annual report 2013 - insage (msc) sdn bhd

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www.krbamboo.com www.karbamboo.com

(Company No. 1014793-D)(Incorporated in Malaysia under the Companies Act, 1965)

KANGER INTERNATIONAL BERHAD

Annual Report 2013

Corporate Information

Corporate Governance Statement

Board of Directors’ Profile

Additional Compliance Information Disclosures

List of Properties

Form of Proxy

Group Corporate Structure

Risk Management and Internal Control Statement

Chairman’s Statement

Directors’ Responsibilities Statement

Analysis of Shareholdings

Notice of Annual General Meeting

Corporate Milestones

Audit Committee Report

Corporate Social Responsibility Statement

FinancialReports

04

18

07

33

81

13

34

82 84

17

35

05

26

06

29

C o N t e N t S

Achieve Perfection, QuAlity first

Achieve Perfection, QuAlity first

4 | Kanger International Berhad Annual Report 2013

corporate information

BOARD OF DIRECTORS

Yang Mulia Dato’ Paduka Sharipah Hishmah Binti Dato’ Sayed Hassan (Independent Non-Executive Chairman)

Leng Xingmin (冷醒民)(Managing Director)

Yang Mulia Syed Hazrain Bin Syed Razlan Jamalullail (Independent Non-Executive Director)

Y.Bhg. Prof. Datuk Seri Dr. Md. Zabid Bin Haji Abdul Rashid (Independent Non-Executive Director)

Prof. Dr. Paul Cheng Chai Liou (Independent Non-Executive Director)

Y.Bhg. Dato’ Izudin Bin Ishak(Independent Non-Executive Director)

AUDIT COMMITTEE

Prof. Dr. Paul Cheng Chai Liou (Chairman)

Y.Bhg. Prof. Datuk Seri Dr. Md. Zabid Bin Haji Abdul Rashid(Member)

Y.Bhg. Dato’ Izudin Bin Ishak(Member)

REMUNERATION COMMITTEE

Y.Bhg. Dato’ Izudin Bin Ishak(Chairman)

Yang Mulia Dato’ Paduka Sharipah Hishmah Binti Dato’ Sayed Hassan(Member)

Prof. Dr. Paul Cheng Chai Liou(Member)

NOMINATION COMMITTEE

Y.Bhg. Prof. Datuk Seri Dr. Md. Zabid Bin Haji Abdul Rashid(Chairman)

Prof. Dr. Paul Cheng Chai Liou(Member)

Y.Bhg. Dato’ Izudin Bin Ishak(Member)

COMPANY SECRETARY

Wong Keo Rou (MAICSA 7021435)

REGISTERED OFFICE

2-1, Jalan Sri Hartamas 8Sri Hartamas50480 Kuala LumpurWilayah Persekutuan (KL)MalaysiaTel. : (603) 6201 1120 Fax. : (603) 6201 3121 / 6201 5959

PRINCIPAL PLACE OF BUSINESS/MANAGEMENT OFFICE

The West Road of JinlingGannan Industrial ParkGanzhou Economic and Technological Development ZoneJiangxi Province, 341000People’s Republic of ChinaTel. : (86) 0797 8321788Fax. : (86) 0797 8323626Email : [email protected] Website : www.krbamboo.com www.karbamboo.com

AUDITORS

Messrs UHY (AF1411)Suite 11.05, Level 11The Gardens South TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurMalaysia

SHARE REGISTRAR

Shareworks Sdn Bhd2-1, Jalan Sri Hartamas 8Sri Hartamas50480 Kuala LumpurWilayah Persekutuan (KL)MalaysiaTel. : (603) 6201 1120 Fax. : (603) 6201 3121 / 6201 5959

ADMISSION SPONSOR

Kenanga Investment Bank Berhad8th Floor, Kenanga InternationalJalan Sultan Ismail50250 Kuala LumpurMalaysiaTel. : (603) 2027 5555Fax. : (603) 2164 6690

PRINCIPAL BANKERS

OCBC Al-Amin Bank BerhadIndustrial and Commercial Bank of China LimitedGanzhou Rural Commercial Bank Co., LtdChina Merchants Bank Co., Ltd

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name: KANGERStock Code : 0170Listed on 23 December 2013

100% 100%

YANSHAN (COUNTY) KANGER BAMBOO INDUSTRIAL CO., LTD(Incorporated in People’s Republic of China)

SHENZHEN KANGER BAMBOO WOOD CO., LTD

(Incorporated in People’s Republic of China)

100%

100%

KANGER INVESTMENT (HK) LIMITED(Incorporated in Hong Kong)

Investment holding

100%

KAR MASTERPIECE SDN BHD(Incorporated in Malaysia)

Research and development and trading of bamboo flooring and related products

Manufacturing and trading of bamboo products Trading of bamboo flooring and related products

KANGER INTERNATIONAL BERHAD(Incorporated in Malaysia)

Investment holding

GANZHOU KANGER INDUSTRIAL CO., LTD

(Incorporated in People’s Republic of China)

Manufacturing and trading of bamboo flooring and related products

| 5 Annual Report 2013

group corporate structure


2004 Established Shenzhen Kanger Bamboo Wood Co., Ltd

Recognised as sole authorised bamboo flooring supplier of B&Q China, which is part of Kingfisher Plc, Europe’s leading home improvement retailer

Launched environmentally friendly bamboo flooring product under ‘Kanger’ brand

2007 Invented interlocking system which enables easy installation for our bamboo flooring products

2008 Ventured upstream into the manufacturing of bamboo flooring by acquiring Ganzhou Kanger Industrial Co., Ltd

Commenced construction of manufacturing plant in Ganzhou city, People’s Republic of China

Obtained CE marking in recognition for compliance with European Union legislation, which enabled our products to be marketed within the European Union

2009 Obtained trademark registration for ‘Kanger’ brand from State Administration for Industry and Commerce of the People’s Republic of China

2010 Expanded operations range to include the manufacturing of strand woven bamboo flooring and related products by acquiring Yanshan (County) Kanger Bamboo Industry Co., Ltd

2011 Entered into Research and Development Agreement with Malaysian Forestry Research and Development Board to collaborate on research and development

Launched ‘KAR Masterpiece’ brand for premium strand woven bamboo flooring and related products

Improved interlocking system to facilitate easier installation of flooring products and obtained a patent for this improved interlocking system

2012 Obtained trademark registration for ‘KAR Masterpiece’ brand

Established first ‘KAR Masterpiece’ retail store in Shenzhen, People’s Republic of China

2013 Listed on the ACE Market of Bursa Malaysia Securities Berhad

corporate miLestones


Board of directors’ profiLe

YANG MULIA DATO’ PADUKA SHARIPAH HISHMAH BINTI DATO’ SAYED HASSAN

Age 61

Nationality Malaysian

Qualification Diploma in Cosmetology from Louisiana State College, the United States of America, 1974

Position on our Board Independent Non-Executive Chairman

Date first appointed to our Board 6 February 2013

Membership of our Board Committees Member of Remuneration Committee

Working experience Upon graduation from Louisiana State College, the United States of America in 1974, she worked with various cosmetic companies. In 1985, she started Tjanting Batik Sdn Bhd which is principally involved in the manufacturing and trading of batik, uniforms and corporate gift items. In 1997, she started the ‘La Cucur’ food outlets specialising in Malaysian delicacies.

She is a director of several private limited companies, including Pandan Sutera Sdn Bhd which own the ‘La Cucur’ food outlets, Laksamana Resources Sdn Bhd, a company dealing with fertiliser for farming, and Amalgamated Batteries Manufacturing (Sarawak) Sdn Bhd, an automotive and industrial battery manufacturer.

Occupation Company Director

Any other directorships in public companies

Nil

Any family relationships with our Directors and/or major shareholders or any companies that have entered into

any transactions with our Group

Mother of Yang Mulia Syed Hazrain Bin Syed Razlan Jamalullail, Independent Non-Executive Director

Interest in securities (as at 1 April 2014) 13,756,959 ordinary shares of RM0.10 each (Indirect interest through her spouse)

List of convictions of offences within the past ten (10) years other than

traffic offences, if any

Nil

No. of Board meetings attended in the financial year

Nil (Kanger was only listed on 23 December 2013)


BoARD oF DIReCtoRS’ PRoFILe (CoNt’D)

LENG XINGMIN (冷醒民)

Age 43

Nationality Chinese (People’s Republic of China)

Qualification Diploma in Business Administration from the Nanchang University (南昌大学), China, 1996

Position on our Board Managing Director


Membership of our Board Committees Nil

Working experience He commenced his career in 1991 with the Bureau of Township Enterprises of Xiushui County, Jiangxi, (江西修水县乡镇企业局管理科) as Deputy Chief Management Officer in its Management Division. In 1998, Leng Xingmin started his own business by opening a gas station in Taishan, Guangdong. In 2000, he established Shenzhen Kangdeshun Industrial Development Co., Ltd. (深圳市康得顺实业发展有限公司) which was mainly involved in the trading of ceramic products.

Leng Xingmin’s involvement in the bamboo flooring industry began in 2004 when his family established Shenzhen Kanger to undertake the trading of bamboo flooring and related products. They subsequently ventured upstream into the manufacturing of bamboo flooring and related products through the acquisitions of Ganzhou Kanger and Yanshan Kanger in 2008 and 2010 respectively. Since his involvement in 2004, Leng Xingmin has been instrumental in the development of our Group, including development and/or improvement of production methods to enhance the quality and/or features of our products.



Nil



Nil

Interest in securities (as at 1 April 2014) 237,210,905 ordinary shares of RM0.10 each (Direct interest)



Nil




Y.BhG. PROF. DAtUK SERI DR. MD. ZABID BIN hAjI. ABDUL RAShID

Age 58


Qualification Bachelor of Science in Agribusiness, Universiti Pertanian Malaysia, 1979

Masters of Science, University of London, 1980

Diplome Etude Approfondie (1983) and Doctor of Science (1988) in Management, University of Aix-Marseille, France

Fellow, CPA Australia (FCPA)

Chartered Accountant, the Malaysian Institute of Accountants

Position on our Board Independent Non-Executive Director


Membership of our Board Committees Chairman of Nomination CommitteeMember of Audit Committee

Working experience He began his career in Sumitomo Corporation as executive in 1979 and subsequently joined Malaysian Industrial Development Authority (MIDA) as economist in the same year. In 1980, Prof. Datuk Seri Dr. Md. Zabid Bin Haji. Abdul Rashid joined Universiti Pertanian Malaysia and was its Head of Department of Management Studies (1995-1997), Deputy Dean of the Faculty of Economics and Management (1995-1997), Founding Dean of the Malaysian Graduate School of Management (1997-2001) and Chief Operating Officer of the Malaysian Graduate School of Management Foundation 1997-2002. He retired from Universiti Pertanian Malaysia in 2003 and joined Open University Malaysia where he held the positions of Director of Centre for Graduate Studies and Professor of Management of the Faculty of Business and Management until 2006.

Occupation President and Vice-Chancellor of Universiti Tun Abdul Razak


Nil



Nil

Interest in securities (as at 1 April 2014) Nil



Nil






PROF. DR. PAUL ChENG ChAI LIOU

Age 66


Qualification Bachelor of Business, University of Southern Queensland, Australia, 1990

Masters of Business Administration and Doctor of Commercial Sciences, Oklahoma City University, the United States of America, 1991

Doctor of Business Administration, University of Newcastle, Australia, 1996

Member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants, Malaysian Institute of Management, and Malaysian National Computer Confederation

Fellow member of CPA Australia and Malaysian Institute of Taxation

Chartered member of the Institute of Internal Auditors.



Membership of our Board Committees Chairman of Audit CommitteeMember of Remuneration CommitteeMember of Nomination Committee

Working experience He is currently an adjunct professor with Universiti Tun Abdul Razak and the senior partner of Cheng and Co, an accounting firm he established in 1993 which has seven (7) branches in Malaysia and five (5) branches overseas and supported by more than 170 staff.

Occupation Chartered Accountant


PeterLabs Holdings BerhadCircular Orbit Berhad Gaxy Education Berhad



Nil




Nil





Y.BhG. DAtO’ IZUDIN BIN IShAK

Age 49


Qualification Diploma in Quantity Surveyor, Universiti Teknologi Malaysia, 1987

Advance Diploma in Business Administration, Institute of Commercial Management, 1990

Masters of Business Administration, Southern Cross University, Australia, 2003



Membership of our Board Committees Chairman of Remuneration CommitteeMember of Audit CommitteeMember of Nomination Committee

Working experience He has more than ten (10) years working experience as a consultant, contractor and developer through the Growth Avenue group of companies, which are principally involved in amongst others, property development and construction and which he is a shareholder and director.



Nil



Nil




Nil





YANG MULIA SYED hAZRAIN BIN SYED RAZLAN jAMALULLAIL

Age 35


Qualification Bachelor of Business (Honours) in Accounting, Universiti Malaya, 2002



Membership of our Board Committees Nil

Working experience He began his career as a Consultant with Thomas International, a human capital consulting company which is part of the Deloitte KassimChan group. In 2003, he joined I-HR Consulting Sdn Bhd, where he was responsible for fund raising and provision of outsourcing services to SMEs. In 2004, he joined Kenanga Private Equity Sdn Bhd, a subsidiary company of K & N Kenanga Holdings Berhad, where he was responsible for evaluation of potential investee companies. Thereafter in 2007, he joined KPMG as executive in its business advisory and internal audit division.

He started RL Zinean Sdn Bhd which is principally involved in developing and supplying agricultural inputs (fertilizer) for plantations in 2008 and is also involved in the recovery of non-recyclable paper waste through another company, Flexoresearch Malaysia Sdn Bhd since 2010.



Nil



Son of Yang Mulia Dato’ Paduka Sharipah Hishmah Binti Dato’ Sayed Hassan, Independent Non-Executive Chairman

Interest in securities (as at 1 April 2014) 425,000 ordinary shares of RM0.10 each (Direct interest)



Nil




cHairman’s statement

On behalf of our Board of Directors, I am pleased to present to you our Annual Report and Financial Statements for the financial year ended 31 December 2013 (“FYE 2013”), the first Annual Report since our listing on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”).

