Yi-Lai AR2012 cover 65, jalan suria 1, taman malim jaya, 75250 melaka darul azim, malaysia tel : 606-336 7128 fax : 606-336 9128 butterworth office : no. 5, persiaran kerapu, off jalan

YI-L

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YI-LAI BERHAD (516043-K)

YI-LAI INDUSTRY BERHAD (165410-W)

YI-LAI MARKETING SDN. BHD. (459342-W)

( formerly known as Alpha T iles Trading Sdn. Bhd.)

HEAD OFFICE & FACTORY :LOT 7020, BATU 23, JALAN AIR HITAM, 810 0 0 KULAIJAYA,JOHOR DARUL TAKZIM, MALAYSIA.TEL : 607-652 2652 FAX : 607-652 3388, 652 4633www.alpha-ti les.com.my

MARKETING OFFICES CUM SHOWROOMS :CENTRAL REGION

NO. 8, JALAN 51A/241, SEKSYEN 51A,4610 0 PETALING JAYA, SELANGOR DARUL EHSAN, MALAYSIA.TEL : 603-7875 4388 FAX : 603-7874 4388, 603-7577 6561EMAIL : marketing@alpha-ti les.com.my ; [email protected]

SOUTHERN REGION

15 & 16, JALAN TROPIKA 1, TAMAN TROPIKA,810 0 0 KULAIJAYA, JOHOR DARUL TAKZIM, MALAYSIA.TEL : 607-663 7523, 663 7623 FAX: 607-663 6823EMAIL : jbmarketing@alpha-ti les.org

MARKETING OFFICES :MELAKA OFFICE:65, JALAN SURIA 1, TAMAN MALIM JAYA,75250 MELAKA DARUL AZIM, MALAYSIATEL : 606-336 7128 FAX : 606-336 9128

BUTTERWORTH OFFICE :NO. 5, PERSIARAN KERAPU, OFF JALAN PERMATANG PAUH,1340 0 BUTTERWORTH, MALAYSIA.TEL : 604-323 3128 FAX : 604-331 1128

SINGAPORE OFFICE :

YI-LAI TRADING PTE. LTD. (198204735E)

NO. 50 LORONG 21, GEYLANG, SINGAPORE 388465TEL : 65-6842 0163 FAX : 65-6846 7937EMAIL : marketingsg@alpha-ti les.org

ANNUAL

REPORT2012

Corporate Information

Profile of Directors

Five Year Financial Highlights

Chairman’s Statement

Corporate Governance Statement

Audit Committee Report

Statement on Risk Management & Internal Control

Sustainability Policy

Financial Statements

List of Landed Properties

Analysis of Shareholdings

Notice of Thirteenth Annual General Meeting

Statement Accompanying Notice of

Thirteenth Annual General Meeting

Annexure A

Share Buy-Back Statement

Proxy Form

2

3

5

6

8

13

18

20

21

64

65

68

72

73

76

CONTENTSCONTENTS

Annual Report 20122

Board Of Directors

Audit CommitteeMr Ong Kheng Swee (Chairman)

Mr Ong Chin Lin

Encik Zabidi bin Md Zain

Company SecretariesMs Ang Mui Kiow (LS 0001886)

Mr Soo Choon Siong (MIA 16981)

Registered OfficeSuite 7E, Level 7, Menara Ansar

65, Jalan Trus, 80000 Johor Bahru

Johor

Tel : 607-224 1035

Fax : 607-221 0891

RegistrarTricor Investor Services Sdn Bhd

Level 17, The Gardens North Tower

Mid Valley City

Lingkaran Syed Putra

59200 Kuala Lumpur

Tel : 603-2264 3883

Fax : 603-2282 1886

Principal BankersUnited Overseas Bank (Malaysia) Bhd

Malayan Banking Berhad

CIMB Bank Berhad

AuditorsKPMG

Chartered Accountants

Level 14, Menara Ansar

65, Jalan Trus, 80000 Johor Bahru

Johor


Independent Non-Executive Chairman

Mr Lim Oon Kok

Managing Director

Mr Hsieh Yu-Tien

Executive Director

Mr Ong Kheng Swee

Independent Non-Executive Director

Mr Ong Chin Lin


Website Addresswww.alpha-tiles.com.my

Corporate [email protected]

Date and Place of IncorporationIncorporated in Malaysia on

6 June 2000

Date of Listing3 May 2002

Stock Exchange ListingMain Market of the Bursa Malaysia

Securities Berhad (“Bursa

Securities”)

Sector : Industrial

Products

Stock Short Name : YILAI

Stock Code : 5048

CORPORATE INFORMATION

Annual Report 2012 3

PROFILE OF DIRECTORS


Independent Non-Executive Chairman

Malaysian, aged 57

Encik Zabidi bin Md Zain was appointed as the Non-

Independent Non-Executive Director on 11 October 2001 and

was appointed as the Chairman on 3 December 2001. On 19

September 2012, he was re-designated as the Independent

Non-Executive Chairman. He is also the Chairman of the

Remuneration Committee and Nomination Committee and a

member of the Audit Committee.

Encik Zabidi holds a degree in Accountancy (Honours) from

the University of Ulster, United Kingdom and is a Fellow of

the Association of Chartered Certified Accountants of United

Kingdom. Encik Zabidi was the Executive Director of Bantu

Corporation Sdn Bhd, a property development company, from

1984 to 1988 and was the Managing Director of Smith Zain

(Malaysia) Sdn Bhd, a member company of Bursa Securities

from 1991 to 1997.

Encik Zabidi does not have any family relationship with any

Director or substantial shareholder of the Company, nor

does he have any conflict of interest with the Group. He has

no directorship in other public companies and has not been

convicted of any offences within the past ten (10) years.

Mr Lim Oon Kok

Managing Director

Singaporean, aged 69

Mr Lim Oon Kok was appointed to the Board on 11 October

2001 and was appointed as the Managing Director on 3

December 2001.

Mr Lim is an entrepreneur and his previous business included

trading in petroleum products, ceramic tiles, marble, granite

and property development. Since 1992, he has ventured into

manufacturing of ceramic tiles.

Mr Lim does not have any family relationship with any Director

or substantial shareholder of the Company, nor does he have

any conflict of interest with the Group. He has no directorship

in other public companies and has not been convicted of any

offences within the past ten (10) years.

Mr Hsieh Yu-Tien

Executive Director

Singaporean, aged 56

Mr Hsieh Yu-Tien was appointed as the Executive Director on

11 October 2001.

Mr Hsieh holds a diploma in Electrical Engineering from

Chung Hua Junior College of Industry, Taiwan. He began

his career as an electrical technician in 1980. He was the

deputy factory manager in Ta Hsin Pottery Co Ltd, Taiwan

from 1982 to 1986 and subsequently he joined P.T. Cikarang

Indah, Indonesia as production manager from 1986 to 1988.

In 1988, he joined White Horse Ceramic Industries Co Ltd,

Taiwan as deputy factory manager until 1993 when he left to

join Yi-Lai Industry Berhad as Production Director.

Mr Hsieh does not have any family relationship with any





Annual Report 20124

Mr Ong Kheng Swee


Malaysian, aged 55

Mr Ong Kheng Swee was appointed as an Independent Non-

Executive Director on 30 January 2002. He is the Chairman

of the Audit Committee, a member of the Remuneration

Committee and Nomination Committee.

Mr Ong is a Fellow of the Association of Chartered Certified

Accountants of United Kingdom, a member of the Malaysian

Institute of Accountants and a Fellow of the Chartered Tax

Institute of Malaysia. He held various senior positions in

both the professional sector (having worked with two major

international accounting firms) and in the commercial sector

as financial controller, group finance director and management

consultant in various industries including petrochemicals,

ceramic tiles, automotive components, minerals and glass. He

is currently the Executive Director / Chief Financial Officer of

an automotive components group of companies. He is also an

independent non-executive director of Power Root Berhad, a

company listed on the Main Market of Bursa Securities.

Mr Ong does not have any family relationship with any

Director or substantial shareholder of the Company, nor does

he have any conflict of interest with the Group. He has not

been convicted of any offences within the past ten (10) years.

Mr Ong Chin Lin


Malaysian, aged 65

Mr Ong Chin Lin was appointed as the Independent Non-

Executive Director on 26 September 2002. He is a member

of the Audit Committee, Remuneration Committee and

Nomination Committee.

Mr Ong holds a Bachelor of Commerce (majoring in

Accountancy) from the Nanyang University, Singapore and

is a Fellow member of the Institute of Chartered Accountants

in England and Wales. He is also a member of the Malaysian

Institute of Accountants. He has vast working experiences as

internal auditor, financial controller and financial consultant

in a variety of industries including oil and gas, manufacturing

and business consultancy. He is presently the independent

non-executive director of Linair Technologies Limited and Old

Chang Kee Ltd, both are listed on the Catalist of Singapore

Exchange Limited.

Mr Ong does not have any family relationship with any





PROFILE OF DIRECTORScont’d


FIVE YEAR FINANCIAL HIGHLIGHTS

2008 2009 2010 2011 2012

OPERATING RESULTS (RM’000)

Revenue 119,138 111,050 131,845 132,742 131,363

EBITDA * 28,923 27,452 32,724 24,269 25,920

Profit before tax 16,836 15,435 19,748 13,314 14,296

Profit after tax 13,184 11,809 15,320 10,598 10,673

Net profit attributable to equity holders 13,184 11,809 15,320 10,598 10,673

* EBITDA- Earnings Before Interest, Taxes, Depreciation and Amortisation

2008 2009 2010 2011 2012

KEY BALANCE SHEET HIGHLIGHTS (RM’000)

Total Assets 215,101 223,914 224,282 222,816 223,032

Total Borrowings - - - - -

Shareholders’ Equity 190,253 196,961 197,983 196,560 196,658

2008 2009 2010 2011 2012

KEY FINANCIAL INDICATORS

Return on Equity 6.9% 6.0% 7.7% 5.4% 5.4%

Return on Total Assets 6.1% 5.3% 6.8% 4.8% 4.8%

Gearing Ratio - - - - -

Net Asset per Share (RM) 1.20 1.25 1.26 1.25 1.26

Earnings per Share (sen) 8.28 7.50 9.74 6.76 6.85

Net Dividend per Share (sen) 6.00 6.00 7.00 7.00 7.00

Net Dividend Yield 11.1% 8.6% 8.6% 8.3% 8.2%

Price Earning (PE) Ratio 6.5 9.3 8.3 12.4 12.4

Share Price as at the Financial Year End (RM) 0.54 0.70 0.81 0.84 0.85

Annual Report 20126

CHAIRMAN’S STATEMENTOn behalf of Yi-Lai Berhad’s Board of Directors, I am pleased to present the Annual Report and Financial Statements of the Group and the Company for the financial year ended 31 December 2012.


FINANCIAL HIGHLIGHTS

For the current financial year ended 31 December 2012, the Group registered a consolidated turnover of RM131.4 million which was comparable to the previous year of RM132.7 million. The Group was able to maintain its sales performance despite the stiff competition in the ceramic tile industry.

The Group’s net profit after tax of RM10.7 million for the year ended 31 December 2012 was also comparable to the net profit after tax of RM10.6 million in the previous year.

THE CURRENT YEAR UNDER REVIEW

The contraction of the Eurozone and Japanese economy as well as weaker than expected growth in large emerging economies i.e. Brazil and India highlight the underlying weakness and downside risks facing the global economy. In the United States, even though it was spared from the “fiscal cliff”, some form of fiscal tightening is expected to materialise.

In the property sector, cost escalation coupled with investor speculations amidst cheap and easy financing had caused the property prices in the hot spots such as Hong Kong, Singapore and Malaysia rise to record high prices. Some countries have started introducing measures to ‘cool down’ the property markets.

On the positive note, despite the cooling measures, the property markets continued to enjoy good demand and thereby benefitting the ceramic tile industry. However, the Malaysian ceramic tile industry continues to be faced with the challenge of stiff competition and excess production capacity amongst the Malaysian manufacturers as well as from lower quality and cheaper imported products.

THE OUTLOOK FOR 2013

The development activities in the Iskandar Region remain vibrant and are anticipated to continue its momentum for at least in the next few years. The Group has managed to secure substantial orders in the Iskandar Region and is confident that we will continue to secure more project orders.

In line with the Group’s vision to enhance its corporate identity, it has changed the company name for one of its wholly-owned subsidiaries from Alpha Tiles Trading Sdn Bhd to “Yi-Lai Marketing Sdn Bhd” on 1 January 2013. With the change, all the subsidiaries in the Group now have a common corporate identity with the name “Yi-Lai”.

