group’s day-to-day operations subject further to the following:-

(a) the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and on terms not to the detriment of the minority shareholders; and

(b) disclosure is made in the annual report of the breakdown of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year based on the following information:

(i) the types of recurrent related party transactions made; and(ii) the names of the related parties involved in each type of the recurrent related

party transactions made and their relationship with the Company.

AND THAT such approval shall continue to be in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the forthcoming AGM at which such Proposed Renewal of and New Shareholders’ Mandate was passed, at which time it will lapse, unless by a resolution passed at an AGM whereby the authority is renewed;

(b) the expiration of the period within which the next AGM of the Company subsequent to the date it is required to be held pursuant to the provisions of the Act; or

(c) revoked or varied by resolution passed by the shareholders in an AGM or Extraordinary General Meeting,

whichever is earlier;

And the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) to give effect to the transactions contemplated and/or authorised by this resolution.”

Ordinary Resolution No. 5 - Approval to Continue in Office as Independent Non-Executive Director

“THAT Mr. Law Piang Woon who has served the Board as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years since 19 June 2001 be and is hereby retained as an Independent Non-Executive Director of the Company.”

Ordinary Resolution No. 6 - Approval to Continue in Office as Independent Non-Executive Director

“THAT Ms. Chew Pei Fang who has served the Board as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years since 20 June 2001 be and is hereby retained as an Independent Non-Executive Director of the Company.”


(Resolution 11)

(Resolution 12)

(Resolution 13)


SPECIAL RESOLUTION - PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE

COMPANY “THAT the following proposed amendments to the Articles of Association of the Company

be and are hereby approved and adopted:-

Article No. Existing Article Proposed Article

151 The Directors shall from time to time in accordance with the provisions of the Act, cause to be prepared and laid before the Company in general meeting such profit and loss accounts, balance sheet and reports as are required under the Act PROVIDED always that the interval between the close of a financial year of the Company and the issue of the annual audited accounts, the directors’ and auditors’ reports to the Exchange shall not exceed four (4) Months or such period as may be prescribed by the Listing Requirements.

The Directors shall from time to time in accordance with the provisions of the Act, cause to be prepared and laid before the Company in general meeting such profit and loss accounts, balance sheet and reports as are required under the Act or such period as may be prescribed by the Listing Requirements.

152 The Company must issue to the Members an annual report relating to it within six (6) months after the expiry of its financial year end in printed format or in CD-ROM or DVD-ROM format or such other format. In the event that the Annual Report is sent in CD-ROM or DVD-ROM format or such other format and a Member requires a printed format of such documents, the Company shall send such documents to the Members within four (4) market days from the date of receipt of the Members’ request. A copy of every balance sheet and profit and loss account which is to be laid before the Company in general meeting (including every document required by law to be annexed thereto) together with a copy of the auditors’ report relating thereto and of the Directors’ report shall not more than six months after the close of the financial year and not less than twenty one days before the date of the meeting, be sent to every Member of, every holder of, and trustees for every debenture holder of, the Company and to every other person who is entitled to receive notice of general meetings from the Company under the provisions of the Act, or these Articles.

Company must issue to the Members an annual report relating to it within four (4) months after the expiry of its financial year end in printed format or in electronic format In the event that the Annual Report is sent in electronic format and a Member requires a printed format of such documents, the Company shall send such documents to the Members within four (4) market days from the date of receipt of the Members’ request. A copy of every balance sheet and profit and The loss account which is to be laid before the Company in general meeting (including every document required by law to be annexed thereto) together with a copy of the auditors’ report relating thereto and of the Directors’ report shall within four (4) months from the close of the financial year and not less than twenty one days before the date of the meeting, be sent to every Member of, every holder of, and trustees for every debenture holder of, the Company and to every other person who is entitled to receive notice of general meetings from the Company under the provisions of the Act, or these Articles.


(Special Resolution)

WHITE HORSE BERHAD6

AND THAT the Directors and Secretaries of the Company be and are hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendments to the Articles of Association of the Company.”

7. To transact any other ordinary business for which due notice has been given.

NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS ALSO HEREBY GIVEN that the Final Tax-Exempt Dividend of 5 sen per share in respect of the financial year ended 31 December 2015 will be payable on 12 July 2016 to depositors who are registered in the Record of Depositors at the close of business on 23 June 2016, if approved by shareholders at the forthcoming Eighteenth Annual General Meeting on Thursday, 26 May 2016.

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

(a) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 23 June 2016 in respect of ordinary transfers; and

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

By Order of the Board

Chua Siew ChuanMAICSA 0777689Company Secretary

Johor Darul Takzim29 April 2016




ExPLANATORY NOTES TO ORDINARY AND SPECIAL BUSINESS:

1. Item 1 of the Agenda

This Agenda item is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

2. Payment of Directors’ Fees

The proposed adoption of the Ordinary Resolution No. 1, if passed, will authorise the payment of Directors’ fees pursuant to Article 67 of the Articles of Association of the Company.

3. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed adoption of the Ordinary Resolution No. 2, if passed, will empower the Directors of the Company to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting provided that the aggregate number of shares issued does not exceed 10% of the issued share capital of the Company during the preceding twelve (12) months for the time being.

The general mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisition(s).

This general mandate sought by the Company is to renew the general mandate granted to the Directors at the Seventeenth Annual General Meeting held on 26 May 2015 to issue shares pursuant to Section 132D of the Companies Act, 1965. As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Seventeenth Annual General Meeting held on 26 May 2015 and which will lapse at the conclusion of the Eighteenth Annual General Meeting.

4. Proposed Renewal of Authority for Share Buy-Back

The proposed adoption of the Ordinary Resolution No. 3 is to renew the authority granted by the shareholders of the Company at the Seventeenth Annual General Meeting held on 26 May 2015. The proposed renewal will allow the Directors to exercise the power of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company any time within the time period stipulated in the Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Main LR”).

5. Proposed Renewal of and New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The proposed adoption of the Ordinary Resolution No. 4 is to renew as well as obtaining new shareholders’ mandate granted by the shareholders of the Company at the Seventeenth Annual General Meeting held on 26 May 2015. The proposed renewal of and new shareholders’ mandate will enable the Company and its subsidiaries (White Horse Berhad Group) to enter into any of the recurrent related party transactions of a revenue or trading nature which are necessary for White Horse Berhad Group’s day to day operations, subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

WHITE HORSE BERHAD8

6. Approval to Continue in Office as Independent Non-Executive Director

(i) Mr. Law Piang Woon

The Board of Directors has vide the Nomination Committee conducted an annual performance evaluation and assessment of Mr. Law Piang Woon (“Mr. Law”) who has served as an Independent Non-Executive Director for a cumulative term of more than nine (9) years and recommended him to continue in office as an Independent Non-Executive Director based on the following justifications:-

(a) Mr. Law has fulfilled the definition of an independent director as set out under Paragraph 1.01 of the Bursa Securities Main LR;

(b) Mr. Law has not been involved in any business or other relationship which could hinder the exercise of independent judgement, objectivity or his ability to act in the best interests of the Company;

(c) Mr. Law has no potential conflict of interest, whether business or non-business related with the Company;

(d) Mr. Law has not established or maintained any significant personal or social relationship, whether direct or indirect, with the Managing Director/Chief Executive Officer and Executive Directors, major shareholders or management of the Company (including their family members) other than normal engagements and interactions on a professional level consistent with his duties and expected of him to carry out his duties as an independent director;

(e) Mr. Law has contributed sufficient time and efforts in his capacity as the designated Senior Independent Non-Executive Director, Chairman of the Audit Committee and Nomination Committee as well as a member of Remuneration Committee; and

(f) Mr. Law does not derive any remuneration and other benefits apart from Directors’ fees that are approved by shareholders.

(ii) Ms. Chew Pei Fang

The Board of Directors has vide the Nomination Committee conducted an annual performance evaluation and assessment of Ms. Chew Pei Fang (“Ms. Chew”) who has served as an Independent Non-Executive Director for a cumulative term of more than nine (9) years and recommended her to continue in office as an Independent Non-Executive Director based on the following justifications:-

(a) Ms. Chew has fulfilled the definition of an independent director as set out under Paragraph 1.01 of the Main LR;

(b) Ms. Chew has not been involved in any business or other relationship which could hinder the exercise of independent judgement, objectivity or her ability to act in the best interests of the Company;

(c) Ms. Chew has no potential conflict of interest, whether business or non-business related with the Company;

(d) Ms. Chew has not established or maintained any significant personal or social relationship, whether direct or indirect, with the Managing Director/Chief Executive Officer and Executive Directors, major shareholders or management of the Company (including their family members) other than normal engagements and interactions on a professional level consistent with her duties and expected of her to carry out her duties as an independent director;




(e) Ms. Chew has contributed sufficient time and efforts in her capacity as Independent Non-Executive Director;

(f) Ms. Chew does not derive any remuneration and other benefits apart from Directors’ fees that are approved by shareholders; and

(g) The Board is desirous to maintain and preserve the current board diversity and board dynamics in terms of gender and age, in line with the Malaysian Government initiatives.

7. Proposed Amendments to the Articles of Association of the Company

The proposed adoption of the Special Resolution is to streamline the Articles of Association of the Company with the recent amendments to the Bursa Securities Main LR.

Further information on the Proposed Renewal of Authority for Share Buy-Back and Proposed Renewal of and New Shareholders’ Mandate are set out in the Circular to Shareholders of the Company which is despatched together with the Company’s Annual Report 2015.

NOTES:-

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 May 2016 (“General Meeting Record of Depositors”) shall be eligible to attend the Meeting.

2. A member entitled to attend and vote at the Meeting is entitled to appoint more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a),(b),(c) and (d) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

3. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he or she specifies the proportion of his or her holdings to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

6. The instrument appointing a proxy must be deposited at the Company's Registered Office at PLO 464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

WHITE HORSE BERHAD10

COrpOraTEINFORMATION

BOARD OF DIRECTORS

Liao Yuan Shun (Chairman/Managing Director)Teo Swee Teng (Deputy Managing Director)Cheng Soon Mong (Deputy Managing Director)Teo Kim Lap (Non-Independent Non-Executive Director)Liao Shen Hua (Non-Independent Non-Executive Director)Teo Kim Tay (Non-Independent Non-Executive Director)Liao Jung Chu (Non-Independent Non-Executive Director)Law Piang Woon (Senior Independent Non-Executive Director)Chew Pei Fang (Independent Non-Executive Director)Rosita Yeo Swat Geok (Independent Non-Executive Director)

SECRETARY

Chua Siew Chuan(MAICSA : 0777689)

REGISTERED OFFICE

PLO 464, Jalan GangsaPasir Gudang Industrial Estate81700 Pasir Gudang Johor Darul TakzimTel : 607 - 251 1111Fax : 607 - 251 1011

REGISTRAR

Securities Services (Holdings)Sdn Bhd (36869-T)Level 7, Menara MileniumJalan Damanlela Pusat Bandar DamansaraDamansara Heights50490 Kuala LumpurWilayah PersekutuanTel : 603 - 2084 9000Fax : 603 - 2094 9940

AUDITORS

Ernst & YoungChartered AccountantsLevel 16-1, Jaya 99, Tower B99 Jalan Sri Lanang75100 MelakaTel : 606 - 288 2399Fax : 606 - 283 2899

AUDIT COMMITTEE

Chairman

Law Piang Woon(Senior IndependentNon-Executive Director)

Members

Liao Jung Chu(Non-IndependentNon-Executive Director)

Chew Pei Fang(IndependentNon-Executive Director)

PRINCIPAL BANKERS

Malayan Banking Berhad (3813-K)69-75, Jalan Meranti MerahTaman Kebun Teh 80250 Johor BahruJohor Darul Takzim

Malayan Banking Berhad (3813-K)14, Pusat PerdaganganJalan Bandar 81700 Pasir Gudang Johor Darul Takzim

The Bank of Nova Scotia BerhadUnit 09, 17th Floor, Office TowerJohor Bahru City Square108, Jalan Wong Ah Fook80000 Johor BahruJohor Darul Takzim

DBS Bank LtdKuala LumpurRepresentative Office#08-01, Menara Keck Seng203, Jalan Bukit Bintang55100 Kuala Lumpur

AmBank (M) BerhadLevel 31, Selesa TowerJalan Dato’ Abdullah Tahir80300 Johor BahruJohor Darul Takzim

RHB Bank Berhad (6171-M)10, Pusat PerdaganganJalan Bandar 81700 Pasir GudangJohor Darul Takzim

United Overseas Bank(Malaysia) Berhad8, Jalan Ponderosa 2/1Taman Ponderosa81100 Johor BahruJohor Darul Takzim

STOCK ExCHANGE

Main Market of Bursa MalaysiaSecurities Berhad

WEBSITE

http://www.whitehorse.com.my


prOFIlE OFDIRECTORS

LIAO YUAN SHUN Taiwanese • age 63

Mr Liao is the Executive Chairman of White Horse Berhad. He was appointed to the Board as Executive Chairman of White Horse Berhad on 6 August 1999. Upon finishing his secondary education in Taiwan, he ventured into the ceramic tiles industry and has more than 35 years of experience in the industry. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the brother of Mr Liao Jung Chu who is a Director of White Horse Berhad. He is the Chairman of the Remuneration Committee. Mr Liao does not have any directorships in other public companies. He is currently the Director of White Horse Berhad’s subsidiaries.

TEO SWEE TENG Malaysian • age 59

Mr Teo is the Deputy Managing Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. His first involvement in the ceramic tiles industry began in 1983 upon completing his secondary education when he started a business in marketing and distributing of ceramic tiles. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the brother of Mr Teo Kim Lap and Mr Teo Kim Tay, who are Directors of White Horse Berhad. Mr Teo does not have any directorships in other public companies. He presently sits on the board of several private limited companies in Malaysia.

CHENG SOON MONG singaporean • age 73

Mr Cheng is the Deputy Managing Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. Mr Cheng graduated from high school and has over 40 years of experience in the ceramic tiles business. Mr Cheng has been an Executive Director of White Horse Ceramic Industries Sdn Bhd since its incorporation in 1991. Mr Cheng has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is not related to any other Directors on the Board nor substantial shareholders of the Company. Mr Cheng does not have any directorships in other public companies. He sits on the board of several private limited companies in Malaysia.

LIAO JUNG CHU Taiwanese • age 77

Mr Liao is a Non-Independent Non-Executive Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. Mr Liao completed his senior high education in veterinarian studies. He then ventured into the ceramic tiles industry in 1972. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the brother of Mr Liao Yuan Shun who is the Executive Chairman of White Horse Berhad, and the father of Mr Liao Shen Hua who is a Director of White Horse Berhad. He is also a member of the Nomination Committee and the Audit Committee of the Company. Mr Liao does not have any directorships in other public companies. He is currently the Director of White Horse Berhad’s subsidiaries.


TEO KIM LAP MalaySiaN • age 57

Mr Teo is a Non Independent Non-Executive Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. Together with his brothers, he ventured into the ceramic tiles business upon completion of his secondary education. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the brother of Mr Teo Swee Teng and Mr Teo Kim Tay, who are Directors of White Horse Berhad. Mr Teo does not have any directorships in other public companies. He presently sits on the board of several private limited companies.

LIAO SHEN HUA Taiwanese • age 53

Mr Liao is a Non-Independent Non-Executive Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. He is a diploma holder in electrical engineering. He was introduced to the ceramic tiles industry soon after his graduation in 1987. As the Executive Director in charge of manufacturing in White Horse Ceramic Industries Sdn Bhd, a position he has been holding since 1991, Mr Liao is currently responsible for the overall manufacturing operation of White Horse Ceramic Industries Sdn Bhd. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the son of Mr Liao Jung Chu who is a Director of White Horse Berhad. Mr Liao does not have any directorships in other public companies. He is currently the Director of White Horse Berhad’s subsidiaries.

TEO KIM TAY Malaysian • age 52

Mr Teo is a Non-Independent Non-Executive Director of White Horse Berhad. He was appointed to the Board on 6 August 1999. He ventured into the ceramic tiles industry upon completion of secondary education. He has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is the brother of Mr Teo Kim Lap and Mr Teo Swee Teng, who are Directors of White Horse Berhad. Mr Teo does not have any directorships in other public companies. He presently sits on the board of several private limited companies.

LAW PIANG WOON Malaysian • age 75

Mr Law is the Senior Independent Non-Executive Director of White Horse Berhad. He was appointed to the Board on 19 June 2001. He holds a degree in Commerce (Accountancy). Mr Law has been practising as a Public Accountant. Apart from his qualification as a Chartered Accountant of Malaysia, he also holds various qualifications including Certified Public Accountant (Australia), Chartered Accountant of Singapore, Fellow of the Chartered Tax Institute of Malaysia (FCTIM) and FCCA (Fellow of ACCA). Mr Law is also an Independent Non-Executive Director of Harn Len Corporation Berhad. Mr Law has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. He is not related to any other Directors on the Board nor substantial shareholders of the Company. Mr Law is also the Chairman of both the Audit Committee and Nomination Committee, as well as a member of the Remuneration Committee.

profile of directors (cont’d)


profile of directors (cont’d)

CHEW PEI FANG singaporean • age 57

Ms Chew is the Independent Non-Executive Director of White Horse Berhad. She was appointed to the Board on 20 June 2001. Ms Chew graduated in 1985 with a Bachelor of Social Science (Economics Honours) and has worked in several companies with vast experience in the field of administration. Ms Chew has attended all four (4) Board Meetings held in the financial year ended 31 December 2015. She is not related to any other Directors on the Board nor substantial shareholders of the Company. Ms Chew is also a member of the Audit Committee, Nomination Committee and Remuneration Committee. Ms Chew does not have any directorships in other public companies.

ROSITA YEO SWAT GEOK Malaysian • age 63

Ms Yeo is the Independent Non-Executive Director of White Horse Berhad. She was appointed to the Board on 19 April 2013. Ms Yeo graduated in 1978 with a Bachelor of Law LBB (Honours) and has been actively practicing law since then. She has been managing her own law firm Messrs. Yeo & Co Advocates & Solicitors since 1989. Ms Yeo attended all four (4) Board Meetings held in the financial year ended 31 December 2015 since her appointment to the Board. Ms Yeo is not related to any other Directors on the Board nor substantial shareholders of the Company. Ms Yeo does not have any directorships in other public companies.

Conflict of Interest

Apart from Mr Law Piang Woon, Ms Chew Pei Fang and Ms Rosita Yeo Swat Geok, the rest of the Directors are deemed interested in recurrent related party transactions, of which a Shareholders’ Mandate has been obtained in the Annual General Meeting held on 26 May 2015. Details pertaining to these transactions are disclosed in the Financial Statements for the financial year ended 31 December 2015.

Conviction of Offence

None of the Directors have been convicted of any offence within the past 10 years other than traffic offences.


Chairman’s Statement

Dear ShareholDerS,

on behalf of our board of directors, it is my pleasure to present our annual report and audited accounts of White horse Group for the financial year ended 31 december 2015.

BuSInESS PERfORmAncE REvIEW AnD fInAncIAl REvIEW

In 2015, Ringgit malaysia (“Rm”) weakened by 20.0% against the United States of america Dollar (“USD”) in the foreign exchange market. (source :malaysian Institute of economic Research (“mIeR”) ) this had a significant impact on the malaysian economy. the malaysian economy continues to record reasonably solid growth despite low energy prices, which is adversely impacting the country’s energy sector. Real Gross Domestic Product (“GDP”) in 2015 as a whole grew by 5.0%.(source : Department of Statistics)

For the financial year ended 31 December 2015, the Group recorded a turnover of Rm752.7 million, a slight decrease of 2% as compared to the previous financial year. the Group’s profit after tax stood at Rm34.2 million in the financial year ended 31 December 2015, a decrease of 42.2% as compared to the previous financial year. this was mainly due to the loss before tax in the second half of the financial year resulting from the unrealised foreign exchange loss on the weakening of Rm, Vietnamese Dong and Indonesia Rupiah against the USD denominated borrowings/payables.


chairman’s statement(cont’d)

CORPORATE SOCIAL RESPONSIBILITY

The Group emphasises on corporate social responsibility, expanding our focus beyond business operations and financial performances.

In the workplace, we place high importance on safety and employees’ well-being and development. All along, we have a Safety and Environmental Committee to ensure a conducive and safe work environment.

The Group embraces diversity at workplace and we do not allow room for any form of discrimination practice against people of different gender, age, ethnicity, nationality or marital status.

By employing a diverse workforce, the Group is able to have a better understanding of today’s dynamic market demographics. It has also enable the Group to tap into a pool of people from diverse background who can provide unique market insights or generate creative solutions, thereby increasing the Group’s competitiveness in today’s globalised and challenging economy.

Gender diversity

As at 31 March 2016, the Group had achieved a ratio of 78:22 in the workforce of the Group in terms of Male/Female, drawing closer to the government’s initiatives to achieve 30% women participation in the workplace.



age diversity

As at 31 March 2016, 39% of our employees belong to the age group of between 26 to 35 with the next largest age group being those aged between 36 to 45 (31%). The Group’s age demographics broadly reflected those of Malaysian where the younger age employees form the majority of the workforce.

Ethnicity diversity

As at 31 March 2016, employees of Malay ethnicity constituted the largest workforce of the Group at 48%, with the foreign ethnicity staff being the next largest workforce at 32%. Therefore, the Group practices a well balance hiring of staff in the Human Resources recruitment process.

In recognition of employees being the most important asset to drive the business, the Group has always endeavored to safeguard the welfare, healthcare, training and career development for our employees. To equip our staff with necessary skills and knowledge, trainings were planned and provided. Long service awards are set up to recognise the efforts and contribution of long service employees. The Group also set up a children’s education incentive fund with the aim of encouraging employee’s children to pursue academic excellence. We also encourage healthy lifestyle among our staff by arranging various sports and recreational activities. The “Family Day” was held last June 2015 for a big get-together for the employees of the Group.