PERFORMANCE OVERVIEW

For the FYE 2013, our Group recorded revenue of RM50.18 million and profit before taxation of RM6.40 million. Gross profit margin and profit before tax margin stood at 23.9% and 12.7% respectively for the FYE 2013.

For the FYE 2013, our Group’s horizontal and vertical bamboo flooring products contributed 62.1% of the revenue, while strand woven products contributed the remaining 37.9%. Of these total sales, 42.87% were contributed from export sales to countries outside of the People’s Republic of China.

Our Group’s profit before taxation has already taken into consideration listing expenses totalling RM2.19 million that was charged against the earnings of our Group in the FYE 2013 pursuant to the initial public offering of our Company. Earnings per share for the FYE 2013 were 5.45 sen, calculated based on the weighted average number of shares in issue as at 31 December 2013.

To our ShareholderS,

“YEAR 2013 SAw US ACHIEvING A MAJOR MILESTONE IN OUR CONTINUOUS GROwTH. wE wERE LISTED ON THE ACE MARKET OF BURSA MALAYSIA SECURITIES BERHAD ON 23 DECEMBER 2013.”


CHAIRMAN’S StAteMeNt (CoNt’D)

As at 31 December 2013, our net assets stood at RM58.08 million,

translating into net assets per share of 13.51 sen,

while our cash reserves stood at RM37.04 million.

OUR CORPORATE EXERCISES

On 23 December 2013, we were successfully listed on the ACE Market of Bursa Securities. Our listing scheme entailed the following:-

Acquisitions

On 30 September 2013, we completed the acquisitions of the following:-

(a) Entire issued and paid-up share capital in Kanger Investment (HK) Limited (“HK Kanger”) comprising 53,427,500 ordinary shares of HKD1.00 each for a total purchase consideration of RM34,999,996, which

was wholly satisfied by the issuance of 349,990,960 new ordinary shares of RM0.10 each (“Kanger Shares”) at an issue price of RM0.10 per Kanger Share. The acquisition of HK Kanger also entailed the acquisition of the wholly-owned subsidiaries of HK Kanger, as follows:-

- The entire issued and paid-up share capital in Ganzhou Kanger Industrial Co., Ltd. comprising 14,000,000 ordinary shares of RMB1 each;

- The entire issued and paid-up share capital in Shenzhen Kanger Bamboo Wood Co., Ltd. comprising 10,000,000 ordinary shares of RMB1 each; and

- The entire issued and paid-up share capital in Yanshan (County) Kanger Bamboo Industry Co., Ltd. comprising 6,000,000 ordinary shares of RMB1 each.

(b) Entire issued and paid-up share capital in KAR Masterpiece Sdn Bhd comprising 200,000 ordinary shares of RM1.00 each for a total purchase consideration of RM2, which was wholly satisfied by the issuance of 20 new Kanger Shares at an issue price of RM0.10 per Kanger Share.

Public Issue

On 19 December 2013, we completed a public issue of 80,000,000 new Kanger Shares which were allocated as follows:-

(a) 11,000,000 Kanger Shares were allotted to the public via balloting; and

(b) 69,000,000 Kanger Shares were allotted to selected investors via placement.

Listing and Quotation

Our entire issued and paid up capital, comprising 430,000,000 Kanger Shares, were quoted on the ACE Market of Bursa Securities on 23 December 2013.



OUR PRODUCTS

We are a ‘green’ building material provider, specialising in the manufacturing and trading of bamboo flooring and related products for the residential and commercial markets under our brands namely, ‘Kanger’ and ‘KAR Masterpiece’, as well as original equipment manufacturer (OEM) at the request of our customers. In addition, we also sell strand woven bamboo planks, a semi-finished product from our strand woven bamboo flooring manufacturing process, to furniture and building materials manufacturers as raw materials for their production.

Our competitive strengths which have enabled us to compete effectively in the industry that we are operating in include our wide distribution network, quality ‘green’ products and product development and innovation.

OUR GROwTH DRIvERS

Our growth is largely driven by the following:-

(a) Sustained growth in the Chinese economy leading to more affluent consumers who possess more readiness and ability to spend on building and refurbishing areas for greater comfort and pleasure;

(b) Sustained growth in China’s property construction and real estate market, a market that the bamboo flooring market is dependent on for the consumption of its products;

(c) Changing consumer preference in favour of sustainable flooring material; and

(d) Improving Chinese bamboo flooring exports underpinned by the recovery of the global economy.

MARKET REvIEw AND BUSINESS OUTLOOK

The bamboo industry’s past performance reflected a steady upward growth despite turbulent economic crosswinds from the West. This signals a resilience than can be attributed to robust export demand amid trying times, but also to strengthening domestic demand for bamboo products. There is a reducing reliance to depend on export demand for industry growth; the domestic market is large and continues to grow along with its affluence and population size. This augurs positively results for the industry and its investors.

The bamboo industry has significant potential, due to bamboo products’ extensive applications, versatility and sustainability. With greater innovations and



development concerning the utilisation of bamboo, particularly in the architecture of green buildings, greater market capture vis-à-vis traditional building materials such as steel and wood-based products could be enabled. As the market gains awareness of sustainable products and designs, the bamboo industry will likely gain traction.

FUTURE PROSPECTS

In line with the bright outlook of the bamboo industry, we have identified the following main strategies to continue to grow our businesses:-

(a) Expand our flooring products with the launching of new series of bamboo flooring products;

(b) Enhance our flooring products to focus more on ‘green’ strand woven products;

(c) Expand our product portfolio to be marketed under the ‘KAR Masterpiece’ brand; and

(d) Expand our presence in China by increasing the number of appointed dealers and number of sales and marketing personnel.

Premised on the above, our Board is of the view that we will enjoy positive growth for the financial year ending 31 December 2014.

ACKNOwLEDGEMENT AND APPRECIATION

On behalf of our Board, I would like to take this opportunity to record my appreciation to our valued shareholders for your continuing trust and support in our Group.

I would also like to thank the team of professionals and the authorities who assisted us with our listing on the ACE Market of Bursa Securities. We are entering a new phase of growth in our Group’s development and I hope for even better things to come.

My sincere gratitude is also extended to our valued customers, bankers, suppliers and business associates for their continuing support and confidence in our Group.

Our Board also extends its appreciation to Prof. Dr. Paul Cheng Chai Liou who is retiring at the forthcoming First Annual General Meeting. Prof. Dr. Paul Cheng Chai Liou has made invaluable contributions to our Group throughout his tenure and we wish him success in his future endeavours.

Last but not least, I would like to thank my fellow Board Members for their commitment to our Group and, to the management and staff, my heartfelt thanks for your loyalty, dedication and commitment to our Group.

YANG MULIA DATO’ PADUKA SHARIPAH HISHMAH BINTI DATO’ SAYED HASSAN Independent Non-Executive Chairman


COrpOrate sOCial respOnsibility statement

Our Group recognises that while we are committed to building a sustainable business, we must also be mindful of our corporate social responsibility (“CSR”) towards key stakeholders when carrying out our business activities. Therefore, we strive to maintain a balance between increasing shareholders’ wealth as well as being responsible towards our human capital, society, the environment and marketplace.

The key aspects of our CSR initiatives are as follows:-

Environment

As a ‘green’ building materials provider, we are committed to ‘green’ operating practices and have in place an environmental management system which has been accredited as being ISO 14001:2004 compliant. Our practice and control for environment management include:-

(a) Preserving, conserving, minimising waste of resources and ensuring that our work environment is free from pollution and recognised hazards;

(b) Complying with relevant environmental, health and safety laws for controlling hazardous chemical substances in products and materials;

(c) Conducting periodic management review of our policy, objectives and targets to ensure suitability and effective implementation of our environmental management program;

(d) Communicating to all employees to ensure adequacy in environmental awareness, skill, knowledge and competency; and

(e) Communicating and promoting awareness to customers and suppliers and making the environmental policy available to the public upon request.

Factory and employees

We provide a safe and friendly factory for our employees under the requirements of ISO. Our safety policy outlines the safety measures to be observed by our employees. The employees are also provided with adjacent hostels attached with kitchens and toilets. We acknowledge the contribution of our employees in driving the performance of our business. We recognise good talents and reward them accordingly with promotions and incentives. We provide induction training for new staff to familiarise themselves with the new environment. To ensure continuity, we continuously identify key talents to be trained as part of our succession planning. We encourage our employees to work together in harmony to achieve a common vision. Every employee is given equal opportunity to rise up in their positions through hard work and dedication.

Training and development

We understand the importance and are committed to the training and development of our employees. We provide regular on-the-job trainings pertaining to management skills and/or technical knowledge to provide them with opportunities to acquire new skills and/or knowledge.

Donation to charitable organisation

During the financial year ended 31 December 2013, we made cash donation to the Education & Development Fund of the Nalanda Buddhist Society for them to channel towards the education programme that they offer. More activities will be planned on a periodical basis in the coming years to broaden our Group’s commitment to worthy charitable causes.


COrpOrate gOvernanCe statement

Our Board of Directors recognises the importance of good corporate governance and fully supports the principles and best practices promulgated in the Malaysian Code on Corporate Governance 2012 (the “Code”). Our Board will continuously evaluate the Group’s corporate governance practices and procedures, and where appropriate will adopt and implement the best practices as recommended by the Code to the best interest of the shareholders of the Company.

The statement below sets out how we have applied the principles and recommendations of the Code pursuant to Rule 15.25 of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

PRinCiPlE 1 – ESTaBliShmEnT oF ClEaR RolES anD RESPonSiBiliTiES

1.1 Clear functions of the Board and management

Our Board understands the importance of the roles and responsibilities between the Board and the Management.

Our Board is primarily responsible for charting and reviewing the strategic direction of our Group, delegates and continues to monitor the implementation of these directions by the Management.

The Management, which is led by our Managing Director, is primarily responsible for implementing strategic direction set by our Board and monitoring our Group’s day-to-day business operations, the adequacy of risk management and internal control systems as well as the compliance with legal requirements that will affect our Group and the industry that our Group operates in.

1.2 Board’s role and responsibilities

Our Board’s roles and responsibilities are as follows:

(a) Oversee and set the strategic direction of our Group and to ensure that our Group operates efficiently and sustains continuous growth.

(b) Oversee the conduct of our Group’s business to ensure the business is properly managed in conformity with ethical values, integrity, fairness, trust and high performance.

(c) Identify business risks and established an appropriate system to reduce and minimise the risks that may adversely affects the performance of our Group and the interest of the stakeholders.

(d) Ensure an appropriate succession plan is in place including the appointment, training and fixing compensation of and where appropriate for our Board, the Managing Director and the Management of our Group.

(e) Develop and implement an investor relations programme that creates better communication between our Group and shareholders as well as other stakeholders.

(f) Review the adequacy and the integrity of our Group’s internal control system and information system, including system for compliance with applicable laws, regulations, rules, directives and guidelines

In discharging its fiduciary duties, our Board has delegated specific tasks to three (3) Board Committees, namely the Audit Committee, the Nomination Committee and the Remuneration Committee. All the Board Committees have its own terms of reference and has the authority to act on behalf of our Board within the authority as lay out in the terms of reference and to report to our Board with the necessary recommendation.

1.3 Code of conduct

Our Board has in place a Code of Conduct which defines behaviour that is acceptable or unacceptable in the workplace for our Directors and employees. It outlines the rules and measurements by which our Directors and employees will be held accountable in observing the stated values and principles. The Code of Conduct includes amongst others the respect for the individual, create a culture of open and honest communication, set tone at the top, uphold the law, avoid conflicts of interest, ensure a healthy workplace and report results accurately.


PRinCiPlE 1 – ESTaBliShmEnT oF ClEaR RolES anD RESPonSiBiliTiES (ConT’D)

1.4 Company’s strategy promote sustainability

Our Board exercises annual reviews of our strategic directions, by making necessary assessment on the sustainability of our Group’s strategic directions, with due consideration over the progress of the long term and short term plan, changes in business and political environment, level of competition, update in risk factors and any other factors which could affects the sustainability our Group’s strategic directions.

1.5 access to information and advice

Our Board has access to reports, papers on specific issues, information on major financial and operational matters. The Management supplies accurate and complete information to our Board in a timely manner to enable our Board to discharge its duties effectively.

Our Board can access to the services of the Company Secretary for information and advice.

Our Board and Board Committees are also allowed under its terms of reference to seek independent professional advice at our Group’s expense.

1.6 Qualified and competent company secretary

Our Board is satisfied with the performance and support rendered by the Company Secretary to our Board in the discharge of its functions. The Company Secretary ensures that all Board meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are recorded and maintained in our statutory register. The Company Secretary also keeps abreast of the evolving capital market environment, regulatory changes and developments in Corporate Governance through continuous training, and updates our Board on the latest regulatory updates.

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

1.7 Board Charter

Our Board is currently looking to formalise and adopt a Board Charter which will set out clear roles and responsibilities for our Board and Management in line with the recommendation of the Code. Once the Board Charter is adopted, it will be made public via our corporate website.

PRinCiPlE 2 – STREngThEn ComPoSiTion

2.1 nomination Committee

The Nomination Committee comprises wholly of Independent Non-Executive Directors, as follows:-

name Position

Y.Bhg. Prof. Datuk Seri Dr. Md. Zabid Bin Haji. Abdul Rashid(Independent Non-Executive Director)

Chairman

Prof. Dr. Paul Cheng Chai Liou(Independent Non-Executive Director)

Member


Member

corporate governance statement (cont’d)



PRinCiPlE 2 – STREngThEn ComPoSiTion (ConT’D)

2.1 nomination Committee (Cont’d)

The Nomination Committee is empowered by our Board and its terms of reference to bring to our Board recommendations as to the appointment of new Directors. The Nomination Committee reviews the required mix of skills, experience, diversity and other qualities of the Director, including core competencies. The Nomination Committee also makes assessment on the effectiveness of our Board and evaluation of the Board as a whole, individual Director and Board Committees.

2.2 Recruitment process, annual assessment and gender diversity policy

The primary responsibilities of the Nomination Committee amongst others include the following:-

(1) Identifying, nominating and orientating new Directors;(2) Ensuring that the Board level recruitment matters are discussed in depth, allowing our Board to instead

spend time on strategic and operational matters;(3) Ensuring that we recruit and retain the best available Executive and Non-Executive Directors;(4) Recommending to our Board a Nomination Framework for the evaluation of our Board’s and individual’s

performance for approval of our Board;(5) Assisting our Board in an annual review of the required mix of skills and experience and other qualities,

including core competencies which Non-Executive Directors should bring to our Board; and(6) Recommending individuals for nomination as members of our Board by accessing the desirability of

renewing existing directorships. Due consideration should be given to the extent to which the interplay of the Director’s expertise, skills, knowledge and experience was demonstrated with those of other Board members.