The ceramic tile industry is operating in a challenging environment as there is stiff competition amongst the local and ASEAN manufacturers. The minimum wage legislation taking effect in 2013, coupled with other escalating costs of business will make sustaining profit margins more difficult. Among the initiatives the Group has undertaken to mitigate the adverse impact of rising costs include launching of a new range of higher end products such as digital print products

and continuing our focus on improving productivity and efficiencies in all areas. Further, the Group is targeting to enhance the brand awareness of “ALPHA” tiles in both the retail as well as the project segments.

In the export segment, the Group had made its maiden presence in the European markets in the beginning of 2013 and despite the global economic uncertainties, we will continue to seek new export markets.

DIVIDENDS

During the year under review, we have paid the following dividends:-

(i) a final single tier dividend of 4.0 sen per ordinary share of RM0.50 each amounting to RM6,228,760 in respect of financial year 2011 on 9 July 2012; and

(ii) an interim single tier dividend of 3.0 sen per ordinary share of RM0.50 each amounting to RM4,671,570 in respect of the current financial year on 8 November 2012.

The Board has recommended and subject to shareholders’ approval, a final single tier dividend of 4.0 sen per ordinary share of RM0.50 each amounting to RM6,228,760 for the financial year ended 31 December 2012.

The total single tier dividend per ordinary share of RM0.50 each for the current financial year is 7.0 sen totalling RM10,900,330 (2011: 7.0 sen totalling RM10,914,811).

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Group is always mindful of our CSR towards our community, our environment, and our workplace. During the financial year, we have continued our High Achievement Award to reward the children of our employees who have achieved excellent academic results in the national examinations including UPSR, PMR, SPM and STPM. We have also made financial contributions to various charitable organisations including schools.

ACKNOWLEDGEMENT AND APPRECIATIONS

On behalf of the Board, I would like to extend our greatest appreciation to our shareholders, valued customers, business associates for their continued support and confidence in the Group. I wish also to thank all our employees for their dedication, commitment and contribution to the success of the Group.

Zabidi bin Md ZainChairman

CHAIRMAN’S STATEMENTcont’d

Annual Report 20128

CORPORATE GOVERNANCE STATEMENT

The Board is fully aware of the significance of sound corporate governance in preserving and enhancing shareholders’ value.

Therefore, the Board is committed to ensure high standards of corporate governance are practiced and cultivated into our

organisational culture.

This statement explains how the Company has applied the Corporate Governance Principles and the extent of compliance with

the Recommendations as set out in the Malaysian Code of Corporate Governance 2012 (the “Code”) pursuant to Paragraph 15.25

of the Listing Requirements of the Bursa Securities throughout the financial year unless otherwise stated.

PRINCIPLES STATEMENT

The following statements set out how the Company has applied the Principles in the Code.

Principle 1: Establish Clear Roles and Responsibilities

The Board has established clear functions reserved for the Board and those delegated to the management. The respective roles

and responsibilities of the Board and management are clearly set out to ensure accountability of both parties.

In discharging its fiduciary and leadership functions, the Board has established and assumed the following roles and

responsibilities:-

The Board has also formalised ethical standards through a code of conduct and ensured its compliance. The code of conduct is

published on the Group’s corporate website. All employees play an important role in establishing, maintaining and enhancing the

reputation, image and brand of the Group.

The Sustainability Policy furnished on page 20 outlines the Group’s strategies to promote sustainable business. This Policy is also

published on the Group’s corporate website.

The Directors have full access to all information and records of the Group. Each Board member receives the monthly financial

reports on performance and operating results of the Group. There are agreed procedures for Directors, whether as a full board or

in their individual capacities, in furtherance of their duties to take independent professional advice at the Company’s expense, if

necessary.

In addition, all Directors have access to the advice and services of a suitably qualified and competent company secretary.

The Board has further developed its Board Charter to lay out the Board’s strategic intent and outlines the Board’s roles and

responsibilities. The Board Charter is periodically reviewed and published on the Group’s corporate website.

Principle 2: Strengthen Composition

The Company’s Articles of Association provide that at least one-third of the Board is subject to retirement by rotation at each Annual

General Meeting. The Directors to retire at each year are the Directors who have been longest in office since their appointment or

re-election. The Articles of Association also provide that a director who is appointed by the Board during the year shall be subject

to re-election at the next Annual General Meeting to be held following his appointment.

The Nomination Committee is empowered by the Board and its terms of reference to bring to the Board recommendations as to

the appointment of new Directors. The Committee comprises exclusively independent non-executive directors.


CORPORATE GOVERNANCE STATEMENTcont’d

PRINCIPLES STATEMENT cont’d

Principle 2: Strengthen Composition cont’d

The Committee is charged with the responsibility to oversee the selection and assessment of directors. The Committee reviews

the effectiveness of the Board, its Committees and the contributions of each individual Director, including independent non-

executive directors, on an annual basis. The Committee also keeps under review the Board structure, size, composition, and mix

of skills, business acumen and competencies required for the Board to effectively discharge its duties. For the financial year ended

31 December 2012, no nominations for new appointments to the Board were made.

The memberships of the Nomination Committee during the year are as follows:-

Chairman : Encik Zabidi bin Md Zain Independent Non-Executive Director

Members : Mr Ong Kheng Swee Independent Non-Executive Director

Mr Ong Chin Lin Independent Non-Executive Director

The Board through the Nomination Committee ensures that only individuals with the proper knowledge, experience, caliber,

professionalism and integrity to fulfill the duties of a Director are recruited to the Board.

The Board recognises the need to structure the remuneration packages for Directors so as to be able to attract, retain and motivate

Directors of the right caliber required to manage the Company and Group and to align the interests of the Directors with those of

the shareholders.

The Remuneration Committee is responsible for recommending to the Board the remuneration framework and remuneration

packages of the executive directors in all its forms. The Committee comprises exclusively independent non-executive directors.

None of the executive Directors participated in any way in determining their individual remuneration. The Board as a whole

determines the remuneration for Non-Executive Directors with individual Directors abstaining from decisions pertaining to their

own remuneration.

The memberships of the Remuneration Committee during the year are as follows:-

Chairman : Encik Zabidi bin Md Zain Independent Non-Executive Director

Members : Mr Ong Kheng Swee Independent Non-Executive Director

Mr Ong Chin Lin Independent Non-Executive Director

The Company Directors’ aggregate remuneration from the Group categorised into appropriate components for the financial year

are as follows:-

Executive

Directors

Non-Executive

Directors

RM’000 RM’000

Fees 140 230

Other Emoluments 1,803 -

Benefit in kind 6 -

Total 1,949 230

Annual Report 201210


Principle 2: Strengthen Composition cont’d

The number of Directors of the Company who served during the financial year and whose aggregate remuneration from the Group falling within the respective band are as follows:-

Number of Directors

Executive

Directors

Non-Executive

Directors

Below RM50,000 - 1

RM50,001 – RM100,000 - 1

RM100,001 – RM150,000 - 1

RM450,001 – RM500,000 1 -

RM1,450,001 – RM1,500,000 1 -

2 3

The Nomination and the Remuneration Committee met twice during the financial year. The Executive Directors as well as the Head of Human Resources attended the meeting upon the invitation of the Chairman of the Committee.

Principle 3: Reinforce Independence

The Board comprises a majority of Independent Directors. There is a clear division of responsibilities between the Chairman and Managing Director to ensure a balance of power and authority. The responsibilities of the Chairman include leading the Board in the oversight of the Group. The Chairman is a non-executive member of the Board. The Managing Director focuses on the business and day to day management and operations of the Group. This division is clearly defined in the Board Charter which is published on the Group’s corporate website.

The Independent Directors play a pivotal role in providing objective and independent judgment to the decision making of the Board. As part of the annual assessment of each Director, the Nomination Committee also undertakes an assessment of its Independent Directors annually. The assessment focuses beyond the Independent Directors’ background, economic and family relationships and considers whether the independent directors can continue to bring independent and objective judgment to board deliberations.

The tenure of an Independent Director should not exceed a cumulative term of nine years. The Group has not complied with this recommendation as two of the Independent Directors namely, Mr Ong Kheng Swee and Mr Ong Chin Lin have joined the Board as Independent Director for more than nine years. However, the Board strongly feels that their independence is not in jeopardy by virtue of long tenures. The Nomination Committee has established a set of stringent criteria to assess the independence status of each Independent Director. The criteria include the following aspects:-

i. Consulting or similar arrangements. The Board views Independent Directors who have any current or recent consulting arrangements with the Group as disqualifying independence, regardless of the magnitude of the fees.

ii. Financial links to executive officers of the Group. The Board views Independent Directors who have any financial links with the executive officers of the Group as non-independent.

iii. Related party transactions. The Board views related party transactions with an Independent Director, his company or affiliated entity have negative implications for independence. The transactions cover procurement, sales, legal, investment, lending, financial or professional service arrangements.

iv. Family relationship. The Board views that Independent Directors with family relationship with any executives or substantial shareholders as impairing independence.

v. Board interlocks. Board interlocks refer to situation where two senior executives from different companies sit on each other’s board. The Board views this arrangement negatively and impairing independence.

vi. Donations to charities affiliated to Independent Directors. If the Independent Directors hold executive role in those charities, the Board views such donations as impairing their independence.

vii. Cross-shareholdings. The Independent Directors are not deemed to be independent by the Board if they sit on the board of

another company that have material cross-shareholdings (more than 5%) with the Group.




Principle 3: Reinforce Independence cont’d

The Board of Directors and the Nomination Committee (with Mr Ong Kheng Swee and Mr Ong Chin Lin being members and removing themselves from the delibrations and decision) have reviewed and evaluated the independence status of both Mr Ong Kheng Swee and Mr Ong Chin Lin and are of the view that both of the Independent Directors do not have any of the above situations that will jeopardize their independence. Due to their varied experience in various industries and their expertise in their respective fields, coupled with their independent and objective mindset, their continuing tenure will be an invaluable contribution to the Board. Therefore, the Board will recommend and seek shareholders’ approval to retain them as Independent Directors at the forthcoming Annual General Meeting.

Principle 4: Foster Commitment

The Directors have devoted sufficient time to carry out their responsibilities.

Board agendas and papers are circulated to all directors at least seven (7) working days in advance of Board meeting. This is to ensure that Directors have sufficient time to consider and deliberate on the matters to be discussed at Board meetings.

There were four (4) board meetings during the financial year ended 31 December 2012 and the Directors’ attendance are as follows:-

Name Attendance

En Zabidi bin Md Zain 4 of 4 meetings

Mr Lim Oon Kok 4 of 4 meetings

Mr Hsieh Yu-Tien 4 of 4 meetings

Mr Ong Kheng Swee 4 of 4 meetings

Mr Ong Chin Lin 4 of 4 meetings

All Directors have complied with the minimum attendance at Board meetings as stipulated by the Bursa Securities Listing Requirements.

The Company conducts a briefing on the ceramic tile industry, organisation structure and business of the Group for new directors, including a tour of the factory’s operation and meetings with senior management staff. All Directors have completed the Mandatory Accreditation Program conducted by Bursa Malaysia Training Sdn Bhd.

In order to keep abreast of the latest development of the various issues in the continuously changing environment in which the Group operates, the Board has prescribed minimum Continuing Education Programs (“CEP”) points per annum to be attained by each Director. For the year ended 31 December 2012, the Board is pleased to inform that all directors have achieved the prescribed CEP points and the programs attended by the Directors were as follows:-

Principle 5: Uphold Integrity In Financial Reporting

The Board aims to provide an understandable, true and fair assessment of the Group’s financial performance and a balanced assessment of the Group’s prospects principally through the quarterly financial reports to the Bursa Securities and the annual report to shareholders.

The Audit Committee reviews and monitors the suitability and independence of external auditors. The independence of external auditors can be impaired by the provision of non-audit services to the Group. Therefore, the Audit Committee has established policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the external auditors.

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




Principle 5: Uphold Integrity In Financial Reporting cont’d

Directors’ Responsibility Statement in respect of the Audited Financial Statements:

The Companies Act 1965 requires the Directors to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of the accounting period and of the results of the operations and cash flows for the period then ended. In preparing the financial statements, the Directors have ensured that the Group has selected and applied consistently suitable accounting policies and made reasonable and prudent judgments and estimates. Applicable approved accounting standards have been followed, subject to any material departures, disclosed and explained in the financial statements.

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

The Directors have also a general responsibility for taking reasonable steps to safeguard the assets of the Group and for the prevention and detection fraud and other irregularities.

Principle 6: Recognise And Manage Risks

The Directors are fully aware of their responsibilities to maintain a sound system of internal control and risk management framework to safeguard shareholders’ investment and the Group’s assets.

The Statement on Risk Management and Internal Control furnished on pages 18 and 19 of this Annual Report provides an overview on the state of internal controls within the Group.

Principle 7: Ensure Timely And High Quality Disclosure

The Board has ensured that the Group complied with all the relevant disclosure requirements required by Bursa Malaysia Listing Requirements. The Board has also specifically dedicated an “Investor Relations” section on the corporate website to provide information such as announcements, financial results, Board Charter, Code of Conduct and Sustainability Policy.