Not forgetting the society at large, the Group organised few blood donation campaigns during the year and had contributed in industrial training for students from various higher institutions. The Group also helped financially and raised funds internally for employees’ families who were affected by the Nepal earthquake.

AWARDS AND ACCOLADES

We are grateful and honoured to have our efforts in striving for quality and service excellence being recognised by various reputable associations. In 2015, the Company was awarded the prestigious Reader’s Digest Platinum trusted award in the Wall and Floor tiles category for the sixth consecutive year. In addition, we were honoured to receive the Brand Laureate Platinum Award 2014-2015 for Best Brands in Consumer – Ceramic Floor and Wall Tiles category.

DIVIDEND

The Board has recommended a final tax-exempt dividend of 5 sen per share for the financial year ended 31 December 2015, subjected to the approval of shareholders at the forthcoming Annual General Meeting in May 2016. In the third quarter of the financial year, the Company had paid a tax-exempted interim dividend of 5 sen per share, this makes up a total of 10% dividend paid out for the financial year ended 31 December 2015.

LOOKING FORWARD Looking forward, the World Bank projected Malaysia's GDP growth at 4.5 per cent for this year. In addition, the primary residential property market will be driven by affordable homes as outlined in Budget 2016 as housing is a basic necessity that needs to be met for the majority of the younger working population. However, it will still be a challenging year, especially for the high rise residential segment and for certain segment of the commercial projects. This is due to the oversupply in the current market along with the after effects on the imposition of the Goods and Services Tax (“GST”), lower commodity prices and stricter home loan approvals.



The Group has been making efforts to strengthen our structure and improve our competitiveness. This includes extensive research and development efforts to churn out new product series at affordable prices, setting up energy efficiency projects and at the same time, to lower manufacturing costs.

Barring any unforeseen circumstances, we remain positive on the prospects of the Group for the financial year ending 2016.

CORPORATE GOVERNANCE

The Board acknowledges the Malaysian Code of Corporate Governance 2012 issued by the Securities Commission Malaysia which sets out the principles, best practices and guidelines that may be applied in the operations of a Company, so as to enhance the transparency and accountability of public listed companies in Malaysia.

Steps are being taken to ensure the Group’s commitment to the Corporate Governance procedures to enhance shareholders’ value and safeguard the assets of the Group. The Risk Management Committee has been functioning in a structured manner to mitigate potential risks facing the group.

Acknowledgements

On behalf of the Board, I would like to express my sincere gratitude to the valued customers, vendors, business associates, bankers and regulatory authorities for their ongoing support and confidence in the Group.

Secondly, I would like to extend my appreciation to my fellow Board members, the Management and staff of the Group for their dedication and contribution to the Group.

Last but not least, I would like to thank our shareholders for your continued support and confidence in the Group.

Thank you.

Liao Yuan ShunChairman of the Board


FINaNCIal HIGHLIGHTS

586,038646,814

RM’000 RM’000

765,200

year year

65,601

2010 2011 2012 2013 20140

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

60,750

38,175

48,182

59,235

Senper share

year

26.4

16.6

21.0

25.8

28.5

0

5

10

15

20

25

30

752,729

2015

530,363 530,041

670,677699,549

RM’000

738,380

year2010 2011 2012 2013 2014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000 761,670

2015

615,807 655,746

2010 2011 2012 2013 2014

14.9

2015

2010 2011 2012 2013 2014

34,217

2015

Revenue(RM’000)

Profit after Tax(RM’000)

Earnings per share *(Sen per share)

Shareholder’s Funds(RM’000)

* Calculated based on the share capital of 240,000,000 ordinary shares of RM1.00 each

586,038646,814

RM’000 RM’000

765,200

year year

65,601

2010 2011 2012 2013 20140

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

60,750

38,175

48,182

59,235

Senper share

year

26.4

16.6

21.0

25.8

28.5

0

5

10

15

20

25

30

752,729

2015

530,363 530,041

670,677699,549

RM’000

738,380

year2010 2011 2012 2013 2014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000 761,670

2015

615,807 655,746

2010 2011 2012 2013 2014

14.9

2015

2010 2011 2012 2013 2014

34,217

2015


COrpOraTE STRUCTURE

100 % subsidiaries• White horse Ceramic (S) pte. Ltd. • White horse Ceramic (phil.) inc. • White horse Ceramic (thailand) Ltd • pt Wh Ceramic indonesia • Grand mark international Co., Ltd

(455130-X)

100%WHITE HORSE

CERAMICINDUSTRIES

SDN BHD(216824-X)

100% WHITE HORSE MARKETING

SDN BHD(250561-D)

100% WHITE HORSE

CERAMIC INDUSTRIES

(VIETNAM) CO., LTD


audIT COMMITTEE REPORT

MEMBERSHIP

The present members of the Audit Committee of the Company are:-

Name Designation

Law Piang Woon (Chairman) Senior Independent Non-Executive Director

Liao Jung Chu (Member) Non Independent Non-Executive Director

Chew Pei Fang (Member) Independent Non-Executive Director

TERMS OF REFERENCE

Objectives

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

(a) evaluate the quality of the audits performed by the internal and external auditors;

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

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

(d) determine the quality, adequacy and effectiveness of the Group's control environment.

Composition of members The Board shall appoint the Audit Committee members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the Audit Committee members shall be independent directors.

In this respect, the Board adopts the definition of “independent director” as defined under the Listing Requirements of Bursa Malaysia Securities Berhad (“bursa Securities”).

All members of the Audit Committee shall be financially literate and at least one (1) member of the Audit Committee must be:-

(a) a member of the Malaysian Institute of Accountants (“MIA”); or

(b) if he is not a member of MIA, he must have at least three (3) years of working experience and:

i. he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or

ii. he must be a member of one of the associations of the accountants specified in Part II of the First Schedule of the Accountants Act 1967; or

(c) fulfils such other requirements as prescribed or approved by Bursa Securities.

No alternate director of the Board shall be appointed as a member of the Audit Committee.

The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.


audit committee report(cont’d)

TERMS OF REFERENCE (CONTINUED)

Retirement and resignation

If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member resulting in non-compliance to the composition criteria as stated in paragraph 1 above, the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.

Chairman

The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an independent director.

In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst themselves elect a Chairman who must be independent director to chair the meeting.

Secretary

The Company Secretary shall be the Secretary of the Audit Committee and as a reporting procedure, the Minutes shall be circulated to all members of the Board.

Meetings

The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairman’s discretion.

Upon the request of the external auditors, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditors believes should be brought to the attention of the directors or shareholders.

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

The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Managing Directors, the Senior Financial Controller, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

The Regional Financial Controller, the head of internal audit and a representative of the external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the external auditors.

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

The Audit Committee met four (4) times during the year and the details of the attendance of each member are as follows:-

Name of Members No. of Meetings Attended

Law Piang Woon (Chairman) 4/4

Liao Jung Chu 4/4

Chew Pei Fang 4/4




Minutes

Minutes of each meeting shall be kept at the registered office and distributed to each member of the Audit Committee and also to the other members of the Board. The Audit Committee Chairman shall report on each meeting to the Board.

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

Quorum

The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent directors.

Authority

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

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

(b) have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group.

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

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any).

(e) where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of Bursa Securities, the Audit Committee shall promptly report such matter to Bursa Securities.

Duties and Responsibilities

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

(a) To consider the appointment of the external auditors, the audit fee and any question of resignation or dismissal;

(b) To discuss with the external auditors before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

(c) To establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into a procedures that must be followed by the external auditors;

(d) To review with the external auditors his evaluation of the system of internal controls and his audit report;

(e) To monitor independence and qualification of external auditors;

(f) To provide support for an assessment on independence and to obtain written assurance from the external auditors confirming that they are, and have been independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements;




Duties and Responsibilities (continued)

(g) To review the quarterly and year-end financial statements of the Board, focusing particularly on:-

• anychangeinorimplementationofmajoraccountingpoliciesandpractices;

• significantadjustmentsarisingfromtheaudit;

• thegoingconcernassumption;

• significantmattershiglightedincludingfinancialreportingissues,significantjudgementmadebymanagement,significant and unusual events or transactions, and how these matters are addressed; and

• compliancewithaccountingstandardsandotherlegalrequirements.

(h) To discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management, where necessary);

(i) To review the external auditors’ management letter and management’s response;

(j) To do the following, in relation to the internal audit function:-

• reviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunction,andthat it has the necessary authority to carry out its work;

• reviewtheinternalauditprogrammeandresultsoftheinternalauditprocessand,wherenecessary,ensurethat appropriate actions are taken on the recommendations of the internal audit function;

• reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;

• approveanyappointmentorterminationofseniorstaffmembersoftheinternalauditfunction;and

• takecognizanceofresignationsofinternalauditstaffmembersandprovidetheresigningstaffmemberanopportunity to submit his reasons for resigning.

(k) To identify principal risks and ensuring the implementation of appropriate internal controls and mitigation measures;

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

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

(n) To consider the major findings of internal investigations and management’s response;

(o) To verify the allocation of employees’ share option scheme (“ESOS”) in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any;

(p) To determine the remit of the internal audit function;

(q) To consider other topics as defined by the Board; and

(r) To consider and examine such other matters as the Audit Committee considers appropriate.



ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR

The Audit Committee has undertaken the following activities during the financial year ended 31 December 2015 (“FYE 2015”):-

(a) Oversight of Financial Reporting

(i) Reviewed the unaudited quarterly financial results for the quarters ended 31 December 2014, 31 March 2015, 30 June 2015, 30 September 2015 and 31 December 2015 and recommended the same for the Board’s approval;

(ii) Reviewed the draft audited financial statements for FYE 2015 and recommended the same for the Board’s approval;

(iii) Reviewed the Group’s compliance with the accounting standards and relevant regulatory requirements;

(b) Oversight of External Auditors

(iv) Reviewed the suitability and independence of the external auditors vide a formalised “Assessment on External Auditors” and upon reviewed and being satisfied with the results of the said Assessment, the same has been recommended to the Board for approval.

(v) Review of the external auditors’ Audit Planning Memorandum for FYE 2015 and management’s response;

(vi) Review and recommended the re-appointment of External Auditors for the financial year ending 31 December 2016;

(c) Oversight of Internal Audit Department (“IAD”) and function

(vii) Review and adoption of an Internal Audit Plan for FYE 2015;

(viii) Reviewed and approved the internal audit reports for FYE 2015;

(ix) Review and adoption of the In-house Internal Audit Charter;

(x) Reviewed the adequacy and performance of the internal audit function and its comprehensive coverage of the Group’s activities;

(xi) Reviewed the effectiveness of the internal audit function vide a formalised “Assessment on Internal Auditors”; and

(d) Review of Related Party Transactions (“RPT”)

(xii) Reviewed the related party transactions, entered into by the Company and its group of companies; (xiii) Review of the draft Circular to Shareholders in relation to the Proposed Renewal of Shareholders’ Mandate

for entering into recurrent RPTs;

(e) Oversight of Risk review matters

(xiv) To review the principal risks identified by the Management and Internal Audit Department and ensuring the implementation of appropriate internal controls and mitigation measures


ACTIVITIES OF THE AUDIT COMMITTEE DURING THE YEAR (CONTINUED)

(f) Other matters

(xv) Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control to be included in the Annual Report 2015; and

(xvi) Review of the draft Circular to Shareholders in relation to the Proposed Renewal of Authority for Share

Buy-back and recommendation of the same to the Board of Directors for approval; and

(xvii) Recommendation of the payment of a final tax-exempt dividend of 5 sen per share for the FYE 2015 to the Board of Directors for approval.

Conclusion made on review of recurrent rpts for fyE 2015

From its review of RPTs entered into by the Company and its group of companies for the financial year ended 31 December 2015, the Audit Committee has concluded that the RPTs were conducted at arm’s length basis and on normal commercial terms consistent with the Company’s usual business practices and policies.

For FYE 2015, the AC was of the opinion that the Group has in place adequate procedures and processes to monitor, track and identify RRPT in a timely and orderly manner.

INTERNAL AUDIT FUNCTION

The Company has an Internal Audit Department (“IAD”) which reports to the Audit Committee. The IAD is mainly responsible for undertaking a regular review of the internal control system of the Group and to ensure its operations are carried out effectively and efficiently.

The scope of Internal Audit covers the periodic audits of key departments, branches and overseas subsidiaries within the Group to test on the appropriateness of control design and implementation as well as compliances with existing policies and procedures.

Other activities undertaken by the IAD during the financial year include: -

• Ascertainedtheextendofcomplianceofestablishedpolicies,proceduresandstatutoryrequirements;

• ReviewedtheoperationflowwithintheGroup;

• Recommendedimprovementonexistingsystems;and

• Presentedtheauditplanforthefinancialyear2015totheAuditCommittee.

IAD Audit Assignments for FYE 2015

Given the diverse nature of the Group’s subsidiaries, the IAD has segregated their audit activities into three (3) main categories:-

(a) Departmental Audit Assignments;(b) Malaysian Branches Audit Assignments; and(c) Subsidiaries Audit Assignments.



INTERNAL AUDIT FUNCTION (CONTINUED)

IAD Audit Assignments for FYE 2015 (continued)

Category of Audit Activities Audit area/ entity Audit Period

Departmental Audit Assignments WHCI• Purchasing• ManagementInformationSystem• InternationalSales• HumanResource• CorporateServices• Financeandaccounts

WHV• InternationalSales• HumanResource• Financeandaccounts• CustomerService• Warehouse

July 2014 to June 2015

Malaysian and VietnamBranches Audit Assignments

Malaysia• Klang,• Ipoh,• BatuPahat,• KualaLumpur,• AlorSetar,• KotaKinabalu,• Kuching,• Kuantan,• KotaBahru,• Ipoh• JohorBahru

Vietnam• Hanoi,• HaiPhong,• Danang,• NhaTrang,• HoChiMinhCity,• CanTho

August 2014 to August 2015

Subsidiaries Audit Assignments • PTWHCeramicIndonesia• WhiteHorseCeramic(Thai)Ltd.• WhiteHorseCeramic(Phil)Ltd.• WhiteHorseCeramic(S)Ltd.• GrandMarkInternationCo.,Ltd.

August 2014 to July 2015

For FYE 2015, the IAD has successfully completed all their audit assignments in accordance with their risk-based Internal Audit Plan 2015.

For FYE 2015, representatives from the IAD attended two (2) Audit Committee Meetings to table their findings and reports.

Operational costs incurred by IAD for FYE 2015

The operational cost incurred by the IAD for FYE 2015 amounted to RM846,155/- (2014: RM852,168/-).



sTaTEmENT ON CORPORATE GOVERNANCE

The Board recognises the importance of the role of good Corporate Governance throughout the Group as a fundamental part of discharging their fiduciary duties and responsibilities, so as to achieve its corporate mission and in enhancing shareholders’ value. The Board is committed to ensure Corporate Governance adopted by the Company is in line with the principles set out in the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”).

The Board further acknowledges the recommendations set out in MCCG 2012 and continues to evaluate the status of the practices and the adopted alternatives.

The application of MCCG 2012 and the extent of compliance with the recommendations of corporate governance are reported as follows.

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

Clear Functions of the Board and Management

The Board is responsible for oversight of the Company.

The Board noted the Group has set its vision “to become a world class ceramic tiles manufacturer”. By utilising high end, imported machinery and technologies – the Board further noted that the Group is the only tile manufacturer in Malaysia capable of producing a range encompassing a broad spectrum of porcelain and ceramic tiles and tile accessories.

The Board Members, in carrying out their duties and responsibilities, are firmly committed to ensuring that set vision be “realised”, that the highest standards of corporate governance and corporate conduct are adhered to, in order that the Company achieves strong financial performance for each financial year, and more importantly delivers long-term and sustainable value to stakeholders. Key matters reserved for the Board’s approval include the following:-

• Approvaloffinancialresults;• DeclarationofDividend;• Issuanceofnewsecurities;• Annualbusinessplan;• Annualfinancialbudget;• Acquisitionordisposalofmaterialfixedassets;and• Acquisitionordisposalofgroupcompanies.

To ensure the effective discharge of its function and responsibilities, the Board delegates some of the Board’s authorities and discretion on the Executive Directors, representing the Management, as well as to properly constituted Board Committees.

The Board Committees are entrusted with specific responsibilities to oversee the Company’s affairs, in accordance with their respective Terms of Reference. At each Board meeting, minutes of the Board Committee meetings are presented to the Board.

The respective Chairmen of the Board Committees will also report to the Board on key issues deliberated by the Board Committees.


statement on corporate governance(cont’d)

ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (CONTINUED)

Clear Roles and Responsibilities

The Board provides stewardship to the Group’s strategic direction and operations, and ultimately the enhancement of long-term shareholders’ value. The Board is primarily responsible for:-

(1) Review and adopt a strategic plan

The strategic plan for 2014 is to fully integrate the White Horse Ceramic Industries (Vietnam) Co., Ltd. (“WHV”) into the Group. The acquisition of WHV was completed on 16 October 2013. The integration plan of WHV into the Group took longer than expected and was only completed in early 2015 due to the weaker economic situation in Vietnam in 2014 with the slow-down in the construction industry and higher interest cost incurred.

Mr. Liao Yuan Shun (“Mr. Liao YS”), the Managing Director (“MD”) reported that as a mitigating measure, senior Management personnel has been making monthly visit to WHV to ensure the performance of WHV be addressed for improvement.

The strategic plan for 2015 as approved by the Board is to review the pricing strategy in order to generate better margin and increase market competitiveness.

(2) Overseeing the conduct of the Company’s business

The MD is the conduit between the Board and the Management in ensuring the success of the Company’s governance and management function.

The MD is responsible for day-to-day management of the Company with all powers, discretions and delegations authorised, from time to time, by the Board.

As the first agenda item at every Board of Directors’ Meeting, Mr. Liao YS as the MD would report to the Board on the following matters:-

• ReportontheperformanceoftheGroupforthequarterunderreview;and• Strategicinitiativesforthenextquarterandfinancialyearunderreview.

For FYE 2015, Mr. Liao YS reported to the Board of Directors that the Company has managed to improve and shorten turnaround timeframe for new products, from the initial research and development (“R&D”) stage to the eventual actual product launching.

(3) Considering management recommendations on key issues including acquisitions and divestments, restructuring, funding and significant capital expenditure

At the Board of Directors’ Meeting during FYE 2015, Mr. Liao YS informed that Management of WHV has secured new sizeable orders projects with the support of bank guarantees. In view thereof, Management has made the recommendation for additional capital expenditures in order to improve production efficiency and product quality.

(4) Succession planning

Mr. Liao YS, the MD is supported by two (2) Deputy MD who were each assigned to look after a specific area of operations of the Group and would be able to cover for him in their area of expertise during Mr. Liao YS’s absence.




Clear Roles and Responsibilities (continued)

(5) Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks

The Audit Committee has been entrusted by the Board to identify, evaluate, monitor and manage any relevant major risk faced by the Group so that the Group will achieve its business objectives. However, the Board as a whole remains responsible for all the actions of the Audit Committee with regard to the execution of the delegated role and this includes the outcome of the review and disclosure on key risks and internal control in the Company’s annual reports.

(6) Reviewing the adequacy and integrity of the Company’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines

Given the diverse locations of the operating departments/ branches/ subsidiaries, the Board has established key control processes to ensure there is a sound framework of Group reporting on internal controls and regulatory compliance.

The Internal Audit Department (“IAD”) is required to review the robustness of the key control processes of the operating departments/ branches/ subsidiaries based on the approved Internal Audit Plan agreed by the Audit Committee.

Code of Ethics and Conduct

The Board has adopted a Code of Ethics and Conduct for Directors with effect from 16 February 2015 in order to adhere to the general principles and standards of business conduct and ethical behaviour in the performance and exercise of their responsibilities as Directors of the Company in order to uphold good corporate integrity.

Expected standards of ethics and conduct

The Board shall adhere to the following:

• ActinamannertoenhanceandmaintainthereputationoftheCompany;• Actinthebestinterestsof,andfulfilltheirfiduciaryobligationstotheCompany;• Complywithallapplicablelaws,rulesandregulations;• Act ingood faith, responsibly,withduecare, competenceanddiligence,without allowing their independent

judgment to be subordinated;• Dealfairlywithallstakeholders;• Notacceptfromorgivetostakeholdersgiftsorotherbenefitsnotnormallycustomary;• DiscloseanypersonalinterestthattheymayhaveregardinganymattersthatmaycomebeforetheBoardand

abstain from discussion and where relevant, abstain from voting as a member of the Board or relevant board committee on any matter in which he/she may have an interest (direct or indirect) or where there may be potential conflict of interest;

• ProhibitedfromusinganyconfidentialinformationoropportunityobtainedinthecourseoftheirserviceasDirectorsin a manner that would be detrimental to the Company's interest;

• ExercisecautionandduecaretosafeguardtheconfidentialityofinformationrelatingtotheaffairsoftheCompanyacquired in the course of their service as Directors except when authorised or legally required to disclose such information; and

• Helpcreateandmaintainacultureofhighethicalstandardsandcommitmenttocompliance.

The Code of Ethics and Conduct will be reviewed periodically to ensure the information remains relevant and appropriate.

An abridged copy of this Code of Ethics and Conduct is available for viewing on the Company’s corporate website at http://www.whitehorse.com.my/code-of-ethics-and-conduct.




Whistle Blowing Policy

The Board has put in place a Whistle Blowing Policy to facilitate the whistle blower to report or disclose through established channels about any violations or wrongdoings they may observe in the Group without fear of retaliation and should they act in good faith when reporting such concerns.

This policy does not apply to or change the Company’s policies and procedures for individual employee grievances or complaints relating to job performances, employment terms and conditions. Such concerns will be channeled to the Human Resources Department for further reviewing.