The Nomination Committee also annually reviews the effectiveness of our Board as a whole, its committees and the contribution of each individual Directors, as well as our Managing Director. Such evaluation will be used as a tool to evaluate the strengths, to identify any gaps or area for improvement. The Nomination Committee will ensure that all assessments and evaluations carried out are properly documented and filed.

Although presently there is no any gender diversity policy, our Board will strive to maintain female composition in line with the recommendation of the Code, in recognition of the contributions that female board members can bring to our Board and our Group. Currently, the Chairman is our only female Director. Nevertheless, our Group is an equal opportunity employer and all appointments and employments are based on merits and are not driven by any racial or gender bias.

2.3 Remuneration Committee

The Remuneration Committee comprises wholly of Independent Non-Executive Directors, as follows:-

name Position


Chairman

Yang Mulia Dato’ Paduka Sharipah Hishmah Binti Dato’ Sayed Hassan(Independent Non-Executive Chairman)

Member


Member


PRinCiPlE 2 – STREngThEn ComPoSiTion (ConT’D)

2.3 Remuneration Committee (Cont’d)

The primary responsibilities of the Remuneration Committee amongst others include the following:-

(1) Establish and recommend to our Board the remuneration structure and policy for the Executive Directors and key management and key technical personnel, including the terms of employment, any benefit, pension or incentive scheme entitlement and any compensation payable on the termination of the service contract by our Group, and to review changes to the policy, as necessary;

(2) To review our Group policy on individual remuneration packages for Executive Directors, key management and key technical personnel to ensure the levels of remuneration be sufficiently attractive and be able to retain them and to recommend the remuneration to our Board;

(3) Establish the performance criteria to evaluate the performance of our Directors and ensuring that the remuneration of Directors are reflective of the responsibility and commitment of Directors concerned; and

(4) To assist our Board in discharging responsibilities relating to, amongst others, compensation strategy, succession planning, management development and other compensation arrangement.

The remuneration of the Managing Director is structured as to link rewards to corporate and individual performance. In respect of the Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken and is a matter for consideration by our Board as a whole. Each individual Director shall abstain from discussion pertaining to his/her own remuneration.

The proposed remuneration of Non-Executive Directors proposed is determined by our Board which comprises the following:-

Directors’ Fees These fees are payable to the Non-Executive Directors and are recommended by our Board for the approval of the shareholders at each annual general meeting.

Meeting Allowances These allowances are payable to the Non-Executive Directors for attendance of the Board and Committee meetings. The meeting allowance is determined by our Board.

The details of the remuneration of Directors for the financial year ended 31 December 2013 are as follows:-

non- Executive Executive Directors Directors Total (Rm’000) (Rm’000) (Rm’000)

Director fees and allowance – 187 187Salary, other emoluments and benefits 89 – 89

Grand Total 89 187 276

The aggregate remuneration of Directors analysed into appropriate band of RM50,000 are as follows:-

no. of DirectorsRange of Remuneration Executive Directors non-Executive Directors

Below RM50,000 – 4RM100,001-RM150,000 1 1

Details of the Director’s Remuneration are set out in applicable bands of RM50,000 which comply with the Listing Requirements of Bursa Securities. Whilst the Code prescribed for individual disclosed of directors’ remuneration packages, our Board is of the view that transparency and accountability aspects of Corporate Governance in respect of our Directors’ remuneration are appropriately and adequately addressed by the board disclosure method adopted by our Board.



PRinCiPlE 3 – REinFoRCE inDEPEnDEnCE

3.1 annual assessment of independent Directos

Our Board through the Nomination Committee assesses the Independent Directors on an annual basis, taking into account the individual Director’s ability to exercise independent judgement at all time, his contributions to the effective functionality of the Board from an external perspective and ability to help in developing proposals and synergies. Our Board also received confirmation in writing from the Independent Directors of their independence.

3.2 Tenure of independent Directors

Our Board is mindful of the cumulative term of 9 years for its Independent Non-Executive Directors and upon the completion of the nine (9) years, an Independent Director may continue to serve on our Board subject to the Independent Director being re-designated as Non-Independent Non-Executive Director or the Independent Director obtaining shareholders’’ approval in the event that he remains as an Independent Director.

3.3 Retention or re-appointment of Directors

As at the end of the financial year, none of the Independent Director has served more than a cumulative term of nine (9) years, for which the Independent Director would be re-designated as an Non-Independent Director after the said nine (9) years of service, or to be officially re-elected by shareholders in general meetings.

3.4 Separation of positions of Chairman and managing Director

We have a clear distinction and separation of roles between the Chairman and Managing Director, with clear division of responsibilities. The Chairman is primarily responsible in leading and guiding our Board, and also serves as the communication point between our Board and the Managing Director whilst the Managing Director and his management team is responsible for implementing the plans chartered out and the day to day management of our Group, with clear authority delegated by our Board.

3.5 Composition of our Board

We are led by an experienced Board, comprising one (1) Independent Non-Executive Chairman, one (1) Managing Director and four (4) Independent Non-Executive Directors. The current composition of our Board provides an effective Board with a mix of industry specific knowledge, broad-based business and commercial experience together with independent judgement on matters of strategy, operations, resources and business conduct. The roles of the Independent Non-Executive Chairman, the Managing Director and the Independent Non-Executive Directors are separated and each has a clear division of responsibilities to ensure a balance of power and authority.

PRinCiPlE 4 – FoSTER CommiTmEnT

4.1 Time commitment

Our Board meets at least, quarterly, to consider all matters relating to the overall control, business performance and strategy of our Group. Additional meeting will be called when and if necessary. The relevant reports and Board Papers are distributed to all Directors in advance of the Board Meeting to allow the Directors sufficient time to peruse for effective discussion and decision making during the meetings. All pertinent issues discussed at the meetings in arriving at decisions and conclusions are properly recorded in the discharge of our Board’s duties and responsibilities.

Our Board recognises the importance of time commitment of its members. The meeting dates for the calendar year are set and our Board members usually confirm their attendance for each meeting. However, we were only listed on the ACE Market of Bursa Securities on 23 December 2013 and hence there is no record of attendance of our Board for the financial year ended 31 December 2013. Save for Prof. Dr. Paul Cheng Chai Liou who is member of other listed company, the rest of the Directors do not have directorships in listed companies. Our Board is reminded to notify the Chairman before accepting any new directorship and any changes in shareholdings.



PRinCiPlE 4 – FoSTER CommiTmEnT (ConT’D)

4.2 Continuing education programme for Directors

The Directors are encouraged to attend continuing education programmes and seminars to keep abreast with current developments in the market place and with new statutory and regulatory requirements. They are provided with updates from time to time on relevant new laws and regulations affecting their directorships and relevant compliances.

All the Directors have attended the Mandatory Accreditation Programme as prescribed by the ACE Market Listing Requirements.

In addition, during the financial year ended 31 December 2013, other seminars attended by certain Directors are as follows:-

nameno. of hours/

Daysmode ofTraining

Title ofTraining

Y.Bhg. Prof. Datuk Seri Dr. Md. ZabidBin Haji Abdul Rashid

2 days Seminar International Conference And Annual Meeting, AACSB, Chicago

Prof. Dr. Paul Cheng Chai Liou 2 days Seminar National TaxConference 2013

Y.Bhg. Dato’ Izudin Bin Ishak 3 days Seminar Course RiskManagement For

Public Sector

Y.Bhg. Dato’ Izudin Bin Ishak 1 day Seminar Seminar PsikoligiDalam Perundingan

PRinCiPlE 5 – UPholD inTEgRiTy in FinanCial REPoRTing

Our Board provides the shareholders with the Audited Financial Statements and quarterly reports on a timely basis. The Audit Committee reviews the quarterly results and audited financial statements, before the approval by our Board, focusing particularly on:-

(1) changes in or implementation of major accounting policy changes;(2) significant and unusual events; and(3) compliance with accounting standards and other legal requirements;

The Managing Director and the Chief Financial Officer provided the assurance to the Audit Committee that adequate processes and controls were in place, the appropriate accounting policies had been adopted and that the relevant financial statements gave a true and fair view of the state of affairs of our Group in compliance with the Malaysian Financial Reporting Standards and the provisions of the Companies Act, 1965.

The Internal Auditors provided an independent assessment of the internal control systems to the Audit Committee.

On an annual basis, the Audit Committee would review and monitor the suitability and independence of the external auditors. The Audit Committee set policy and procedures on the provision of non-audit services by the external auditors. For year 2013, the non-audit services rendered by the external auditors were the Reporting Accountants for our listing on the ACE Market of Bursa Securities.

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

The Audit Committee is satisfied with the competence and independence of the external auditors and had recommended the re-appointment of the external auditors to the Directors at the annual general meeting.



PRinCiPlE 6 – RECogniSE anD managE RiSkS

Our Board has ultimate responsibility for reviewing our Group’s risks, approving the risk management framework and policy and overseeing our Group’s strategic risk management and internal control framework. Our Board through the Audit Committee would obtain reports from the Internal Auditors on the periodic checks on the internal control systems.

The details of the risk management are set out in the Risk Management and Internal Controls Statement in this Annual Report. The internal audit function of our Group is outsourced to a professional services firm to provide the Audit Committee and our Board with the assurance they require pertaining to the adequacy and effectiveness of internal control. Please refer to the Audit Committee Report in this Annual Report for details of the internal audit function.

The details of the internal control system are set out in the Risk Management and Internal Controls Statement in this Annual Report.

PRinCiPlE 7 – EnSURE TimEly anD high QUaliTy DiSCloSURE

Our Board strives to comply with corporate disclosure requirements set by Bursa Securities and follows the main forms of information disclosure:-

(a) Continuous disclosure – which is its core disclosure obligation and primary method of informing the market and shareholders.

(b) Periodical disclosure – in the form of full year and quarterly reporting of financial results and major investments, capital expenditure and funding activities proposed by us and the Annual Report.

(c) Specific information disclosure – as and when required, of administrative and corporate developments, usually in the form of press releases.

All information made available to Bursa Securities is immediately available to shareholders, stakeholders and the public on our Investor Relations section of the website: www.krbamboo.com.my.

Our website incorporated an Investor Relations section where our announcements would be captured under the Newsroom section. Under the Investor Relations section, other than the newsroom, the public could access the corporate information, financial information, corporate governance matters and stock information.

PRinCiPlE 8 – STREngThEn RElaTionShiP BETwEEn ComPany anD ShaREholDERS

Our notice of the annual general meeting is given to the shareholders at least 21 days before the meeting. This would enable the shareholders to plan their time and also to appoint proxies and corporate representatives for the annual general meeting. In addition, this would provide the shareholders ample time to read the annual report and if ask questions during the annual general meeting. The Chairman and Board members, with the assistance of the external auditors, are available to respond and provide explanations in the question and answer session.

The Chairman of the meeting would remind the shareholders, proxies and corporate representatives on their rights to demand for a poll in accordance with the provisions of our Articles of Association for any resolutions. The voting process at the annual general shall be by way of show of hands unless a poll is demanded. The Chairman may demand for a poll for any substantive resolutions put forward for voting at the annual general meetings.

At each annual general meeting, all the Directors of our Company will be present at the meetings to answer any questions that the shareholders may ask. The Chairman of the meeting will provide time for the shareholders to ask questions for each agenda in the notice of the annual general meeting. The external auditors will also be present at the annual general meeting to answer any questions that the shareholders may ask. The shareholders will also be able to meet with the Directors after the meeting when they will mingle with the shareholders, proxies and corporate representatives.



ComPlianCE STaTEmEnT

Our Board recognises and views that corporate governance is an on-going process and is of the view that our Group has substantially complied with the recommendations of the Code and will take appropriate steps towards embracing the Principles and Recommendations of the Code at a pace and timeframe consistent with the size, priority and dynamics of our Group, and shall remain committed to attaining the highest possible standards through the continue adoption of the best practises and all other applicable laws.

This statement is made in accordance with a resolution of the Board dated 16 April 2014.



risk management and internal COntrOl statement

The Malaysian Code on Corporate Governance 2012 (“Code”) requires listed companies to maintain a sound risk management framework and internal controls system (Principal 6 of the Code). Our Board is pleased to include a statement on the state of our Group’s risk management and internal control during the year under review. The statement is prepared in accordance with Rule 15.26 (b) of Bursa Malaysia Securities Berhad ACE Market Listing Requirements and as guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

RESPonSiBiliTy

Our Board is responsible for the adequacy and effectiveness of our Group’s risk management and internal control systems. Our Board ensures that the systems manage the Group’s key areas of risk within an acceptable risk profile to increase the likelihood that our Group’s policies and business objectives will be achieved. Due to the inherent limitations in any risk management and internal control system, our Board continually reviews the system to ensure that the risk management and internal control systems provide a reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud.

Our Board through the Audit Committee has established an ongoing process for identifying, evaluating and managing the significant risks faced by our Group and this process includes enhancing the risk management and internal control system as and when there are changes to the business environment or regulator guidelines. The process is regularly reviewed by our Board and is guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers. The Management assists our Board in the implementation of our Board’s policies and procedures on risk and control by identifying and assessing the risks faced and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks.

Our Board is of the view that the risk management and internal control system in place for the year under review and up to the date of issuance of the financial statements is adequate and effective to safeguard the shareholders’ investment, the interests of customers, regulators, employees and our Group’s assets.

RiSk managEmEnT

The context within which our Group manages risks and the key focus of accountability for this is as follows:-

(1) Strategic Risks – our Board and managing Director

Strategic risks are primarily risks caused by events that are external to our Group, but have a significant impact on our Group’s strategic decisions or activities.

The causes of these risks include matters such as national and global economies, government policies and regulations, interest rates and climatic conditions. Often, they cannot be predicted or monitored through a systematic operational procedure. The lack of advance warning and frequent immediate response required to manage strategic risks means they are often best identified and monitored by senior management as part of their strategic planning and review mechanisms.