Principle 8: Strengthen Relationship Between Company And Shareholders

The Board recognises the importance of maintaining active communication with its shareholders and timely dissemination of information concerning the Group’s business performance.

The key mean for communications with shareholders is the Annual General Meeting (“AGM”) where the Chairman will present his report on the performance of the Group and sufficient time will be allocated to obtain feedback from the shareholders or for shareholders to raise questions or concerns. Members of the Board, Senior Management and the auditors of the Company are present at the AGM to respond to any queries from the stockholders.

The Board may consider to adopt poll voting at future general meetings.

OTHER INFORMATION

1. Material Contracts

There is no material contract involving the Company and its subsidiaries with directors and substantial shareholders since the end of the previous financial year.

2. Share buy-back

During the current financial year, the company did not purchase its own shares. On a cumulative basis, the company has purchased 4,281,000 ordinary shares at a total cost of RM3,113,599. The average cost per share is RM0.73.

The shares repurchased are retained as treasury shares. There were no resale of treasury shares or cancellation of shares during the current financial year.



AUDIT COMMITTEE REPORT

A. ESTABLISHMENT AND COMPOSITION

The membership of the Audit Committee during the year are as follows:-

Chairman : Mr Ong Kheng Swee Independent Non-Executive Director

Members : Mr Ong Chin Lin Independent Non-Executive Director

Encik Zabidi bin Md Zain Independent Non-Executive Chairman

B. TERMS OF REFERENCE

The terms of reference of the Committee is summarised on pages14 to 17 of this Annual Report.

C. MEETINGS

During the financial year, the Audit Committee held four (4) meetings. Details of each member’s meeting attendances are as

follows:-

Name Attendance

Mr Ong Kheng Swee 4 of 4 meetings

Mr Ong Chin Lin 4 of 4 meetings

Encik Zabidi bin Md Zain 4 of 4 meetings

The meetings were appropriately structured through the use of agendas, which were distributed to the members with

sufficient notification.

The executive director and company secretary together with representatives of the external auditors, Messrs KPMG as well

as the Finance Manager were present by invitation at all the meetings.

D. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Committee carried out its duties in accordance with its terms of reference during the year.

The main activities undertaken by the Audit Committee during the financial year included the following:-

1) Reviewed and recommended for Board approval the quarterly unaudited financial statements for announcement to

the Bursa Securities;

2) In respect of the quarterly condensed financial statements as well as the semi-annual returns, reviewed the Company’s

compliance with the Listing Requirements of the Bursa Securities, Malaysian Accounting Standards Board (“MASB”)

and other legal and regulatory requirements;

3) Reviewed and recommended for Board approval the annual business budget;

4) Reviewed the audit report and observations made by the external auditors on the audited financial statements that

require appropriate management action and the management’s response thereon and reported the same to the

Board;

5) Considered and recommended to the Board for approval of the audit fees payable to the external auditors as disclosed

in Note 12 to the financial statements;

6) Reviewed the external auditors’ scope of work and audit plan for the financial year 2012;


AUDIT COMMITTEE REPORTcont’d

D. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR cont’d

The main activities undertaken by the Audit Committee during the financial year included the following:- cont’d

7) Reviewed the independence and objectivity of the external auditors and the services provided, including non-audit

services. During the financial year ended 31 December 2012, the non-audit fees paid to the external auditors of the

Group and of the Company amounted to RM52,200 and RM34,000 respectively mainly for the provision of quarterly

review of the condensed financial statements;

8) Reviewed the report from the Risk Management Committee and management action plans for improvement

opportunities in risk management, internal controls and governance processes;

9) Reviewed related party transactions entered into by the Group and ensured all transactions are at arms length’s

basis;

10) Reviewed the annual report (which included the Corporate Governance Statement, Audit Committee Report and

Statement of Internal Control) and audited financial statements of the Group and recommended to the Board for

approval;

11) Reviewed the internal audit reports, which highlighted audit issues, recommendations and management response

and action plans. Discussed with management actions taken to improve the system of internal controls based on the

improvement opportunities identified in the internal audit reports;

12) Reviewed the internal audit department’s resources requirements, audit program and plan for the year under review;

13) Held one meeting with the External Auditors without the presence of any management or executive directors to

discuss any significant matters which the External Auditors may wish to raise.

E. INTERNAL AUDIT FUNCTION

The internal audit function is performed in-house and reports to the Audit Committee and is independent of the activities of

the Group. The principal role of the internal audit department is to undertake independent, regular and systematic reviews

of the risk management, internal controls and corporate governance system so as to provide reasonable assurance that such

systems are operating and continue to operate satisfactorily and effectively.

The internal audit function provides the Audit Committee with independent and objective reports on the state of risk

management control systems and governance of the Group and the extent of compliance with the Group’s policies and

procedures as well as relevant statutory requirements and regulations.

The internal audit department submits regular reports on their activities, findings, recommendations for improvement

opportunities, management responses and action plans at the Audit Committee meetings.

The costs incurred for the internal audit function in respect of the financial year ended 31 December 2012 amounted to

RM76,000. Further details of the activities of the internal audit function are set out in the Statement on Risk Management

and Internal Control on pages 18 to 19.

F. SUMMARY OF THE TERMS OF REFERENCE

Objectives

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling the following oversight objectives

on the Group activities:-



F. SUMMARY OF THE TERMS OF REFERENCE cont’d

Composition

The Board shall elect and appoint Committee members from amongst their members, comprising no fewer than three (3)

Directors. All the Audit Committee members must be Non-Executive Directors, with a majority of them being Independent

Non-Executive Directors. No alternate Director of the Board shall be appointed as a member of the Committee.

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

- he or she must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967;

or

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

If a member of the Committee resigns or for any reason ceases to be a member with the result that the number of

members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of new

members as may be required to fill the vacancy.

The Chairman of the Committee shall be an Independent Non-Executive Director.

The Board shall review the terms of office of each of its members at least once (1) every three (3) years.

Quorum and Committee’s Procedures

Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate.

In order to form a quorum for the meeting, the majority of the members present must be Independent Non-Executive

Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the

members present.

The Company Secretary or any other suitable person shall be appointed Secretary of the Committee (“the Secretary”). The

Secretary, in conjunction with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant

support papers, at least one (1) week prior to each meeting to the members of the Committee. The minutes shall be circulated

to members of the Board.

The Committee may, as and when deemed necessary, invite other Board members and senior management members to

attend the meetings.

The Chairman shall submit an annual report to the Board summarising the Committee’s activities during the year and the

related significant results and findings.

The Committee shall regulate the manner of proceedings of its meetings, having regard to normal conventions on such

matter.

Authority

The Committee is authorised to seek any information it requires from employees, who are required to cooperate with any

request made by the Committee.

The Committee shall have full and unlimited access to any information pertaining to the Group.

The Committee shall have direct communication channels with the internal (if any) and external auditors and with senior

management of the Group and shall be able to convene meetings with the external auditors, the internal auditors or both,

excluding the attendance of other directors and other employees of the Company, whenever deemed necessary. The

Chairman of the Committee should engage on a continuous basis with senior management, the head of internal audit and

the external auditors in order to be kept informed of matters affecting the Group.



Authority cont’d

The Committee shall have the resources that are required to perform its duties. The Committee can obtain, at the

expense of the Company, outside legal or other independent professional advice it considers necessary.

Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting

in a breach of the Bursa Securities Listing Requirements, the Committee shall promptly report such matter to the Bursa

Securities.

Responsibilities and Duties

In fulfilling its primary objectives, the Committee shall undertake the following responsibilities and duties:

1) Review the appointment of external auditors, the audit fee and any question of resignation or dismissal before making

recommendations to the Board;

2) Review the independence and objectivity of the external auditors and their services, including non-audit services and

the professional fees, so as to ensure a proper balance between objectivity and value for money;

3) Review with the external auditor before the commencement of each audit, the audit scope and plan, including any

changes to the planned scope of the audit plan;

4) Review major audit findings and the management’s response during the year with management, external auditors

and internal auditors, including the status of previous audit recommendations;

5) To discuss any problems and reservations arising from the interim and final audits and any matters the auditor may

wish to discuss (in the absence of management where necessary);

6) With respect to the Internal Audit function:-

6.1) Review the adequacy of the scope and plan, functions, competency and resources of the internal audit functions

and that it has the necessary authority to carry out its work.

6.2) Review the internal audit program and the results of the internal audit process and where necessary action is

taken on the recommendations of the internal audit function.

6.3) Review any appraisal or assessment of the performance of members of the internal audit function.

6.4) Approve any appointment or termination of senior staff members of the internal audit function.

6.5) Inform itself of resignations of internal audit staff members and provide the resigning staff an opportunity to

submit his reasons for resigning.

7) Review the adequacy and integrity of internal control systems, including enterprise risk management, management

information system, and the internal auditors’ and/or external auditors’ evaluation of the said systems;

8) Review the quarterly results and the year end financial statements, prior to the approval by the Board focusing

particularly on:-

- changes in or implementation of major accounting policy changes;

- significant or unusual events;

- compliance with accounting standards and other legal requirements; and

- going concern assumptions.





Responsibilities and Duties cont’d

9) Review procedures in place to ensure that the Group is in compliance with the Companies Act 1965, Bursa Securities

Listing Requirements and other legislative and reporting requirements;

10) Review any related party transaction and conflict of interest situation that may arise within the Company or the Group,

including any transaction, procedure or course of conduct that raises question on management integrity;

11) Direct and where appropriate supervise any special projects or investigation considered necessary, and review

investigation reports on any major defalcations, frauds and thefts;

12) Prepare reports as the circumstances dictate or at least once (1) a year, to the Board summarising the work performed

in fulfilling the Committee’s primary responsibilities;

13) Any other activities, as authorised by the Board.


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following

statement which outlines the main features and scope of the risk management and internal control system of the Group during

the year.

BOARD OF DIRECTORS’ RESPONSIBILITIES

The Board is responsible for the Group’s system of internal control and risk management, including the establishment of an

appropriate control environment and framework as well as reviewing its adequacy and integrity. Because of the inherent

limitations in any system of internal controls, such a system is designed to manage rather than eliminate the risk of failure

to achieve business and corporate objectives, and can only provide reasonable and not absolute assurance against material

misstatement or loss. The system of internal controls covers, interalia, risk management and financial, organisational, operational

and compliance controls.

The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group in

its achievement of objectives and strategies. This process has been in place for the year under review and up to the date of approval

of this statement for inclusion in the annual report. The review on the adequacy and effectiveness of the risk management and

internal control system has been undertaken by the Board.

ENTERPRISE RISK MANAGEMENT FRAMEWORK

The Board, through the Audit Committee, continually reviews the risk management and internal control system and ensures that

necessary actions have been taken to remedy any significant failings or weaknesses identified from that review.

The risk assessment process involves identification of risks, prioritisation and formulation of action plans to mitigate these risks and

enhance the control systems, which operates independently of the activities in the Group.

The Risk Management Policies manual outlines the risk management framework for the Group and provides practical guidance to

all employees on risk management issues.

As part of the risk management framework, the Risk Management Committee is tasked to identify, assess and monitor the on-

going risk faced by the Group.

The on-going risk management processes are coordinated by the internal audit department in conjunction with the key

management staff in each operating unit to prepare action plans, with implementation time-scales to continually identify and

address any risks and control issues that may arise.

To further enhance the risk management process, on-going training for selected management and staff is carried out to instill a risk

management culture within the Group.

INTERNAL AUDIT

The internal audit function adopts a risk-based approach based on the risk profiles of the Group’s key activities with emphasis on

significant risk areas. Internal audit independently reviews the risk identification procedures and control processes implemented

by management and reports to the Audit Committee on a quarterly basis. The internal audit function also reviews the internal

controls of the Group operations and activities based on the annual internal audit plan approved by the Audit Committee.

The Audit Committee reviews the findings, recommendations and management response and action plans before reporting and

making recommendations to the Board in enhancing the risk management, internal controls and governance systems. The Audit

Committee presents its findings to the Board on a quarterly basis or earlier as appropriate.


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

cont’d

OTHER KEY COMPONENTS OF INTERNAL CONTROL SYSTEM

Apart from risk management and the internal audit, the other key components of the Group’s internal control system are:-

(1) Organisational Structure

The Board has put in place an organisational structure with formally defined lines of responsibility and delegation of

authority.

(2) Reporting and Review

Monthly management accounts and reports are submitted to the Board members which include among others financial and

non-financial key performance indicators, the monitoring of results against budget, with major variances being explained

and management action taken, where necessary.

(3) Operational Policies and Procedures

Documented operating procedures and policies manuals form an integral part of the internal control systems to safeguard

the Group’s assets and ensure accurate, timely and complete information for decision making.