Only genuine concerns should be reported under the whistle blowing procedures. The report should be made in good faith with a reasonable belief that the information and any allegations in it are substantially true and the report is not made for personal gain. Malicious and false allegations will be viewed seriously and treated as a gross misconduct and if proven may lead to dismissal. procedure for reporting:-

1. Parties can report if they are aware of any wrongdoing, including but not limited to the following:-

• Fraud,• Misappropriationofassets• Sexualharassment• Criminalbreachoftrust• corruption• Misuseofconfidentialinformation• Questionableorimproperaccounting• ActsoromissionswhicharedeemedtobeagainsttheinterestoftheGroup,laws,regulationsorpublic

policies 2. Any concern should be raised with immediate superior. If for any reason, it is believed that it is not possible or

appropriate, then the concern should be reported to the Group’s Managing Director. Channel of reporting as follows:-

Name : Liao Yuan Shun, Group managing Director Email : [email protected]

Fascimile : 607- 2511 011 Mail : White Horse Berhad Plo 464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700, Pasir Gudang, Johor Mark : Strictly Confidential




procedure for reporting:- (continued)

3. If for any reason, it is believed that reporting to management is a concern or not possible or appropriate, then the concern should be reported to the Audit Committee of the Company. Channel of reporting as follows:-

Reporting to : Chairman of the Audit Committee Mr. Law Piang Woon Fascimile : 603-2094 9940 Mail : c/o Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium, Jalan Damanlela Pusat Bandar Damansara, Damansara Heights 50490 Kuala Lumpur Mark : Strictly Confidential

Confidentiality

The identity of the whistleblower will be kept confidential. Consent of whistleblower will be sought should there be a need to disclose identity for investigation purposes. actions

1. All reports will be investigated promptly by the person receiving the report or disclosure. If required, assistance from other resources within the Group.

2. Upon completion of investigation, appropriate course of action will be recommended to the Audit Committee for their deliberation. Decision taken by the Audit Committee will be implemented immediately.

3. Where possible, steps will also be implemented to prevent similar situation from recurring.4. The Audit Committee will report to the Board of Directors on a periodic basis about the reports received and

actions taken.

For FYE 2015, none of the designated persons have received any report or concerns vide the abovementioned reporting channels.




Strategies Promoting Sustainability

The Board views the commitment to sustainability and Environmental, Social and Governance (“ESG”) performance as part of its broader responsibility to clients, shareholders and the communities in which it operates.

The Group recognises the importance of its corporate and social responsibility whilst pursuing its corporate goals. The Group continues to invest in its staff through continuous training to develop in-house capability and also a united workforce that assists the Group in realising its goals and objectives.

(A) Environmental Aspect - Safety, health and Environmental policy

The Board has established a Safety, Health and Environmental Policy to ensure the Group operates its business activities with full commitment in achieving environmental, safety and health excellence under the following principles:

• ComplywithMalaysianenvironmental,safetyandhealthlawsandregulationsinacosteffectivemanner;

• Raiseindividualawarenessinenvironmental,safetyandhealthresponsibilitiesthroughtraining,educationand ownership awareness;

• EnsuretheEnvironmental,SafetyandHealthpolicyisavailabletothepublicuponrequest.

(B) Social Aspect – Corporate Social responsibility (“CSr”)

The Board recognises the importance of CSR whilst pursuing its corporate goals. Please refer to the Chairman’s Statement of this Annual Report for the CSR activities conducted by the Group for FYE 2015.

(C) Governance Aspect – Quality, Environmental, Safety and health Certifications

The Board strongly believes in maintaining the quality of its products and services, and the safety of its processes. As such, the Group has the documentation of its standard operating procedures in place, which encompass all work processes.

The Company has received the following quality, environmental, safety and health certifications:-

Certification Description

ISO 9001:2008 Quality management system certificationISO 14001:2004 Environmental management system certification

Access to Information and Advice

All Board members are supplied with information on a timely manner, where possible the agenda of the Board Meeting is set in consultation with the Chairman and Group MD. Apart from the ad-hoc meetings, due notice of at least 14 days is given to the Directors. This will allow the Directors to plan ahead and to maximise their participation.

Board papers are circulated in advance with a minimum of seven (7) days prior to Board meetings and the reports provide, amongst others, financial and corporate information, significant financial and corporate issues, the Group’s performance and any management proposals which require the approval of the Board.




Access to Information and Advice (continued)

The Directors have individual and independent access to the advice and dedicated support services of the Company Secretary in 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.

Protocol for seeking of professional advisory services

Where applicable, the Directors whether as a full board or in their individual capacity, are encouraged to seek independent professional advice from the following parties:-

• Forcorporateand/orgovernancematters,theexternalcompanysecretaries;

• Forauditand/oraudit-relatedmatters,anyrepresentativesoftheauditengagementteamoftheExternalAuditorsor the in-house Internal Auditors;

• ForanyotherspecificissueswhereprofessionaladviceisrequiredtoenabletheBoardtodischargeitsdutiesinconnection with specific matters, the Board may proceed to do so, with prior consultation of the Board Chairman, in relation to the quantum of fees to be incurred.

Qualified and Competent Company Secretary

The appointment and removal of the Company Secretaries is a matter for the Board. All Directors have unrestricted access to the advice and services of the Company Secretaries, who are responsible for ensuring that board procedures are followed and that applicable rules and regulations are complied with.

In performing their duties, the Company Secretary carry out, amongst others, the following tasks:-

• StatutorydutiesasrequiredundertheCompaniesAct,1965,MainMarketListingRequirements(“Main LR”) of the Bursa Malaysia Securities Berhad (“Bursa Securities”), Capital Market and Services Act, 2007;

• FacilitatingandattendingBoardMeetingsandBoardCommitteeMeetings,respectively;• Ensuring thatBoardMeetings andBoardCommitteeMeetings, respectively areproperly convened and the

proceedings are properly recorded;• EnsuringtimelycommunicationoftheBoardleveldecisionstotheManagementforfurtheraction;• EnsuringthatallappointmentstotheBoardand/orBoardCommitteesareproperlymadeinaccordancewiththe

relevant regulations and/or legislations;• Maintainingrecordsforthepurposeofmeetingstatutoryobligations;• FacilitatingtheprovisionofinformationasmayberequestedbytheDirectorsfromtimetotimeonatimelymanner

and ensuring adherence to Board policies and procedures; • FacilitatingtheconductoftheassessmentstobeundertakenbytheBoardand/orBoardCommitteesaswellas

to compile the results of the assessments for the Board and/or Board Committee’s notation and• Assisting theBoardwith the preparation of announcements for release toBursaSecurities andSecurities

Commission Malaysia; and• RenderingadviceandsupporttotheBoardandManagement.

The appointed Company Secretary is a member of the Malaysian Institute of Chartered Secretaries and Administrators (“MAICSA”) and are qualified to act as company secretary under Section 139A of the Companies Act, 1965.




Qualified and Competent Company Secretary (continued)

The brief profile of the Company Secretary is as follows:-

Ms. Chua Siew Chuan, FCIS

Ms. Chua has been elected as a Fellow Member of the MAICSA since 1997. She has more than 35 years of experience in handling corporate secretarial matters, with working knowledge of many industries and government services. She is currently the President of MAICSA.

Ms. Chua is a Chartered Secretary by profession. She is the Managing Director of Securities Services (Holdings) Sdn. Bhd., a prominent corporate secretarial service provider in Malaysia. Ms. Chua is also the named company secretary for a number of public listed companies, public companies, private limited companies and societies.

Ms. Chua has been appointed as Company Secretary to the Group with effect from 3 May 1999.

The Board is satisfied with the support rendered by the Company Secretary to the Board in discharge of its roles and responsibility. The Company Secretary plays an advisory role to the Board on the Company’s contribution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations.

The Company Secretary attends the meetings of the Board and the Board Committee and ensure that the meetings are properly convened and the deliberations at the meetings are well captured and minuted.

Board Charter

The Board had on 20 November 2013, approved the Board Charter and the same was uploaded to the Company’s website. The Board recognises the importance to set out the key values, principles and ethos of the Company, as policies and strategy development are based on these considerations. The Board Charter had included the division of responsibilities and powers between the Board and management as well as the different committees established by the Board.

The Board Charter entails the following:-

(1) The Board• RolesandresponsibilitiesoftheBoard;• Boardcomposition;• Nominationandappointment;• IndependenceofDirectors;• BoardCommittees;• RoleofChairmanoftheBoard;and• ManagingDirectors.

(2) Board Procedures• ProcessandproceduresforBoardMeetings;and• NoticeofMeeting,AgendaandBoardPapers.

(3) Directors’ Remuneration

(4) Communication• RelationshipwithManagement;and• RelationshipwithShareholders.

(5) Application of Board Charter




Board Charter (continued)

The Board will review the Board Charter from time to time and make any necessary amendments to ensure they remain consistent with the Board’s objectives, current law and practices.

A full copy of the Board Charter is available for viewing on the Company’s corporate website at http://www.whitehorse.com.my/board-charter.

STRENGTHEN COMPOSITION

Nomination Committee

The Nomination Committee was set up on 8 February 2002. The term of office of the Nomination Committee is three (3) years and may be re-nominated and re-appointed by the Board. The members of the Nomination Committee are as follows:-

Law Piang Woon Senior Independent Non-Executive Director Chairman

Liao Jung Chu Non-Independent Non-Executive Director Member

Chew Pei Fang Independent Non-Executive Director Member

For FYE 2015, the Nomination Committee met once.

The terms of reference of the Nomination Committee include:-

(a) Annually review the required mix of skills and experience and other qualities, including core competencies which non-executive and executive Directors should have.

(b) Assess on an annual basis, the effectiveness of the Board as a whole, the committees of the Board and for assessing the contribution of each individual Director, including Independent Non-Executive Directors, as well as the Managing Directors. All assessments and evaluations carried out by the Nomination Committee in the discharge of all its functions should be properly documented.

(c) Be entitled to the services of a company secretary who must ensure that all appointments are properly made, that all necessary information is obtained from Directors, both for the Company’s own records and for the purposes of meeting statutory obligations, as well as obligations arising from the Main LR of the Bursa Securities or other regulatory requirements.

The Board is of the opinion that Mr. Law Piang Woon, a Senior Independent Non-Executive Director, is ideal as Chairman of the Nomination Committee, given his experience and time commitment, as well as in compliance with

The Nomination Committee has undertaken the following activities during the financial year:-

(i) Examined the size of the Board, mix of skills, independence and time commitment based on the commercial needs of the Company;

(ii) Conducted the Effectiveness of the Board evaluation to assess the effectiveness of the Board as a whole and Board Committees in accordance with the eight (8) principles of the MCCG 2012;

(iii) Evaluated the contribution and performance of each individual Director;



STRENGTHEN COMPOSITION (CONTINUED)

Nomination Committee (continued)

(iv) Review and recommendation to the Board, the adoption of “Declaration by Independent Directors” to confirm the “independence” of the Independent Directors on an annual basis;

(v) Review and recommendation to the Board, the re-election of the Directors who will be retiring at the forthcoming Annual General Meeting (“AGM”) of the Company;

(vi) Review and recommendation to the Board, the re-appointment of the Directors who are over the age of seventy (70) years at the forthcoming AGM of the Company; and

(vii) Review and recommendation to the Board, the retention of the Independent Non-Executive Directors in accordance with the MCCG 2012.

Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors

Recruitment or Appointment of Directors

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

• TorecommendtotheBoardofDirectors,candidatesforalldirectorshipstobefilledbytheShareholdersortheBoard of Directors. In making its recommendations, the Nomination Committee should consider the candidates’ the following:–

(a) Having regard to mix of skills, character, experience, integrity, competence; time commitment pursuant to Paragraph 2.20A of the Main LR of Bursa Securities;

(b) knowledge, expertise and experience;

(c) professionalism;

(d) gender diversity; and

(e) in the case of candidates for the position of Independent Non-Executive Directors, the Nomination Committee should also evaluate the candidates’ ability to discharge such responsibilities/functions as expected from Independent Non-Executive Directors.

• Toconsider,inmakingitsrecommendations,candidatesfordirectorshipsproposedbytheMDand,withinthebounds of practicability, by any other senior executive or any Director or Shareholder.

• TorecommendtotheBoardofDirectors,thenomineestofilltheseatsonBoardCommittees.

• ToassesstheeffectivenessoftheBoardofDirectorsasawholeandeachindividualDirectors/committeesoftheBoard.

• ToreviewtrainingprogrammesfortheBoardofDirectorsandtofacilitateboardinductionandtrainingprogrammes,including induction training for new Board members.

• ToactinlinewiththedirectionsoftheBoardofDirectors.

• ToconsiderandexaminesuchothermattersastheNominationCommitteeconsidersappropriate.




Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (continued)

Recruitment or Appointment of Directors (continued)

The attendance of Directors who are members of Board Committee during the FYE 2015 is set out below:-

Director Designation Audit Committee

NominationCommittee

Remuneration Committee

Liao Yuan Shun Chairman/Managing Director Not a member Not a member 1/1

Liao Jung Chu Non-Independent Non-Executive Director

4/4 1/1 Not a member

Law Piang Woon Senior Independent Non-Executive Director

4/4 1/1 1/1

Chew Pei Fang IndependentNon-Executive Director

4/4 1/1 1/1

Re-election of Directors

Article 94 of the Articles of Association of the Company state that one-third (1/3) of the Directors shall retire from office and shall be eligible for re-election at each AGM. All Directors shall retire from office at least once in each three (3) years but shall be eligible for re-election. As such, pursuant to Article 94, the following Directors are to retire at the forthcoming Eighteenth AGM of the Company (hereinafter referred to as “the Retiring Directors”):-

(a) Mr. Teo Swee Teng(b) Mr. Teo Kim Lap

For the Retiring Directors, the Nomination Committee has conducted the following assessment based on the criteria as prescribed by the Main LR of Bursa Securities:-

• Character;• Experience;• Integrityandprofessionalism;and• Timecommitmenttodischargehisroles.

The Nomination Committee further considered the following additional criteria:-

• ResultsobtainedfromthePeer-to-PeerAssessmentSurvey;• SupplyofrelevantandtimelyinformationtotheBoard;• SupportrenderedtotheGroupMD;and• AdequacyoffunctionalknowledgeasExecutiveDirectoroverseeingthefunctionofHumanResourcesandFinance.

Upon review, the Nomination Committee were satisfied with the performance of the Retiring Directors. The Board has in turn concurred the same and resolved that both Mr. Teo Swee Teng and Mr. Teo Kim Lap be recommended to the shareholders for approval at the forthcoming Eighteenth AGM.




Re-appointment of Directors

The Board has resolved that the following ordinary resolution be recommended to the shareholders for approval at the Eighteenth AGM of the Company:-

“That pursuant to Section 129(6) of the Companies Act, 1965, the following Directors who are over the age of seventy (70) years, be and are hereby re-appointed as Directors of the Company and to hold office until the conclusion of the next Annual General Meeting:-

(a) Mr. Liao Jung Chu;(b) Mr. Law Piang Woon; and(c) Mr. Cheng Soon Mong.

Retention of Independent Directors

Article 94 of the Articles of Association of the Company state that one-third (1/3) of the Directors shall retire from office and shall be eligible for re-election at each AGM. All Directors shall retire from office at least once in each three (3) years but shall be eligible for re-election. As such, pursuant to Article 80, the following Directors are to retire at the forthcoming Twenty-First AGM of the Company (hereinafter referred to as “the Retiring Directors”):-

Mr. Law Piang Woon

The Board of Directors has vide the Nomination Committee conducted an annual performance evaluation and assessment of Mr. Law Piang Woon (“Mr. Law”) who has served as an Independent Non-Executive Director for a cumulative term of more than nine (9) years and recommended him to continue in office as an Independent Non-Executive Director based on the following justifications:-

(a) Mr. Law has fulfilled the definition of an independent director as set out under Paragraph 1.01 of the Bursa Securities Main LR;

(b) Mr. Law has not been involved in any business or other relationship which could hinder the exercise of independent judgement, objectivity or his ability to act in the best interests of the Company;

(c) Mr. Law has no potential conflict of interest, whether business or non-business related with the Company;

(d) Mr. Law has not established or maintained any significant personal or social relationship, whether direct or indirect, with the Managing Director/Chief Executive Officer and Executive Directors, major shareholders or management of the Company (including their family members) other than normal engagements and interactions on a professional level consistent with his duties and expected of him to carry out his duties as an independent director;

(e) Mr. Law has contributed sufficient time and efforts in his capacity as the designated Senior Independent Non-Executive Director, Chairman of the Audit Committee and Nomination Committee as well as a member of Remuneration Committee; and

(f) Mr. Law does not derive any remuneration and other benefits apart from Directors’ fees that are approved by shareholders; and

(g) Mr. Law continues to maintain his professional accountancy qualifications as Certified Public Accountants, Australia; Chartered Accountant in Singapore; Fellow of Chartered Tax Institute in Malaysia; and Fellow of the Association of Chartered Certified Account.




Retention of Independent Directors (continued)

Ms. Chew Pei Fang

The Board of Directors has vide the Nomination Committee conducted an annual performance evaluation and assessment of Ms. Chew Pei Fang (“Ms. Chew”) who has served as an Independent Non-Executive Director for a cumulative term of more than nine (9) years and recommended her to continue in office as an Independent Non-Executive Director based on the following justifications:-

(a) Ms. Chew has fulfilled the definition of an independent director as set out under Paragraph 1.01 of the Main LR;

(b) Ms. Chew has not been involved in any business or other relationship which could hinder the exercise of independent judgement, objectivity or her ability to act in the best interests of the Company;

(c) Ms. Chew has no potential conflict of interest, whether business or non-business related with the Company;

(d) Ms. Chew has not established or maintained any significant personal or social relationship, whether direct or indirect, with the Managing Director/Chief Executive Officer and Executive Directors, major shareholders or management of the Company (including their family members) other than normal engagements and interactions on a professional level consistent with her duties and expected of her to carry out her duties as an independent director;

(e) Ms. Chew has contributed sufficient time and efforts in her capacity as Independent Non-Executive Director;

(f) Ms. Chew does not derive any remuneration and other benefits apart from Directors’ fees that are approved by shareholders; and

(h) The Board is desirous to maintain and preserve the current board diversity and board dynamics in terms of gender and age, in line with the Malaysian Government initiatives.

Annual Assessment of the Board

The Nominating Committee conducted the following assessments annually:-

(i) Directors’ self-assessment and peer assessment survey

In conducting the Survey, the following main criteria were adopted by the Nomination Committee:-

• Contributiontointeraction;• QualityofInput;and• UnderstandingofRole.

Based on the Survey conducted for FYE 2015, the Nominating Committee was satisfied with the performance of the individual Board of Directors.

(ii) Evaluation on the effectiveness of the Board of Directors and the Committees of the Board

In conducting the Evaluation, the following main criteria were adopted by the Nomination Committee:-

• BoardStructure;• BoardOperations;• BoardRolesandResponsibilities;• BoardChairman’sRolesandResponsibilities;and• MD’sRoleandResponsibilities.



Annual Assessment of the Board (continued)

Based on the Evaluation conducted for FYE 2015, the Nomination Committee overall performance in five (5) areas have improved as compared to the results of the financial year ended 31 December 2014. The Nomination Committee was therefore satisfied with the performance of the Board and Committees of the Board.

Board Diversity Policy

The Board affirms its commitment to boardroom diversity as a truly diversified Board to enhance the Board’s effectiveness, creativity and capacity to thrive in good times and weather tough times.

Bearing in mind that an appointment to the Board is a long term commitment to the Company, the Board has not set any short term target or measure for boardroom diversity but nevertheless works to ensure that there is no discrimination on the basis of, but not limited to, ethnicity, race, age, gender, nationality, political affiliation, religious affiliation, sexual orientation, marital status, education, physical ability or geographic region, during the recruitment of new Board members.

The Board has indicated its commitment to boardroom diversity by the following appointments:-

Gender Diversity

Ms. Chew Pei Fang is the Independent Non-Executive Director of the Company since 20 June 2001. Ms. Rosita Yeo Swat Geok, has been appointed as an Independent Non-Executive Director to the Board on 19 April 2013.

age Diversity

The Board believes that the Directors with diverse age profile will be able to provide a different perspective and bring vibrancy to the Group’s strategy making process.

The age profile of the Directors were ranging from fifty-two to seventy-seven years of age, which underlies the Board’s commitment to age diversity at the Board level appointment.

Diversity in Nationality and Geographic region

Mindful of global mobility of talents, the Board does not restrict its composition to just Malaysians. The Board endeavour to source and appoint Directors of diverse nationality and of trans-national background and experiences:-

• Mr.LiaoYS,theChairmanandManagingDirector,isaTaiwanesewhohasmorethan35yearsofexperienceinthe ceramic industry.

• Mr.ChengSoonMong,theDeputyMD,isaSingaporeanwithover40yearsofexperienceintheceramictilesbusiness.

• Mr.LiaoJungChu,aNon-IndependentNon-ExecutiveDirector,isaTaiwanesewhohasmorethan44yearsofexperience in the ceramic tiles industry.

• Mr.LiaoShenHua,anotherNon-IndependentNon-ExecutiveDirector,isaTaiwanesewhoisresponsiblefortheoverall manufacturing operation of one of the key subsidiary of the Company.




Remuneration Committee

The Remuneration Committee was set up on 8 February 2002. The term of office of the Remuneration Committee is three (3) years and may be re-nominated and re-appointed by the Board. The members of the Remuneration Committee are as follows:-

Liao Yuan Shun Chairman/Managing Director Chairman

Law Piang Woon Senior Independent Non-Executive Director Member

Chew Pei Fang Independent Non-Executive Director Member

For FYE 2015, the RC met once. The terms of reference of the Remuneration Committee include:-

(a) Review, assess and recommend to the Board of Directors the remuneration packages of the Executive Directors in all forms, with other independent professional advice or outside advice as necessary.

(d) Be entitled to the services of a company secretary who must ensure that all decisions made on the remuneration packages of the Executive Directors be properly recorded and minuted in the minutes book.