Accountability for managing strategic risks therefore rests with our Board and the Managing Director. The benefit of effectively managing strategic risks is our Group can better forecast and quickly adapt to the changing demands that are placed upon our Group. It also means that our Group are less likely to be surprised by some external events that call for significant change.


RiSk managEmEnT (ConT’D)

(2) operational Risks – heads of Division/ Department

Operational risks are inherent in the ongoing activities within the different business units or subsidiaries of our Group. These are the risks associated with such things as the day to day operational performance of staff, the risks caused by the company structure and the manner in which the subsidiaries report to corporate headquarters. Senior management needs ongoing assurance that operational risks are identified and managed.

Accountability for managing operational risks rests particularly with the Heads of Business Division/Departments. The benefits of efficiently managing operational risks include maintaining superior quality standards, eliminating undesirable surprises, the early identification of problematic issues, being prepared for emergencies if they happen and being held in high regard by shareholders for the efficient and effective management of risk.

inTERnal ConTRol

The key processes that have been established in reviewing the adequacy and effectiveness of the internal control system include the following:-

Internal Audit

The Internal Audit function is outsourced to an independent professional firm to check for compliances with policies and procedures and the effectiveness of our Group’s internal control systems and highlight significant findings in respect of any non-compliance. The internal auditors report directly to the Audit Committee. The internal audit will focus on the key operational processes in the People’s Republic of China. The proposed internal audit plan will be submitted to the Audit Committee for consideration and approval each year. The Audit Committee is responsible to review and discuss with the Management on the issues highlighted by the internal auditors, whenever necessary.

Audit Committee

The Audit Committee reviews and discusses internal control issues identified by the Internal Auditors, External Auditors and the Management, and evaluate the adequacy and effectiveness of our Group’s risk management and internal control systems. They also review the internal audit functions with particular emphasis on the scope and frequency of audits and the adequacy of resources. The minutes of the Audit Committee meetings are tabled to the Boards of the Group on a periodical basis.

Organisational Structure

Our Group has in place an organisational structure with clearly defined lines of responsibilities and functionalities which promotes appropriate levels of accountability for risk management, control procedures and effectiveness of operations. All new employees are required to undergo an orientation programme and the job function is clearly written for transparency and better accountability.

Limit of Authority

There are policy guidelines and authority limits imposed on the Executive Directors and Management within our Group in respect of the day-to-day operations, signing of sales and supplier agreements, acquisitions and disposal of assets. Disaster Recovery Plan and General Safety And Security

Our Group has a written disaster recovery plan in the event our businesses suffer from any accidents or natural disasters. The plan is updated regularly to comply with the latest safety standards. Our Group also has proper control procedure to safeguard the interests and safety of our employees and our assets.

risk management and internal control statement (cont’d)


inTERnal ConTRol (ConT’D)

Control Environment

Our Board considers the integrity of staff at all levels to be of utmost importance, and this is pursued through comprehensive recruitment, appraisal and reward programmes. There is an effective group organisation structure within which business activities are planned, controlled and monitored.

Our Group’s culture and values, and the standard of conduct and discipline we expect from our employees have been communicated to them via the employee handbook or letters of appointment.

ConClUSion

To the best knowledge of our Board, there were no material losses incurred during the period under review as a result of weakness in internal control. Our Board has received assurance from the Managing Director and Chief Financial Officer that our Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, based on the risk management and internal control system of our Group. The Management continues to take measures to improve and strengthen the internal control environment.

REViEw oF ThE STaTEmEnT By EXTERnal aUDiToRS

The external auditors have reviewed this Risk Management and Internal Control Statement for inclusion in the annual report of our Group for the financial year ended 31 December 2013 and reported to our Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by our Board in reviewing the adequacy and effectiveness of the risk management and internal control system.

This statement was made in accordance with a resolution of our Board of Directors dated 16 April 2014.

risk management and internal control statement (cont’d)


audit COmmittee repOrt

mEmBERS oF aUDiT CommiTTEE

The members of the Audit Committee are as follows:-

name Position


Chairman

Y.Bhg. Prof. Datuk Seri Dr. Md. Zabid Bin Haji. Abdul Rashid(Independent Non-Executive Director)

Member


Member

Our Audit Committee is pleased to present the Audit Committee Report for the financial year ended 31 December 2013.

1. aTTEnDanCE oF mEETing

During the financial year under review, the audit committee did not hold any meeting as we were only listed on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) on 23 December 2013.

2. TERmS oF REFEREnCE

2.1 Composition of audit Committee

The Audit Committee comprised of three (3) members who are Directors of the Company. In compliance with the ACE Market listing requirements of Bursa Securities and the Malaysian Code on Corporate Governance 2012 (“Code”), the Audit Committee is comprised of not fewer than three (3) members, all of whom are Non-Executive Directors.

Prof. Dr. Paul Cheng Chai Liou meets the requirement of Rule 15.09 (1) (c) (i) of the ACE Market listing requirements of Bursa Securities in that he is a Chartered Accountant and a member of the Malaysian Institute of Accountants.

2.2 meetings

The Audit Committee will meet at least four (4) times a year although such additional meetings may be called at any time at the discretion of the Audit Committee.

The meetings are pre-scheduled and are timed just before our Board meetings. The Agenda carries matters that need to be deliberated, reviewed or decided on and further reported to our Board. Notices and Audit Committee papers are circulated to all members well before each meeting with sufficient time for them to prepare themselves for deliberating on the matters being raised.

If the need arises, the Chairman has the discretion to call for the attendance of Management, Internal Auditor and External Auditors during such meetings.

The Audit Committee will also meet the External Auditors in private sessions without the presence of Management to discuss audit related matters that Auditors wish to raise directly with the Audit Committee.

2.3 minutes

The Company Secretary shall be the secretary of the Audit Committee. The Company Secretary shall provide the necessary administrative and secretarial services for the effective functioning of the Audit Committee. The minutes of the meetings are circulated to the Audit Committee and all members of our Board.


2. TERmS oF REFEREnCE (ConT’D)

2.4 objectives

The primary objectives of the Audit Committee are to:-

(i) relieve the full Board from detailed involvement in the review of the results of internal and external audit activities and to ensure that audit findings are brought up to the highest level for consideration.

(ii) comply with Bursa Securities ACE Market Listing Requirements and other specified financial standards, required disclosure policies, regulations, rules, directives or guidelines developed and administered by Bursa Securities.

(iii) provides forum for dialogue or meetings as a direct line of communication between our Board and the external auditors, internal auditors and Management.

2.5 authority

The Audit Committee shall have the following authority as empowered by our Board:-

(i) to have explicit authority to investigate any matters within its terms of reference;

(ii) to have the resources which are required to perform its duties;

(iii) to have full, free and unrestricted access to the chief executive officer and chief financial officer and to any information, records, properties from both internal and external auditors and any employee(s) of the Group;

(iv) to have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity, if any;

(v) to have the rights to obtain external legal or other independent professional advice whenever necessary in furtherance of their duties; and

(vi) to be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed company, whenever deemed necessary.

2.6 Duties and Functions

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

(i) to recommend the nomination of person or persons as external auditors.

(ii) to consider the external auditors for appointment, audit fees and review any letter of resignation or dismissal and proposal for re-appointment of external auditors or whether there is reason (supported by grounds) to believe that the external auditors is not suitable for re-appointment.

(iii) to review the nature and scope of the audit with the internal and external auditors before the audit commences and ensure co-ordination where more than one audit firm is involved;

(iv) to review the evaluation of the system of internal controls with the auditors;

(v) to review the assistance given by our Group’s officer to the external auditors;

(vi) to review any appraisal or assessment of the performance of the internal auditors;

audit committee report (cont’d)


2. TERmS oF REFEREnCE (ConT’D)

2.6 Duties and Functions (Cont’d)

(vii) to review the quarterly results and annual financial statements, prior to the approval by our Board, focusing particularly on:-

- any changes in accounting policies and practices- significant adjustments arising from the audit- any other significant and unusual events- the going concern assumption- compliance with accounting standards and other legal requirements

(viii) to review the external auditor’s management letter and Management’s response;

(ix) to review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;

(x) to review the internal audit programme and the results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function;

(xi) to review and recommend to our Board the Corporate Governance Statement and Statement on Internal Control in relation to internal control and the management of risk to be included in the annual report;

(xii) to consider the report, major findings and Management’s response on any internal investigations carried out by the internal auditors;

(xiii) to review the adequacy and effectiveness of risk management, internal control and governance systems;

(xiv) to review any related party transaction and conflict of interest situation that may arise within us or our Group including any transaction, procedure or course of conduct that raises questions of Management integrity; and

(xv) to carry out such other responsibilities, functions or assignments as may be defined jointly by the Audit Committee and our Board from time to time.

No member of the Audit Committee shall have a relationship which in the opinion of our Board will interfere with the exercise of independent judgement in carrying out the functions of the Audit Committee.

3. SUmmaRy oF aCTiViTiES DURing ThE FinanCial yEaR

There were no principal activities undertaken by the Audit Committee during the financial year ended 31 December 2013 as we were only listed on the ACE Market of Bursa Securities on 23 December 2013.



4. inTERnal aUDiT FUnCTion

The Audit Committee is supported by the internal audit team whose primary responsibility is to evaluate and report on the adequacy, integrity and effectiveness of the overall system of internal control of the Group. The internal audit function of the Group is outsourced to an external consultant who reports directly to the Audit Committee with its findings and recommendations. Any necessary corrective actions after reporting to the Board of Directors by the Audit Committee will be directed by the Board.

For financial year ended 31 December 2013, the internal audit team has developed a one year risk-based internal audit plan to support the execution of internal control reviews based on the risk profile established by the Audit Committee. An internal audit assignment in accordance to the Audit Plan as approved by the Audit Committee covering the area of corporate governance practices and internal control systems were completed by the internal audit team and the report had been presented to the Audit Committee for its review. The report also includes recommendations as well as proposed corrective actions to be adopted by the Management. In the subsequent financial year, follow-up audits will then be carried out to determine whether the Management has taken the recommended corrective actions in the previous internal audit report.

The cost incurred for the internal audit function in respect of the financial year ended 31 December 2013 was approximately RM35,000.



additiOnal COmplianCe infOrmatiOn disClOsures

maTERial ConTRaCTS

During the financial year under review, there was no material contract entered into by us and our subsidiaries which involved our Directors’ and major shareholders’ interest.

UTiliSaTion oF PRoCEEDS RaiSED FRom CoRPoRaTE PRoPoSalS

We were listed on the ACE Market of Bursa Securities on 23 December 2013. The status of utilisation of the gross proceeds of RM20 million from the public issue by our Group as at 31 December 2013 are as follows:-

Estimated timeframe for utilisation (from date Proposed actual Purpose of listing) utilisation utilisation Deviation Balance Rm ’000 Rm ’000 Rm ’000 % Rm ’000

i) Capital expenditure Within 12 months 1,000 – – – 1,000ii) R&D expenditure Within 24 months 2,000 – – – 2,000iii) Repayment of Within bank borrowings 12 months 5,500 – – – 5,500iv) Working capital Within 24 months 8,200 (989) 109 (1) 1.3 7,320v) Estimated listing Within expenses 3 months 3,300 (3,191) (109) (1) (3.3) –

Total gross proceeds 20,000 (4,180)

note:

(i) The excess amount budgeted for will be utilised for working capital purposes.

non-aUDiT FEES

The non-audit fees paid by our Group to the external auditors, Messrs UHY, during the financial year were RM60,000 in relation to their role as Reporting Accountants for our listing on the ACE Market of Bursa Malaysia Securities Berhad.

VaRiaTion in RESUlTS

There was no variation in results of 10% or more between the profit stated in the announced unaudited financial statements and the audited financial statements.


direCtOrs’ respOnsibilities statementfOr the audited finanCial statements

The Directors are required by the Companies Act 1965 to prepare financial statements for each financial year which have been made out in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of our Group and our Company at the financial year end and of the results and cash flows of our Group and our Company for the financial year.

In preparing the financial statements, the Directors have:-

• adoptedsuitableaccountingpoliciesandappliedthemconsistently;• madejudgementsandestimatesthatareprudentandreasonable;• ensuredthatapplicableaccountingstandardshavebeenfollowed;• preparedthefinancialstatementsonagoingconcernbasis;and• ensuredthatproperaccountingrecordsarekeptsoastoenablethepreparationofthefinancialstatements

with reasonable accuracy.

The Directors are responsible for taking such steps as are reasonably open to them to safeguard the assets of our Group and our Company, and to detect and prevent fraud and other irregularities.


directors’report

consolidatedstatement ofchanges inequity

notes to theFinancialstatements

independent auditors’report

statement bydirectors

statement ofchanges inequity

supplementaryinformation

statements ofFinancialposition

statutorydeclaration

statements ofcomprehensiveincome

statements ofcash Flows

36

45

49

41 43 44

47

40

46

80

40

Financial REPORts


direCtOrs’ repOrt

The Directors have pleasure in submitting their report together with the audited financial statements of the Group for the financial year ended 31 December 2013 and the audited financial statements of the Company for the financial period from 27 August 2012 (date of incorporation) to 31 December 2013.

inCoRPoRaTion anD CommEnCEmEnT oF BUSinESS

The Company was incorporated on 27 August 2012 under the Companies Act, 1965 in Malaysia and its principal activity is investment holding. The principal activities of its subsidiary companies are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year/period.

On 5 February 2013, the Company had changed its status from a private limited company to public limited company and hence changed its name from Kanger International Sdn. Bhd. to Kanger International Berhad.

On 23 December 2013, the Company was listed on ACE Market of Bursa Malaysia Securities Berhad.

FinanCial RESUlTS

group Company Rm Rm

Profit/(Loss) for the financial year/period 4,962,409 (2,694,561)

Attributable to: Owners of the parent 4,962,409

RESERVES anD PRoViSionS

There were no material transfers to or from reserves or provisions during the financial year/period.

DiViDEnD

There were no dividends proposed, declared or paid by the Company since the date of incorporation. The Board of Directors does not recommend any dividend in respect of the current financial period.

iSSUE oF ShaRES anD DEBEnTURES

At the date of incorporation, the Company issued 2 ordinary shares of RM1.00 each as subscribers’ shares.