The Board has reviewed the adequacy and effectiveness of the risk management and internal control system through the above

processes and is not aware of any significant weaknesses or deficiencies in the Group’s system of internal control for the year under

review and to the date of this report. The Board has also received assurance from the Managing Director and Finance Manager that

the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on

the risk management and internal control system of the Group.


SUSTAINABILITY POLICY

OBJECTIVE

We aim to develop the Group as a long term, sustainable business that delivers value for all our stakeholders i.e. our shareholders,

business partners, customers, suppliers, employees and the wider community. We believe that by managing our business

responsibly, we will create a financially stable organisation and deliver value for our shareholders.

SCOPE & GOVERNANCE

This policy applies to all the Directors, key management and employees and relevant stakeholders of the Group. We ensure this

policy is embedded into our business. This policy will be continuously monitored and reviewed and is shared with stakeholders

through our corporate website and other channels as appropriate.

AREAS OF FOCUS

(I) Our Customers

We believe in delivering excellent products and services for our customers to meet their needs. We ensure that we meet

their expectations responsibly while adhering to applicable quality requirements. We have robust policies and procedures in

place to ensure we meet these requirements.

(II) Our employees

We value our employees and will use our best endeavours to ensure a safe workplace and maintain proper occupational

health and safety practices to commensurate with the nature of the Group’s business. Every employee is treated fairly and

with respect and we do not accept any form of discrimination.

(III) Our supply chain

We aim to develop mutually beneficial relationships with our suppliers and we are committed to working with suppliers who

meet our business and sustainability standards.

(IV) Our environment

We are committed to identifying, managing and minimising the environmental impact of our business activities. We work

closely with our environmental management consultants to help us manage our impacts and ensure that we comply with all

relevant environmental legislations.

(V) Our community

We aim to engage with the local communities in which we conduct our business by providing financial and non-financial

supports to the needy groups.

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Financial Position

Income Statements

Statements of Comprehensive Income

Consolidated Statement of Changes in Equity

Statement of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

22

25

25

26

28

29

30

31

32

33

34

FINANCIALSTATEMENTSFINANCIALSTATEMENTS


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2012

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for

the financial year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The Company is an investment holding company. The principal activities of its subsidiaries are disclosed in Note 4 to the financial

statements. There has been no significant change in the nature of these activities during the financial year.

RESULTS

Group Company

RM RM

Profit for the year 10,672,775 11,238,456

RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in

the financial statements.

DIVIDENDS

Since the end of the previous financial year, the Company paid:

i) a final single tier dividend of 4.0 sen per ordinary share totalling RM6,228,760 in respect of the year ended 31 December 2011

on 9 July 2012; and

ii) an interim single tier dividend of 3.0 sen per ordinary shares totalling RM4,671,570 in respect of the year ended 31 December

2012 on 8 November 2012.

The final dividend recommended by the Directors in respect of the year ended 31 December 2012 is a single tier dividend of 4.0

sen per ordinary share totalling RM6,228,760.

DIRECTORS OF THE COMPANY

Directors who served since the date of the last report are:

En. Zabidi bin Md Zain

Mr. Lim Oon Kok

Mr. Hsieh, Yu-Tien

Mr. Ong Kheng Swee

Mr. Ong Chin Lin


DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2012

cont’d

DIRECTORS’ INTERESTS IN SHARES

The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned

subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the Directors

who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM0.50 each

Name of Directors Interest

At 1

January

2012 Bought Sold

At 31

December

2012

Company

Mr. Lim Oon Kok Direct 39,058,942 - (4,000,000) 35,058,942

Deemed * 9,161,205 4,000,000 - 13,161,205

En. Zabidi bin Md Zain Direct 9,338,281 - - 9,338,281

Deemed # 1,524,000 - - 1,524,000

Mr. Hsieh, Yu-Tien Direct 800,006 - (400,000) 400,006

* By virtue of shares held by his spouse and his children.

# By virtue of shares held by Edufocus Computer Aided Learning Sdn. Bhd., a company in which he has interest.

None of the other Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of its

related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit

(other than a benefit included in the aggregate amount of emoluments 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 other than a

Director who has significant financial interests in a company which received rental income from a subsidiary in the normal course

of business.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of

the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body

corporate.

ISSUE OF SHARES

There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

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


OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to

ascertain that:

i) all known bad debts have been written off and adequate provision has been made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an

amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and

in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company

misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the

Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial

statements of the Group and of the Company misleading.

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

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures

the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable

within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially

affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31

December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has

any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

AUDITORS

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

LIM OON KOK HSIEH, YU-TIEN

Johor Bahru

Date: 22 March 2013

DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2012cont’d


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

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

In the opinion of the Directors, the financial statements set out on pages 28 to 62 are 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 2012 and of their financial

performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 21 on page 63 to the financial statements has been compiled in

accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of

Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants,

and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

LIM OON KOK HSIEH, YU-TIEN

Johor Bahru

Date: 22 March 2013

I, Soo Choon Siong, the officer primarily responsible for the financial management of YI-LAI BERHAD, do solemnly and sincerely

declare that the financial statements set out on pages 28 to 63 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 above named in Johor Bahru in the State of Johor on 22 March 2013.

SOO CHOON SIONG

Before me:

NORANI BT. HJ KHALID

Commissioner for Oaths

J-140


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF YI-LAI BERHAD(INCORPORATED IN MALAYSIA)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Yi-Lai Berhad, which comprise the statements of financial position as at 31 December

2012 of the Group and of the Company, and the income statements, statements of comprehensive income, changes in equity and

cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other

explanatory information, as set out on pages 28 to 62.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in

accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act,

1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on our 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 give a true and fair view of the financial position of the Group and of the Company as

of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian

Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965

in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

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

(b) We have considered the financial statements and the auditors’ report of the subsidiary of which we have not acted as

auditors, which are indicated in Note 4 to the financial statements.

(c) We are satisfied that the accounts of the subsidiaries 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 accounts of the subsidiaries did not contain any qualification or any adverse comment made under

Section 174(3) of the Act.


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF YI-LAI BERHAD

(INCORPORATED IN MALAYSIA)cont’d

OTHER REPORTING RESPONSIBILITIES

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out

in Note 21 on page 63 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities

Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial

Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our

opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter

No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities

Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by

Bursa Malaysia Securities Berhad.

OTHER MATTERS

As stated in Note 1(a) to the financial statements, Yi-Lai Berhad adopted Malaysian Financial Reporting Standards (“MFRS”) and

International Financial Reporting Standards (“IFRS”) on 1 January 2012 with a transition date of 1 January 2011. These standards

were applied retrospectively by the Directors to the comparative information in these financial statements, including the

statements of financial position as at 31 December 2011 and 1 January 2011, and the statements of comprehensive income,

changes in equity and cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report

on the comparative information that is prepared in accordance with MFRS and IFRS, and hence it is unaudited. Our responsibilities

as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in

these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do

not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash

flows for the year then ended.

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.

KPMG WEE BENG CHUAN

Firm Number: AF 0758 Approval Number: 2677/12/14 (J)

Chartered Accountants Chartered Accountant

Johor Bahru

Date: 22 March 2013


STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2012

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

Group Company

Note 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Assets

Property, plant and

equipment 3 83,672,106 86,092,815 82,011,970 - - -

Investments in

subsidiaries 4 - - - 80,371,207 80,371,207 80,371,207

Deferred tax assets 5 58,000 57,000 105,000 - - -

Total non-current assets 83,730,106 86,149,815 82,116,970 80,371,207 80,371,207 80,371,207

Inventories 6 54,123,299 52,529,960 52,780,484 - - -

Trade and other

receivables 7 39,896,485 35,871,970 38,303,925 2,000 198,229 2,000

Amount due from

subsidiaries 4 - - - 6,254,000 6,210,000 6,360,000

Tax recoverable 1,567,211 1,959,458 498,915 80,058 13,058 113,424

Other investments 8 20,867,333 - - 20,867,333 - -

Cash and cash

equivalents 9 22,847,690 46,304,548 50,581,529 986,947 21,418,251 24,210,843

Total current assets 139,302,018 136,665,936 142,164,853 28,190,338 27,839,538 30,686,267

Total assets 223,032,124 222,815,751 224,281,823 108,561,545 108,210,745 111,057,474

Equity

Share capital 80,000,000 80,000,000 80,000,000 80,000,000 80,000,000 80,000,000

Reserves 116,658,397 116,560,291 117,982,707 28,411,871 28,073,745 30,920,399

Total equity attributable

to owners of the

Company/Total equity 10 196,658,397 196,560,291 197,982,707 108,411,871 108,073,745 110,920,399

Liabilities

Deferred tax liabilities/

Total non-current

liabilities 5 7,755,000 7,905,000 8,210,000 - - -

Trade and other payables 11 18,538,548 18,290,963 17,834,802 149,674 137,000 137,075

Taxation 80,179 59,497 254,314 - - -

Total current liabilities 18,618,727 18,350,460 18,089,116 149,674 137,000 137,075

Total liabilities 26,373,727 26,255,460 26,299,116 149,674 137,000 137,075

Total equity and liabilities 223,032,124 222,815,751 224,281,823 108,561,545 108,210,745 111,057,474


INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2012


Group Company

Note 2012 2011 2012 2011

RM RM RM RM

Revenue

Goods sold 130,965,368 132,741,568 - -

Dividend income from:

- Quoted investment 397,791 - 397,791 -

- Subsidiaries - - 11,005,900 9,284,000

131,363,159 132,741,568 11,403,691 9,284,000

Cost of goods sold (106,726,189) (109,216,131) - -

Gross profit 24,636,970 23,525,437 11,403,691 9,284,000

Other income 609,258 399,138 - -

Distribution expenses (6,458,096) (6,403,231) - -

Administrative expenses (5,021,247) (4,762,850) (330,732) (339,250)

Other expenses (85,840) (602,775) (30,458) -

Results from operating activities 13,681,045 12,155,719 11,042,501 8,944,750

Interest income 615,186 1,158,411 258,297 703,494

Profit before tax 12 14,296,231 13,314,130 11,300,798 9,648,244

Tax expense 13 (3,623,456) (2,716,118) (62,342) (219,731)

Profit for the year 10,672,775 10,598,012 11,238,456 9,428,513

Basic and diluted earnings per ordinary share (sen) 14 6.85 6.76

Dividends per ordinary share paid (sen) - net 15 7.00 7.00 7.00 7.00


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2012

Group Company

2012 2011 2012 2011

RM RM RM RM

Profit for the year 10,672,775 10,598,012 11,238,456 9,428,513

Foreign currency translation differences for foreign

operations/

Other comprehensive income for the year, net of tax 325,661 254,739 - -

Total comprehensive income for the year 10,998,436 10,852,751 11,238,456 9,428,513

Total comprehensive income attributable to:

Owners of the Company/

Total comprehensive income for the year 10,998,436 10,852,751 11,238,456 9,428,513



CONSOLIDATED STATEMENT OFCHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

Attributable to owners of the Company

Non-distributable Distributable

Note

Share

capital

Share

premium

Exchange

fluctuation

reserve

Treasury

shares

Retained

earnings

Total

equity

RM RM RM RM RM RM

Group

At 1 January 2011 80,000,000 24,376,066 660,975 (1,814,603) 94,760,269 197,982,707

Total comprehensive

income for the year - - 254,739 - 10,598,012 10,852,751

Own shares acquired 10 - - - (1,298,996) - (1,298,996)

Dividends to owners of

the Company 15 - - - - (10,976,171) (10,976,171)

At 31 December 2011 80,000,000 24,376,066 915,714 (3,113,599) 94,382,110 196,560,291

Total comprehensive

income for the year - - 325,661 - 10,672,775 10,998,436

Dividends to owners of

the Company 15 - - - - (10,900,330) (10,900,330)

At 31 December 2012 80,000,000 24,376,066 1,241,375 (3,113,599) 94,154,555 196,658,397



Attributable to owners of the Company

Non-distributable Distributable

Note

Share

capital

Share

premium

Treasury

shares

Retained

earnings

Total

equity

RM RM RM RM RM

Company

At 1 January 2011 80,000,000 24,376,066 (1,814,603) 8,358,936 110,920,399

Total comprehensive income for the

year - - - 9,428,513 9,428,513

Own shares acquired 10 - - (1,298,996) - (1,298,996)

Dividends to owners of the Company 15 - - - (10,976,171) (10,976,171)

At 31 December 2011 80,000,000 24,376,066 (3,113,599) 6,811,278 108,073,745

Total comprehensive income for the

year - - - 11,238,456 11,238,456

Dividends to owners of the Company 15 - - - (10,900,330) (10,900,330)

At 31 December 2012 80,000,000 24,376,066 (3,113,599) 7,149,404 108,411,871

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2012



STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2012

Group Company

2012 2011 2012 2011

Note RM RM RM RM

Cash flows from operating activities

Profit before tax 14,296,231 13,314,130 11,300,798 9,648,244

Adjustments for:-

Depreciation 8,001,214 8,238,531 - -


- Other investments (397,791) - (397,791) -

- Subsidiaries - - (11,005,900) (9,284,000)