Directors’ Remuneration Policy

The policies and procedures for determining the remuneration packages of the Directors and MD of the Company are formalised in the form of a Directors’ Remuneration Policy.

The objectives of the Directors’ Remuneration Policy are to attract and retain Directors of the calibre needed to manage the Group successfully. In the case of the Group MD and Executive Directors, the component parts of their remuneration are structured to link rewards to corporate and individual performances. For Non-Executive Directors, their level of remuneration reflects the experience, expertise and level of responsibilities undertaken by the particular Non-Executive Director concerned.

The range of remuneration received by the Directors for the FYE 2015 is set out in the Notes to the Financial Statements. The Company opts not to disclose the remuneration of individual Directors as the Company believes that this information will not add significantly to the understanding and evaluation of the Company’s governance.

Details of the remuneration for the Directors of the Company comprising remuneration received/receivable from the Company and its subsidiary companies during the FYE 2015 are as follows: - (i) Aggregate remuneration categorised into appropriate components:

RM (‘000) Executive Directors Non-Executive Directors

Salaries 1,148 1,301Fees 220 340Bonus & Others 104 94Benefits-in-kind 104 68




Directors’ Remuneration Policy (continued)

(ii) The number of Directors of the Company whose total remuneration falls within the following bands are as follows:

Executive Directors Non-Executive Directors

Below RM50 000 – 3RM 200,001 to RM 250,000 – 1RM 250,001 to RM 300,000 1 1RM 300,001 to RM 350,000 – –RM 350,001 to RM 400,000 – 1RM 400,001 to RM 450,000 – –RM 450,001 to RM 500,000 – –RM 500,001 to RM 550,000 2 1

REINFORCE INDEPENDENCE

Annual Assessment of Independence

The Board has set out policies and procedures to ensure effectiveness of the Independent Non-Executive Directors on the Board, including new appointments. The Board assesses the independence of the Independent Non-Executive Directors annually, taking into account the individual Director’s ability to exercise independent judgment at all times and to contribute to the effective functioning of the Board.

The Independent Non-Executive Directors are not employees and they do not participate in the day-to-day management as well as the daily business of the Company. They bring an external perspective, constructively challenge and help develop proposals on strategy, scrutinise the performance of Management in meeting approved goals and objectives, and monitor risk profile of the Company’s business and the reporting of monthly business performances.

The Board noted that Letters of Declaration has been executed by the following Independent Non-Executive Directors of the Company, confirming their independence pursuant to relevant Main LR of Bursa Securities as well as the MCCG 2012 and that they have undertaken to inform the Company immediately should there be any change which could interfere with the exercise of their independent judgement or ability to act in the best interest of the Company:-

• Mr.LawPiangWoon;• Ms.ChewPeiFang;and• Ms.RositaYeoSwatGeok.

Based on the outcome of the Directors’ self-assessment and peer assessment survey; the Evaluation on the effectiveness of the Board as a whole, as well as the additional assessment on the independence of the Independent Directors, the Board is satisfied with the level of independence demonstrated by the Independent Non-Executive Directors and their ability to act in the best interest of the Company.

The Board considers that its Independent Directors provide an objective and independent views on various issues dealt with at the Board and Board Committee level. All Non-Executive Directors are independent of management and free from any relationship. The Board is of the view that the current composition of independent directors fairly reflects the interest of minority shareholders in the Company through the Board representation.



REINFORCE INDEPENDENCE (CONTINUED)

Tenure of Independent Directors

One of the recommendation of the MCCG 2012 states that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. However, the Nomination Committee and the Board have determined at the annual assessment carried out that Mr. Law Piang Woon and Ms. Chew Pei Fang, who have served on the Board for more than nine (9) years, remains objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. The length of their services on the Board does not in any way interfere with their exercise of independent judgment and ability to act in the best interests of the Company.

Shareholders’ Approval for the Retention of Independent Non-Executive Directors

Mr. Law Piang Woon and Ms. Chew Pei Fang have offered themselves for re-appointment as Directors of the Company at the forthcoming Eighteenth AGM. The Board is satisfied with the skills, contribution and independent judgment that Mr. Law Piang Woon and Ms. Chew Pei Fang bring to the Board. In view thereof, the Board recommends and supports their retention as Independent Non-Executive Directors of the Company which will be tabled for shareholders’ approval at the forthcoming Eighteenth AGM of the Company.

Separation of Positions of the Chairman and Managing Director

The Board is led by Mr. Liao YS, who is the Chairman and Managing Director of the Company. He is assisted by two (2) Deputy Managing Directors. Although the positions of Chairman and Managing Director are held by the same individual, the roles of the Chairman and Managing Director are clearly demarcated and each has a clear accepted division of responsibilities.

As outlined in the Board Charter, the Chairman is primarily responsible for matters pertaining to the Board and the overall conduct of the Company. The MD together with the Deputy MDs oversee the running of the Group and the implementation of the Board’s decisions, business strategies and policies. There is also a clear demarcation of responsibilities between the roles of the MD and Deputy MDs to ensure a balance of authority and power, such that no one individual has unfettered powers of decision-making.

Composition of the Board

The Board comprises members experienced in ceramic tiles manufacturing and marketing and is supported by other professionals in the legal, operational, marketing, research and development, administration and financial sectors. The effective combination of existing technical skills and working experience is vital for the continual success of the Group. The profile of the Directors is presented in pages 11 to 13 of the Annual Report.

The Board has ten (10) members. Seven (7) of the ten (10) members are Non-Executive members, three (3) of whom are Independent Non-Executive Directors. The composition of the Board complied with paragraph 15.02 of the Main LR of Bursa Securities. The Independent Non-Executive Directors provide an unbiased and independent view and judgement to the pertinent issues of the Company and the interest of the stakeholders and the Group. The number of Directors reflects fairly the investment of the shareholders in particular the minority shareholders.

The Independent Non-Executive Directors are independent of management and free from any business relationship, which could materially interfere with their independent judgement. Their role is to provide independent view, advice and judgment to ensure a balanced and unbiased decision-making process as well as to safeguard the interest of public shareholders. As the Chairman/Managing Director of the Company is a Non-Independent Executive Director, the Company acknowledges the importance of increasing the number of Independent Directors pursuant to Recommendation 3.5 of the MCCG 2012 and is currently seeking for potential candidates to ensure the balance of power and authority on the Board.

The Board has identified the Senior Independent Non-Executive Director, Mr. Law Piang Woon to whom concerns of shareholders and other stakeholders may be conveyed.

For FYE 2015, Mr. Law Piang Woon has not received any concerns raised by any shareholders.



FOSTER COMMITMENT

Time Commitment

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of the Directors at the Board meetings as set out in the table.

Name of Members Attendance

Liao Yuan Shun 4/4

Teo Swee Teng 4/4

Cheng Soon Mong 4/4

Liao Jung Chu 4/4

Liao Shen Hua 4/4

Teo Kim Lap 4/4

Teo Kim Tay 4/4

Law Piang Woon 4/4

Chew Pei Fang 4/4

Rosita Yeo Swat Geok 4/4

To ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively, one criterion as agreed by the Board for determining candidates for the pool of potential Directors is that they must be able to commit sufficient time to the Company.

Board Protocol on Time Commitment

As a general rule, the Directors are expected to devote sufficient time and attention to the affairs of the Company.

The Board has in place the following protocols:-

(1) Board appointment in other companies

The Directors are required to submit an update on their other directorships and shareholdings to the Company Secretary every quarter. Such information is used to monitor the number of directorship held by the Directors and to notify the Companies Commission of Malaysia accordingly.

Any Director is, while holding office, at liberty to accept other Board appointment(s) in other companies so long as the appointment is not in conflict with the Company’s business and does not affect the discharge of his duty as a Director of the Company.

Prior the acceptance of new Board appointment(s) in other companies, the Directors should notify the Chairman of the Board and/or the Company Secretary in writing. The said notification should include an indication of time that will be spent on the new appointment.

For FYE 2015 and up to the date of this Statement, the Company Secretaries has received one such notification from an INED.




FOSTER COMMITMENT (CONTINUED)

Board Protocol on Time Commitment (continued)

(2) Restriction on Directorship in other listed companies

None of the Directors have more than five directorships in public listed companies listed on Bursa Securities. (3) Annual Meeting Schedule

In facilitating the schedule of the Directors, the Company Secretaries will prepare and circulate in advance an annual meeting schedule, which includes all the proposed meeting dates for Board and Board Committee Meetings, as well as the AGM. Upon the concurrence by all the Board members, the annual meeting schedule will be adopted for the applicable financial year.

Training

In order for the enlarged White Horse Berhad Group to remain competitive, the Board ensures that the Directors continuously enhance their skills and expand their knowledge to meet the challenges of the Board.

The Board has cultivated the following best practices:-

• AllnewlyappointedDirectorsaretoattendtheMandatoryAccreditationProgrammeasprescribedbytheMainLR of Bursa Securities within the stipulated timeframe;

• AllDirectorsareencouragedtoattendtalks,trainingprogrammesandseminarstoupdatetheirknowledgeonthe latest regulatory and business environment;

• TheDirectorsmayberequestedtoattendadditionaltrainingcoursesaccordingtotheir individualneedsasaDirector or member of Board Committees on which they serve;

• TheDirectorsarebriefedbytheCompanySecretariesonthelettersissuedbyBursaSecuritiesateveryBoardmeeting.

All members of the Board have attended the Mandatory Accreditation Programme prescribed by Bursa Securities.

Upon assessing the training needs of the Directors, the Board recognised that continuing education would be the way forward in ensuring its members are continually equipped with the necessary skills and knowledge to meet the challenges ahead.

As at the date of this Statement, the Board members have participated in the following continuing education programmes:-

No. Dates Description of Training Programmes

1. 29 August 2015 The New Companies Bill and Company Secretaries II

2. 11 September 2015 Understanding the Principles of Integrated Reporting and its Disclosure Framework

3. 25 November 2015 Art of War and its Nine (9) Variations Strategies In addition, the Company Secretaries and the External Auditors update the Board on a regular basis the respective changes and amendments to regulatory requirements and laws and accounting standards to help Directors keep abreast of such developments.


FOSTER COMMITMENT (CONTINUED)

2016 Training Needs

Upon review of the training needs of the Directors for the financial year ending 31 December 2016 and recognising the need to keep abreast with the fast changing business and regulatory environment, the Board has encouraged its members to attend at least two (2) continuing education programmes, whereby one (1) of those should be in relation to the Main LR of Bursa Securities.

UPHOLD INTEGRITY IN FINANCIAL REPORTING

Compliance with Applicable Financial Reporting Standards

In presenting the annual audited financial statements and quarterly announcements of results to shareholders, the Board takes responsibility to present a balanced and meaningful assessment of the Group’s position and prospect and to ensure that the financial statements are drawn up in accordance with the provisions of Companies Act, 1965 and applicable accounting standards in Malaysia. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy, adequacy and completeness. The Responsibility Statement by the Directors pursuant to MMLR of Bursa Securities is set out in this Annual Report.

In addition to the above, the Company also undertook an independent assessment of the internal control system and the Audit Committee has been assured that no material issue or major deficiency had been detected which posed a high risk to the overall internal control under review.

Assessment of Suitability and Independence of External Auditors

For the FYE 2015, the Audit Committee has formalised the procedures to assess the suitability and independence of external auditors vide an annual assessment of the suitability and independence of the external auditors.

In its assessment of “Suitability” of the external auditors, the Audit Committee considered, inter alia, the following factors:-

• Theexternalauditorshave theadequate resources,skills,knowledgeandexperience toperformtheirdutieswith professional competence and due care in accordance with approved professional auditing standards and applicable regulatory and legal requirements;

• TotheknowledgeoftheAuditCommittee,theexternalauditorsdonothaveanyrecordofdisciplinaryactionstaken against them for unprofessional conduct by the Malaysian Institute of Accountants (“MIA”) which has not been reversed by the Disciplinary Board of MIA;

• Theengagementpartnerhasnotservedforacontinuousperiodofmorethanfive(5)yearswiththeCompany;• TheexternalauditfirmhasthegeographicalcoveragerequiredtoaudittheCompany;• TheexternalauditfirmadvisestheAuditCommitteeonsignificantissuesandnewdevelopmentspertainingto

risk management, corporate governance, financial reporting standards and internal controls on a timely basis;• TheexternalauditfirmconsistentlymeetsthedeadlinessetbytheCompany;• Thelevelofqualitycontrolproceduresintheexternalauditfirm,includingtheauditreviewprocedures;and• TheexternalauditscopeisadequatetocoverthekeyfinancialandoperationalrisksoftheCompany.

In its assessment of “independence” of the external auditors, the Audit Committee considered, inter alia, the following factors:-

• Theleadengagementpartnerhasnotservedforacontinuousperiodofmorethanfive(5)yearswiththeCompany;• TheAuditCommitteereceiveswrittenassurancefromtheexternalauditorsconfirmingthattheyare,andhave

been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements;

• Tenureofthecurrentexternalauditors.




UPHOLD INTEGRITY IN FINANCIAL REPORTING (CONTINUED)

Assessment of Suitability and Independence of External Auditors (continued)

The Audit Committee noted for the FYE 2015, Messrs. Ernst & Young, the external auditors of the Company confirmed that the engagement quality control reviewer and members of the engagement team in the course of their audits were and had been independent for the purpose of the audit in accordance with the terms of relevant professional and regulatory requirements.

Upon completion of its assessment, the Audit Committee was satisfied with Messrs. Ernst & Young’s technical competency and audit independence during the financial year under review and recommended to the Board the re-appointment of Messrs. Ernst & Young as external auditors for the financial year ending 31 December 2016. The Board has in turn, has recommended the same for shareholders’ approval at the forthcoming AGM of the Company.

RECOGNISE AND MANAGE RISKS

Sound Framework to Manage Risks

The Risk Management Committee was set up in November 2004, comprising members from the Executive Directors and Management. The objective of the Risk Management Committee is to provide assistance to the Board in discharging its fiduciary responsibilities relating to safeguarding of shareholders’ capital through a structured approach to risk management. The Risk Management Committee has since held one (1) meeting in the FYE 2015. Reviews were made on existing mitigation plans of certain operational risks. New areas of operational risks were also identified and responsibilities were delegated to plan appropriate and timely actions.

The Risk Management Committee has established an Enterprise Risk Management Framework to determine the Company’s level of risk tolerance and actively identity, assess and monitor key business to safeguard shareholders’ investments.

Internal Audit Function

The internal audit function is independent of the operations of the Group and provides reasonable assurance that the Group’s system of internal control is satisfactory and operating effectively. The internal auditors adopt a risk-based approach towards the planning and conduct of audits, which are consistent with the Group’s framework in designing, implementing and monitoring its internal control system. An Internal Audit Planning Memorandum, setting out the internal audit work expected to be carried out for a period of one year, is tabled to the Audit Committee at the beginning of the year.

The Company has its own internal audit function to identify and assess the principal risks and to review the adequacy and effectiveness of the internal controls of the Group. Areas for improvement were highlighted and the implementation of recommendations was monitored. None of the internal control weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Annual Report.

Formal Assessment of Internal Auditors

For the FYE 2015, the Audit Committee has formalised the procedures to assess the performance of internal auditors vide an annual assessment of the suitability of the internal auditors.

In its assessment, the Audit Committee considered, inter alia, the following assessment criteria:-

• Understanding;• Charterandstructure;• Skillsandexperiences;• Communication;and• Performance.

Upon completion of its assessment, the Audit Committee was satisfied with the in-house internal auditors’ technical competency and audit independence during the financial year under review.


ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure Policy

The Company recognises the value of transparent, consistent and coherent communications with investment community consistent with commercial confidentiality and regulatory considerations. The Company aims to build long-term relationships with shareholders and potential investors through appropriate channels and disclosure of information.

These investors are provided with sufficient business, operations and financial information on the Group to enable them to make informed investment decisions.

The Company’s website has a “Contact” section where shareholders and potential investors may direct their enquiries on the Company. The Company will endeavour to reply to these queries in the shortest possible time.

Leverage on Information Technology for Effective Dissemination of Information

The Company’s website incorporates an Investor Relations section which provides all relevant information on the Company and is accessible by the public. This Investor Relations section enhances the Investor Relations function by including all announcements made by the Company, annual reports as well as the financial information of the Company.

The announcement of the quarterly financial results is also made via Bursa LINK immediately after the Board’s approval. The Board discloses to the public all material information necessary for informed investment and takes reasonable steps to ensure that all shareholders enjoy equal access to such information.

Downloadable “Tiles Handbook”

The Board noted the Group has developed a unique “Tiles Handbook”, which is downloadable from the Company’s website at www.whitehorse.com.my. The said Handbook focuses on the various aspects of ceramic tiles such as characteristics of the tiles, tips for choosing appropriate tiles prior to purchase, types of checks to be made before laying the tiles, methods of laying the tiles as well as care and maintenance of the tiles.

White Horse Ceramic App

This mobile application (“App”) enables the public to quickly and easily view the Group’s latest ceramic wall tiles, ceramic floor tiles and porcelain tiles series. It is is downloadable from the Company’s website at www.whitehorse.com.my; by way of scanning of QR Code; purchase from Apple App Store or Download vide Google Playstore.

STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

Encourage Shareholder Participation at General Meetings

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

Several channels are used to disseminate information on a timely basis, such as:-

• TheAGMwhich isusedasthemain forumofdialogueforshareholderstoraiseany issuespertainingtotheCompany;

• Annualreport,quarterlyfinancialresultsandvariousannouncementsmadetoBursaSecurities;and• Thewebsitehttp://www.whitehorse.com.mywhichprovidescorporateinformationontheGroup.




STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS (CONTINUED)

Encourage Poll Voting

The Board noted the Recommendation 8.2 of the MCCG 2012 states that the Board should encourage poll voting. In line with this recommendation, the Chairman will inform the shareholders of their right to demand a poll vote at the commencement of the general meeting.

The Board will consider and explore the suitability and feasibility of adopting electronic voting in coming years to facilitate greater shareholders participation at general meeting, and to ensure accurate and efficient outcomes of the poll voting process.

Shareholders’ Communication and Investor Relations

The Company is committed to on-going communication across its entire shareholder base, whether institutional investors, private or employee shareholders. This is achieved principally through annual and quarterly reports and the AGM and timely dissemination of information on significant company developments and price sensitive information in accordance with the MMLR of Bursa Securities. All the Directors were present at the Seventeenth AGM of the Company held on 26 May 2015 to engage with the shareholders personally and proactively.

The proceedings of the AGM included the presentation of the Company’s operating and financial performances for the financial year under review, the presentation of financial statements to the shareholders, and a question and answer session in which the Chairman of the Meeting would invite shareholders to raise questions on the Company’s financial statements and other items for adoption at the AGM, before putting a resolution to vote. The Executive Directors ensure that sufficient opportunities are given to shareholders to raise issues relating to the affairs of the Company and that adequate responses are given.

All Non-Executive Directors abstained from voting on the resolution concerning their remuneration. The external auditors and/or share registrar will be on standby to act as independent scrutineers and poll administrator respectively, should a demand for a poll be requested. The results of all the resolutions set out in the Notice of the Eighteenth AGM will be announced on the same day to the Bursa Securities, which is accessible on the Bursa Securities’ website.

The Board ensures that full information of the Directors who are retiring at the AGM and willing to serve if re-elected are disclosed in the Notice of the AGM.

The explanatory notes facilitating full understanding and evaluation of issues involved in the proposed resolutions accompanying each item of special business is included in the Notice of the AGM.

investor relations

The Company holds dialogue sessions and arranges visits to manufacturing facilites and showrooms for potential and existing institutional investors.

Conclusion

The Board is satisfied that for the FYE 2015, it complies substantially with the principles and recommendations of the MCCG 2012.

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors passed on 26 February 2016.


addITIONal COMPLIANCE INFORMATION

The following information is provided in compliance with Paragraph 9.25 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:-

1. Variation in Results

There was no material variance between the audited results of the financial year and the unaudited results previously announced. The Company did not make any release on the profit estimate, forecast or projections for the financial year.

2. 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.

3. Material Contracts

There was no material contracts entered into by the Company or its subsidiaries, involving Directors’ and major shareholders’ interest during the financial year.

4. Corporate Proposal There was no corporate proposal announced but not completed as at 31 December 2015.

5. Utilisation of Proceeds

There were no proceeds arising from the corporate exercise during the financial year.

6. Non-audit Fees

For the financial year ended 31 December 2015, Messrs. Ernst & Young and Ernst & Young Tax Consultants Sdn. Bhd., the external auditors and tax agent of the Company respectively, have rendered certain non-audit services to the Company, a breakdown of which is listed below for information:-

CompanyNon-audit services rendered by (RM)

Messrs. Ernst & Young

1. Agreed Upon Procedures of Electricity Utilisation Percentage Computation Receipt 5,000/-2. Special Sales Tax Refund 32,000/-

Ernst & Young Tax Consultants Sdn. Bhd.

1. Fees for Services Rendered in Respect of the Preparation and Submission of Form BE 31,100/-2. Fees for Services Rendered in Connection with Goods and Services Tax Readiness Engagement 180,000/-3. Fees for Services Rendered in Respect of the Preparation of Transfer Pricing Documentation 12,000/-4. Preparation and Submission of Forms C 47,000/-

TOTAL 307,100/-


additional compliance information(cont’d)

7. Profit Guarantee

During the financial year, there was no profit guarantee given by the Company.

8. Share Buy-back

During the financial year, the Company had bought back a total of 19,700 of its issued shares from the open market at an average price of RM2.29 per share. The share buy-back transaction was financed by internally generated funds. The purchased shares are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

9. Depository Receipt Programme

During the financial year, the Company did not sponsor any Depository Receipt Programme.