During the financial period, the authorised share capital of the Company was split from RM1.00 to RM0.10 and has been subsequently increased from RM100,000 to RM50,000,000 by the creation of the 499,000,000 new ordinary shares of RM0.10 each.


iSSUE oF ShaRES anD DEBEnTURES (ConT’D)

During the financial period, the Company also issued:

(a) 349,999,980 new ordinary shares of RM0.10 each for a total cash consideration of RM34,999,980 as consideration to acquire two subsidiary companies; and

(b) 80,000,000 new ordinary shares of RM0.10 each at RM0.25 for a total cash consideration of RM20,000,000 for capital expenditure, research and development expenditure, repayment of bank borrowings, payment of listing expenses and working capital purposes.

The new ordinary shares issued during the financial period rank pari passu in all respects with the existing ordinary shares of the Company.

There were no issues of debentures during the financial period.

oPTionS gRanTED oVER UniSSUED ShaRES

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

DiRECToRS

The Directors who served since the date of incorporation are as follows:

Dato’ Paduka Sharipah Hishmah Binti Sayed Hassan (appointed on 6.2.2013)Leng Xingmin (appointed on 6.2.2013)Prof. Datuk Seri Dr. Md Zabid Haji Abdul Rashid (appointed on 6.2.2013)Prof. Dr. Paul Cheng Chai Liou (appointed on 6.2.2013)Syed Hazrain bin Syed Razlan Jamalullail (appointed on 6.2.2013)Dato’ Izudin bin Ishak (appointed on 6.2.2013)Vemalan a/l Naraynan (first Director, resigned on 6.2.2013)Fong Nyuk Lean (first Director, resigned on 6.2.2013)

DiRECToRS’ inTERESTS

The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at year end (including their spouses or children) according to the Register of Directors’ Shareholdings are as follows:

no. of ordinary shares of Rm0.10 each (after the share split of which was Rm1.00 initially) at date of at incorporation acquired Disposed 31.12.2013

Direct interest:Leng Xingmin – 237,210,905 – 237,210,905

indirect interest:Dato’ Paduka Sharipah Hishmah binti Sayed Hassan 1 – 13,756,959 – 13,756,959

1 Deemed interests pursuant to Section 134(12)(c) of the Companies Act, 1965 in compliance with the Companies (Amendment) Act, 2007 by virtue of their spouse and/or child direct interests in the Company.

directors’ report (cont’d)


DiRECToRS’ BEnEFiTS

Since the date of incorporation, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remunerations received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Neither during nor at the end of the financial period, was the Company a party to any arrangement the object of which is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

oThER STaTUToRy inFoRmaTion

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

(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts to be written off and no allowance for doubtful debts was required; 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.

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

(i) it necessary to write off any bad debts or to make any provision for doubtful debts in the financial statements of the Group and of the Company;

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

(iii) any amount stated in the financial statements of the Group and of the Company misleading; and

(iv) adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

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

(ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year/period.

(d) No contingent or other liabilities of the Group and of the Company have become enforceable, or are likely to become enforceable within the period of twelve months after the end of the financial year/period which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due.



oThER STaTUToRy inFoRmaTion (ConT’D)

(e) In the opinion of the Directors:

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

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

SigniFiCanT anD SUBSEQUEnT EVEnTS

The significant and subsequent events of the Group are disclosed in Note 30 to the financial statements.

aUDiToRS

The Auditors, Messrs UHY, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 16 April 2014.

____________________________________ ____________________________________ DaTo’ PaDUka ShaRiPah PRoF. DaTUk SERi DR. mD ZaBiD hiShmah BinTi SayED haSSan haJi aBDUl RaShiD



statement by direCtOrspursuant tO seCtiOn 169(15) Of the COmpanies aCt, 1965

We, the undersigned, being two of the Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 43 to 79 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and for the financial period from 27 August 2012 (date of incorporation) to 31 December 2013 respectively and of their financial performance and cash flows for the financial year/period then ended.

The supplementary information set out in page 80 have been compiled 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 and the directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 16 April 2014.

____________________________________ ____________________________________ DaTo’ PaDUka ShaRiPah PRoF. DaTUk SERi DR. mD ZaBiD hiShmah BinTi SayED haSSan haJi aBDUl RaShiD

statutOry deClaratiOnpursuant tO seCtiOn 169(16) Of the COmpanies aCt, 1965

I, PRoF. DaTUk SERi DR. mD ZaBiD haJi aBDUl RaShiD, being the Director responsible for the financial management of kangER inTERnaTional BERhaD, do solemnly and sincerely declare that the financial statements set out on pages 43 to 79 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed )PRoF. DaTUk SERi DR. mD ZaBiD haJi aBDUl RaShiD )at kUala lUmPUR in the Federal Territory )on 16 April 2014. ) ____________________________________ PRoF. DaTUk SERi DR. mD ZaBiD haJi aBDUl RaShiD

Before me,

____________________________________ mohan a.S. maniam (NO. W 521) CommiSSionER FoR oaThS


independent auditOrs’ repOrttO the members Of kanger internatiOnal berhad

REPoRT on ThE FinanCial STaTEmEnTS

We have audited the financial statements of kangER inTERnaTional BERhaD, which comprise the statements of financial position as at 31 December 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the financial year ended 31 December 2013 of the Group and for the financial period from 27 August 2012 (date of incorporation) to 31 December 2013 of the Company, and a summary of significant accounting policies and other explanatory information, as set out on pages 43 to 79.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and 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 of 31 December 2013 and of their financial performance and cash flows for the financial year ended 31 December 2013 and the financial period from 27 August 2012 (date of incorporation) to 31 December 2013 respectively.


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 subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the accounts and the auditors’ report of the all the subsidiary companies of which we have not acted as auditors, as disclosed in Note 6 to the financial statements.

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

(d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.

oThER REPoRTing RESPonSiBiliTiES

The supplementary information set out on page 80 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 maTTER

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.

UhyFirm Number: AF 1411Chartered Accountants

yEoh aik ChUanApproved Number: 2239/07/14 (J)Chartered Accountant

KUALA LUMPUR

16 April 2014

independent auditors’ report (cont’d)


statements Of finanCial pOsitiOnas at 31 deCember 2013

group Company 2013 2013 note Rm Rm

non-Current assets

Property, plant and equipment 4 11,775,966 –Intangible assets 5 1,500,000 –Investments in subsidiary companies 6 – 34,999,998

13,275,966 34,999,998

Current assets

Inventories 7 21,803,194 –Trade receivables 8 3,374,763 –Other receivables 9 8,437,146 –Amounts due from subsidiary companies 10 – 15,989,295Fixed deposits with licensed banks 11 7,964,992 –Cash and bank balances 11 29,075,097 528,146

70,655,192 16,517,441

Total assets 83,931,158 51,517,439

Equity

Share capital 12 43,000,000 43,000,000Share premium 13 11,000,000 11,000,000Other reserves 13 (9,283,685) –Retained earnings/(Accumulated losses) 13,364,659 (2,694,561)

Total Equity 58,080,974 51,305,439

Current liabilities

Trade payables 14 1,303,460 –Other payables 15 498,832 212,000Amount due to a Director 16 353,630 –Bank borrowings 17 22,293,320 –Tax payable 1,400,942 –

Total liabilities 25,850,184 212,000

Total Equity and liabilities 83,931,158 51,517,439

The accompanying notes form an integral part of the financial statements.


statements Of COmprehensive inCOme fOr the finanCial year ended 31 deCember 2013 and fOr the periOd frOm 27 august 2012(date Of inCOrpOratiOn) tO 31 deCember 2013

group Company 1.1.2013 to 27.8.2012 to 31.12.2013 31.12.2013 note Rm Rm

Revenue 18 50,180,564 –

Cost of sales (38,182,554) –

Gross profit 11,998,010 –

Other income 872,748 3,262

Administrative expenses (2,965,195) (506,382)

Distribution expenses (631,304) –

Other operating expenses (2,201,765) (2,191,441)

Finance costs 19 (678,714) –

Profit/(Loss) before tax 20 6,393,780 (2,694,561)

Taxation 21 (1,431,371) –

Net profit/(loss) for the financial year/period 4,962,409 (2,694,561)

Other comprehensive income- Foreign currency translation 3,067,248 –

Profit/(Loss) for the financial year/period, representing total comprehensive income for the financial year/period 8,029,657 (2,694,561)

Earnings per share (sen) Basic 22 5.45



COnsOlidated statement OfChanges in equityfOr the finanCial year ended 31 deCember 2013

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statement Of Changes in equity fOr the finanCial periOd frOm 27 august 2012(date Of inCOrpOratiOn) tO 31 deCember 2013

non - Distributable

Share Share accumulated Capital Premium losses Total Rm Rm Rm Rm

Company

At date of incorporation 2 – – 2

Loss for the financial period, representing total comprehensive income for the financial period – – (2,694,561) (2,694,561)

Transaction with owners: Issuance of shares 8,000,000 11,000,000 – 19,000,000

Issued of share for share exchange for merger exercise 34,999,998 – – 34,999,998 42,999,998 11,000,000 – 53,999,998

At 31 December 2013 43,000,000 11,000,000 (2,694,561) 51,305,439



statements Of Cash flOws fOr the finanCial year ended 31 deCember 2013 and fOr the periOd frOm 27 august 2012(date Of inCOrpOratiOn) tO 31 deCember 2013

group Company 1.1.2013 to 27.8.2012 to 31.12.2013 31.12.2013 Rm Rm

Cash Flows From operating activities

Profit/(Loss) before tax 6,393,780 (2,694,561)Adjustments for: Depreciation of property, plant and equipment 970,719 – Interest expenses 678,714 – Interest income (185,561) (3,262) Property, plant and equipment written off 21,664 –

Operating profit/(loss) before working capital changes 7,879,316 (2,697,823)

Changes in working capital: Inventories (3,765,589) – Receivables (3,557,377) – Payables 1,180,280 212,000 Amounts owing by/to subsidiary companies – (15,989,295) Amount owing to a Director 353,630 –

(5,789,056) (15,777,295)

Cash generated from/(used in) operations 2,090,260 (18,475,118)

Interest received 185,561 3,262 Interest paid (678,714) – Tax paid (829,890) –

(1,323,043) 3,262

net cash generated from/(used in) operating activities 767,217 (18,471,856)

Cash Flows From investing activities Purchase of property, plant and equipment (96,685) – Acquisition of intangible assets (1,500,000) –

net cash used in investing activities (1,596,685) –



Cash Flows From Financing activities Drawdown of bank borrowings 18,992,610 – Proceeds from issuance of shares 19,000,000 19,000,000 Repayment of bank borrowings (15,529,570) –

net cash generated from financing activities 22,463,040 19,000,000

net increase in cash and cash equivalents 21,633,572 528,144Cash and cash equivalents at beginning of the financial year/date of incorporation 11,575,007 2Effect of exchange translation difference on cash and cash equivalents 3,831,510 –

Cash and cash equivalents at end of the financial year/period 37,040,089 528,146

Cash and cash equivalents at end of the financial year/period comprises: Fixed deposits with licensed banks 7,964,992 –Cash and bank balances 29,075,097 528,146

37,040,089 528,146


statements oF cash Flows (cont’d)


nOtes tO the finanCial statements

1. CoRPoRaTE inFoRmaTion

The Company was incorporated on 27 August 2012 under the Companies Act, 1965 in Malaysia and its principal activity is investment holding. The principal activities of its subsidiary companies are disclosed in Note 6.

There have been no significant changes in the nature of these activities during the financial year/period.

On 5 February 2013, the Company had changed its status from a private limited company to a public limited company and hence changed its company name from Kanger International Sdn. Bhd. to Kanger International Berhad.

On 23 December 2013, the Company was listed on ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) as further detailed in Note 30.

The registered office of the Company is located at 2-1, Jalan Sri Hartamas 8, Sri Hartamas, 50480 Kuala Lumpur, Wilayah Persekutuan.

2. BaSiS oF PREPaRaTion

(a) Statement of Compliance

The financial statements of the Group and the Company have been prepared on the historical cost convention except as disclosed in the notes to the financial statements and in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia.

Since the date of incorporation, the Group and the Company have adopted all the applicable MFRSs issued by the Malaysian Accounting Standards Board (“MASB”).

The Group and the Company have not applied the following MFRSs, Issues Committee (“IC”) Interpretation and amendments to MFRSs that have been issued by the MASB but are not yet effective:

Effective dates forfinancial periods

beginning on or after

Amendments to MFRS 10 Investment Entity 1 January 2014Amendments to MFRS 12 Investment Entities 1 January 2014Amendments to MFRS 127 Investment Entities 1 January 2014Amendments to MFRS 132 Offsetting Financial Assets and

Financial Liabilities1 January 2014

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

1 January 2014

Amendments to MFRS 139 Novation of Derivatives and Continuation of Hedging

1 January 2014

IC Interpretation 21 Levies 1 January 2014Amendments to MFRS 119 Defined Benefits Plans:

Employee Contributions1 July 2014

Amendments to MFRSs contained in the document entitled “Annual Improvements 2010 - 2012 Cycle”

1 July 2014

Amendments to MFRSs contained in the document entitled “Annual Improvements 2011 - 2013 Cycle”

1 July 2014


notes to the Financial statements (cont’d)

2. BaSiS oF PREPaRaTion (ConT’D)

(a) Statement of Compliance (Cont’d)

Effective dates forfinancial periods

beginning on or after

Amendments to MFRS 7 Mandatory Date of MFRS 9 and Transition Disclosures

To be announcedby MASB

MFRS 9 (IFRS 9 (2009)) Financial Instruments (IFRS 9 issued by IASB in November 2009)


MFRS 9 (IFRS 9 (2010)) Financial Instruments (IFRS 9 issued by IASB in October 2010)


The Group and the Company intend to adopt the above MFRSs, IC Interpretation as well as amendments to MFRSs when they become effective.

The initial application of the MFRSs, IC Interpretation as well as amendments to MFRSs are not expected to have any financial impacts to the financial statements of the Group and the Company except as discussed below:

mFRS 9 Financial instruments

MFRS 9 (IFRS 9 (2009)) replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement on classification and measurement of financial asset. MFRS 9 requires financial asset to be measured at fair value or amortised cost. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

MFRS 9 (IFRS 9 (2010)) includes the requirements for the classification and measurement of financial liabilities and for derecognition. Measurement for financial liability designated as at fair value through profit or loss, requires the amount of change in the fair value of the financial liability, that is attributable to the change of credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss.