Property, plant and equipment:

- (Gain)/Loss on disposal (49,867) 527,266 - -

- Written off 36,892 48,404 - -

Interest income (615,186) (1,158,411) (258,297) (703,494)

(Reversal)/Inventories written down (305,616) 292,811 - -

Allowance for slow moving inventories 320,901 - - -

Changes in fair value of other investments 30,458 - 30,458 -

Operating profit/(loss) before changes in working

capital 21,317,236 21,262,731 (330,732) (339,250)

Changes in inventories (1,608,624) (42,287) - -

Changes in trade and other receivables (4,220,744) 2,628,184 - -

Changes in trade and other payables 573,135 710,668 12,674 (75)

Changes in amount due from subsidiaries - - (44,000) 150,000

Cash generated from/(used in) operations 16,061,003 24,559,296 (362,058) (189,325)

Tax paid (3,361,527) (4,628,478) (129,342) (119,365)

Net cash from/(used in) operating activities 12,699,476 19,930,818 (491,400) (308,690)

Cash flows from investing activities

Acquisition of:

- Property, plant and equipment (5,619,319) (13,079,053) - -

- Other investments (20,897,791) - (20,897,791) -

Proceeds from disposal of property, plant and

equipment 51,900 184,239 - -

Dividend received from:

- Subsidiaries - - 11,005,900 9,284,000

- Other investments 397,791 - 397,791 --

Interest received 811,415 962,182 454,526 507,265

Net cash (used in)/from investing activities (25,256,004) (11,932,632) (9,039,574) 9,791,265

Cash flows from financing activities

Dividends paid to owners of the Company (10,900,330) (10,976,171) (10,900,330) (10,976,171)

Repurchase of treasury shares - (1,298,996) - (1,298,996)

Net cash used in financing activities (10,900,330) (12,275,167) (10,900,330) (12,275,167)

Net decrease in cash and cash equivalents (23,456,858) (4,276,981) (20,431,304) (2,792,592)

Cash and cash equivalents at 1 January 46,304,548 50,581,529 21,418,251 24,210,843

Cash and cash equivalents at 31 December 9 22,847,690 46,304,548 986,947 21,418,251



NOTES TO THE FINANCIAL STATEMENTS

Yi-Lai Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa

Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are as follows:

Principal place of business

Lot 7020, Batu 23

Jalan Air Hitam

81000 Kulaijaya

Johor

Malaysia

Registered office

Suite 7E, Level 7

Menara Ansar

65, Jalan Trus

80000 Johor Bahru

Johor

Malaysia

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012 comprise the

Company and its subsidiaries (together referred to as the “Group”). The financial statements of the Company as at and for the

financial year ended 31 December 2012 do not include other entities.

The Company is an investment holding company. The principal activities of its subsidiaries are disclosed in Note 4.

These financial statements were authorised for issue by the Board of Directors on 22 March 2013.

1. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial

Reporting Standards (MFRS), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia.

These are the Group’s and the Company’s first financial statements prepared in accordance with MFRS and MFRS 1,

First-time Adoption of Malaysian Financial Reporting Standards has been applied.

In the previous years, the financial statements of the Group and of the Company were prepared in accordance with

Financial Reporting Standards (FRS). The transition to MFRS has no financial impact to the financial statements of the

Group and of the Company.

The following are accounting standards, amendments and interpretations that have been issued by the Malaysian

Accounting Standards Board (MASB) but have not been adopted by the Group and the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012

Presentation of Financial Statements - Presentation of Items of Other Comprehensive

Income

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013

Consolidated Financial Statements

Joint Arrangements

Disclosure of Interests in Other Entities

Fair Value Measurement

Employee Benefits (2011)

Separate Financial Statements (2011)

Investments in Associates and Joint Ventures (2011)

Stripping Costs in the Production Phase of a Surface Mine


NOTES TO THE FINANCIAL STATEMENTScont’d

1. BASIS OF PREPARATION cont’d

(a) Statement of compliance cont’d

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013 cont’d

Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities First-time Adoption of Malaysian Financial Reporting Standards – Government Loans

First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)

Presentation of Financial Statements (Annual Improvements 2009- 2011 Cycle) Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle) Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)

Consolidated Financial Statements: Transition GuidanceJoint Arrangements: Transition GuidanceDisclosure of Interests in Other Entities: Transition Guidance


Consolidated Financial Statements: Investment EntitiesDisclosure of Interests in Other Entities: Investment Entities

Separate Financial Statements (2011): Investment EntitiesFinancial Instruments: Presentation – Offsetting Financial Assets and Financial

Liabilities


Financial Instruments (2009) Financial Instruments (2010)

Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and Transition Disclosures

The Group and the Company plan to apply the abovementioned standards, amendments and interpretations in the respective financial year when the above standards, amendments and interpretations become effective.

The initial application of these standards, amendments and interpretations are not expected to have any material financial impacts to the current and prior periods financial statements of the Group and the Company upon their first adoption.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in Note 7 -

Trade and other receivables.



2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial statements,

and have been applied consistently by Group entities, unless otherwise stated and in preparing the opening MFRS statements

of financial position of the Group and of the Company at 1 January 2011 (the transition date to MFRS framework), unless

otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements

of subsidiaries are included in the consolidated financial statements from the date that control commences until

the date that control ceases. Control exists when the Company has the ability to exercise its power to govern

the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,

potential voting rights that presently are exercisable are taken into account.

Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any

impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments

includes transaction costs.

(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the

date on which control is transferred to the Group.

Acquisitions on or after 1 January 2011

For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as:

less

assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree

either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs

in connection with a business combination are expensed as incurred.

Acquisitions before 1 January 2011

As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred

before the date of transition to MFRSs, i.e. 1 January 2011. Goodwill arising from acquisitions before 1 January

2011 has been carried forward from the previous FRS framework as at the date of transition.

(iii) Acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as

equity transactions between the Group and its non-controlling interest holders. Any difference between the

Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or

against Group reserves.


2. SIGNIFICANT ACCOUNTING POLICIES cont’d

(a) Basis of consolidation cont’d

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any

non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit

arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous

subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted

for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence

retained.

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable

directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of

financial position and statement of changes in equity within equity, separately from equity attributable to the

owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated

statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the

comprehensive income for the year between non-controlling interests and owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests

even if doing so causes the non-controlling interests to have a deficit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group

transactions, are eliminated in preparing the consolidated financial statements.

(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at

exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are

retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the

reporting date except for those that are measured at fair value are retranslated to the functional currency at the

exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising

on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of

currency risk, which are recognised in other comprehensive income.

(ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill

and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the

reporting period, except for goodwill and fair value adjustments arising from business combinations before 1

January 2011 which are treated as assets and liabilities of the Company. The income and expenses of foreign

operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange rates

at the dates of the transactions.




(b) Foreign currency cont’d

(ii) Operations denominated in functional currencies other than Ringgit Malaysia cont’d

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign

currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned subsidiary, then

the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When

a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative

amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the profit or loss on

disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant

proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes

of only part of its investment in an associate or joint venture that includes a foreign operation while retaining

significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or

loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to

a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses

arising from such a monetary item are considered to form part of a net investment in a foreign operation and are

recognised in other comprehensive income, and are presented in the FCTR in equity.

(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when,

the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at

fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the

financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and

only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract

is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is

recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

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

Fair value through profit or loss category comprises financial assets that are held for trading, including

derivatives (except for a derivative that is a financial guarantee contract or a designated and effective

hedging instrument) or financial assets that are specifically designated into this category upon initial

recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair

values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their

fair values with the gain or loss recognised in profit or loss.




(c) Financial instruments cont’d

(ii) Financial instrument categories and subsequent measurement cont’d

Financial assets cont’d

(b) Held-to-maturity investments

Held-to-maturity investments category comprises debt instruments that are quoted in an active market

and the Group or the Company has the positive intention and ability to hold to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised

cost using the effective interest method.

(c) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using

the effective interest method.

(d) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not

held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and

whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised

as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in

other comprehensive income, except for impairment losses, foreign exchange gains and losses arising

from monetary items and gains and losses of hedged items attributable to hedge risks of fair value

hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised

in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt

instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for

impairment (see Note 2(h)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value

through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative

that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities

that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values

cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair

values with the gain or loss recognised in profit or loss.




(c) Financial instruments cont’d

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the

holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the

original or modified terms of a debt instrument.

Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a

straight-line method over the contractual period or, when there is no specified contractual period, recognised

in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes

probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower

than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require

delivery of the asset within the time frame established generally by regulation or convention in the marketplace

concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date

accounting. Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a

receivable from the buyer for payment on the trade date.

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows

from the financial asset expire or the financial asset is transferred to another party without retaining control or

substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the

carrying amount and the sum of the consideration received (including any new asset obtained less any new

liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or

loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is

discharged 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.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less any accumulated depreciation and any

accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs

directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling

and removing the items and restoring the site on which they are located. The cost of self-constructed assets also

includes the cost of materials and direct labour. Cost also may include transfers from equity of any gain or loss

on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that

equipment.




(d) Property, plant and equipment cont’d

(i) Recognition and measurement cont’d

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

between knowledgeable willing parties 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 when available and replacement

cost when appropriate.

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.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the

proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within

“other income” and “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying

amount of the item if it is probable that the future economic benefits embodied within the component will

flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component

is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are

recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets

are assessed, and if a component has a useful life that is different from the remainder of that asset, then that

component is depreciated separately.

Depreciation is recognised profit or loss on a straight-line basis over the estimated useful lives of each

component of an item of property, plant and equipment. Leasehold land is amortised in equal instalments

over the remaining lease period of 46 - 93 years while buildings are depreciated on a straight line basis over the

shorter of 50 years or the lease period. Freehold land is not depreciated. Property, plant and equipment under

construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Plant and machinery 3 - 15 years

Motor vehicles, office and other equipment 5 years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period and adjusted

as appropriate.

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership

are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the

lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition,

the asset is accounted for in accordance with the accounting policy applicable to that asset.




(e) Leased assets cont’d

(i) Finance lease cont’d

Minimum lease payments made under finance leases are apportioned between the finance expense and the

reduction of the outstanding liability. The finance expense is allocated to each period during the lease term

so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease

payments are accounted for by revising the minimum lease payments over the remaining term of the lease

when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

(ii) Operating leases

Leases, where the Group or the Company does not assume substantially all the risks and rewards of

ownership are classified as operating leases and the leased assets are not recognised in the statement of

financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of

the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense,

over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they

are incurred.

(f) Inventories

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

The cost of inventories is measured based on the weighted average cost formula, and includes expenditure incurred

in acquiring the inventories and bringing them to their existing location and condition. In the case of work-in-progress

and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of

completion and the estimated costs necessary to make the sale.

(g) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments

which have an insignificant risk of changes in fair value. For the purpose of statement of the cash flows, cash and cash

equivalents are presented net of bank overdrafts and pledged deposits.

(h) Impairment

(i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss and investments

in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a

result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected

as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument,

a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any

such objective evidence exists, then the financial asset’s recoverable amount is estimated.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit

or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated

future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is

reduced through the use of an allowance account.




(h) Impairment cont’d

(i) Financial assets cont’d

An impairment loss in respect of available-for-sale financial assets is recognised in the profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through the profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in the profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax assets and assets arising from employee benefits) 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.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs 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 or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are

recognised.




(i) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable reserves, or both.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity, and the resulting surplus or deficit on the transaction is presented in share premium.

(j) Income tax

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

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

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

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable equity, 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.

(k) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.




(k) Revenue and other income cont’d

(ii) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive

payment is established, which in the case of quoted securities is the ex-dividend date.

(iii) Interest income

Interest income is recognised as it accrues using the effective interest method.

(l) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave

are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short term cash bonus or profit-sharing plans

if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided

by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contribution to statutory pension funds are charged to profit or loss in the financial year to which

they relate. Once the contributions have been paid, the Group has no further payment obligations.

(m) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the

weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted

average number of ordinary shares outstanding adjusted for own shares held for the effects of all dilutive potential

ordinary shares.

(n) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn

revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s

other components. An operating segment’s operating results are reviewed regularly by the chief operating decision

maker, which in this case is the Managing Director of the Group, to make decisions about resources to be allocated to

the segment and to assess its performance, and for which discrete financial information is available.