10. Options or Convertible Securities

There were no options or convertible securities issued by the Company during the financial year.


sTaTEmENT ON rIsk maNagEmENTAND INTERNAL CONTROL

Pursuant to Paragraph 15.26 (b) of Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“MMLR”), the Board of Directors of White Horse Berhad is pleased to provide the following statement on the state of risk management and internal control of the Group, which has been prepared in accordance with the Statement on Internal Control: Guidance for Directors of Public Listed Companies issued by the Institute of Internal Auditors Malaysia and adopted by Bursa Securities.

The Board of Directors acknowledges its responsibility for maintaining a sound system of risk management and internal control to safeguard shareholders’ investment and the Group assets, and for reviewing its adequacy and integrity.

In view of the limitations that are inherent in any system of internal control, this system is designed to manage, rather than eliminate the risk of failure to achieve corporate objectives. Accordingly, the system could provide only reasonable but not absolute assurance against material misstatement, operational failures, fraud or loss.

The Group has in place an on-going process for identifying, evaluating, monitoring and managing significant risks that may affect the achievement of business objectives, throughout the year under review. This process is reviewed performed by the Board via the Audit Committee.

The Board and management practise proactive significant risks identification on a yearly basis or earlier as appropriate, particularly for any major proposed transactions, changes in nature of activities and/or operating environment, or venturing into new operating environment which may entail different risks, and put in place the appropriate risk response strategies and controls until those risks are managed to, and maintained at, a level acceptable to the Board.

The Board acknowledges the importance of internal audit. Group Internal Audit performs periodic audits of the Company and subsidiaries within the Group based on a risk-based approach in developing its audit plan which addresses all the core auditable areas of the Group based on their risk profile. The audit focuses on areas with high risk and potential inadequate controls to ensure that an adequate action plan is in place to improve the controls. For those areas with high risk and in adequate controls, the audit ascertains that the risks are effectively mitigated by the controls.

All audit findings, recommendations and management actions are rigorously deliberated upon at Audit Committee meetings before being reported to the Board. Quarterly reports to the Audit Committee track the progress towards completion of all corrective actions taken on issues highlighted by the Group Internal Auditors.

The monitoring, review and reporting arrangements in place give reasonable assurance that the structure of controls and their implementation are appropriate to the Group’s operations and that risks are at an acceptable level throughout the Group’s businesses. Such arrangements, however, do not eliminate the possibility of human error or deliberate circumvention of control procedures by employees and others.

The Board is of the view that the system of internal controls in place for the year under review and up to the date of issuance of the financial statements is sound and sufficient to safeguard the shareholders’ investment, the interest of customers, regulators, employees and the Group’s assets.

The key elements of the Group’s existing system of internal controls are described below:-

• The organisation structure is clearly defined bymeans of organisation charts andmain job function andresponsibilities are communicated to all levels.

• ClearlydocumentedinternalpoliciesandproceduressetoutinaseriesofStandardOperatingProcedures,whichis constantly reviewed for improvement to reflect changes in business structures and processes.

• TheAuditCommitteeexaminestheeffectivenessoftheGroup’ssystemofinternalcontrolonbehalfoftheBoard.This is accomplished through the review of the internal audit department’s work, which adopts a series of audit program in identifying areas of priority and which is carried out in accordance with the audit plan.

• Regularinternalauditvisits,whichprovideindependentassuranceontheeffectivenessoftheGroup’ssystemofinternal control and advising management on areas for further improvement.

• TheGrouphasapolicyonapprovingauthorityforitsoperatingandcapitalexpenditure.


statement on risk management and internal control(cont’d)

The Board is committed towards operating and maintaining a sound system of internal control and recognises that the system must continuously evolve to support the type of business and size of operations of the Group. As such, the Board will, when necessary, put in place appropriate action plans to rectify any potential weaknesses or further enhance the system of internal control. There were no material losses incurred during the financial year as a result of weaknesses in internal control.

For the financial year under review and up to the date of approval of this Statement on Risk Management and Internal Control, based on inquiry, information and assurances provided by the Managing Director and Financial Controller, the Board is satisfied that the Group’s risk management and internal control system is operating adequately and effectively in all materials aspects. Measures are in place and continually being taken to ensure the ongoing adequacy and effectiveness of risk management and internal control to safeguard the Group’s assets and enhance shareholders’ investment.

As required by Paragraph 15.23 of Bursa Securities MMLR, the external auditors have reviewed this Statement of Risk Management and Internal Control. Their review was preformed in accordance with Recommended Practice Guide 5 (“RPG5”) issued by the Malaysian Institute of Accountants. RPG5 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risks management and internal control systems of the Group.

The statement is made in accordance with resolution of the Board of Directors dated 26 February 2016.


sTaTEmENT OF DIRECTOR’S RESPONSIBILITYin relation to the Financial Statements

The Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the Group and of the Company as at end of each financial year and of the results and cash flows of the Group and of the Company for the financial year then ended.

During the preparation of the financial statements, the Directors have considered the following :

- appropriate accounting policies have been used and are consistently applied;- reasonable and prudent judgments and estimates were made; and- all applicable approved accounting standards in Malaysia have been followed.

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

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

CONTENTS OffINANCIAL STATEMENTS

DIRECTORS’ REPORT_56

STATEMENT BY DIRECTORS_60

STATUTORY DECLARATION_60

INDEPENDENT AUDITORS’ REPORT_61

STATEMENTS OF COMPREHENSIVE INCOME_63

STATEMENTS OF FINANCIAL POSITION_64

STATEMENTS OF CHANGES IN EQUITY_66

STATEMENTS OF CASH FLOWS_68

NOTES TO THE FINANCIAL STATEMENTS_70

SUPPLEMENTARY INFORMATION_126


dIrECTOrs’REPORT

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are described in Note 17 to the financial statements.

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

RESULTS

Group Company RM'000 RM'000 Profit net of tax attributable to equity holders of the parent 34,217 15,341

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except for fair value changes of the contingent consideraton asset, as disclosed in Note 18 to the financial statements.

DIVIDENDS

The amount of dividends paid by the Company since 31 December 2014 were as follows:

RM'000

In respect of financial year ended 31 December 2014 Interim tax exempt dividend of 5 sen per share paid on 12 January 2015 11,469In respect of financial year ended 31 December 2014 Final tax exempt dividend of 5 sen per share paid on 10 July 2015 11,469In respect of financial year ended 31 December 2015 Tax exempt interim dividend of 5 sen per share paid on 13 January 2016 11,469

34,407

At the forthcoming Annual General Meeting, a final tax exempt dividend of 5 sen per share in respect of the financial year ended 31 December 2015 of 5% on 229,375,200 ordinary shares, amounting to a total dividend payable of RM11,468,760 (5 sen net per share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2016.


directors’ report (cont’d)

DIRECTORS

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

Liao Yuan Shun Liao Jung ChuLiao Shen HuaTeo Swee TengTeo Kim LapTeo Kim TayCheng Soon MongLaw Piang WoonChew Pei FangRosita Yeo Swat Geok

DIRECTORS' BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 12 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 30 to the financial statements.

DIRECTORS' INTERESTS

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

Number of ordinary shares of RM1 each 1.1.2015 Bought Sold 31.12.2015

Direct interest

Liao Yuan Shun 1,052,800 – – 1,052,800 Liao Jung Chu 1,098,000 – – 1,098,000 Liao Shen Hua 1,705,797 – – 1,705,797 Teo Swee Teng 11,073,593 – – 11,073,593 Teo Kim Lap 11,083,027 – – 11,083,027 Teo Kim Tay 12,409,015 – – 12,409,015 Cheng Soon Mong 4,877,735 – – 4,877,735



DIRECTORS' INTERESTS (CONTINUED)

Number of ordinary shares of RM1 each 1.1.2015 Bought Sold 31.12.2015

Indirect interest

Liao Yuan Shun 29,064,055 – – 29,064,055 Liao Jung Chu 41,117,303 – – 41,117,303 Liao Shen Hua 12,000,000 – – 12,000,000 Teo Swee Teng 2,425,000 – – 2,425,000 Teo Kim Lap 1,450,000 – – 1,450,000 Teo Kim Tay 150,000 – – 150,000 Cheng Soon Mong 132,500 – – 132,500 Chew Pei Fang 120,000 – – 120,000

Liao Jung Chu by virtue of his interest in shares in the Company is also deemed interested in shares of all the Company's subsidiaries to the extent the Company has an interest.

None of other directors in office at the end of the financial year had any interest in shares in the Company during the financial year.

TREASURY SHARES

During the financial year, the Company repurchased 19,700 of its issued ordinary shares from the open market at the average price of RM2.31 per share. The total consideration paid for the repurchase including transaction costs was RM45,463. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

As at 31 December 2015, the Company held as treasury shares a total of 10,624,800 of its 240,000,000 issued ordinary shares. Such treasury shares are held at a carrying amount of RM16,354,000 and further relevant details are disclosed in Note 27(b) to the financial statements.

OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

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



OTHER STATUTORY INFORMATION (CONTINUED)

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

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

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

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

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

(e) As 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 liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

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

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

AUDITORS

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 April 2016.

Liao Yuan Shun Cheng Soon Mong


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

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

We, Liao Yuan Shun and Cheng Soon Mong, being two of the directors of White Horse Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 63 to 125 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the year then ended.

The information set out in Note 38 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 26 April 2016.

Liao Yuan Shun Cheng Soon Mong

I, Cheng Soon Mong, being the director primarily responsible for the financial management of White Horse Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 63 to 126 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared bythe abovenamed Cheng Soon Mongat Johor Bahru in the State of Johoron 26 April 2016 Cheng Soon Mong

Before me,

ABD KARIM BIN ABD RAHMANCommissioner for Oaths


INdEpENdENTAUDITORS’ REPORTto the members of White Horse Berhad (Incorporated in Malaysia)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of White Horse Berhad, which comprise statements of financial position of the Group and of the Company as at 31 December 2015, and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 63 to 125.

Directors’ responsibility for the financial statements

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

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

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

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

opinion

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


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.

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

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

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 38 on page 126 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

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

Ernst & Young Lee Ah Too AF: 0039 2187/09/17(J) Chartered Accountants Chartered Accountant

Melaka, MalaysiaDate: 26 April 2016

independent auditors’ report(cont’d)


sTaTEmENTs OFCOMPREHENSIVE INCOMEfor the financial year ended 31 December 2015

Group Company Note 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Revenue 8 752,729 765,200 8,144 24,144 Cost of goods sold (553,132) (566,240) – – Gross profit 199,597 198,960 8,144 24,144

Other items of income Interest income 2,534 2,048 – 6 Other income 9 11,970 16,678 9,190 12,498 Other items of expenseAdministrative and general expenses (103,111) (73,372) (1,958) (2,529)Selling and distribution expenses (57,415) (58,191) – – Interest expense (5,890) (9,764) – –

Profit before tax 10 47,685 76,359 15,376 34,119 Income tax expense 13 (13,468) (17,124) (35) – Profit for the year 34,217 59,235 15,341 34,119 Other comprehensive income:other comprehensive income to be reclassified to profit or loss in subsequent periods (net of tax):Foreign currency translation of foreign operations 12,056 2,560 – –

Other comprehensive income for the year, net of tax 12,056 2,560 – –

Total comprehensive income for the year, net of tax 46,273 61,795 15,341 34,119

Earnings per share attributable to equity holders of the parent (sen per share):Basic and diluted 14 14.9 25.8

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


sTaTEmENTs OFFINANCIAL POSITIONas at 31 December 2015

Group Company Note 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 AssetsNon-current assetsProperty, plant and equipment 15 482,240 470,601 – – Prepaid land lease payments 16 19,295 20,152 – – Investment in subsidiaries 17 – – 223,384 223,384 Goodwill 677 677 – – Other asset 18 48,929 32,686 48,929 32,686 551,141 524,116 272,313 256,070

Current assetsInventories 19 409,569 367,442 – – Trade and other receivables 20 148,707 155,465 10,751 34,049 Other current assets 21 18,729 24,741 76 76 Tax recoverable – – 289 286 Investment securities 22 1,000 1,000 – – Cash and bank balances 23 144,235 123,799 521 644 722,240 672,447 11,637 35,055 Total assets 1,273,381 1,196,563 283,950 291,125 Current liabilities Loans and borrowings 24 248,742 211,462 – – Trade and other payables 25 137,711 110,690 38,121 17,729 Taxation 4,870 7,387 – – Dividend payable 11,505 11,494 11,505 11,494 402,828 341,033 49,626 29,223 Net current assets/(liabilities) 319,412 331,414 (37,989) 5,832 Non-current liabilities Loans and borrowings 24 1,391 2,093 – – Other payable 25 91,839 90,538 – 19,936 Deferred taxation 26 15,653 24,519 – – 108,883 117,150 – 19,936 Total liabilities 511,711 458,183 49,626 49,159

Net assets 761,670 738,380 234,324 241,966



Equity attributable to equity holders of the parent Share capital 27 240,000 240,000 240,000 240,000 Share premium 27 6,936 6,936 6,936 6,936 Treasury shares 27(b) (16,354) (16,309) (16,354) (16,309)Retained earnings 28 511,541 500,262 3,742 11,339 Foreign currency translation reserve 29 19,547 7,491 – – Total equity 761,670 738,380 234,324 241,966

Total equity and liabilities 1,273,381 1,196,563 283,950 291,125

statements of financial position(cont’d)



sTaTEmENTs OFCHANGES IN EQUITYfor the financial year ended 31 December 2015

l---------------- Non-Distributable ----------------l Foreign currency Distributable Total Share Share Treasury translation Retained Note equity capital premium shares reserve earningsGroup RM’000 RM’000 RM’000 RM’000 RM’000 RM’0002015

Opening balance at 1 January 2015 738,380 240,000 6,936 (16,309) 7,491 500,262

Profit for the year 34,217 – – – – 34,217 Other comprehensive income 12,056 – – – 12,056 –

Total comprehensive income 46,273 – – – 12,056 34,217

Purchase of treasury shares 27(b) (45) – – (45) – – Dividends 35 (22,938) – – - – (22,938)

Total transactions with owners (22,983) – – (45) – (22,938)

Closing balance at 31 December 2015 761,670 240,000 6,936 (16,354) 19,547 511,541

2014

Opening balance at 1 January 2014 699,549 240,000 6,936 (16,284) 4,931 463,966

Profit for the year 59,235 – – – – 59,235 Other comprehensive income 2,560 – – – 2,560 –

Total comprehensive income 61,795 – – – 2,560 59,235

Purchase of treasury shares 27(b) (25) – – (25) – – Dividends 35 (22,939) – – - – (22,939)

Total transactions with owners (22,964) – – (25) – (22,939)

Closing balance at 31 December 2014 738,380 240,000 6,936 (16,309) 7,491 500,262


l-------- Non-Distributable --------l Distributable Total Share Share Treasury Retained Note equity capital premium shares earnings Company RM’000 RM’000 RM’000 RM’000 RM’000 2015

Opening balance at 1 January 2015 241,966 240,000 6,936 (16,309) 11,339

Profit for the year, representing total comprehensive income 15,341 – – – 15,341

Purchase of treasury shares 27(b) (45) – – (45) – Dividends 35 (22,938) – – – (22,938)

Total transactions with owners (22,983) – – (45) (22,938)

Closing balance at 31 December 2015 234,324 240,000 6,936 (16,354) 3,742

2014

Opening balance at 1 January 2014 230,811 240,000 6,936 (16,284) 159

Profit for the year, representing total comprehensive income 34,119 – – – 34,119

Purchase of treasury shares 27(b) (25) – – (25) – Dividends 35 (22,939) – – – (22,939)

Total transactions with owners (22,964) – – (25) (22,939)

Closing balance at 31 December 2014 241,966 240,000 6,936 (16,309) 11,339

statements of changes in equity(cont’d)



sTaTEmENTs OFCASH FLOWSfor the financial year ended 31 December 2015

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Operating activitiesProfit before tax 47,685 76,359 15,376 34,119

Adjustments for:Amortisation of prepaid land lease payments 1,144 1,095 – – Bad debts written off 67 436 – – Investment in joint venture written off – 27 – – Depreciation of property, plant and equipment 44,243 41,153 – – (Gain)/loss on disposal of property, plant and equipment (366) 234 – – Interest expense 5,890 9,764 – – Interest income (2,534) (2,048) – (6)Inventories written off – 3,985 – – Inventories written down 8,403 1,435 – – Net unrealised foreign exchange loss/(gain) 27,721 10,260 (400) 70 Unrealised fair value changes of contingent consideration asset (8,790) (12,498) (8,790) (12,498)Property, plant and equipment written off 98 47 – – Impairment loss on trade receivables 601 378 – – Reversal of allowance for impairment of trade receivables – (278) – – Total adjustments 76,477 53,990 (9,190) (12,434)

Operating cash flow before changes in working capital 124,162 130,349 6,186 21,685 Changes in working capitalDecrease/(increase) in receivables 15,740 (45,546) 23,298 23,476 Decrease in other current asset 6,012 9,011 – – Increase in inventories (50,530) (3,857) – – Increase/(decrease) in payables 28,932 (11,625) (6,597) (22,295)

Total changes in working capital 154 (52,017) 16,701 1,181

Cash flow from operations 124,316 78,332 22,887 22,866

Taxes paid (26,581) (23,264) (38) 436 Interest received 2,534 2,048 – 6 Interest paid (5,890) (9,764) – – (29,937) (30,980) (38) 442

Net cash flows from operating activities 94,379 47,352 22,849 23,308



Investing activitiesPurchase of property, plant and equipment (42,404) (48,277) – – Purchase of prepaid land lease payments (8) (9,325) – – Purchase of investment securities - (1,000) – – Proceeds from disposal of property, plant and equipment 638 235 – –

Net cash flows used in investing activities (41,774) (58,367) – –

Financing activitiesDividends paid (22,927) (22,925) (22,927) (22,925)(Decrease)/increase in loans and borrowings (9,217) 31,213 – – Repayment of obligations under finance leases (56) – – – Purchase of treasury shares (45) (25) (45) (25)

Net cash flows (used in)/from financing activities (32,245) 8,263 (22,972) (22,950) Net increase/(decrease) in cash and cash balances 20,360 (2,752) (123) 358 Effects of foreign exchange rate changes 76 (1,573) – – Cash and cash balances at 1 January 123,799 128,124 644 286

Cash and cash balances at 31 December (Note 23) 144,235 123,799 521 644

statements of cash flows(cont’d)



NOTEs TO ThEFINANCIAL STATEMENTSfor the financial year ended 31 December 2015

1. CORPORATE INFORMATION

White Horse Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The principal place of business and the registered office of the Company is located at PLO 464, Jalan Gangsa,

Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor.

The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries are described in Note 17. There have been no significant changes in the nature of the principal activities during the financial year.

2. BASIS OF PREPARATION

The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (MFRS) as issued by the Malaysian Accounting Standards Board (MASB), International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company have been prepared on a historical basis, except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to nearest thousand (RM'000) except when otherwise indicated.

3. BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Company and of its subsidiaries as at 31 December 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

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

- Exposure, or rights, to variable returns from its involvement with the investee; and- The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

- The contractual arrangement with the other vote holders of the investee;- Rights arising from other contractual arrangements; and- The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in profit or loss from the date the Group gains control until the date the Group ceases to control the subsidiary.


notes to the financial statements(cont’d)

3. BASIS OF CONSOLIDATION (CONTINUED)

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4.1 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in either profit or loss or as a change to OCI. If the contingent consideration is not within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.



4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

4.1 Business combinations and goodwill (continued)

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed off, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Business combinations 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 merger reserve. The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.

4.2 Current versus non-current classification

Assets and liabilities in statement of financial position are presented based on current/non-current classification. An asset is current when it is:

- Expected to be realised or intended to sold or consumed in normal operating cycle; - Held primarily for the purpose of trading;- Expected to be realised within twelve months after the reporting period, or- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least

twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle;- It is held primarily for the purpose of trading;- It is due to be settled within twelve months after the reporting period; or- There is no unconditional right to defer the settlement of the liability for at least twelve months after

the reporting period.

All other liabilities are classified as non-current.

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

4.3 Fair value measurement

The Group measures financial instruments such as investment securities and contingent consideration assets at fair value at each reporting date.Fair value related disclosures for financial instruments are summarised in the following notes:

Note

Investment securities 22.Other asset - Contingent consideration asset 18.Financial instruments (including those carried at amortised) 32.




4.3 Fair value measurement (continued)

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

- In the principal market for the asset or liability; or- In the absence of a principal market, in the most advantageous market for the asset or liability.

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

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilitiesLevel 2 - Valuation techniques for which the lowest level input that is significant to the fair value

measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable

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

Policies and procedures are determined by senior management for both recurring fair value measurement and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the senior management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed according to the accounting policies of the Group. For this analysis, the senior management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.




4.4 Foreign currencies

(a) Functional and presentation currency

The Group’s and the Company's financial statements are presented in Ringgit Malaysian which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(b) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at the functional currency spot rates at the date of the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates at the reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation. These are recognised in OCI until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in OCI.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

(c) Group companies

On consolidation, the assets and liabilities of foreign operations are translated into RM at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognised in profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.




4.5 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group or the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group and the Company have concluded that they are the principals in all of its revenue arrangements since they are the primary obligors in all the revenue arrangements, have pricing latitude and are also exposed to inventory and credit risks

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

(a) Sale of goods

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

(b) Dividend income

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

(c) Management fees

Management fees are recognised when services are rendered.

(d) Interest income

For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate ("EIR"), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in profit or loss.

(e) Rental income

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




4.6 Employee benefits

(i) Short term benefits

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

(ii) Defined contribution plans

The Group makes contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

4.7 Taxes

(a) Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

(b) Deferred tax

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

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

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

(ii) in respect of taxable temporary differences associated with investments in subsidiaries and interest in a joint venture, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.




4.7 Taxes (continued)

(b) Deferred tax (continued)

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

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

(ii) in respect of deductible temporary differences associated with investments in subsidiaries and interest in a joint venture, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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

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

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.




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

The Company recognises a liability to make cash or non-cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. A distribution is authorised when it is approved by the shareholders and a corresponding amount is recognised directly in equity.