Under MFRS 139, the entire amount of the change in fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss.

The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 9.

(b) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and the Company’s functional currency.



2. BaSiS oF PREPaRaTion (ConT’D)

(c) Significant accounting estimates and judgements

The summary of accounting policies as described in Note 3 are essential to understand the Group’s and the Company’s results of operations, financial position, cash flows and other disclosures. Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgements and the use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Directors exercise their judgement in the process of applying the Group’s accounting policies.

Estimates, assumptions concerning the future and judgements are made in the preparation of the

financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results

The key assumptions concerning the future and other key sources of estimation or uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below:

(i) Depreciation of property, plant and equipment

The costs of property, plant and equipment are depreciated on a straight-line basis over the useful lives of the assets. Management estimates the useful lives of the property, plant and equipment as disclosed in Note 3(c)(iii). These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment as at 31 December 2013 is disclosed in Note 4.

(ii) Development costs

Initial capitalisation of development costs is based on Management’s judgement that technical and economical feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, Management makes assumptions regarding the expected future cash generations of the project, discount rates to be applied and the expected period of benefits.

Detailed sensitivity analysis has been carried out and the Directors are confident that the

carrying amount of the asset will be recovered in full. This situation will be closely monitored and adjustments will be made in future periods, if the market activity indicates that such adjustments are appropriate.

(iii) income taxes

There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is involved especially in determining tax base allowances and deductibility of certain expenses in determining the Group-wide provision for income taxes. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax provisions in the financial period in which such determination is made.



3. SigniFiCanT aCCoUnTing PoliCiES

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies, which have been prepared in accordance with the Group’s accounting policies, and are all drawn up to the same reporting period.

(i) Subsidiary companies

Subsidiary companies are those companies in which the Group has long term equity interest and has the power, directly or indirectly, to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights.

Investments in subsidiary companies is stated at cost less any impairment losses in the Company’s statement of financial position. The cost of investments includes transaction costs.

Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

(ii) Consolidation

Subsidiary companies are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

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

Under the merger method of accounting, the results of subsidiary companies are presented as if the merger had been effected throughout the current year. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting credit differences is classified as equity and regarded as a non-distributable reserve. Any resulting debit difference is adjusted against any suitable reserve. Any share premium, capital redemption reserve and any other reserves which are attributable to share capital of the merged entities, to the extent that they have not been capitalised by a debit difference, are reclassified and presented as movement in other capital reserves.



3. SigniFiCanT aCCoUnTing PoliCiES (ConT’D)

(b) Foreign currency translation

(i) Foreign currency translation and balances

Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date.

Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the rate at the date of transaction.

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

(ii) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange prevailing at the reporting date, the date of transition to MFRS, which are treated as assets and liabilities of the Company. Income and expenses items are translated at the average rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rate at the dates of the transactions are used. Exchange differences arising from the translation are recognised in other comprehensive income.

On disposal of a foreign operation, the cumulative amount of exchange differences relating to that foreign operation, recognised in other comprehensive income and accumulated in equity shall be reclassified to profit or loss when the gain or loss on disposal is recognised.

(c) Property, plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 3(i).

(i) Recognition and measurement

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use.

The cost of property, plant and equipment recognised as a result of a business combination is

based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items.




(c) Property, plant and equipment (Cont’d)

(i) Recognition and measurement (Cont’d)

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss.

Land and buildings are measured at fair value less accumulated depreciation on buildings and impairment losses recognised after the date of the revaluation. Valuations are performed with sufficient regularity, usually every five years, to ensure that the carrying amount does not differ materially from the fair value of the land and buildings at the end of the reporting period.

As at the date of revaluation, accumulated depreciation, if any, is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Any revaluation surplus arising upon appraisal of land is recognised in other comprehensive income and credited to the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluations of land are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to other comprehensive income.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statements of comprehensive income as incurred.

(iii) Depreciation

Depreciation is recognised in the profit or loss on straight line basis to write off the cost or valuation of each asset to its residual value over its estimated useful life. Leased assets are depreciated over the shorter of the lease term and their useful lives.

Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:

Leasehold land Over the remaining year of lease term of 45 yearsBuilding 20 yearsPlant and machinery 3 - 10 yearsOffice equipment 3 - 10 yearsMotor vehicles 5 yearsTools and equipment 3 - 5 years

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




(d) intangible assets

intangible assets acquired separately

Intangible assets acquired separately are measured on initial recognition at cost. Subsequent expenditure is capitalised when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

Intangible assets which have finite useful lives are carried at cost less accumulated amortisation and

accumulated impairment losses. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives. The useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each reporting date.

Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses, are not amortised but tested for impairment annually. The assessment of indefinite useful lives is reviewed annually to determine whether the indefinite useful lives continue to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

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

(e) Financial assets

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

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately in profit or loss.

The Group and the Company classify their financial assets as loan and receivables.

loan and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the end of the reporting period which are presented as non-current assets.

After initial recognition, financial assets categorised as loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.




(e) Financial assets (Cont’d)

Regular way purchase or sale of financial assets

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

Derecognition of financial assets

Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount and the sum of consideration received and any cumulative gains or loss that had been recognised in equity is recognised in the profit or loss.

(f) Financial liabilities

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

All financial liabilities are initially recognised at fair value plus transaction cost and subsequently carried at amortised cost using the effective interest method. Changes in the carrying value of these liabilities are recognised in the profit or loss.

The Group and the Company classify their financial liabilities as other financial liabilities measured at amortised cost. Management determines the classification of its financial liabilities at initial recognition.

Other financial liabilities are non-derivatives financial liabilities. The Group’s and the Company’s other financial liabilities comprise trade and other payables and borrowings. Financial liabilities are classified as current liabilities; except for maturities more than 12 months after the end of the reporting period, in which case they are classified as non-current liabilities.

Derecognition of financial liabilities

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Offsetting of Financial Instruments

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




(g) inventories

Raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value.

Cost of raw material is determined on weighted average basis. Cost of finished goods and work-in-progress consists of direct material, direct labour and an appropriate proportion of production overheads (based on normal operating capacity).

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

(h) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdraft and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(i) impairment of assets

(i) non-financial assets

The carrying amounts of non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. Intangible assets with indefinite useful lives is tested for impairment annually as at the end of each reporting period, either individually or at the cash-generating unit level, as appropriate and when circumstances indicate that the carrying value may be impaired.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment loss is recognised immediately in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

The recoverable amount of an asset or cash-generating units is the greater of its value in use

and its fair value less costs to sell. 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.

Previously recognised impairment losses are assessed at the end of each reporting period whether there is any indication that the loss has decreased or no longer exists. An 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 the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.




(i) impairment of assets (Cont’d)

(ii) Financial assets

All financial assets, other than the investment in subsidiary company, are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

Financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivable and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics.

Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with defaults on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit asset’s original effective interest rate). The carrying amount of the asset is reduced through the use of an allowance account and the amount of impairment loss is recognised in the profit or loss.

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

(j) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the nominal value of shares issued. Ordinary shares are classified as equity.

Dividends on ordinary shares are accounted for in equity as appropriation of retained earnings and

recognised as a liability in the period in which they are declared.

(k) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.




(k) Borrowing costs (Cont’d)

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(l) Revenue

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.

(i) goods sold and services rendered

Revenue from sales of goods and services measured at the fair value of the consideration receivable and is recognised when significant risk and rewards have been transferred to the buyer, if any, or upon performance of services, net of sales taxes and discounts.

(ii) interest income

Interest income is recognised using the effective interest method.

(iii) Rental income

Rental income is recognised on an accrual basis. (iv) government grant

The government grant is recognised as and when the Group and the Company received the grant.

(m) income taxes

Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years

Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.




(m) income taxes (Cont’d)

The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

(n) Employee benefits

(i) Short term employee benefit

Wages, salaries, bonuses and social security contributions are recognised as an expense in the reporting period in which the associated services are rendered by employees of the Group and of the Company. 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 and medical leave are recognised when the absences occur.

The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.

(ii) Define contribution plans

As required by law, companies in Malaysia contributions to the state pension scheme, the Employee Provident Fund (“EPF”). Some of the Group’s foreign subsidiary companies also make contributions to their respective countries’ statutory pension schemes. Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group has no further payment obligations.

(o) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers are responsible for allocating resources and assessing performance of the operating segments and make overall strategic decisions. The Group’s operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.


notes to the Financial statements (cont’d) 4.

P

Ro

PE

RT

y, P

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at

Valu

atio

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aseh

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Bui

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ry

equi

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tal

2013

R

m

Rm

R

m

Rm

R

m

Rm

R

m

Rm

Co

stA

t 1

Janu

ary

2013

3

,231

,616

3,

341,

537

142,

197

4,56

2,58

3 1,

375,

804

2,06

1,86

1 14

5,17

9 14

,860

,777

A

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ition

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– 13

,166

83

,520

–

– –

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– (9

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) –

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ces

327,

568

338,

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14,3

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481

139,

456

208,

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4

At

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3 3,

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184

3,68

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7,36

5 5,

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1,51

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159,

895

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atio

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Janu

ary

2013

20

9,14

6 46

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6 76

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– 13

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9 3,

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811

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the

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7 23

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8 –

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9 W

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– (2

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) –

– –

– (2

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At

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3 28

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8 71

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8 10

9,49

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9 4,

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31 D

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3 3

,270

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2,

968,

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7,06

6 11

,775

,966



4. PRoPERTy, PlanT anD EQUiPmEnT (ConT’D)

(a) Fair value basis of leasehold land

Leasehold land is stated at fair value, which has been determined based on valuations exercise conducted in previous years. Valuations are performed by independent professional valuers with appropriate qualifications and experience in the valuation of properties in the relevant locations. The fair value of leasehold land is determined based on open market values.

(b) Had the leasehold land been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the financial year would be as follow:

group 2013 Rm

Leasehold land 3,270,026

(c) Assets pledged as securities to financial institutions

The carrying amount of property, plant and equipment of the Group pledged as securities for bank borrowings as disclosed in Note 17 are:

group 2013 Rm

at valuationLeasehold land 3,270,026

at costBuilding 2,923,733 Office equipment 5,901 Plant and machinery 1,200,976

7,400,636

5. inTangiBlE aSSETS

group 2013 Rm

at costAt beginning of the financial year –Additions 1,500,000 At end of the financial year 1,500,000

This is in respect of the rights and technology know how acquired during the year.



6. inVESTmEnTS in SUBSiDiaRy ComPaniES

Company 2013 Rm

Unquoted shares, at costIn Malaysia 2 Outside Malaysia 34,999,996 34,999,998

Details of the subsidiary companies are as follows:

name of companyCountry of

incorporationEffective

interest (%)2013

Principal activities

Direct holding

KAR Masterpiece Sdn. Bhd.

Malaysia 100 Trading of bamboo products for interior and exterior applications

Kanger Investment (HK) Ltd. (“HK Kanger”)

Hong Kong 100 * Investment holding company

indirect holdingSubsidiary company of hk kanger:

Ganzhou Kanger Industrial Co. Ltd. (“Ganzhou Kanger”)

China 100 Manufacturing and trading of bamboo flooring and related products

Subsidiary companies of ganzhou kanger:

Shenzen Kanger Bamboo Wood Co., Ltd.

China 100 Trading of bamboo flooring and related products

Yanshan (County) Kanger Bamboo Industry Co., Ltd.

China 100 Manufacturing and trading of bamboo flooring and related products

* Subsidiary company not audited by UHY, Malaysia.

merger accounting

The merger method of accounting was adopted for consolidation in which the results of the subsidiary companies are presented as if the merger had been effected throughout the current financial year. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholders at the date of transfer.



7. inVEnToRiES

group 2013 Rm

at cost,Raw materials 4,734,576Work-in-progress 10,805,042Finished goods 6,263,576

21,803,194

Included in inventories are inventories with carrying amount of RM2,164,400 which have been pledged to licensed banks as security for credit facilities granted to the Group as disclosed in Note 17.

8. TRaDE RECEiVaBlES

The Group’s normal trade credit terms granted to the customers ranges from 30 to 90 days. Other credit terms are assessed and approved on a case to case basis.

Trade receivables are recognised at their original invoice amounts which represent their fair values on initial recognition.

Analysis of the trade receivables ageing as at the end of the financial year is as follow:

group 2013 Rm

Neither past due nor impaired 2,610,443 Past due more than 31 to 60 days but not impaired 176,219 Past due more than 180 to 210 days but not impaired 588,101 764,320

3,374,763

As at 31 December 2013, trade receivables of RM764,320 were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default.

All the trade receivables of the Group has Renminbi (“RMB”) as foreign currency exposure.



9. oThER RECEiVaBlES

group 2013 Rm

Other receivables 1,481,022 Deposits 64,225 Prepayments 16,861 Advances to suppliers 6,875,038

8,437,146

The foreign currency exposure profile is as follow:

group 2013 Rm

RmB:Other receivables 2,305,219Deposits 51,300Prepayments 15,699Advances to suppliers 6,875,038

9,247,256

10. amoUnTS DUE FRom SUBSiDiaRy ComPaniES

Amounts due from subsidiary companies are non-interest bearing, unsecured and repayable on demand.

11. FiXED DEPoSiT wiTh liCEnSED BankS, CaSh anD Bank BalanCES

The interest rates of fixed deposits of the Group ranges from 0.39% to 1.54% per annum.

The fixed deposits with licensed banks of the Group are pledged to licensed banks for credit facilities granted to the Group as disclosed in Note 17.


group 2013 Rm

RmB: Fixed deposits with licensed banks 7,964,992 Cash and bank balances 13,427,557 21,392,549 United States Dollar (“USD”):Cash and bank balances 14,958,046 36,350,595



12. ShaRE CaPiTal

group/Company 2013 Par number value of shares amount Rm Units Rm

authorisedAt date of incorporation 1.00 100,000 100,000 Share split 0.10 900,000 –

0.10 1,000,000 100,000

Created during the financial period 0.10 499,000,000 49,900,000

At 31 December 0.10 500,000,000 50,000,000

issued and fully paidAt date of incorporation 1.00 2 2 Share split 0.10 18 –

0.10 20 2

Issued during the financial period Acquisition of subsidiary companies 0.10 349,999,980 34,999,998 Additional shares issued 0.10 80,000,000 8,000,000 429,999,980 42,999,998

At 31 December 0.10 430,000,000 43,000,000

At the date of incorporation, the Company issued 2 ordinary shares of RM1.00 each as subscribers’ shares.