3. PROPERTY, PLANT AND EQUIPMENT

Land and

buildings

Plant and

machinery

Motor

vehicles,

office

and other

equipment

Construction-

in-progress Total

RM RM RM RM RM

Group

At cost

At 1 January 2011 48,074,950 153,468,103 8,737,759 670,334 210,951,146

Additions 2,895,647 7,936,828 606,296 1,640,282 13,079,053

Disposals (88,075) (3,557,506) (844,600) - (4,490,181)

Written off (55,850) (138,307) (11,240) - (205,397)

Transfers - 665,787 - (665,787) -

Exchange differences - - 15,925 - 15,925

At 31 December 2011/

1 January 2012 50,826,672 158,374,905 8,504,140 1,644,829 219,350,546

Additions 591,538 3,072,939 212,321 1,742,521 5,619,319

Disposals - (57,278) (318,230) - (375,508)

Written off (37,840) (1,413,680) (40,567) - (1,492,087)

Transfers - 2,751,416 373,793 (3,125,209) -


At 31 December 2012 51,380,370 162,728,302 8,750,969 262,141 223,121,782

Accumulated depreciation

At 1 January 2011 7,665,906 113,795,973 7,477,297 - 128,939,176

Depreciation charge 719,572 6,819,789 699,170 - 8,238,531

Disposals (4,111) (2,929,975) (844,590) - (3,778,676)

Written off (10,393) (135,363) (11,237) - (156,993)



1 January 2012 8,370,974 117,550,424 7,336,333 - 133,257,731

Depreciation charge 724,637 6,611,189 665,388 - 8,001,214

Disposals - (56,551) (316,924) - (373,475)

Written off (6,193) (1,408,942) (40,060) - (1,455,195)


At 31 December 2012 9,089,418 122,696,120 7,664,138 - 139,449,676

Carrying amounts

At 1 January 2011 40,409,044 39,672,130 1,260,462 670,334 82,011,970


1 January 2012 42,455,698 40,824,481 1,167,807 1,644,829 86,092,815

At 31 December 2012 42,290,952 40,032,182 1,086,831 262,141 83,672,106



3. PROPERTY, PLANT AND EQUIPMENT cont’d

Group

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Carrying amounts of land and buildings

Freehold land 14,805,412 14,560,912 13,829,210

Leasehold land 5,295,482 5,410,171 5,370,665

Buildings 22,190,058 22,484,615 21,209,169

42,290,952 42,455,698 40,409,044

Others

The gross amount of property, plant and equipment of the Company that are fully depreciated but still in use amounted to

RM80,380,000 (31.12.2011: RM73,519,206; 1.1.2011: RM64,532,313).

4. INVESTMENTS IN SUBSIDIARIES/AMOUNT DUE FROM SUBSIDIARIES

Company

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Unquoted shares, at cost 80,371,207 80,371,207 80,371,207

Details of the subsidiaries, all of which are 100% (31.12.2011: 100%; 1.1.2011: 100%) owned are as follows:

Name of company Principal activities

Place of

incorporation

Yi-Lai Industry Berhad Manufacture and sale of ceramic and homogeneous tiles Malaysia

Yi-Lai Marketing Sdn. Bhd.

(formerly known as Alpha Tiles

Trading Sdn. Bhd.)

Trading and distribution of tiles Malaysia

Yi-Lai Trading Pte. Ltd.* Trading and distribution of tiles Singapore

* Not audited by member firms of KPMG International

The amounts due from subsidiaries are non-trade in nature, unsecured, interest free and are repayable on demand.



5. DEFERRED TAX ASSETS/(LIABILITIES)

Recognised deferred tax assets/(liabilities)

The amounts determined after appropriate offsetting are as follows:

Group

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Deferred tax assets 58,000 57,000 105,000

Deferred tax liabilities (7,755,000) (7,905,000) (8,210,000)

(7,697,000) (7,848,000) (8,105,000)

Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax assets

against current tax liabilities and where the deferred taxes relate to the same taxation authority.

Deferred tax assets and liabilities are attributable to the following:

Group

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Property, plant and equipment

- capital allowances (8,237,000) (8,422,000) (8,641,000)

Trade receivables 43,000 57,000 105,000

Inventories 497,000 483,000 397,000

Others - 34,000 34,000

(7,697,000) (7,848,000) (8,105,000)

Movement in temporary difference during the year are as follows:

Group

At 1 January

2011

Recognised

in profit or

loss (Note 13)

At 31

December

2011

Recognised

in profit or

loss (Note 13)

At 31

December

2012

RM’000 RM’000 RM’000 RM’000 RM’000


- capital allowances (8,641) 219 (8,422) 185 (8,237)

Trade receivables 105 (48) 57 (14) 43

Inventories 397 86 483 14 497

Others 34 - 34 (34) -

(8,105) 257 (7,848) 151 (7,697)



6. INVENTORIES

Group

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Raw materials 14,282,000 14,992,888 13,803,419

Work-in-progress 1,161,124 1,389,549 969,828

Finished goods 28,086,451 25,895,109 28,231,861

Consumable stores 10,593,724 10,252,414 9,775,376

54,123,299 52,529,960 52,780,484

Recognised in profit or loss:

Group

31.12.2012 31.12.2011 1.1.2011

RM RM RM

Inventories recognised as cost of goods sold 49,141,182 52,455,573 48,006,776

(Reversal)/Write-down to net realisable value (305,616) 292,811 899,763

The (reversal)/write-down is included in cost of goods sold.

7. TRADE AND OTHER RECEIVABLES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Trade receivables 39,447,298 35,361,100 37,944,863 - - -

Other receivables, deposits

and repayments 449,187 510,870 359,062 2,000 198,229 2,000

39,896,485 35,871,970 38,303,925 2,000 198,229 2,000

Included in the trade receivables of the Group are impairment losses of RM167,945 (31.12.2011: RM238,462; 1.1.2011: RM

RM432,807). Impairment loss on trade receivables is made for debtors where management considers the recoverability to

be doubtful. On a quarterly basis, the management reviews trade debtors’ ageing report, repayment history and any other

available evidence of possible default by debtors.



8. OTHER INVESTMENTS

Unit trusts quoted

in Malaysia

RM

Group/Company

Current

Financial assets at fair value through profit or loss:

- Held for trading 20,867,333

Representing items:

At fair value 20,867,333

Market value of quoted investments 20,867,333

9. CASH AND CASH EQUIVALENTS

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Cash and bank balances 6,505,051 4,818,872 6,214,598 986,947 418,251 110,843

Short term deposits with

licensed banks 16,342,639 41,485,676 44,366,931 - 21,000,000 24,100,000

22,847,690 46,304,548 50,581,529 986,947 21,418,251 24,210,843

Cash and bank balances of the Group denominated in currencies other than the functional currency comprise RM1,263,234

(31.12.2011: RM678,525; 1.1.2011: RM3,742,220) of cash and bank balances denominated in Singapore Dollar.

10. CAPITAL AND RESERVES

Share capital

Group/Company Group/Company

Number of shares

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Ordinary shares of RM0.50

each:

Authorised 500,000,000 500,000,000 500,000,000 1,000,000,000 1,000,000,000 1,000,000,000

Issued and fully paid 80,000,000 80,000,000 80,000,000 160,000,000 160,000,000 160,000,000



10. CAPITAL AND RESERVES cont’d

Reserves

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Non-distributable

Share premium 24,376,066 24,376,066 24,376,066 24,376,066 24,376,066 24,376,066

Exchange fluctuation reserve 1,241,375 915,714 660,975 - - -

Treasury shares (3,113,599) (3,113,599) (1,814,603) (3,113,599) (3,113,599) (1,814,603)

22,503,842 22,178,181 23,222,438 21,262,467 21,262,467 22,561,463

Distributable

Retained earnings 94,154,555 94,382,110 94,760,269 7,149,404 6,811,278 8,358,936

116,658,397 116,560,291 117,982,707 28,411,871 28,073,745 30,920,399

Treasury share

The shareholders of the Company, by a special resolution passed in a general meeting held on 18 May 2011, approved the

Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhancing the value of the

Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and

its shareholders.

During the financial year, the Company repurchased NIL (31.12.2011: 1,534,000; 1.1.2011: NIL) of its issued share capital from

the open market at an average price of NIL (31.12.2011: RM0.8468; 1.1.2011: NIL) per share. The total consideration paid

including transaction costs was NIL (31.12.2011: RM1,298,996; 1.1.2011: NIL). The repurchase transactions were financed by

internally generated funds. The shares repurchased are retained as treasury shares.

At 31 December 2012, the Company holds 4,281,000 (31.12.2011: 4,281,000; 1.1.2011: 2,747,000) of the Company’s shares

as treasury shares. The number of outstanding ordinary shares of RM0.50 each in issue after the set off is 155,719,000

(31.12.2011: 155,719,000; 1.1.2011: 157,253,000).

Retained earnings

The Company has adopted the single tier company income tax system pursuant to Finance Act, 2007.

11. TRADE AND OTHER PAYABLES

Group Company

31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011

RM RM RM RM RM RM

Trade payables 10,627,893 9,042,351 9,021,409 - - -

Other payables and accrued

expenses 7,910,655 9,248,612 8,813,393 149,674 137,000 137,075

18,538,548 18,290,963 17,834,802 149,674 137,000 137,075



12. PROFIT BEFORE TAX

Group Company

2012 2011 2012 2011

RM RM RM RM

Profit before tax is arrived at after charging/

(crediting)

Auditors’ remuneration:

- Audit fees

Company’s auditors 88,000 88,000 25,000 25,000

Other auditors 18,779 14,595 -- --

- Non-audit fee

KPMG Malaysia 34,700 34,700 31,000 31,000

Local affiliates of KPMG Malaysia 17,500 20,000 3,000 3,000

Allowance for slow-moving inventories 320,901 - - -

Bad debts written off 60,109 - - -

Depreciation 8,001,214 8,238,531 - -

(Reversal)/Inventories written down (305,616) 292,811 - -

Property, plant and equipment:

- Written off 36,892 48,404 - -

- (Gain)/Loss on disposal (49,867) 527,266 - -

Personnel expenses (including key management

personnel):

- Contributions to state plans 1,535,147 1,411,804 - -

- Wages, salaries and others 21,102,210 20,661,578 - -

Rental of premises 297,667 318,025 - -

Reversal of impairment loss on trade receivables (70,516) (39,593) - -


- Subsidiaries - - (11,005,900) (9,284,000)

- Other investments (397,791) - (397,791) -

Realised gain on foreign exchange (368,736) (241,256) - -

Changes in fair value of other investments 30,458 - 30,458 -



12. PROFIT BEFORE TAX cont’d

Key management personnel compensation

The key management personnel compensation are as follows:

Group Company

2012 2011 2012 2011

RM RM RM RM

Directors

- Fees 369,786 364,732 110,000 110,000

- Remuneration 1,809,157 1,589,391 - -

Total short-term benefits 2,178,943 1,954,123 110,000 110,000

Other key management personnel:

- Other short term employee benefits 971,705 1,148,978 - -

3,150,648 3,103,101 110,000 110,000

The estimated monetary value of Directors’ benefit-in-kind is RM5,900 (2011: RM5,900)

Other key management personnel comprise persons other than the Directors of the Group entities, having authority and

responsibility for planning, directing and controlling the activities of the entities either directly or indirectly.

13. TAX EXPENSE

Recognised in profit or loss

Major components of income tax expense include:

Group Company

2012 2011 2012 2011

RM RM RM RM

Current tax expense

Malaysia

- Current year 3,670,000 2,886,000 65,000 176,000

- Prior year 47,680 60,323 (2,658) 43,731

3,717,680 2,946,323 62,342 219,731

Overseas 56,776 26,795 - -

Deferred tax income

- Origination and reversal of temporary difference (121,000) (265,000) - -

- Prior year (30,000) 8,000 - -

(151,000) (257,000) - -

3,623,456 2,716,118 62,342 219,731



13. TAX EXPENSE cont’d

Recognised in profit or loss cont’d

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Reconciliation of tax expense

Profit before tax 14,296 13,314 11,301 9,648

Income tax calculated using Malaysian tax rate of 25% 3,575 3,329 2,825 2,412

Non-deductible expenses 217 201 83 85

Tax exempt income (149) (30) (2,843) (2,321)

Effect of different tax rate in foreign jurisdictions (45) (23) - -

Utilisation of reinvestment allowance - (827) - -

Others 7 (3) - -

3,605 2,647 65 176

Under/(Over) provided in prior years 18 69 (3) 44

Tax expense 3,623 2,716 62 220

14. BASIC EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2012 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

Group

2012 2011

RM RM

Profit for the year attributable to ordinary shareholders 10,672,775 10,598,012

Weighted average number of ordinary shares

Group

2012 2011

Issued ordinary shares at 1 January 160,000,000 160,000,000

Effect of treasury shares held (4,281,000) (3,203,000)

Weighted average number of ordinary shares at 31 December 155,719,000 156,797,000

Basic earnings per ordinary share (sen) 6.85 6.76

Diluted earnings per ordinary share

There are no dilutive potential ordinary shares.