Non-cash distributions are measured at the fair value of the assets to be distributed with fair value re-measurement recognised directly in equity.

Upon distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in profit or loss.

4.9 Property, plant and equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing component parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:

- Leasehold land: 60 to 908 years- Buildings: 15 to 96 years- Plant, machinery and equipment: 5 to 12 years- Other assets: 3 to 10 years

Assets under construction included in property, plant and equipment are not depreciated as these assets are not yet available for use.

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year-end, and adjusted prospectively, if appropriate.




4.10 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

(a) As lessee

Finance leases that transfer substantially all the risks and benefits incidental to ownership of the leased item to the Group, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in profit or loss as finance costs.

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

Operating lease payments are recognised as an operating expense in profit or loss on a straight-line basis over the lease term.

(b) As lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

4.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

4.12 Investment in subsidiaries

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

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

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

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

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




4.13 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

4.14 Financial assets

(a) Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

(b) Subsequent measurement

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

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

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by MFRS 139. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in profit or loss.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Re-assessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.

The Group and the Company have designated money market funds as at fair value through profit or loss.




4.14 Financial assets (continued)

(b) Subsequent measurement (continued)

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables. This category generally applies to trade and other receivables.

Loans and receivables of the Group and Company comprise trade and other receivables (other than prepaid operating expenses and tax recoverable), due from related companies and cash and bank balances.

(iii) Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Group has the positive intention and an ability to hold them to maturity. After initial measurement, held to maturity investments are measured at amortised cost using the EIR, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in profit or loss. The losses arising from impairment are recognised in profit or loss as finance costs. The Group and the Company did not have any held-to-maturity investments during the years ended 31 December 2015 and 2014.

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

AFS financial investments include equity investments and debt securities. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, AFS financial investments are subsequently measured at fair value with unrealised gains or losses recognised in OCI and credited in the AFS reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the AFS reserve to profit or loss in finance costs. Interest earned whilst holding AFS financial investments is reported as interest income using the EIR method.





(b) Subsequent measurement (continued)

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

The Group evaluates whether the ability and intention to sell its AFS financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets, the Group may elect to reclassify these financial assets if the management has the ability and intention to hold the assets for foreseeable future or until maturity.

For a financial asset reclassified from the AFS category, the fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to profit or loss.

The Group and the Company did not have any AFS financial instruments during the years ended 31 December 2015 and 2014.

(c) Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the statements of financial position) when:

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

- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.





(d) Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occured since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(i) Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss. Interest income (recorded as finance income in profit or loss) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in profit or loss.





(d) Impairment of financial assets (continued)

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

For AFS financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as AFS, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in profit or loss) is removed from OCI and recognised in profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognised in OCI.

In the case of debt instruments classified as AFS, the impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

4.15 Financial liabilities

(a) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.




4.15 Financial liabilities (continued)

(b) Subsequent measurement

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

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

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

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by MFRS 139. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

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

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in MFRS 139 are satisfied. No financial liabilities has been designated at fair value through profit or loss during the reporting period.

(ii) Other financial liabilities

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

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

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

(c) Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.




4.15 Financial liabilities (continued)

(d) Derecognition

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

4.16 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

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

- Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. These costs are assigned on a weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.

4.17 Impairment of non-financial assets

At each reporting date, an assessment is made as to whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, the depreciated replacement cost valuation model is used.

Impairment calculation are based on detailed budgets and forecast calculations, which are prepared separately for each CGU to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, are recognised in profit or loss in expense categories consistent with the function of the impaired asset.




4.17 Impairment of non-financial assets (continued)

Goodwill is tested for impairment annually at reporting date and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

For assets other than goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the recoverable amount of the asset or CGU is estimated. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.

4.18 Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the consolidated statement cash flows, cash and bank balances consist of cash and short-term deposits as defined above.

4.19 Provisions

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When it is expected that some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

4.20 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments and are recorded at the proceeds received, net of directly attributable incremental transaction costs.




4.21 Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of such equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in share premium.

4.22 Segment reporting

For management purposes, the Group is organised into operating segments based on their geographical location which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 37, including the factors used to identify the reportable segments and the measurement basis of segment information.

5. CHANGES IN ACCOUNTING POLICIES

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

On 1 January 2015, the Group and the Company adopted the following new and amended MFRSs and IC Interpretation mandatory for annual financial periods beginning on or after 1 January 2015.

Effective for annual periodsDescription beginning on or after

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014Annual Improvements to MFRSs 2010 – 2012 Cycle 1 July 2014Annual Improvements to MFRSs 2011 – 2013 Cycle 1 July 2014

Adoption of the above standards and interpretation did not have any effect on the financial performance or position of the Group and the Company.



6. STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Effective for annual periodsDescription beginning on or after

Annual Improvements to MFRSs 2012–2014 Cycle 1 January 2016Amendments to MFRS 116 and MFRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016Amendments to MFRS 116 and 141 Agriculture: Bearer Plants 1 January 2016Amendments to MFRS 10 and MFRS 128 Sale or Contribution ofassets between an Investor and its Associate or Joint Venture DeferredAmendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1 January 2016Amendments to MFRS 127 Equity Method in Separate Financial Statements 1 January 2016Amendments to MFRS 101: Disclosure Initiatives 1 January 2016Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016MFRS 14 Regulatory Deferral Accounts 1 January 2016Amendments to MFRS 107: Disclosure Initiatives 1 January 2017Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017MFRS 15 Revenue from Contracts with Customers 1 January 2018MFRS 9 Financial Instruments 1 January 2018MFRS 16 Leases 1 January 2019

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application except as disclosed below:

MFRS 9 Financial Instruments

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



6. STANDARDS ISSUED BUT NOT YET EFFECTIVE (CONTINUED)

MFRS 15 Revenue from Contracts with Customers

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

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

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

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The directors of the Company anticipate that the application of MFRS 15 will not have a material impact on the amounts reported and disclosures made in the Group’s financial statements. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.

MFRS 16 Leases

MFRS 16 will supersede the current lease guidance including MFRS117 Leases and its related interpretations when it become effective.

The scope of MFRS 16 includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.

MFRS 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance leases under MFRS 117. The standard includes two recognition exemptions for lessees – leases of ‘low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset).

Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting is substantially unchanged from today’s accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2019 with early permission permitted, but not before an entity applies MFRS 15. The Company is currently assessing the impact of MFRS 16 and plans to adopt the new standard on the required effective date.



7. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of these financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

7.1 Judgments made in applying accounting policies

In the process of applying the Group’s accounting policies, management has not made any critical judgments, apart from those involving estimations, which could have a significant effect on the amounts recognised in the financial statements.

7.2 Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

(a) Useful lives of plant and machinery

The cost of plant and machinery for the manufacture of tiles is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these plant and machinery to be 5 to 12 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(b) Impairment of loans and receivables

The impairment loss on trade receivables of the Group is based on the evaluation of collectability and ageing analysis of the receivables and on management's judgment. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the current credit-worthiness and the past collection history on each receivables. If the financial conditions of the receivables of the Group were to deteriorate, additional provision may be required.

(c) Written down of inventories

The Group reviews the adequacy of valuation of the inventories at each reporting date to ensure that inventories are stated at the lower of cost and net realisable value. In assessing the extent of written down of slow moving inventories, the directors, having considered all available information, such as the age of the inventories, trend, as well as the quality of the inventories, are of the opinion that the inventories are properly written down to the value which can be realised in the ordinary course of business.



7. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

7.2 Estimates and assumptions (continued)

(d) Taxes

Deferred tax assets are recognised for unutilised tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which the losses and credits can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

As at the end of the reporting period as disclosed in Note 26, the Group has unutilised tax losses amounting to RM38,847,000 (2014: RM37,087,000) for which deferred tax assets have not been recognised. The Group has no taxable temporary differences nor any tax planning opportunities available that could partly support the recognition of these losses and credits as deferred tax assets.

(e) Fair value measurement of financial instruments

Contingent consideration asset, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When contingent consideration meets the defination of a financial asset, it is subsequently re-measured to fair value at each reporting date. The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting performance target and the discount factor.

As part of accounting for the acquisition of White Horse Ceramic Industries (Vietnam) Co., Ltd., a contingent consideration with an estimated fair value of RM18,371,000 was recognised at the acquisition date and re-measured to RM48,929,000 (2014: RM32,686,000) as at the reporting date. Future developments may require further revisions to the estimate. The maximum consideration to be received is USD12,000,000. The contingent consideration is classified as other asset.

(f) Impairment of non-financial assets

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

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

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



7. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONTINUED)

7.2 Estimates and assumptions (continued)

(f) Impairment of non-financial assets (continued)

In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, the depreciated replacement cost valuation model is used.

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

8. REVENUE

Revenue of the Group and of the Company consists of the following:


Gross dividends from a subsidiary – – 8,000 24,000 Management fees from a subsidiary – – 144 144 Sale of goods 752,729 765,200 – –

752,729 765,200 8,144 24,144

9. OTHER INCOME


Unrealised fair value changes of contingent consideration asset 8,790 12,498 8,790 12,498 Rental income 624 576 – – Gain on disposal of property, plant and equipment 366 – – – Reversal of impairment loss of trade receivables – 278 – – Unrealised gain on foreign exchange – – 400 – Sundry income 2,190 3,326 – –

11,970 16,678 9,190 12,498



10. PROFIT BEFORE TAx

The following items have been included in arriving at profit before tax:


Auditors’ remuneration- Statutory audit Company’s auditors 231 209 48 39 Underprovision in prior year 2 3 2 – Other auditors 71 85 – – Bad debts written off 67 436 – – Impairment loss on trade receivables 601 378 – – Inventories written off – 3,985 – –inventories written down 8,403 1,435 – – Amortisation of prepaid land lease payments 1,144 1,095 – – Depreciation of property, plant and equipment 44,243 41,153 – – Non-executive directors’ remuneration 1,661 2,148 98 98 Property, plant and equipment written off 98 47 – – Operating lease:- minimum lease payments for land and buildings 3,576 3,592 – – - income (646) (576) – – Employee benefits expense (Note 11) 102,800 100,303 – – Net foreign exchange losses 30,501 7,027 242 70 Loss on disposal of property, plant and equipment (366) 234 – – Investment in joint venture written off – 27 – –

11. EMPLOYEE BENEFITS ExPENSE


Wages and salaries 91,634 88,660 – – Social security contributions 699 714 – – Contributions to defined contribution plan 6,515 6,149 – – Other staff related expenses 3,952 4,780 – –

102,800 100,303 – –

Included in employee benefits expense of the Group are executive directors’ remuneration amounting to RM1,238,000 (2014: RM1,532,000) as further disclosed in Note 12.



12. DIRECTORS’ REMUNERATION


Executive: Salaries and other emoluments 860 1,148 – – Fees 220 220 – – Bonus 104 104 – – Contributions to defined contribution plan 54 60 – –

Total executive directors’ remuneration excluding benefits in kind (Note 11) 1,238 1,532 – – Benefits-in-kind 105 104 – –

1,343 1,636 – –

Non executive: Salaries and other emoluments 851 1,301 8 8 Fees 306 340 90 90 Bonus 179 94 – – Contributions to defined contribution plan 73 66 – – Social security costs 1 1 – – Benefits-in-kind 112 68 – –

# 1,522 1,870 98 98

Other Directors: Executive directors of the subsidiaries: Salaries and other emoluments 169 264 – – Fees 60 60 – – Bonus 13 13 – – Contributions to defined contribution plan 9 9 – – Benefits-in-kind – 1 – –

251 347 – –

Total excluding benefits in kind 2,899 3,680 98 98

# This includes remuneration of RM1,410,000 (2014: RM1,802,000) paid to non-executive directors of the Company, who are executive directors of the subsidiaries.



12. DIRECTORS’ REMUNERATION (CONTINUED)

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

2015 2014 Number of Directors Number of Directors

Non- Non- Executive executive Executive executive

Below RM50,000 – 3 – 3 RM200,001 – RM250,000 – 1 – – RM250,001 – RM300,000 1 1 – –RM300,001 – RM350,000 – – – 1 RM350,001 – RM400,000 – 1 1 1 RM400,001 – RM450,000 – – – –RM450,001 – RM500,000 – – – 1 RM500,001 – RM550,000 2 1 – – RM600,001 – RM650,000 – – 2 1

3 7 3 7

13. INCOME TAx ExPENSE

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2015 and 2014 are:


Statement of comprehensive income:Current income tax:- Malaysian income tax 22,170 23,059 35 – - Foreign tax 1,329 1,200 – – Overprovision in prior years (300) (687) – –

23,199 23,572 35 –

Deferred income tax (Note 26):- Origination and reversal of temporary differences (7,556) (6,026) – –- Effect of reduction in Malaysian income tax rate (906) – – – - Overprovision in prior years (1,269) (422) – –

(9,731) (6,448) – –

Income tax expense recognised in profit or loss 13,468 17,124 35 –



13. INCOME TAx ExPENSE (CONTINUED)

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2015 and 2014 are as follows:

2015 2014 Group RM’000 RM’000

Profit before tax 47,685 76,359

Taxation at Malaysian statutory tax rate of 25% (2014: 25%) 11,921 19,090 Reduction in Malaysian income tax rate (906) – Different tax rates in other countries 367 (18)Adjustments: Expenses not deductible for tax purposes 6,293 2,876 Income not subject to tax (2,427) (3,286) Deferred tax asset recognised in respect of current year’s tax losses – (1,389) Deferred tax asset not recognised in respect of current year’s tax losses – 1,330 Overprovision of income tax in prior years (300) (687) Overprovision of deferred tax in prior years (1,269) (422) Others (211) (370)

Income tax expense recognised in profit or loss 13,468 17,124

Company

Profit before tax 15,376 34,119

Taxation at Malaysian statutory tax rate of 25% (2014: 25%) 3,844 8,530 Adjustment: Expenses not deductible for tax purposes 389 595 Income not subject to tax (4,198) (9,125)

Income tax expense recognised in profit or loss 35 –

Income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year. The Malaysian statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective year of assessment 2016.



14. EARNINGS PER SHARE

(a) Basic

Basic earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year.

The following tables reflect the profit and share data used in the computation of basic earnings per share for the years ended 31 December:

Group 2015 2014

Profit net of tax attributable to owners of the parent (RM’000) 34,217 59,235

Weighted average number of ordinary shares in issue (‘000) * 229,386 229,401

Basic earnings per share (sen) 14.9 25.8

* The weighted average number of shares takes into account the weighted average effect of changes in treasury shares transactions during the year.

(b) Diluted

The diluted earnings per share is the same as basic earnings per share as the Company does not have any dilutive potential ordinary shares.



15. PROPERTY, PLANT AND EQUIPMENT

Plant, machinery * Land and and # Other buildings equipment assets TotalGroup RM’000 RM’000 RM’000 RM’000

Cost:At 1 January 2014 342,834 617,209 33,019 993,062 Additions 21,585 23,606 3,086 48,277 Disposals (533) (636) (195) (1,364)Written off (20) (1,570) (289) (1,879)Exchange differences 2,661 1,155 131 3,947

At 31 December 2014 and 1 January 2015 366,527 639,764 35,752 1,042,043 Additions 12,839 25,813 3,970 42,622 Disposals (583) (173) (2,490) (3,246)Written off (3) (1,375) (203) (1,581)Exchange differences 9,857 7,453 1,009 18,319

At 31 December 2015 388,637 671,482 38,038 1,098,157

Accumulated depreciation and impairment loss:At 1 January 2014 68,565 436,357 27,182 532,104 Charge for the year 9,147 29,871 2,135 41,153 Disposals (356) (358) (181) (895)Written off (6) (1,566) (260) (1,832)Exchange differences 720 104 88 912

At 31 December 2014 and 1 January 2015 78,070 464,408 28,964 571,442 Charge for the year 8,935 32,672 2,636 44,243 Disposals (583) (137) (2,254) (2,974)Written off (1) (1,284) (198) (1,483)Exchange differences 2,911 1,021 757 4,689

At 31 December 2015 89,332 496,680 29,905 615,917

Net carrying amountAt 31 December 2014 288,457 175,356 6,788 470,601

At 31 December 2015 299,305 174,802 8,133 482,240

# Other assets comprise office equipment, furniture, fixtures, computers, renovation and motor vehicles.



15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

* Land and buildings

Long term Freehold leasehold Construction land land Buildings in progress Total RM’000 RM’000 RM’000 RM’000 RM’000

Cost:At 1 January 2014 10,800 55,499 276,535 – 342,834 Additions 15,465 – 6,056 64 21,585 Disposal – – (533) – (533)Written off – – (20) – (20)Exchange differences – – 2,661 – 2,661

At 31 December 2014 and 1 January 2015 26,265 55,499 284,699 64 366,527 Additions – 11,394 1,050 395 12,839Disposal – – (583) – (583)Written off – – (3) – (3)Exchange differences – – 9,857 – 9,857

At 31 December 2015 26,265 66,893 295,020 459 388,637

Accumulated depreciation and impairment loss:At 1 January 2014 – 6,801 61,764 – 68,565 Charge for the year – 891 8,256 – 9,147 Disposal – – (356) – (356)Written off – – (6) – (6)Exchange differences – – 720 – 720

At 31 December 2014 and 1 January 2015 – 7,692 70,378 – 78,070 Charge for the year – 891 8,044 – 8,935 Disposal – – (583) – (583)Written off – – (1) – (1)Exchange differences – – 2,911 – 2,911

At 31 December 2015 – 8,583 80,749 – 89,332

Net carrying amountAt 31 December 2014 26,265 47,807 214,321 64 288,457

At 31 December 2015 26,265 58,310 214,271 459 299,305



15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(a) Property, plant and equipment acquired during the financial year were by means of:

Group 2015 2014 RM’000 RM’000

Cash payment 42,404 48,277 Finance lease arrangement 218 –

42,622 48,277

(b) Included in the property, plant and equipment of the Group are motor vehicles with net carrying amount of RM717,000 (2014: RM Nil) held under finance lease arrangements.

(c) The net carrying amounts of property, plant and equipment pledged for borrowings (Note 24) are as follow:

Group 2015 2014 RM’000 RM’000

Plant, machinery and equipment 5,434 5,514

(d) All other assets were subject to negative pledge in relation to the bank borrowings granted to the Group as referred to in Note 24.

16. PREPAID LAND LEASE PAYMENTS

Group 2015 2014 RM’000 RM’000

Cost: At 1 January 32,009 22,432 Additions 8 9,325 Exchange differences 509 252

At 31 December 32,526 32,009

Accumulated amortisation:At 1 January 11,857 10,660 Amortisation for the year 1,144 1,095 Exchange differences 230 102

At 31 December 13,231 11,857

Net carrying amount 19,295 20,152



16. PREPAID LAND LEASE PAYMENTS (CONTINUED)

Group 2015 2014 RM’000 RM’000

Amount to be amortised:- Not later than one year 1,144 1,706 - More than one year but not later than five years 4,576 6,824 - More than five years 13,575 11,622

Prepaid land lease payments are subject to negative pledge in relation to the bank borrowings granted to the Group as referred to in Note 24.

17. INVESTMENTS IN SUBSIDIARIES

Company 2015 2014 RM’000 RM’000

Unquoted shares, at cost 223,384 223,384

Details of the subsidiaries are as follows:

Country of Proportion (%) ofName of subsidiaries incorporation Principal activities ownership interest 2015 2014

held by the Company:

White Horse Malaysia Manufacture and 100 100 Ceramic Industries distribution of ceramic andSdn. Bhd. 1 homogeneous tiles

White Horse Malaysia Distribution of ceramic and 100 100Marketing Sdn. Bhd. 1 homogeneous tiles

White Horse Vietnam Manufacture and 100 100 Ceramic Industries distribution of ceramic and(Vietnam) Co., Ltd. 2 homogeneous tiles

held through White horse Ceramic industries Sdn. bhd.:

White Horse Ceramic (S) Singapore Distribution of ceramic 100 100Pte. Ltd. 3 and homogeneous tiles

White Horse Ceramic Philippines Distribution of ceramic 100 100(Phil.) Inc. 3 and homogeneous tiles



17. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Country of Proportion (%) ofName of subsidiaries incorporation Principal activities ownership interest 2015 2014

held through White horse Ceramic industries Sdn. bhd. (continued):

White Horse Ceramic Thailand Distribution of ceramic 100 100(Thailand) Ltd. 3 and homogeneous tiles

PT WH Ceramic Indonesia Distribution of ceramic 100 * 100 *Indonesia 3 and homogeneous tiles

White Horse Ceramic Cambodia Ceased operations – # 100(Cambodia) Ltd. 1

Grand Mark International People’s Distribution of ceramic, 100 100 Co., Ltd. 3 Republic building materials, and

of China hardware

1 Audited by Ernst & Young, Malaysia2 Audited by member firm of Ernst & Young Global3 Audited by firms other than Ernst & Young* The total equity interests held by the Group is 100% and it is held by the following subsidiaries:

(i) White Horse Ceramic Industries Sdn. Bhd. 99%(ii) White Horse Ceramic (S) Pte. Ltd. 1%

# White Horse Ceramic (Cambodia) Ltd. had been struck off on 2 December 2015.

18. OTHER ASSET

This represents the contingent consideration asset recognised on the acquisition of WHV during year 2013. White Horse Investment (S) Pte Ltd (“WHI”), the previous shareholder of WHV guarantees that WHV will achieve cumulative adjusted profit after tax of not less than USD12,000,000 from financial year 2013 to 2016. In the event there is a total guaranteed profit shortfall, WHI has contractually agreed to pay the Company such shortfall up to a maximum of USD12,000,000 through the offset of amount due to the previous shareholder by the Group. The contingent consideration asset of RM18,371,000 was recognised during the acquisition date and subsequently remeasured to RM48,929,000 (2014: RM32,686,000) by the Group and the Company based on the discounting cash flow method.