During the financial period, the authorised share capital of the Company was split from RM1.00 to RM0.10 and has been subsequently increased from RM100,000 to RM50,000,000 by the creation of the 499,000,000 new ordinary shares of RM0.10 each.

During the financial period, the Company issued:

(a) 349,999,980 new ordinary shares of RM0.10 each for a total cash consideration of RM34,999,980 to acquire two subsidiary companies; and

(b) 80,000,000 new ordinary shares of RM0.10 each at RM0.25 for a total cash consideration of RM20,000,000 for capital expenditure, research and development expenditure, repayment of bank borrowings, payment of listing expenses and working capital purposes.

The new ordinary shares issued during the financial period rank pari passu in all respects with the existing ordinary shares of the Company.

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All

ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets.



13. oThER RESERVES

The nature of reserves of the Group is as follows:

(a) Share premium

Share premium arose from public issue of 80,000,000 shares of RM0.25 each at a premium of RM0.15 per share in 2013, net of share issue expenses amounting to RM11,000,000.

(b) Revaluation reserve

The revaluation reserve represents increases in the fair value of leasehold land recognised in prior year.

(c) merger reserve

This represents the excess of the cost of the merger against the values of the shares received.

(d) Foreign currency translation reserve

The exchange 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.

14. TRaDE PayaBlES

The normal trade credit term granted by the suppliers to the Group is 90 days. Other credit terms are assessed and approved on a case to case basis.

All the trade payables of the Group has RMB as foreign currency exposure.

15. oThER PayaBlES

group Company 2013 2013 Rm Rm

Other payables 232,247 –Accruals 266,585 212,000

498,832 212,000


group 2013 Rm

RmB:Other payables 232,247 Accruals 44,828 277,075 USD:Accruals 2,958

280,033



16. amoUnT DUE To a DiRECToR

The amount due to a director are unsecured, interest free advances and repayable on demand.

17. Bank BoRRowingS

group 2013 Rm

SecuredTerm loan 8,901,095 Bill payables 13,392,225 Total bank borrowings (Repayable within twelve months) 22,293,320

The above credit facilities obtained from licensed banks are secured by the following:

(a) Legal charge over the property, plant and equipment, inventories and fixed deposits with licensed banks of the Group as disclosed in Notes 4, 7 and 11;

(b) Jointly and severally guarantee by a third party guarantor, a Director of the Company and a subsidiary company; and

(c) The Company’s Director personal property.

The above credit facilities bear interest rates per annum are as follows:

group 2013 %

Term loans 6.20% - 9.60%

All the bank borrowings of the Group are denominated in RMB as foreign currency exposure.

18. REVEnUE

Revenue represents the invoiced value of goods sold net of tax, less returns and discounts, if any.

19. FinanCE CoSTS

group 2013 Rm

interest expenses on:Factoring 48,207Term loans 630,507 678,714



20. PRoFiT/(loSS) BEFoRE TaX

Profit/(Loss) before tax for the Group and for the Company are derived at after charging/(crediting):


Auditors’ remuneration 82,705 20,000 Depreciation of property, plant and equipment 970,719 –Directors’ remuneration:Directors of the Company- Fees 187,000 187,000 - Salaries and other emoluments 55,472 –Directors of the subsidiary companies- Fees 60,000 –- Salaries and other emoluments 1,542,997 –- EPF 6,600 –Government grant (443,932) –Interest income (185,270) (3,262)Listing expenses expensed off 2,191,441 2,191,441Property, plant and equipment written off 21,664 –Realised gain on foreign exchange (86,395) –Rental of premises 106,218 –Rental income (154,860) –

21. TaXaTion

group 2013 Rm

Tax expenses recognised in profit or loss Current income tax 1,470,120 Overprovision in prior year (38,748)

1,431,372

Current income tax for the Group is calculated at the statutory tax rate of 25% of the estimated assessable profits for the financial year except for a subsidiary company’s where the current income tax is calculated at the preferential tax rate of 15%.

No provision for taxation for the financial period was made as the Company was in a tax loss position.



21. TaXaTion (ConT’D)

A reconciliation of income tax expenses applicable to profit/(loss) before tax at the statutory tax rate/preferential tax rate to income tax expenses at the effective income tax of the Group and the Company are as follows:


Profit/(Loss) before tax 6,393,780 (2,694,561)

Tax at Malaysia statutory tax rate of 25% 1,598,445 (673,640)Effects of different tax rates in other jurisdictions (849,097) –Income not subject to tax (2,248) –Expenses not deductible for tax purposes 706,920 673,640Deferred tax assets not recognised 16,100 –Overprovision of income tax in prior year/period (38,748) –

Tax expense for the financial year/period 1,431,372 –

The Group has unused tax losses amounting to approximately RM129,000 available for carry forward to set-off against future taxable profits.

22. EaRningS PER ShaRE

group 2013 Rm

Net profit for the financial year attributable to ordinary shareholders 4,962,409

Weighted average number of ordinary shares in issue Share issue pursuant to: - additional shares issued 2,849,315 - share exchange for merger exercise 88,219,173

91,068,488

Basic earnings per share (Sen) 5.45

The Group has no dilution in its earnings per ordinary share as there are no dilutive potential ordinary shares. There have been no other transactions involving ordinary shares or potential ordinary shares since the end of the financial year and before the authorisation of these financial statements.

23. DEFERRED TaX aSSETS

Deferred tax assets have not been recognised in respect of the timing differences arising from the unused tax losses amounting to RM129,000.

The unused tax losses are available indefinitely for offset against future taxable profits of the Group.



24. EmPloyEE BEnEFiTS EXPEnSES

group 2013 Rm

Short-term employee benefits (Excluding director) 2,014,946

Included in the employee benefits expenses above are contribution made to the social contribution funds under a defined contribution plan for the Group amounting to RM172,609.

25. RElaTED PaRTy DiSCloSURE

(a) Identifying related parties

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

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group and certain members of senior management and chief executive officers of major subsidiary companies of the Group.

The Group has related party relationship with the key management personnel while the Company has related party relationships with its subsidiary companies and key management personnel.

(b) In addition to the transactions detailed elsewhere in the separate financial statements, the Group and the Company had the following transactions with related parties during the financial year:

group 2013 Rm

Director of a subsidiary companySales of goods 5,340

(c) Compensation of key management personnel

Remuneration of Directors and key management personnel are as follows:


Short-term employee benefits 1,911,291 187,000



26. SEgmEnT inFoRmaTion

For management purposes, the Group is organised into business units based on their products and services, and has three reportable segments as follows:

Investment holding Investment holding

Manufacturing and trading Manufacturing and trading of bamboo flooring and related products

Research and development Performing research and development work for the Group

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.

Transactions between segments are carried out on agreed terms between both parties. The effects of such inter-segment transactions are eliminated on consolidation.

Per manufacturing Research adjustments Consolidated investment and and and Financial holding Trading Development Eliminations Statements Rm Rm Rm Rm Rm

2013RevenueExternal sales – 50,180,564 – – 50,180,564Inter-segment – 3,683,795 – (3,683,795) –

Total revenue – 53,864,359 – (3,683,795) 50,180,564

ResultsSegment results (2,788,022) 10,775,410 (107,781) – 7,879,607Interest income 3,563 181,706 1 – 185,270Finance costs – (678,714) – – (678,714)Depreciation of property, plant and equipment – (970,719) – – (970,719)Property, plant and equipment written off – (21,664) – – (21,664)

(Loss)/Profit before taxation (2,784,459) 9,286,019 (107,780) – 6,393,780Taxation – (1,431,371) – – (1,431,371)

(Loss)/Profit for the financial year (2,784,459) 7,854,648 (107,780) – 4,962,409



26. SEgmEnT inFoRmaTion (ConT’D)

Per manufacturing Research adjustments Consolidated investment and and and Financial holding Trading Development Eliminations Statements Rm Rm Rm Rm Rm

2013assetsAdditions to non-current assets – 96,686 1,500,000 – 1,596,686Segment assets 88,383,158 76,396,103 248,863 (82,693,652) 82,334,472

Total assets 88,383,158 76,492,789 1,748,863 (82,693,652) 83,931,158

liabilitiesSegment liabilities 15,040,598 42,007,571 1,908,755 (33,106,740) 25,850,184

non-cash itemsDepreciation of property, plant and equipment – 970,719 – – 970,719Property, plant and equipment written off – 21,664 – – 21,664

geographical segment

Revenue information based on the geographical location of customers is as follow:

Revenue 2013 Rm

group

People’s Republic of China 28,706,907 Turkmenistan 5,486,531 Emirates 4,323,284 Germany 2,348,431 Romania 2,116,620 Hong Kong 2,108,910 Panama 1,764,581 Others 3,325,300 50,180,564



27. FinanCial inSTRUmEnTS

(a) Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised.

The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

Financial liabilities at loans and amortised receivables cost Total Rm Rm Rm

group2013Financial assetsTrade receivables 3,374,763 – 3,374,763 Other receivables 8,437,146 – 8,437,146 Fixed deposit with licensed banks 7,964,992 – 7,964,992Cash and bank balances 29,075,097 – 29,075,097

Total financial assets 48,851,998 – 48,851,998

Financial liabilitiesTrade payables – 1,303,460 1,303,460 Other payables – 498,832 498,832 Amount owing to a Director – 353,630 353,630 Bank borrowings – 22,293,320 22,293,320

Total financial liabilities – 24,449,242 24,449,242

Company2013Financial assetsAmount owing by a subsidiary company 15,989,295 – 15,989,295 Cash and bank balances 528,146 – 528,146

Total financial assets 16,517,441 – 16,517,441

Financial liabilityOther payables – 212,000 212,000 Total financial liability – 212,000 212,000



27. FinanCial inSTRUmEnTS (ConT’D)

(b) Financial risk management objectives and policies

The Group’s and the Company’s financial risk management policy is to ensure that adequate financial resources are available for the development of the Group’s and the Company’s operations whilst managing their financial risks, including foreign currency exchange risk, interest rate risk, credit risk, liquidity and cash flows risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group’s and the Company’s policy is not to engage in speculative transactions.

The following sections provide details regarding the Group’s and the Company’s exposure to the

abovementioned financial risks and the objectives, policies and processes for the management of these risks.

(i) Credit risk

Cash at banks are placed with credit worthy financial institutions.

Credit risk arises mainly from the inability of the customers to make payments when due. The Group and the Company have adopted a policy of only dealing with creditworthy counterparties. Receivables are monitored on an ongoing basis via the Group’s and the Company’s management reporting procedures and action will be taken for long outstanding debts.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represent the Group’s and the Company’s maximum exposure to credit risk in relation to financial assets. No financial assets of the Group carry a significant exposure to credit risk. Whilst the Company has significant exposure of credit risk on amounts due from subsidiary companies.

(ii) liquidity risk

The Group’s and the Company’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group and the Company monitor cash flows and ensures that sufficient funding is in place to meet the obligations as and when they fall due.

The following table analyses the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay.




(b) Financial risk management objectives and policies (Cont’d)

(ii) liquidity risk (Cont’d)

on demand or repayable within 1 year Rm

group2013Trade payables 1,303,460 Other payables 498,832 Amount owing to a Director 353,630 Bank borrowings 22,293,320

Total undiscounted financial liabilities 24,449,242

Company2013Other payables 212,000

Total undiscounted financial liability 212,000

(iii) market risk

Foreign currency exchange risk

The Group is exposed to foreign currency risk on transactions that are denominated in foreign currencies primarily RMB and USD.

The Group has not entered into any derivative instruments for hedging or trading purposes as the net exposure to foreign currency risk is not significant. Where possible, the Group will apply natural hedging by selling and purchasing in the same currency. However, the exposure to foreign currency risk is monitored from time to time by management.

Foreign currency risk sensitivity

A 10% strengthening of Ringgit Malaysia against the following foreign currencies at the end of the reporting period would increase/(decrease) the profit before tax and other comprehensive income by the amounts shown below.

This analysis assumes that all other variables remain unchanged.

RmB USD

group2013Profit before taxation 1,810,571 1,495,509

A 10% weakening of Ringgit Malaysia against the above foreign currencies at the end of the reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.




(b) Financial risk management objectives and policies (Cont’d)

(iii) market risk (Cont’d)

interest rate risk

The Group and the Company obtain financing through other financial liabilities. The Group’s and the Company’s policy is to obtain financing with the most favourable interest rates in the market.

The Group and the Company constantly monitor their interest rate risk and do not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. At the end of the reporting period, there were no interest rate swap contracts or other derivative instruments outstanding.

The carrying amounts of the Group’s financial instruments that are exposed to interest rate risk are as follows:

group 2013 Rm

Financial assetFixed deposits with licensed banks 7,964,992

Financial liability Bank borrowings 8,901,095

The Group is exposed to interest rate risk arising from its short term debts obligations and its fixed deposits. Fixed deposits interest rate is insignificant and any fluctuations in the rate would have no material impact on the results of the Group.

interest rate risk sensitivity

An increase in market interest rates by 1% on financial assets and financial liabilities of the Group which have variable interest rates at the end of the reporting period would decrease the profit before taxation by RM9,361. This analysis assumes that all other variables remain unchanged.

A decrease in market interest rates by 1% on financial assets and financial liabilities of the Group which have variable interest rates at the end of the reporting period would have had the equal but opposite effect on the amounts shown above, on the basis that all other variables remain unchanged.

(c) Fair values of financial assets and financial liabilities

The fair values of financial instruments refer to the amounts at which the instruments could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction. Fair values have been arrived at based on prices quoted in an active, liquid market or estimated using certain valuation techniques such as discounted future cash flows based upon certain assumptions. Amount derived from such methods and valuation technique are inherently subjective and therefore do not necessarily reflect the amounts that would be received or paid in the event of immediate settlement of the instruments concerned.




(c) Fair values of financial assets and financial liabilities (Cont’d)

On the basis of amount estimated from the methods and techniques as mentioned in the preceding paragraph, the carrying amount of the various financial assets and financial liabilities reflected on the statement of financial position approximate their fair values.