15. DIVIDENDS

Dividends recognised by the Company are:

Sen per share Total amount Date of payment

RM

2012

2012 - Interim, single tier 3.00 4,671,570 8 November 2012

2011 - Final, single tier 4.00 6,228,760 9 July 2012

Total amount 7.00 10,900,330

2011

2011 - Interim, single tier 3.00 4,686,051 8 November 2011

2010 - Final, single tier 4.00 6,290,120 8 July 2011

Total amount 7.00 10,976,171

After the end of the reporting period, the following final dividend was recommended by the Directors. This dividend will be

recognised in subsequent financial period upon approval by the owners of the Company at the forthcoming Annual General

Meeting of the Company.

Sen per share Total amount

RM

2012 - Final, single tier 4.0 6,228,760

16. OPERATING SEGMENTS

No segment reporting has been prepared as the Group principally operates in Malaysia and contribution of its Singapore

operation is insignificant (less than 10%). The business activities of the Group are mainly relating to the manufacture and sale

of ceramic and homogeneous tiles.

Major customers

The following are major customers with revenue equal or more than 10% of the Group’s total revenue:

Revenue Segment

2012 2011

RM’000 RM’000

Customer - A 36,895 35,689 Malaysia

Customer - B 18,443 19,777 Malaysia



17. CAPITAL COMMITMENT

Group

2012 2011

RM’000 RM’000


Contracted but not provided for 539 325

18. FINANCIAL INSTRUMENTS

18.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loans and receivables (“L&R”);

(b) Fair value through profit or loss (“FVTPL”):

- Held for trading (“HFT”), or

(c) Other financial liabilities measured at amortised cost (“FL”).

31.12.2012

Carrying

amount L & R/(FL) FVTPL (HFT)

RM’000 RM’000 RM’000

Financial assets

Group

Other investments 20,867 - 20,867

Trade and other receivables 39,896 39,896 -

Cash and cash equivalents 22,848 22,848 -

83,611 62,744 20,867

Company

Other investments 20,867 - 20,867

Trade and other receivables 2 2 -

Cash and cash equivalents 986 986 -

21,855 988 20,867


Group

Trade and other payables (18,539) (18,539) -

Company

Trade and other payables (150) (150) -



18. FINANCIAL INSTRUMENTS cont’d

18.1 Categories of financial instruments cont’d

31.12.2011

Carrying

amount L & R/(FL) FVTPL (HFT)

RM’000 RM’000 RM’000

Financial assets

Group



82,176 82,176 -

Company



21,616 21,616 -


Group

Trade and other payables (18,291) (18,291) -

Company

Trade and other payables (137) (137) -

1.1.2011

Financial assets

Group



88,886 88,886 -

Company



24,213 24,213 -


Group

Loans and borrowings (17,835) (17,835) -

Company

Loans and borrowings (137) (137) -




18.2 Net gains and losses arising from financial instruments

Group

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Net gains on:

Loan and receivables

- Short term deposits with licensed banks and trade receivables 1,069 1,439 1,251

Fair value through profit or loss:

- Held for trading 368 - -

1,437 1,439 1,251

Company

Net gains on:

Loan and receivables

- Short term deposits with licensed banks and trade receivables 258 703 25

Fair value through profit or loss:

- Held for trading 368 - -

626 703 25

18.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

18.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.

The Group trades extensively with a few established distributors which the Group has a long standing business relationship. As at the end of the reporting period, the Group’s four largest distributors constitute approximately 51% (2011: 57%) of total trade receivables. Both these distributors do not have any significant outstanding balances exceeding their normal credit terms as at the end of the reporting period.

The maximum exposure to credit risk for the Group is represented by the carrying amounts of each financial asset.

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally financial guarantees of banks, shareholders or directors of customers are obtained, and credit evaluations are

performed on customers requiring credit over a certain amount.




18.4 Credit risk cont’d

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by

the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are

measured at their realisable values. A significant portion of these trade receivables are regular customers that have

been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any

trade receivables having significant balances past due more than 30 days which are deemed to have higher credit risk,

are monitored individually.

Trade receivables amounting to RM36,063,000 and NIL (31.12.2011: RM32,494,000 and NIL) of the Group and

the Company respectively are secured by financial guarantees given by banks, shareholders or directors of the

customers.

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the

end of the reporting period was:

Gross

Individual

impairment Net

RM’000 RM’000 RM’000

31.12.2012

Not past due 30,317 - 30,317

Past due 0 - 30 days 6,819 (9) 6,810

Past due 31 - 120 days 2,282 - 2,282

Past due more than 120 days 197 (159) 38

39,615 (168) 39,447

31.12.2011

Not past due 30,768 -- 30,768

Past due 0 - 30 days 3,907 -- 3,907

Past due 31 - 120 days 677 -- 677


35,599 (238) 35,361

1.1.2011

Not past due 33,526 (15) 33,511

Past due 0 - 30 days 3,587 -- 3,587

Past due 31 - 120 days 949 (136) 813


38,378 (433) 37,945




18.4 Credit risk cont’d

The movements in the allowance for impairment losses of receivables during the financial year were:

Group

2012 2011

RM’000 RM’000

At 1 January 238 433

Impairment loss reversed (70) (40)

Impairment loss written off - (155)

At 31 December 168 238

18.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s

exposure to liquidity risk arises principally from its various payables.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to

ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

18.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that

will affect the Group’s financial position or cash flows.

Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than

the functional currency. The currencies giving rise to this risk are primarily Singapore Dollar (SGD), US Dollar (USD) and

Euro.

The Group does not generally hedge its exposure to fluctuations in foreign exchange rates.

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the currency of the Group) risk, based on

carrying amounts as at the end of the reporting period was:

Denominated in

USD SGD EURO

RM’000 RM’000 RM’000

31.12.2012

Cash and cash equivalents - 1,263 -

Trade and other payables (2,399) (8) (275)

Intra-group balances - 430 -

(2,399) 1,685 (275)




18.6 Market risk cont’d

Currency risk cont’d

Exposure to foreign currency risk cont’d

Denominated in

USD SGD EURO

RM’000 RM’000 RM’000

31.12.2011

Cash and cash equivalents - 679 -

Trade payables (1,523) - (234)

Intra-group balances - 602 -

(1,523) 1,281 (234)

1.1.2011

Cash and cash equivalents - 3,742 -

Trade and other payables (2,023) - -

Intra-group balances - 1,139 -

(2,023) 4,881 -

Currency risk sensitivity analysis

Foreign currency risk arises from Group which has a Ringgit Malaysia functional currency. The exposure to currency risk

of Group which do not have a Ringgit Malaysia functional currency is not material and hence, sensitivity analysis is not

presented.

Interest rate risk

The Group’s exposure to change in interest rates relate primarily to interest-earning deposits.

Exposure to interest rate risk

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as

at the end of the reporting period was:

31.12.2012 31.12.2011 1.1.2011

RM’000 RM’000 RM’000

Fixed rate instruments

Financial assets 16,343 48,947 44,367

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the

Group does not designate derivatives as hedging instruments under a fair value hedged accounting model. Therefore,

a change in interest rates at the end of the reporting period would not affect profit or loss.




18.7 Fair value of financial instruments

The carrying amounts of cash and cash equivalents, short term receivables and payables approximate fair values due to the relatively short term nature of these financial instruments.

The fair value of other financial assets and liabilities, together with the carrying amounts shown in the balance sheets, are as follows:

31.12.2012

Group/Company

Carrying

amount

Fair

value

RM’000 RM’000

Quoted unit trusts 20,867 20,867

The following summarises the methods used in determining the fair values of financial instruments reflected in the table.

Investments in equity securities

The fair values of financial assets that are quoted in an active market are determined by reference to their quoted closing bid price at the end of the reporting period.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

31.12.2012

Level 1 Total

RM’000 RM’000

Financial assets

Investment in unit trusts 20,867 20,867

19. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investors, creditors and market confidence and to sustain future development of the business. The Directors monitor and maintain an optimal capital and liquidity ratio that enables the Group to operate effectively without external borrowings.

There were no changes in the Group’s approach to capital management during the financial year.

20. RELATED PARTY

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

Except as disclosed in Note 12 and rental expense of RM148,267 paid by a subsidiary to a company in which a Director has significant financial interest, there are no significant related party transactions during the year.



21. SUPPLEMENTARY FINANCIAL INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS OR

LOSSES

The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and unrealised

profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group Company

2012 2011 2012 2011

RM’000 RM’000 RM’000 RM’000

Total retained earnings of the Company and its

subsidiaries:

- realised profits 170,678 171,063 7,149 6,811

- unrealised losses (7,828) (7,985) - -

Less: Consolidated adjustments 162,850 163,078 7,149 6,811

(68,696) (68,696) - -

Total retained earnings 94,154 94,382 7,149 6,811

The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of

Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing

Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.



LIST OF LANDED PROPERTIES

Location

Description/

Existing Use

Approximate

age of

building

(years)

Approximate

land/built-up

area Tenure

Net book

value at 31

Dec 2012

RM’000

Lot 7020, Mukim of Senai-Kulai,

District of Johor Bahru, Johor

(Acquired on 15 April 1989)

Factory

building

22 years 4.0519

hectares

Freehold 7,829



(Acquired on 7 August 1997)

Factory

building and

warehouse

13 years 4.04686

hectares

Freehold 14,172

PTD 19564, Mukim Senai-Kulai,


(Acquired on 28 April 1992)

Double storey

intermediate

terrace house

for hostel

purposes

24 years 143 square

meter

Freehold 75

PN 4478, Lot 409, Section 32,

Bandar Petaling Jaya, Selangor

(Acquired on 27 September 2004)

Marketing

office,

showroom

cum

warehouse

8 years 5,772.3 square

meter

Leasehold 99

years expiring

on 3 June

2058

6,163

H.S.(D) 438320 PTD 95217 & H.S.(D) 438321

PTD 95218, Mukim of Senai-Kulai,


(Acquired on 1 December 2005)

Warehouse 6 years 19,461.3

square meter

Freehold 7,628

Geran 225856

(Geran 26456)


District of Kulaijaya, Johor

(Acquired on 12 May 2010)

Vacant land N/A 4.0468

hectares

Freehold 4,794

HSM No 2580,

Lot PT 6599,

Mukim Bachang, Daerah Melaka Tengah,

Melaka

(Acquired on 1 September 2010)

Marketing

office

6 years 146 square

meter

Leasehold 99

years expiring

on 5 Nov 2105

434

15 & 16, Jalan Tropika 1,

Taman Tropika, 81000 Kulaijaya, Johor

(Acquired on 24 February 2011)

Marketing

office cum

showroom

2 years 328 square

meter

Freehold 1,000

1545, Jalan Lagenda 53,

Taman Lagenda Putra,

81000 Kulaijaya, Johor

(Acquired on 12 May 2011)

Double storey

intermediate

terrace house

for hostel

purposes

2 years 153 square

meter

Freehold 196


ANALYSIS OF SHAREHOLDINGSAS AT 29 MARCH 2013

Authorised Share Capital : RM500,000,000

Issued and Paid-up Share Capital : RM80,000,000 divided into 160,000,000 shares of RM0.50 each

Class of Shares : Ordinary shares of RM0.50 each

Voting Right : One vote per ordinary share

Number of Shareholders : 3,373

A. DISTRIBUTION OF SHAREHOLDERS AS AT 29 MARCH 2013

Size of Holdings

No. of

Shareholders

% of

Shareholders

No. of

Shares

% of Issued

Capital

1 – 99 9 0.27 264 0.00

100 – 1,000 609 18.05 572,695 0.36

1,001 – 10,000 1,883 55.83 9,545,904 5.97

10,001 – 100,000 770 22.83 23,639,800 14.77

100,001 – 7,999,999 100 2.96 81,382,395 50.86

8,000,000 and above 2 0.06 44,858,942 28.04

TOTAL 3,373 100,000 160,000,000 100.00

B. THIRTY LARGEST SECURITIES ACCOUNT HOLDERS AS AT 29 MARCH 2013

(as shown in the Record of Depositors)