Significant unobservable valuation inputs are provided below:

2015 2014

Assumed probability of cumulative adjusted profit shortfall of WHV USD12,000,000 USD10,100,000

Discount rate 2.60% 2.60%

Significant increase/(decrease) in the profit after tax of WHV would result in (lower)/higher fair value of the contingent consideration asset, while significant increase/(decrease) in the discount rate would result in lower/(higher) fair value of the asset.



18. OTHER ASSET (CONTINUED)

A reconciliation of fair value measurement of the contingent consideration asset is provided below:

2015 2014 RM’000 RM’000

Opening balance as at 1 January 32,686 19,023 Fair value changes recognised in profit or loss 8,790 12,498 Unrealised foreign exchange gain 7,453 1,165

Closing balance as at 31 December 48,929 32,686

The fair value of the contingent consideration asset increased due to the weaker performance of WHV compared with budget as well as the appreciation of USD against RM.

19. INVENTORIES

Group 2015 2014 RM’000 RM’000

Cost Raw materials 83,616 69,028 Work-in-progress 17,312 11,758 Finished goods 238,965 240,420 Packing materials 1,811 1,626 Abrasive stones 4,989 2,387 Consumable supplies 36,436 23,162

383,129 348,381 Net realisable valueRaw materials 3,204 2,140 Finished goods 23,236 16,921

409,569 367,442

The amount of inventories recognised as an expense in cost of sales of the Group was RM553,132,000 (2014: RM566,240,000).

The written off and written down of inventories during the year are amounted to RM Nil (2014: RM3,985,000) and RM8,403,000 (2014: RM1,435,000) respectively during the year.



20. TRADE AND OTHER RECEIVABLES


CurrentTrade receivablesThird parties 107,075 120,588 – – Due from companies in which certain directors of the Company have interests: - Teobros Ceramica Sdn. Bhd. * 33,970 32,622 – – - White Horse Ceramic Co., Ltd. * 3,177 2,228 – –

144,222 155,438 – – Less: Allowance for impairment (third parties) (3,306) (7,449) – –

Trade receivables, net 140,916 147,989 – –

Other receivablesDue from a subsidiary – – 10,751 34,049 Other receivables and deposits 7,791 7,476 – –

7,791 7,476 10,751 34,049

148,707 155,465 10,751 34,049

Total trade and other receivables 148,707 155,465 10,751 34,049 Add: Cash and bank balances (Note 24) 144,235 123,799 521 644

Total loans and receivables represent the financial assets carried at amortised 292,942 279,264 11,272 34,693

* These companies are substantially owned by certain directors of the Company.



20. TRADE AND RECEIVABLES (CONTINUED)

(a) Trade receivables

The Group’s normal trade credit term ranges from 30 to 120 days (2014: 30 to 120 days). The trade credit term given to companies in which certain directors have interest ranges from 180 to 210 days (2014: 180 to 210 days). Other credit terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

The Group has no significant concentration of credit risk that may arise from exposure to a single or to groups of debtors except for the amounts due from companies in which certain directors have interests as disclosed above.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

2015 2014 RM’000 RM’000

Neither past due nor impaired 112,856 106,219

1 to 30 days past due not impaired 10,758 9,113 31 to 60 days past due not impaired 1,173 7,332 61 to 90 days past due not impaired 1,127 5,251 91 to 120 days past due not impaired 5,310 2,057 More than 121 days past due not impaired 8,921 17,251

27,289 41,004 Impaired 4,077 8,215

144,222 155,438

Receivables that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

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

Receivables that are past due but not impaired

The Group has total trade receivables amounting to RM27,289,000 (2014: RM41,004,000) that are past due at the reporting date but not impaired. The directors are of the opinion that the receivables are collectible in view of long term business relationships with the customers. These receivables are unsecured in nature.

RM13,639,000 (2014: RM 4,521,000) of the amount past due but not impaired are related to a company in which certain directors of the company has interest.



20. TRADE AND RECEIVABLES (CONTINUED)

(a) Trade receivables (continued)

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

2015 2014 RM’000 RM’000

Trade receivable - nominal amounts 4,077 8,215 Less: Allowance for impairment (3,306) (7,449)

771 766

Movement in allowance accounts:

2015 2014 RM’000 RM’000

At 1 January 7,449 7,284 Charge for the year (Note 10) 601 378 Written off (4,862) – Reversal of impairment losses (Note 10) – (278)Exchange difference 118 65

At 31 December 3,306 7,449

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.

(b) Related party balances

Amount due from a subsidiary is non-interest bearing, unsecured and is repayable on demand.



21. OTHER CURRENT ASSETS


Prepaid operating expenses 8,172 7,650 76 76 Advances to suppliers of raw materials and property, plant and equipment 8,283 17,091 – – GST receivables 2,274 – – –

18,729 24,741 76 76

22. INVESTMENT SECURITIES

Group 2015 2014 RM’000 RM’000

CurrentFinancial assets at fair value through profit or lossMoney market funds quoted in Malaysia 1,000 1,000

23. CASH AND BANK BALANCES


Cash on hand and at banks 139,350 58,608 521 644 Deposits with licensed banks 4,885 65,191 – –

Cash and bank balances 144,235 123,799 521 644

Bank balances of the Group amounting to RM56,000 (2014: RM43,000) are held under trust by certain managerial staff of the Group.

Short-term deposits are made for varying periods with maturity of less than three months depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The weighted average effective interest rates as at 31 December 2015 for the Group was 2.65% (2014: 2.67%) per annum.



24. LOANS AND BORROWINGS

Group 2015 2014 Maturity RM’000 RM’000

CurrentSecured:Obligations under finance leases (Note 31(c)) 2016 73 – USD bank loan at COF + 2% p.a. (2014: COF + 2% p.a.) 2016 1,302 1,047

Unsecured:USD bank loan at COF + 2% p.a. (2014: COF + 2% p.a.) 2016 10,565 8,986 USD bank loan at Vietnam inter-bank offer rate at 3% p.a. (2014: Vietnam inter-bank rate at 3% p.a.) 2016 6,464 651 USD bank loan at COF + 3% p.a. (2014: COF + 3% p.a.) 2016 1,918 3,379 USD bank loan at COF + 2% p.a. 2016 1,155 - Bankers’ acceptances at 2.46% (2014: 3.25%) p.a. 2016 29,593 41,449 Foreign currency trade loan at 1.02% p.a. 2015 – 4,421 Revolving credits at 1.40% (2014: 1.59%) p.a. 2016 197,672 151,529

248,742 211,462

Non-currentSecured:Obligations under finance leases (Note 31(c)) 2017 89 – USD bank loan at COF + 2% p.a. (2014: COF + 2% p.a.) 2017 1,302 2,093

1,391 2,093

Total loans and borrowings 250,133 213,555

The remaining maturities of the loans and borrowings as at 31 December 2015 are as follows:

Group 2015 2014 RM’000 RM’000

On demand or within one year 248,742 211,462 More than 1 year and less than 2 years 1,391 1,047 More than 2 years and less than 5 years – 1,046

250,133 213,555

USD bank loan at COF + 2%

This loan is secured by a mortgage over certain of the Group’s property, plant and equipment (Note 15).

The loans and borrowings are subject to negative pledge over all assets of the Group as referred to in Notes 15 and 16.



25. TRADE AND OTHER PAYABLES


CurrentTrade payablesThird parties 52,480 50,781 – – Due to a company in which certain directors of the Company have interests: - Teobros Ceramica Sdn. Bhd. 201 50 – –

52,681 50,831 – –

Other payablesDue to a company in which certain directors of the Company have interests - White Horse Investment (S) Pte. Ltd.* 37,983 16,729 37,983 17,100 Other payables and accruals 47,047 43,130 138 629

85,030 59,859 38,121 17,729

137,711 110,690 38,121 17,729

Non-currentOther payableDue to a company in which certain directors of the Company have interests - White Horse Investment (S) Pte. Ltd.* 91,839 90,538 – 19,936

Total trade and other payables 229,550 201,228 38,121 37,665 Add: Loans and borrowings (Note 25) 250,133 213,555 – –

Total financial liabilities carried at amortised cost 479,683 414,783 38,121 37,665

* A company owned substantially by certain directors of the Company, namely Liao Yuan Shun, Liao Jung Chu, Liao Shen Hua, Teo Swee Teng, Teo Kim Lap, Teo Kim Tay and Cheng Soon Mong.

(a) Trade payables

The amounts are non-interest bearing. The normal trade credit terms granted to the Group range from 30 to 90 days (2014: 30 to 90 days).



25. TRADE AND OTHER PAYABLES (CONTINUED)

(b) Related party balances

Amounts due to a company in which certain directors of the Company have interests are unsecured and non-interest bearing. Amount due to a company in which certain directors of the Company have interests amounting to RM37,983,000 (2014: RM37,036,000) represent outstanding purchase consideration for the acquisition of White Horse Ceramic Industries (Vietnam) Co. Ltd..

26. DEFERRED TAx

Group 2015 2014 RM’000 RM’000

At 1 January 24,519 31,004 Recognised in profit or loss (Note 13) (9,731) (6,448)Exchange differences 865 (37)

At 31 December 15,653 24,519

Deferred income tax as at 31 December relates to the following:

Deferred Deferred tax liabilities tax assets Accelerated capital Provisions allowances and others Total RM’000 RM’000 RM’000

At 1 January 2014 30,603 401 31,004 Recognised in profit or loss 173 (6,621) (6,448)Exchange differences 5 (42) (37)

At 31 December 2014 30,781 (6,262) 24,519 Recognised in profit or loss (2,203) (7,528) (9,731)Exchange differences 12 853 865

At 31 December 2015 28,590 (12,937) 15,653

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Unregonised tax losses

At the reporting date, the Group has tax losses of approximately RM38,847,000 (2014: RM37,087,000) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability.



27. SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES

Number of ordinary l---------------------- Amount -----------------------l share of RM1 each Total Share Share share capital capital capital (Issued and Treasury (Issued and Share and share Treasury fully paid) shares fully paid) premium premium shares ’000 ’000 RM’000 RM’000 RM’000 RM’000

Group and Company

At 1 January 2014 240,000 10,594 240,000 6,936 246,936 (16,284)Purchase of treasury shares – 11 – – – (25)

At 31 December 2014 and 1 January 2015 240,000 10,605 240,000 6,936 246,936 (16,309)Purchase of treasury shares – 20 – – – (45)

At 31 December 2015 240,000 10,625 240,000 6,936 246,936 (16,354)

Number of ordinary shares of RM1 each Amount 2015 2014 2015 2014 ’000 ’000 RM’000 RM’000

Authorised share capital

At 1 January/31 December 1,000,000 1,000,000 1,000,000 1,000,000

(a) Share capital

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

(b) Treasury shares

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance.

The Company acquired 19,700 (2014: 11,000) shares in the Company through purchases on Bursa Malaysia Securities Berhad during the financial year. The total amount paid to acquire the shares was RM45,463 (2014: RM24,761) and this is presented as a component within shareholders’ equity.

The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares.



28. RETAINED EARNINGS

The Company may distributes dividends out of its retained earnings as at 31 December 2015 under the single tier system.

29. FOREIGN CURRENCY TRANSLATION RESERVE

The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

30. RELATED PARTY DISCLOSURES

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:


Gross dividend income from White Horse Ceramic Industries Sdn. Bhd., a subsidiary – – 8,000 24,000

Management fees from subsidiaries – – 144 144

Sales of goods to Teobros Ceramica Sdn. Bhd. * 41,191 35,652 – –

Sales of raw materials, consumable supplies and products to White Horse Ceramic Co., Ltd @ 4,183 4,190 – –

* A company owned substantially by certain directors, namely Teo Swee Teng, Teo Kim Lap and Teo Kim Tay.

@ A company owned substantially by certain directors, namely Liao Yuan Shun, Liao Jung Chu and Liao Shen Hua.



30. RELATED PARTY DISCLOSURES (CONTINUED)

(b) Compensation of key management personnel

Group 2015 2014 RM’000 RM’000

Short-term employee benefits 2,647 3,333

Key management personnel comprise of executive directors of the Company and non-executive directors of the Company who are the executive directors of the subsidiaries.

31. COMMITMENTS

(a) Capital commitments

Group 2015 2014 RM’000 RM’000

In respect of capital expenditure: - Approved but not contracted for 25,000 9,900

b) Operating lease commitments - as lessee

The Group has entered into non-cancellable operating lease agreements for the use of land and buildings. These leases have an average life of between 2 to 37 years with renewal option included in the certain contracts. Certain contracts include escalation clauses computed based on percentage of rental while others include fixed rentals for an average life of between 2 to 5 years. There are no restrictions placed upon the Group by entering into these leases.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities are as follows:

Group 2015 2014 RM’000 RM’000

Future minimum rentals payments:Not later than 1 year 4,591 7,177 Later than 1 year and not later than 5 years 8,478 8,006 After 5 years 37,638 35,376

50,707 50,559



31. COMMITMENTS (CONTINUED)

(c) Finance lease commitments

The Group has finance leases for certain items of motor vehicles (Note 15). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

2015 2014 RM’000 RM’000 Minimum lease payments: Not later than 1 year 78 – Later than 1 year but not later than 2 years 78 – Later than 2 years but not later than 5 years 17 –

Total minimum lease payments 173 – Less: Amounts representing finance charges (11) –

Present value of minimum lease payments 162 –

Present value of payments:Not later than 1 year 73 –

Later than 1 year but not later than 2 years 73 – Later than 2 years but not later than 5 years 16 –

Present value of minimum lease payments 162 – Less: Amount due within 12 months (Note 24) (73) –

Amount due after 12 months (Note 24) 89 –

32. FAIR VALUE OF FINANCIAL INSTRUMENTS

Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables (current) 20Trade and other payables (current) 25Loans and borrowings (current) 24Loans and borrowings (non-current) 24



32. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Group’s assets as at reporting date:

Quoted prices in Significant Significant active observable unobservable market inputs inputs Total (Level 1) (Level 2) (Level 3) RM’000 RM’000 RM’000 RM’000

Group

As at 31 December 2015 Assets measured at fair value:(i) Financial asset at fair value through profit or loss - Quoted investment securities (Note 22) 1,000 1,000 – –

(ii) Other asset - Contingent consideration asset (Note 18) – – – 48,929

As at 31 December 2014

Assets measured at fair value:(i) Financial asset at fair value through profit or loss - Quoted investment securities (Note 22) 1,000 1,000 – –

(ii) Other asset - Contingent consideration asset (Note 18) – – – 32,686

During the reporting period ended 31 December 2015 and 2014, there were no transfers between the various fair value measurements.



33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial liabilities comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. Financial assets include trade and other receivables and cash and short-term deposits that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks and ensures that the Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises interest rate risk and foreign cash and short-term currency risk. Financial instruments affected by market risk include loans and borrowings, deposits, trade and other receivables and trade and other payables.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Exposure to the risk of changes in market interest rates relates primarily to the long-term debt obligations with floating interest rates.

Interest rate risk arises primarily from interest-bearing borrowings. Interest rate exposure is managed by maintaining a balanced mix of fixed and floating rate borrowings and regular reviews of its debt portfolio.

Information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective notes.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates based on the utilisation of floating rate loans and borrowings throughout the reporting period. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as follows:

Effect on Group’s profit before tax 2015 2014 RM’000 RM’000

Increase in 10 basis points (250) (214) Decrease in 10 basis points 250 214

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment.



33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

(a) Market risk (continued)

(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. Exposure to the risk of changes in foreign exchange rates relates primarily to the operating activities when revenue or expense is denominated in a foreign currency other than the functional currency of the operations to which they relate.

The net unhedged financial assets/(financial liabilities) of the Group that are not denominated in its functional currency are as follows:

Net Financial Assets/(Liabilities) Held in Foreign Currency Cinese United Functional Currency Yuan States of Group Companies Renminbi Dollars Euro Total RM’000 RM’000 RM’000 RM’000

At 31 December 2015

Singapore Dollars – 1,603 – 1,603 Ringgit Malaysia 3,627 (186,025) 6,282 (176,116) Indonesian Rupiah (“IDR”) – 30 – 30 Vietnamese Dong (“VND”) – (116,002) – (116,002)

3,627 (300,394) 6,282 (290,485)

At 31 December 2014

Singapore Dollars – 1,038 – 1,038 Ringgit Malaysia 75 (69,996) (3,411) (73,332) Indonesian Rupiah (“IDR”) – 37 – 37 Vietnamese Dong (“VND”) – (87,780) (1,285) (89,065)

75 (156,701) (4,696) (161,322)

Sensitivity analysis for foreign currency risk

The following table illustrates the sensitivity of the Group’s profit before tax to a reasonably possible change in the USD, CNY and Euro exchange rate at the reporting date against the functional currency of the Group, with all other variables held constant.




(a) Market risk (continued)

(ii) Foreign currency risk (continued)

Group 2015 2014 RM’000 RM’000 Profit before tax

USD/RM - strengthened 10% (2014: 5%) (18,603) (3,500) - weakened 10% (2014: 5%) 18,603 3,500 CNY/RM - strengthened 10% (2014: 5%) 363 4 - weakened 10% (2014: 5%) (363) (4)Euro/RM - strengthened 10% (2014: 5%) 628 (171) - weakened 10% (2014: 5%) (628) 171 USD/SGD - strengthened 10% (2014: 5%) 160 52 - weakened 10% (2014: 5%) (160) (52)USD/IDR - strengthened 10% (2014: 5%) 3 2 - weakened 10% (2014: 5%) (3) (2)USD/VND - strengthened 10% (2014: 5%) (11,600) (4,389) - weakened 10% (2014: 5%) 11,600 4,389 Euro/VND - strengthened 10% (2014: 5%) – (64) - weakened 10% (2014: 5%) – 64

(b) 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 and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

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

At the reporting date, the Group does not have any significant exposure to any individual customer or counterparty except for companies in which certain directors have interests as disclosed in Note 20, which accounts for 26% (2014: 26%) of the total trade receivables. The directors believe that this does not create significant impact for the Group in view of the fact that the directors have direct participation and influential power in the management of these counterparties.




(b) Credit risk (continued)

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable financial institutions with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 20.

(c) 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 and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group and the Company manage its debt maturity profile, operating cash flows and the availability of funding so as to ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group and the Company maintain sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group and the Company strive to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group and the Company raise committed funding from financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

l--------------------- 2015 --------------------l Within One to one year five years Total RM’000 RM’000 RM’000

Group

Financial liabilities:Trade and other payables 138,356 106,716 245,072 Loans and borrowings 248,747 1,397 250,144

Total undiscounted financial liabilities 387,103 108,113 495,216

Company

Financial liabilities:Other payables, including financial guarantees* 281,715 1,302 283,017





(c) Liquidity risk (continued)

Analysis of financial instruments by remaining contractual maturities (continued)

l--------------------- 2014 --------------------l Within One to one year five years Total RM’000 RM’000 RM’000

Group

Financial liabilities:Trade and other payables 111,628 103,398 215,026 Loans and borrowings 211,462 2,093 213,555


Company

Financial liabilities:Other payables, including financial guarantees* 229,825 22,205 252,030


* Based on the maximum amount that can be called for under the financial guarantee contracts.

A nominal amount of RM244,896,000 (2014: RM213,555,000) relating to corporate guarantees provided by the Company to banks for its subsidiaries’ loans and borrowings.

The fair value of the corporate guarantees granted by the Company to banks in respect of loans and borrowings obtained by its subsidiaries is not material as the difference in borrowing rates charged by the banks is not significant in the absence of such guarantees.

34. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a healthy capital ratio to support its operations and maximise shareholder value.

The Group manages its capital structure and makes adjustments, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders. No changes were made in the objectives, policies or processes during the years ended 31 December 2015 and 31 December 2014.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances.



34. CAPITAL MANAGEMENT (CONTINUED)


Loans and borrowings 24 250,133 213,555 – – Trade and other payables 25 229,550 201,228 38,121 37,665 less: - Cash and bank balances 23 (144,235) (123,799) (521) (644)

Net debt 335,448 290,984 37,600 37,021

Total capital 761,670 738,380 234,324 241,966

Capital and net debt 1,097,118 1,029,364 271,924 278,987

Gearing ratio 30.6% 28.3% 13.8% 20.5%

35. DIVIDENDS

Group and Company 2015 2014 RM’000 RM’000

Recognised during the financial year: Dividends on ordinary shares:- Final tax exempt dividend for 2014: 5 sen 11,469 11,470 (2013: 5 sen) per share- Interim tax exempt dividend for 2015: 5 sen (2014: 5 sen) per share 11,469 11,469

22,938 22,939

At the forthcoming Annual General Meeting, a final tax exempt dividend of 5% in respect of the current financial year ended 31 December 2015 on 229,375,200 ordinary shares, amounting to a total dividend payable of RM11,468,760 (5 sen net per share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2016.

36. SEGMENTAL REPORTING

For management purposes, the Group is organised into business units based on their geographical areas, and has three reportable operating segments as below:

(i) Malaysia - The Malaysia segment includes manufacturing and distribution of ceramic homogenous tiles in Malaysia.

(ii) Vietnam - The vietnam segment includes manufacturing and distribution of ceramic homogenous tiles in Vietnam.

(iii) Others - The other segments include distribution of ceramic homogenous tiles in Indonesia, Philippine, Singapore, and Thailand.



36. SEGMENTAL REPORTING (CONTINUED)

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on negotiated and mutually agreed terms.