The methodologies used in arriving at the fair values of the principal financial assets and financial

liabilities of the Group and the Company are as follows:

Cash and cash equivalents, trade and other receivables, intercompany balances, trade and other payables, amount owing to a director, and bank borrowings.

The carrying amounts are considered to approximate the fair values as they are within the normal credit terms or they have short-term maturity period.

28. CaPiTal managEmEnT

The Group’s and the Company’s management manage their capital to maintain a strong capital base and safeguard the Group’s and the Company’s ability to continue as a going concern and maintain an optimal capital structure, so as to maximise shareholders value. The management reviews the capital structure by considering the cost of capital and the risks associated with the capital.

In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividend paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Total capital managed at Group and at Company level, which comprises issued share capital, reserves, cash and cash equivalent, and bank borrowings.

The gearing ratio is as follows:


Total loans and borrowings 22,293,320 –Less: Cash and cash equivalents 37,040,089 528,146

Excess of cash and cash equivalents 14,746,769 528,146 Total equity 58,080,974 51,305,439 Gearing ratio N/A N/A

The gearing ratio is not applicable as the cash and cash equivalents of the Group and of the Company are sufficient to settle the outstanding debts.



29. CaPiTal CommiTmEnT

group 2013 Rm

Capital work in progress in respect of the construction of factory 1,084,020

30. SigniFiCanT anD SUBSEQUEnT EVEnTS

(a) On 23 December 2013, the Company was listed on ACE Market of Bursa Securities.

(b) On January 2014, HK Kanger, a wholly owned subsidiary company has subscribe for the increase in paid up share capital in its subsidiary – Ganzhou Kanger amounting to RM14,802,050, in order to broaden its capital base.

31. ComPaRaTiVE FigURES

No comparative figures are available as these are the first financial statements of the Group and of the Company.

32. DaTE oF aUThoRiSaTion FoR iSSUE

The financial statements of the Group for the financial year ended 31 December 2013 and of the Company for the financial period from 27 August 2012 (Date of incorporation) to 31 December 2013 were authorised for issue in accordance with a resolution of the Board of Directors on


supplementary infOrmatiOn On the disClOsure Of realised and unrealised prOfits Or lOsses

The following analysis of realised and unrealised retained earnings/(accumulated loss) of the Group and of the Company at 31 December 2013 is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants The retained earnings/(accumulated losses) of the Group and of the Company as at 31 December 2013 is analysed as follows:


Retained earnings/(Accumulated loss)- Realise 13,364,659 (2,694,561)

The disclosure of realised and unrealised profits or losses is solely compiled in accordance to the Malaysian Institute of Accountants 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 issued on 20 December 2010.

The disclosure of realised and unrealised profits and losses is solely for the purpose of disclosure requirements of Bursa Malaysia Securities Berhad Listing Requirements.


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ShaRE CaPiTal

Authorised Share Capital : RM50,000,000 divided into 500,000,000 ordinary shares of RM0.10 eachIssued and Fully Paid-up Capital : RM43,000,000 divided into 430,000,000 ordinary shares of RM0.10 eachClass of Shares : Ordinary shares of RM0.10 eachVoting Rights : One vote per ordinary share

ShaREholDing DiSTRiBUTion SChEDUlE(AS PER THE RECORD OF DEPOSITORS)

no. of % ofno. of Shareholders Size of Shareholdings Shares held Shares

2 Less than 100 40 * 43 100 to 1,000 30,000 0.01 207 1,001 to 10,000 1,214,000 0.28 195 10,001 to 100,000 7,627,100 1.77 66 100,001 to less than 5% of issued shares 127,195,059 29.58 2 5% and above of the issued shares 293,933,801 68.36

515 ToTal 430,000,000 100.00

* Less than 0.01%

liST oF 30 laRgEST SECURiTiES aCCoUnT holDERS(AS PER THE RECORD OF DEPOSITORS)

no. of Percentage name of Shareholders Shares held (%)

1. Kenanga Capital Sdn Bhd 237,210,905 55.17 Pledged Securities Account For Leng Xingmin2. Kenanga Capital Sdn Bhd 56,722,896 13.19 Pledged Securities Account For Lim Lai Choy @ Lim Aun Nee3. Kenanga Nominees (Tempatan) Sdn Bhd 16,000,000 3.72 Kenanga Capital Sdn Bhd For David Lee Tai Wai4. Syed Sirajuddin Putra Jamalullail 13,806,959 3.215. Syed Razlan Ibni Syed Putra 13,756,959 3.206. Menteri Kewangan Malaysia 10,864,722 2.53 Section 14 (SICDA)7. Kenanga Nominees (Tempatan) Sdn Bhd 8,698,000 2.02 Pledged Securities Account For Teo Hak Chan8. Kang Yeat Guat 7,206,026 1.689. Kenanga Nominees (Tempatan) Sdn Bhd 6,900,000 1.60 Pledged Securities Account For Seow Kan Lam 10. Kenanga Nominees (Tempatan) Sdn Bhd 6,471,600 1.51 Pledged Securities Account For Ngu Yin Sing11. HSBC Nominees (Asing) Sdn Bhd 4,589,300 1.07 TNTC For Driehaus Ultra Select Fund, L.P.12. Kenanga Nominees (Tempatan) Sdn Bhd 4,319,700 1.00 Pledged Securities Account For David Lee Tai Wai13. Chen Tam Chai 4,000,000 0.9314. Kenanga Nominees (Tempatan) Sdn Bhd 3,100,000 0.72 Pledged Securities Account For Chan Choy Hah15. Chan Swee Hoong 2,000,000 0.47

analysis Of sharehOldingsas at 1 april 2014


liST oF 30 laRgEST SECURiTiES aCCoUnT holDERS (ConT’D)(AS PER THE RECORD OF DEPOSITORS)

no. of Percentage name of Shareholders Shares held (%)

16. Kenanga Nominees (Tempatan) Sdn Bhd 2,000,000 0.47 Pledged Securities Account For Ng Ngat Seng17. Kenanga Nominees (Asing) Sdn Bhd 1,800,000 0.42 For Leng Xiaofei18. Maybank Securities Nominees (Tempatan) Sdn Bhd 1,763,900 0.41 Pledged Securities Account For Ho Yock Main19. Teh Hoon @ Teh Boon Mei 1,000,000 0.23 20. Kenanga Investment Bank Berhad 1,000,000 0.23 IVT (HFT)21. Oh Kooi Beng 940,000 0.22 22. Ngu Yin Sing 925,000 0.22 23. Tham Wai Chee 800,000 0.19 24. Hong Choe Ling 746,060 0.17 25. Yu Tuan Jye 700,000 0.16 26. Eng Kim Seng 700,000 0.16 27. Lim Kye Hwa 650,000 0.15 28. Malacca Equity Nominees (Tempatan) Sdn Bhd 618,000 0.14 Exempt An For Phillip Capital Management Sdn Bhd (EPF)29. Kenanga Nominees (Tempatan) Sdn Bhd 600,000 0.14 Pledged Securities Account For Tan Kok Pin @ Kok Khong30. Siti Khalijah Binti Mohamed @ Yousof 595,000 0.14

ToTal 410,485,027 95.46

SUBSTanTial ShaREholDERS(AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS)

no. of Shares held name of Shareholders Direct % indirect %

1. Leng Xingmin 237,210,905 55.17 – –2. Lim Lai Choy @ Lim Aun Nee 56,722,896 13.19 – –

DiRECToRS’ ShaREholDingS(AS PER THE REGISTER OF DIRECTORS’ SHAREHOLDINGS)

no. of Shares held name of Directors Direct % indirect %

1. Dato’ Paduka Sharipah Hishmah – – 13,756,959 * 3.20 binti Sayed Hassan 2. Leng Xingmin 237,210,905 55.17 – –3. Syed Hazrain 425,000 0.10 – – bin Syed Razlan Jamalullail 4. Prof. Datuk Seri Dr. Md Zabid – – – – bin Haji Abdul Rashid 5. Prof. Dr. Paul Cheng Chai Liou – – – –6. Dato’ Izudin bin Ishak – – – –

* Deemed interested by virtue of the shares held by her spouse.

analysis oF shareholdings (cont’d)


nOtiCe Of annual general meeting

noTiCE iS hEREBy giVEn ThaT the First Annual General Meeting of kangER inTERnaTional BERhaD will be held at Skyview 7, level 29, The gardens, midvalley City, lingkaran Syed Putra, 59200 kuala lumpur, Tuesday, 27 may 2014 at 10.00 a.m. for the following purposes:-

agEnDa

aS oRDinaRy BUSinESS

1. To receive the Audited Financial Statements for the period ended 31 December 2013 and the Directors’ and Auditors’ Reports thereon.

(Ordinary Resolution 1)

2. To approve the payment of Directors’ fees. (Ordinary Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 90 of the Company’s Articles of Association and being eligible, offers themselves for re-election:-

(i) Dato’ Paduka Sharipah Hishmah Binti Sayed Hassan(ii) Dato’ Izudin Bin Ishak(iii) Prof. Datuk Seri Dr. Md. Zabid Bin Haji Abdul Rashid(iv) Leng Xingmin(v) Syed Hazrain Bin Syed Razlan Jamalullail(vi) Prof. Dr. Paul Cheng Chai Liou

(Ordinary Resolution 3)(Ordinary Resolution 4)(Ordinary Resolution 5)(Ordinary Resolution 6)(Ordinary Resolution 7)(Ordinary Resolution 8)

4. To re-appoint Messrs UHY as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.


aS SPECial BUSinESS

To consider and if thought fit, to pass the following resolution:

5. authority to issue Shares Pursuant to Section 132D of the Companies act, 1965

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


By Order of the BoardkangER inTERnaTional BERhaD

wong kEo RoU (maiCSa 7021435)Company SecretaryKuala Lumpur5 May 2014


Director to Retire at the First Annual General Meeting

Pursuant to the Company’s Articles of Association, Prof. Dr. Paul Cheng Chai Liou will be retiring under Article 90 and he has given his notification that he does not wish to seek re-election at the First Annual General Meeting.

Notes:-

1. A member of the Company entitled to attend and vote at this meeting may appoint one or more proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a General Meeting of the Company shall have the same rights as the member to speak at the General Meeting.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

3. Where a member is an authorised nominee as defined under the Depositories Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a Member 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.

5. 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 the common seal or under the hand of an officer or attorney duly authorised.

6. To be valid the proxy form duly completed must be deposited at the registered office not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

7. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 May 2014, shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

Explanatory Notes on Special Business

The proposed Ordinary Resolution 10, if passed, will empower the Directors of the Company to issue and allot shares in the Company from time to time and for such purposes as the Directors consider would be in the best interest of the Company (“Share Mandate”). This Share Mandate is a new mandate and will, unless revoked or varied by the Company in general meeting, expire at the conclusion of the next Annual General Meeting of the Company.

This Share Mandate will provide flexibility of the Company to raise funds, including but not limited to placing of shares, for purpose of funding future investment projects and/or working capital and/or acquisitions.

notice oF annual general meeting (cont’d)

This Page Has Been Intentionally Left Blank

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FoRm oF PRoXy

I/We ............................................................................................................................................................................(FULL NAME IN BLOCK LETTERS)

(NRIC No./Passport No./Company Registration No.: ................................................................................................ )

of ...............................................................................................................................................................................(FULL ADDRESS)

being a member/members of kangER inTERnaTional BERhaD, hereby appoint ............................................

............................................................................................. NRIC No./Passport No: ................................................(FULL NAME IN BLOCK LETTERS)

of ................................................................................................................................................................................(FULL ADDRESS)

or failing him ........................................................................ NRIC No./Passport No: ................................................(FULL NAME IN BLOCK LETTERS)

of ................................................................................................................................................................................(FULL ADDRESS)

or failing him, the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the First Annual General Meeting of the Company to be held at Skyview 7, level 29, The gardens, midvalley City, lingkaran Syed Putra, 59200 kuala lumpur on Tuesday, 27 may 2014 at 10.00 a.m. and at any adjournment thereof.

oRDinaRy RESolUTionS FoR againST

1. Receive the Audited Financial Statements and Directors’ and Auditors’ Reports

2. Payment of Directors’ Fees

3. Re-election of Dato’ Paduka Sharipah Hishmah Binti Sayed Hassan

4. Re-election of Dato’ Izudin Bin Ishak

5. Re-election of Prof. Datuk Seri Dr. Md. Zabid Bin Haji Abdul Rashid

6. Re-election of Leng Xingmin

7. Re-election of Syed Hazrain Bin Syed Razlan Jamalullail

8. Re-election of Prof. Dr. Paul Cheng Chai Liou

9. Re-appointment of Auditors

10. Authority to issue shares under Section 132D of the Companies Act, 1965

(Please indicate with an “X” in the space provided on how you wish to cast your vote. If you do not do so, the proxy willvote or abstain from voting at his discretion.)

Dated this .....................day of ....................................2014. ....................................................... Signature(s) of member(s)Notes:-

1. A member of the Company entitled to attend and vote at this meeting may appoint one or more proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a General Meeting of the Company shall have the same rights as the member to speak at the General Meeting.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

3. Where a member is an authorised nominee as defined under the Depositories Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

4. Where a Member 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.

5. 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 the common seal or under the hand of an officer or attorney duly authorised.

6. To be valid the proxy form duly completed must be deposited at the registered office not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

7. In respect of deposited securities, only members whose names appear on the Record of Depositors on 21 May 2014, shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

CDS account no. - -

no. of Shares held

(Incorporated in Malaysia)

康尔国际控股有限公司kangER inTERnaTional BERhaD (1014793-D)

Fold this flap for sealing

Then fold here

1st fold here

AFFIXSTAMP

The Company Secretary

kangER inTERnaTional BERhaD2-1, Jalan Sri Hartamas 8

Sri Hartamas50480 Kuala Lumpur

Wilayah Persekutuan (KL)

(1014793-D)

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RT 2013

www.krbamboo.com www.karbamboo.com

(Company No. 1014793-D)(Incorporated in Malaysia under the Companies Act, 1965)

KANGER INTERNATIONAL BERHAD

Annual Report 2013

annual report 2013 - insage (msc) sdn bhd

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