31 December 2015

Adjustments and Malaysia Vietnam Others Eliminations Notes Consolidated RM’000 RM’000 RM’000 RM’000 RM’000

RevenueExternal sales 564,662 98,613 89,454 – 752,729 Inter-segment sales 26,165 38,797 – (64,962) A –

Total revenue 590,827 137,410 89,454 (64,962) 752,729

ResultsInterest income 2,440 71 23 – 2,534 Depreciation and amortisation 31,010 11,956 2,421 – 45,387Inventories written off – – – – – Inventories written down 8,403 – – – 8,403 Unrealised foreign exchange loss 19,158 8,306 257 – 27,721 Unrealised fair value changes of contingentconsideration asset 8,790 – – – 8,790 Segment profit/(loss) 61,351 (8,764) 988 (5,890) B 47,685

AssetsAdditions tonon-current assets 36,504 4,665 1,453 – 42,622 Segment assets 994,290 200,716 77,698 677 C 1,273,381

LiabilitiesSegment liabilities 364,574 120,689 5,925 20,523 D 511,711

Other segment informationCapital commitments 25,000 – – – 25,000




31 December 2014

Adjustments and Malaysia Vietnam Others Eliminations Notes Consolidated RM’000 RM’000 RM’000 RM’000 RM’000

RevenueExternal sales 599,465 85,322 80,413 – 765,200 Inter-segment sales 25,875 34,699 – (60,574) A –

Total revenue 625,340 120,021 80,413 (60,574) 765,200

ResultsInterest income 1,976 47 25 – 2,048 Depreciation and amortisation 30,015 10,119 2,114 – 42,248Inventories written off 3,985 – – – 3,985Inventories written down 1,435 – – – 1,435 Unrealised foreign exchange loss 7,789 2,247 224 – 10,260 Unrealised fair value changes of contingent consideration asset 12,498 – – – 12,498 Segment profit/(loss) 86,091 (5,327) 5,359 (9,764) B 76,359

AssetsAdditions to non-current assets 41,425 6,449 403 – 48,277 Segment assets 956,023 161,801 78,062 677 C 1,196,563

LiabilitiesSegment liabilities 328,660 92,699 4,918 31,906 D 458,183

Other segment informationCapital commitments 9,900 – – – 9,900




A Inter-segment revenues are eliminated on consolidation.

B The following items are added to/(deducted from) segment profit to arrive at “profit before tax “ presented in the consolidated statement of comprehensive income.

2015 2014 RM’000 RM’000

Finance costs (5,890) (9,764)

C The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2015 2014 RM’000 RM’000

Goodwill 677 677

D The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2015 2014 RM’000 RM’000

Income tax payable 4,870 7,387 Deferred tax liabilities 15,653 24,519

20,523 31,906

37. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the directors on 26 April 2016.


supplEmENTaryINFORMATION

38. SUPPLEMENTARY INFORMATION – BREAKDOWN OF REALISED AND UNREALISED RETAINED EARNINGS

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2015 into realised and unrealised earnings is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.


Total retained earnings of the White Horse Berhad and its subsidiaries: - Realised 535,850 526,219 3,742 11,339 - Unrealised (37,666) (32,766) – –

498,184 493,453 3,742 11,339

Less: Consolidated adjustment 13,357 6,809 – –

Total Group’s retained earnings as per consolidated accounts 511,541 500,262 3,742 11,339


lIsT OFLANDED PROPERTIESas at 31 December 2015

Location Address DescriptionExistingUse Tenure

ApproximateAge of

Building(years)

Land &Built-up

Area(sq meter)

Dateof

Acquisition

2015CarryingAmount

(RM)

Lot PTD 156654,HS(D) 309464Mukim of Plentong,District of Johor Bahru,Johor

PLO 464, Jalan Gangsa,Pasir GudangIndustrial Estate,81700 Pasir GudangJohor

Industrial buildingand a block of5 Storeycorporate officewith basement.

Owner occupied

Lease from JohorCorporation30 years expiringon 03/07/2022with option forfurther extensionof 30 years.

19 83,079&

64,425

01-Oct-91 37,249,117

Lot PTD 2860,HS(D) 367647Mukim of Sungai Tiram,District of Johor Bahru,Johor

PLO 29,Tanjung LangsatIndustrial Complex,81700 Pasir Gudang

Industrial building Owneroccupied

Leasehold 60years expiringon 08/02/2064

14 129,624&

92,047

01-Sep-00 68,722,109

Lot PTD 4068,HS(D) 491784Mukim of Sungai Tiram,District of Johor Bahru,


Industrial building Owneroccupied


5 117,055&

27,090

24-Nov-09 33,367,334

Lot PTD 4587,HS(D) 503711Mukim of Sungai Tiram,District of Johor Bahru,


Vacant Land forIndustrial building

Owneroccupied


4 50,931&0

01-Jan-13 6,927,433

Lot PTD 119781,HS(D) 247731,Mukim of Plentong,District of Johor Bahru,Johor

PLO 453, Jalan Keluli 3,Pasir GudangIndustrial Estate,81700 Pasir GudangJohor

Single storeywarehouseand annexedwith doublestorey office

Owneroccupied

Lease from JohorCorporation30 years expiringon 30/12/2026with option forfurther extensionof 30 years.

18 24,280&

14,295

01-May-95 8,875,205


PLO 496, Jalan Keluli 3, Pasir GudangIndustrial Estate,81700 Pasir GudangJohor

Single storeywarehouse

Owneroccupied

Leasehold 30years expiringon 21/06/2030with option forfurther extensionof 30 years.

15 25,490&

14,605

01-Sep-00 9,368,566


PLO 728, Zone 12,Pasir GudangIndustrial Area


Owneroccupied


10 20,488&

13,413

30-Sep-07 9,448,008



ApproximateAge of

Building(years)

Land &Built-up

Area(sq meter)

Dateof

Acquisition

2015CarryingAmount

(RM)


Block 7,Jalan Cendana 2,Taman Cendana,81700 Pasir GudangJohor

A block of5 storey mediumcost flat with38 unitsapartments

Owner occupied


19 3,600&

2,531

31-Mar-97 1,833,932

HS(D) 135082& 135083PTD 71022 & 71023Mukim Plentong

Block 69 & 68Jalan Tembusu,Taman Air Biru,81700 Pasir Gudang,Johor.

A block of5 storey mediumcost flat with35 unitsapartments

Owneroccupied


29 2,678&

2,230

31-Jan-07 2,545,584



Industrial land Owneroccupied


14 4,468&0

01-Jul-02 521,759



Natural gasservice station

Owneroccupied


14 400&0

01-Sep-01 59,392

GRN 459987LOT 90523Mukim of PlentongDistrict of Johor Bahru.

H.S.(D) No 302878,P.T. No PTD 15664Mukim of Plentong District of Johor Bahru.

Vacant Land for2 storeywarehouse andshowroomwith 3-storeyoffice

Owneroccupied

Freehold 2 9,528 30-Sep-14 15,465,139

Lot P.T.No:17306,HS(M) 10066,Mukim of Batu,District of Gombak,Selangor.

No:1, JalanPersiaran Satu,Bandar Baru Selayang,68100 Batu Caves

Single storeywarehouseand annexedwith threestorey office

Owneroccupied


18 12,550&

7,884

01-Jul-95 12,983,141

GM 975 Lot 2737Mukim Klang,Daerah Klang

Lot 2737,Jalan Nong / KS2,Taman PerindustrianSg, Jati41200 Klang,Selangor


Owneroccupied

Freehold 8 12,014&

8,628

24-Mar-05 13,535,540

list of landed properties(cont’d)



ApproximateAge of

Building(years)

Land &Built-up

Area(sq meter)

Dateof

Acquisition

2015CarryingAmount

(RM)

Lot No:67890,HS(D)KA 1257/76Mukim Ulu Kinta,District of Kinta,Perak

Plot 76,Persiaran Portland,Kawasan PerindustrianTasek,31400 Ipoh


Owner occupied


14 4,065&

2,717

28-Feb-02 2,160,491

PN 2918, Lot 68293,Mukim Ulu Kinta,District of Kinta,Perak

Plot 81,Persiaran Portland,Kawasan PerindustrianTasek,31400 Ipoh

Vacant Land forIndustrial Building

Owneroccupied


40 4,065 31-Jan-11 1,044,216

Mukim 63 Lot 1214Mukim Mergung,Daerah Kota Setar

No 202Kaw PerusahaanMergong II,Lorong Perak 805150 Alor Setar, Kedah

7 units of2 storey and2 units ofwarehouse

Owneroccupied


38 5,727 31-Jul-07 3,472,797

HS(M) 460 PT 4526,Mukim 01,Seberang Perai TengahPulau Pinang

No 3088Jalan Kelisa Emas 1,Seberang Jaya, 13700 Perai


Owneroccupied

Freehold 10 7,778&

8,894

01-Mar-06 17,566,896

Lot 55, HS(D) 1456,PTD 8754, Mukim ofKuala Kuantan,Pahang

Lot 55, SemambuIndustrial Estate,25350 Kuantan


Owneroccupied


36 4,480&

1,583

30-Sep-98 1,161,003

HS(D) 3087,PTD 2404, MukimSimpang Kanan,Batu Pahat, Johor.

104, Jalan Jelawat,Taman Banang,83000 Batu Pahat,Johor.

Single StoreyShophouse

Owneroccupied

Freehold 44 164 14-Feb-11 331,824

HS(M) 11473,LOT 5644,Mukim Kajang,Daerah Hulu Langat,Selangor

HS(M) 11473,LOT 5644,Mukim Kajang,Daerah Hulu Langat,Selangor

Vacant Land Owneroccupied


46 15,517 30-Sep-14 9,333,744




ApproximateAge of

Building(years)

Land &Built-up

Area(sq meter)

Dateof

Acquisition

2015CarryingAmount

(RM)

Country Lease No. 015364646Mile 10, Tuaran Road,District of Kota Kinabalu, Sabah

Mile 10, Tuaran Road,in the District of Kota Kinabalu,Sabah.

Vacant Land Owner occupied


92 9,834 31-Jul-15 11,393,919

No 7525 Tambol,Bang Pleeyai,Amphur, Bangplee,Samutprakam,Bangkok, Thailand.

Bangna Tart RoadKM 11, Bangplee,Samutprakam,Bangkok, Thailand


Owner occupied

Leasehold 22years expiringon 24 Jan 2027

11 9,600&

8242

13-Jan-05 7,991,314

A 12502 (now knownas Lot 1342m)MK 11, Singapore

No. 1,Sungai Kadut Way,Singapore 728770


Owneroccupied


23 4,374&

2,916

25-Jul-03 7,011,937

Street 2A, My Xuan AIndustrial Park,Tan Thanh District,Ba Ria-Vung TauProvince,Vietnam

Street 2A, My Xuan AIndustrial Park,Tan Thanh District,Ba Ria-Vung TauProvince,Vietnam

Industrialbuildings and ablock of 4 storeycorporate office

Owneroccupied


8 278,511&

99,802

01-Aug-08 29,180,834

48, Street 4, Da NangIndustrial Park,An Don, Son TraDistrict, Da Nang City,Vietnam

48, Street 4, Da NangIndustrial Park,An Don, Son TraDistrict, Da Nang City,Vietnam


Owneroccupied


11 6,253&

4,527

01-May-05 911,311

Total : 312,462,545



aNalysIs OFSHAREHOLDINGSas at 31 March 2016

Authorised Share Capital : RM1,000,000,000/- Issued and Fully Paid-Up Capital (inclusive of treasury shares) : RM240,000,000/- Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : One vote per ordinary share

1. DISTRIBUTION OF SHAREHOLDERS

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

1 - 99 8 0.37 159 0.00100 - 1,000 238 10.88 192,841 0.081,001 - 10,000 1,575 72.02 5,623,700 2.4510,001 - 100,000 274 12.53 7,636,500 3.33100,001 - 11,468,759 (less than 5% 85 3.89 108,785,488 47.43 of Issued Shares)11,468,760 and above (5% and above 7 0.32 107,136,51 46.71 of Issued Shares)

2,187 100.00 229,375,200 100.00

2. DIRECTORS’ SHAREHOLDINGS

The Directors’ Shareholdings of White Horse Berhad based on the Register of Directors’ Shareholdings are as follows:-

No. of Ordinary Shares HeldNo. Direct % Indirect %

1. Liao Yuan Shun 1,052,800 0.46 29,064,055 (1) 12.672. Liao Jung Chu 1,098,000 0.48 41,117,303 (2) 17.923. Liao Shen Hua 1,705,797 0.74 12,000,000 (3) 5.234. Teo Swee Teng 11,073,593 4.83 2,425,000 (4) 1.065. Teo Kim Lap 11,083,027 4.83 1,450,000 (5) 0.636. Teo Kim Tay 12,409,015 5.41 150,000 (6) 0.077. Cheng Soon Mong 4,877,735 2.13 132,500 (7) 0.068. Chew Pei Fang – – 120,000 (8) 0.059. Law Piang Woon – – – –10. Rosita Yeo Swat Geok – – – –


analysis of shareholdings(cont’d)

3. LIST OF SUBSTANTIAL SHAREHOLDERS

The List of Substantial Shareholders of White Horse Berhad based on the Register of Substantial Shareholders of the Company and their respective shareholdings are as follows:-

No. of Ordinary Shares HeldNo. Direct % Indirect %

1. Lembaga Tabung Haji 22,488,700 9.80 – –2. Trade Favor International Co., Ltd. 22,363,160 9.75 – –3. Fulland Enterprise Co., Ltd. 13,875,637 6.05 – –4. Global Union Enterprise Inc. 12,000,000 5.23 – –5. Ever Flicker Int’l Corp. 12,000,000 5.23 – –6. Link Well Enterprise Corp. 12,000,000 5.23 – –7. Liao Yuan Shun 1,052,800 0.46 29,064,055 (1) 12.678. Liao Jung Chu 1,098,000 0.48 41,117,303 (2) 17.939. Teo Swee Teng 11,073,593 4.83 2,425,000 (4) 1.0610 Teo Boon Hoo 11,663,335 5.08 – –11. Teo Kim Tay 12,409,015 5.41 150,000 (6) 0.0712. Teo Kim Lap 11,083,027 4.83 1,450,000 (5) 0.6313. Liao Shen Yao 1,705,897 0.74 12,000,000 (9) 5.2314. Liao Shen Hua 1,705,797 0.74 12,000,000 (3) 5.2315. Liao Shen Chun 1,705,609 0.74 12,000,000 (10) 5.23

Note:

(1) Deemed interested through his wife, Liao Chen Mei Hsiu and his sons, Liao Hung Chang and Liao Chia Feng, his daughters, Liao Chung Yi and Liao Chia Ning and through his direct interest in Trade Favor International Co., Ltd.

(2) Deemed interested through his sons, Liao Shen Hua, Liao Shen Yao and Liao Shen Chun and through his direct interest in Global Union Enterprise Inc., Ever Flicker Int’l Corp. and Link Well Enterprise Corp.

(3) Deemed interested through his direct interest in Global Union Enterprise Inc.

(4) Deemed interested through his mother, Yeow Hoon Eng, his wife, Ku Kuan and his sons, Teo Wee Kee and Teo Wee Siong and his daughter, Teo Wei Chin

(5) Deemed interested through his mother, Yeow Hoon Eng, his wife, Ong Yock Hong and his son, Teo Rhen Gie and his daughters Teo Sin Rhu and Teo Sin Yee

(6) Deemed interested through his mother, Yeow Hoon Eng

(7) Deemed interested through his wife, Tan Pak Lan and his son, Cheng Hang Huat and his daughter, Cheng Swee Chin

(8) Deemed interested through her spouse, Yap Wai Ming

(9) Deemed interested through his direct interest in Ever Flicker Int’l Corp.

(10) Deemed interested through his direct interest in Link Well Enterprise Corp.


analysis of shareholdings(cont’d)

4. LIST OF THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS

No. Names Shareholdings %

1. Lembaga Tabung Haji 22,488,700 9.80%2. Trade Favor International Co. Ltd. 22,363,160 9.753. Fulland Enterprise Co. Ltd. 13,875,637 6.054. Teo Kim Tay 12,409,015 5.415. Ever Flicker Int’l Inc. 12,000,000 5.236. Global Union Enterprise Inc. 12,000,000 5.237. Link Well Enterprise Corp. 12,000,000 5.238 Teo Swee Teng 11,073,593 4.839. Teo Boon Hoo 11,058,835 4.8210. Teo Kim Lap 11,048,527 4.8211. Cheng Soon Mong 4,877,735 2.1312. Ang Tian Su 4,206,694 1.8313. UOB Kay Hian Nominees (Asing) Sdn. Bhd. 3,074,900 1.34 exempt an for UoB Kay Hian pte ltd14. Forever Fame Ltd. 3,000,000 1.3115. Well Sky Corp. 3,000,000 1.3116. Wong Heng Mui 2,717,560 1.1817. Liao Chia Feng 2,363,500 1.0318. Lim Pei Tiam @ Liam Ahat Kiat 2,293,900 1.0019. Shih, Ming-Kuei 1,962,439 0.8620. Chang, Chin-Chen 1,732,000 0.7621. Liao Shen Yao 1,705,897 0.7422. Liao Shen Hua 1,705,797 0.7423. Liao Shen Chun 1,705,609 0.7424. Malaysia Nominees (Tempatan) Sendirian Berhad 1,645,900 0.72 great eastern life assurance (Malaysia) Berhad25. Liao Hung Chang 1,641,000 0.7226. Shih, Chi-Fong 1,500,000 0.6527. Shih, Chih-Che 1,500,000

0.6528. Affin Hwang Nominees (Asing) Sdn. Bhd. 1,300,570 0.57 UoB Kay Hian pte ltd for siow Meow Hoon29. Chen, Hen-Jui 1,300,000 0.5730. Chen, Liao Wen 1,300,000 0.57

184,850,968 80.59

Note :-

The analysis of shareholdings is based on the issued and paid-up share capital of the Company as at 31 March 2016 after deducting 10,624,800 ordinary shares of RM1.00 each bought back by the Company and held as Treasury Shares as at 31 March 2016.


sChEdulE OFSHARE BUY-BACKfor the financial year ended 31 December 2015

Save as disclosed below, there were no purchases for other months during the financial year:-

Lowest Highest Average No. of Ordinary Purchase Purchase Purchase Shares of RM1.00 Price Per Price Per Price Per Total PurchaseDate of Purchase each Purchased Share Share Share Consideration (RM) (RM) (RM) (RM)

21/04/2015 10,000 2.300 2.300 2.300 23,176.5920/10/2015 9,700 2.280 2.280 2.280 22,286.70

TOTAL 19,700 45,463.29

During the financial year, the Company has made purchases of 19,700 ordinary shares (all of which are retained as treasury shares). As at 31 March 2016, the Company held 10,624,800 treasury shares, none of the treasury shares held were resold or cancelled during the financial year.

✄

NO. OF SHARES HELD

CDS ACCOUNT NO.

(Company No: 455130 - X)(Incorporated in Malaysia)

FORM OF PROxY

*I/We, ............................................................................................................................ NRIC/Passport No./Company (FULL NAME IN BLOCK CAPITALS)

No. ......................................................................... of ..............................................................................................

.................................................................................................................................................................................... (FULL ADDRESS)

being a *member/members of WHITE HORSE BERHAD, hereby appoint ................................................................

.................................................................................... NRIC/Passport No. .............................................................. (FULL NAME IN BLOCK CAPITALS)

of ................................................................................................................................................................................

.................................................................................................................................................................................... (FULL ADDRESS)

or failing *him/her, ....................................................................................................................................................... (FULL NAME IN BLOCK CAPITALS)

NRIC/Passport No. ................................................. of ..............................................................................................

.................................................................................................................................................................................... (FULL ADDRESS)

or failing *him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the Eighteenth Annual General Meeting of the Company to be held at PLO 464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim on Thursday, 26 May 2016 at 2:00 p.m. and at any adjournment thereof for/against the resolution(s) to be proposed thereat.

AGENDA

No. Resolutions For Against

1. To approve the declaration of the Final Tax-Exempt Dividend of 5 sen per share for the financial year ended 31 December 2015.

2. To re-elect Mr. Teo Swee Teng who retires pursuant to Article 94 of the Company’s Articles of Association.

3. To re-elect Mr. Teo Kim Lap who retires pursuant to Article 94 of the Company’s Articles of Association.

4. To re-appoint the Director, Mr. Liao Jung Chu who retires pursuant to Section 129(6) of the Companies Act, 1965.

5. To re-appoint the Director, Mr. Law Piang Woon who retires pursuant to Section 129(6) of the Companies Act, 1965.

6. To re-appoint the Director, Mr. Cheng Soon Mong who retires pursuant to Section 129(6) of the Companies Act, 1965.

7. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.

8. As Special Business Ordinary Resolution No. 1- Payment of Directors’ Fees

9. As Special Business Ordinary Resolution No. 2- Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

No. Resolutions For Against

10. As Special Business Ordinary Resolution No. 3- Proposed Renewal of Authority for Share Buy-Back

11. As Special Business Ordinary Resolution No. 4- Proposed Renewal of and New Shareholders’ Mandate for Recurrent Related Party

Transactions of a Revenue or Trading Nature

12. As Special Business Ordinary Resolution No. 5- Approval to Continue in Office as Independent Non-Executive Director - Mr. Law

Piang Woon

13. As Special Business Ordinary Resolution No. 6- Approval to Continue in Office as Independent Non-Executive Director - Ms. Chew

Pei Fang

14. Special Resolution- Proposed Amendments to the Articles of Association of the Company

* strike out whichever not applicable

Please indicate your vote by a (/) in the respective box of each resolution. Unless voting instructions are indicated in the space above, the proxy will vote or abstain from voting as he/she thinks fit.

As witness my/our hand(s) this ___________ day of _____________________, 2016

_____________________________________Signature(s)/Common Seal of Member(s)

Notes:-

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 May 2016 (“General Meeting Record of Depositors”) shall be eligible to attend the Meeting.

2. A member entitled to attend and vote at the Meeting is entitled to appoint more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a),(b),(c) and (d) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

3. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he or she specifies the proportion of his or her holdings to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorised.

5. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

6. The instrument appointing a proxy must be deposited at the Company’s Registered Office at PLO 464, Jalan Gangsa, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor Darul Takzim not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

For appointment of two proxies, percentage of shareholdings to be represented by the proxies

No. of shares Percentage

Proxy 1

Proxy 2

Proxy 3

Total 100%

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