No. Name

No. of Shares

Held

% of Issued

Capital

1. Lim Oon Kok 28,858,942 18.61

2. Lembaga Tabung Haji 16,000,000 10.32

3. Amsec Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account – Ambank (M) Berhad for Zabidi Bin Md Zain

7,673,000 4.95

4. Chan Bon Chin @ Chan Siew Keow 6,228,184 4.02

5. Gan Thian Chin 6,047,600 3.90

6. Yi-Lai Berhad – Share Buy-Back Account 4,821,000 3.11

7. Lim Oon Kok 4,700,000 3.03

8. HDM Nominees (Asing) Sdn Bhd

- DBS Vickers Secs (S) Pte Ltd for Liao Feun Chu

4,408,730 2.84


- DBS Vickers Secs (S) Pte Ltd for Lim Yun-An

4,220,172 2.72


- DBS Vickers Secs (S) Pte Ltd for Lim Yun-Li

4,000,000 2.58

11. Addeen Transport Sdn Bhd 3,511,300 2.26

12. Affin Nominees (Asing) Sdn Bhd

- UOB Kay Hian Pte Ltd for Goh Ah Moy

3,407,000 2.20

13. Amanahraya Trustees Berhad

- Public Islamic Opportunities Fund

2,062,800 1.33


ANALYSIS OF SHAREHOLDINGSAS AT 29 MARCH 2013cont’d

B. THIRTY LARGEST SECURITIES ACCOUNT HOLDERS AS AT 29 MARCH 2013 (as shown in the Record of Depositors) cont’d

No. Name

No. of Shares

Held

% of Issued

Capital

14. Citigroup Nominees (Asing) Sdn Bhd

- Exempt An for OCBC Securities Private Limited (Client A/C – NR)

1,929,500 1.24

15. Citigroup Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Zabidi Bin Md Zain (473846)

1,665,000 1.07

16. Edufocus Computer Aided Learning Sdn Bhd 1,524,000 0.98

17. Cimsec Nominees (Asing) Sdn Bhd

- Exempt An for CIMB Securities (Singapore) Pte Ltd (Retail Clients)

1,403,900 0.91

18. Choy Wee Chiap 1,205,100 0.78

19. DB (Malaysia) Nominee (Asing) Sdn Bhd

- Exempt An for British and Malayan Trustees Limited (Yeoman 3-Rights)

850,000 0.55

20. Ng Keng Kock 800,000 0.52

21. Khor Ang Ling 760,000 0.49

22. Liao, Hsin-Wei 725,000 0.47


- UOB Kay Hian Pte Ltd for Liao, Chia-Chu

700,000 0.45

24. ECML Nominees (Asing) Sdn Bhd

- Monex Boom Securities (HK) Limited For Chen Liping

615,000 0.40

25. Citigroup Nominees (Tempatan) Sdn Bhd

- Exempt An for American International Assurance Berhad

568,000 0.37

26. HLB Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Lim Kim Wah

546,100 0.35

27. Affin Nominees (Asing) Sdn Bhd

- UOB Kay Hian Pte Ltd for Lim Lih Tyng

532,303 0.34

28. Yap Ma Tit 530,000 0.34

29. Amanahraya Trustees Berhad

- Public Strategic Smallcap Fund

511,100 0.33

30. Heng Ah Lik 502,900 0.32

TOTAL 111,306,631 71.79


C. SUBSTANTIAL SHAREHOLDERS AS AT 29 MARCH 2013

No. of Shares Held Percentage

No. Name Direct Deemed (%)

1. Lim Oon Kok 35,058,942 13,161,205 (a) 31.10

2. Liao Feun Chu 4,408,730 43,811,417 (b) 31.10

3. Zabidi bin Md Zain 9,338,281 1,524,000 (c) 7.01

4. Anyta Hanim Binti Anuar - 10,862,281 (d) 7.01

5. Lembaga Tabung Haji 16,000,000 -- 10.32

D. DIRECTORS’ INTEREST IN SHARES AS AT 29 MARCH 2013

No. of Shares Held Percentage

No. Name Direct Deemed (%)

1. Lim Oon Kok 35,058,942 13,161,205 (a) 31.10

2. Zabidi bin Md Zain 9,338,281 1,524,000 (c) 7.01

3. Hsieh Yu-Tien 400,006 - 0.26

4. Ong Kheng Swee - - -

5. Ong Chin Lin - - -

Notes:

(a) Deemed interest by virtue of the shareholdings of his spouse, Madam Liao Feun Chu and his children, Ms Lim Yun-An, Ms Lim Lih Tyng and

Ms Lim Yun-Li.

(b) Deemed interest by virtue of the shareholdings of her spouse, Mr Lim Oon Kok and her children, Ms Lim Yun-An, Ms Lim Lih Tyng and Ms Lim

Yun-Li.

(c) Deemed interest by virtue of the shareholdings of Edufocus Computer Aided Learning Sdn. Bhd., a company in which he and his spouse have

interest.

(d) Deemed interest by virtue of the shareholdings of her spouse, Encik Zabidi Bin Md Zain and Edufocus Computer Aided Learning Sdn. Bhd., a

company in which she and her spouse have interest.

ANALYSIS OF SHAREHOLDINGSAS AT 29 MARCH 2013

cont’d


NOTICE OF THIRTEENTHANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting (“13th AGM”) of YI-LAI BERHAD (“YLB” or “the Company”)

will be held at Lot 7020, Batu 23, Jalan Air Hitam, 81000 Kulaijaya, Johor Darul Ta’zim on Tuesday 21 May 2013 at 10.00 am for the

purpose of considering and, if thought fit, passing the following resolutions:-

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together

with the Directors’ and Auditors’ reports thereon.

2. To approve the payment of a final single tier dividend of 4.0 sen per ordinary share of RM0.50 each for

the financial year ended 31 December 2012.

3. To approve the payment of Directors’ fees totalling RM110,000 for the financial year ended 31

December 2012.

4. To re-elect the following Directors retiring in accordance with the Company’s Articles of

Association:-

(a) Mr Lim Oon Kok - Article 81

(b) Mr Ong Chin Lin - Article 81

5. To re-appoint the retiring Auditors, Messrs KPMG as Auditors and to authorise the Directors to fix their

remuneration.

SPECIAL BUSINESS

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

Resolution:

6. ORDINARY RESOLUTION

Proposed authority to issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company and

the approvals of the relevant governmental/regulatory authorities, the directors be and are hereby

empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in 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 does

not exceed ten percent (10%) of the issued and paid-up share capital of the Company for the time

being and that such authority shall continue in force until the conclusion of the next Annual General

Meeting of the Company.”


Proposed Renewal of Share Buy-Back Scheme of YLB to purchase its own shares of up to 10% of

the issued and paid-up share capital of the Company

“THAT, subject to the Company’s compliance with all applicable rules, regulations, orders

and guidelines made pursuant to the Companies Act, 1965, the provisions of the Company’s

Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad

(“Bursa Securities”), the Company be and is hereby authorised to the fullest extent permitted by

law, to buy-back and/or hold from time to time and at anytime such amount of ordinary shares of

RM0.50 each in the Company as may be determined by the Directors of the Company from time to

time through Bursa Securities upon such terms and conditions as the Directors may deem fit and

expedient in the interests of the Company (“Proposed Share Buy-Back”) provided that:

(Please refer to

Note No. 1)

RESOLUTION 1

RESOLUTION 2

RESOLUTION 3

RESOLUTION 4

RESOLUTION 5

RESOLUTION 6


(a) the maximum number of shares which may be purchased and/or held by the Company at any

point of time pursuant to the Proposed Share Buy-Back shall not exceed ten percent (10%) of

the total issued and paid-up share capital of the Company for the time being quoted on Bursa

Securities;

(b) the maximum amount of funds to be allocated by the Company pursuant to the Proposed

Share Buy-Back shall not exceed the sum of retained profits and the share premium account

of the Company based on its latest audited financial statements available up to the date of a

transaction pursuant to the Proposed Share Buy-Back;

THAT the shares purchased by the Company pursuant to the Proposed Share Buy-Back may be dealt

with in all or any of the following manner (as selected by the Company):

(i) the shares so purchased may be cancelled; and/or

(ii) the shares so purchased may be retained as treasury shares in accordance with the relevant

rules of Bursa Securities for distribution as dividend to the shareholders and/or resell through

Bursa Securities and/or subsequently cancelled; and/or

(iii) part of the shares so purchased may be retained as treasury shares with the remainder being

cancelled;

THAT such authority shall commence upon the passing of this resolution, until the conclusion of

the next Annual General Meeting of the Company or the expiry of the period within which the next

Annual General Meeting is required by law to be held unless revoked or varied by ordinary resolution

of the shareholders of the Company in general meeting but so as not to prejudice the completion of

a purchase made before such expiry date;

AND THAT the Directors of the Company be and are hereby authorised to take all steps as are necessary

or expedient to implement or to give effect to the Proposed Share Buy-Back with full powers to amend

and/or assent to any conditions, modifications, variations or amendments (if any) as may be imposed

by the relevant governmental/regulatory authorities from time to time and with full power to do all

such acts and things thereafter in accordance with the Companies Act, 1965, the provisions of the

Company’s Memorandum and Articles of Association and the requirements of the Bursa Securities

and all other relevant governmental/regulatory authorities.”


RETENTION OF INDEPENDENT DIRECTOR, MR. ONG KHENG SWEE

THAT Mr. Ong Kheng Swee be retained as Independent Non-Executive Director of the Company in

accordance with the Malaysian Code on Corporate Governance 2012.


RETENTION OF INDEPENDENT DIRECTOR, MR. ONG CHIN LIN

THAT Mr. Ong Chin Lin be retained as Independent Non-Executive Director of the Company in

accordance with the Malaysian Code on Corporate Governance 2012.

10. SPECIAL RESOLUTION

PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION OF THE COMPANY

THAT the Proposed Amendments to the Company’s Articles of Association as set out in Annexure A be

and are hereby approved and adopted.

AND THAT the Directors and Secretary of the Company be and are hereby authorised take all steps

as are necessary and expedient in order to implement, finalise and give full effect to the Proposed

Amendments to the Company’s Articles of Association.


cont’d

RESOLUTION 7

RESOLUTION 8

RESOLUTION 9

RESOLUTION 10


11. To transact any other business for which due notice shall have been given in accordance with the

Company’s Articles of Association and the Companies Act, 1965.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

Subject to the approval of the shareholders at the Thirteenth Annual General Meeting, a final single tier

dividend of 4.0 sen per ordinary share of RM0.50 each for the financial year ended 31 December 2012, will

be paid on 8 July 2013 to those registered in the Record of Depositors at the close of business on 10 June

2013.

A depositor shall qualify for entitlement to dividend only in respect of:

a. Shares transferred into the Depositor’s Securities Account before 4 p.m. on 10 June 2013 in respect of

ordinary transfers; and

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

Malaysia Securities Berhad.

Further notice is hereby given that for the purpose of determining a member who shall be entitled to attend

the Thirteenth Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn.

Bhd. to issue a General Meeting Record of Depositors as at 15 May 2013. Only a depositor whose name

appears on the Record of Depositors as at 15 May 2013 shall be entitled to attend the said meeting or

appoint proxies to attend and/or vote on his/her behalf.

By Order of the Board

ANG MUI KIOW

SOO CHOON SIONG

Secretaries

Johor Bahru

26 April 2013

NOTES:

1. Audited Financial Statements

This agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of

the members/shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

2. Form of Proxy

i. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote in his stead. A

proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to

the Company.

ii. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings

to be represented by each proxy.

iii. 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 Seal or under the hand of an officer or attorney duly authorised.

(While pending the proposed amendments to YLB’s Articles of Association to be approved at its 13th AGM, YLB expressly allow where a

member/shareholder is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991(“SICDA”)

which holds ordinary shares in YLB 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.)

NOTICE OF THIRTEENTHANNUAL GENERAL MEETINGcont’d


iv. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, 80000

Johor Bahru, Johor Darul Ta’zim, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment

thereof.

3. Explanatory Notes on Special Business

i. Proposed authority to issue shares pursuant to Section 132D of the Companies Act, 1965

The Proposed authority to issue shares, Ordinary Resolution No. 6, if passed, will give the Directors of the Company, from the date of the

above Annual General Meeting, authority to issue not more than ten percent (10%) of the issued and paid-up share capital of the Company.

Such issuance of shares will still be subject to the approvals of the Securities Commission and Bursa Malaysia Securities Berhad. This

authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Pursuant to Paragraph 6.03(3) of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the Company is seeking renewal

of the proposed authority to issue shares. There was no issuance of shares and thus no proceeds being raised since the last renewal was

sought. The renewed general mandate will provide flexibility to the Company for any possible fund raising activities and there is no specific

purpose and utilisation for the proceeds to be raised under this mandate. Hence, the proceeds to be raised, if any, may be used for funding

future investment and working capital.

ii. Proposed Authority for Renewal of Share Buy-Back

The Proposed Renewal of Share Buy-Back, Ordinary Resolution No. 7, if passed, will empower the Company to purchase and/or hold up to

ten percent (10%) of the issued and paid-up share capital of the Company. This authority, unless revoked or varied at a general meeting,

will expire at the next Annual General Meeting of the Company. For further information on the Proposed Renewal of Share Buy-Back, please

refer to the Share Buy-Back Statement on pages 76 to 81 of the Annual Report 2012.

iii. Retention as Independent Non-Executive Directors of the Company pursuant to the Malaysian Code on Corporate Governance

2012 (Resolution 8 and Resolution 9)

(a) Mr. Ong Kheng Swee

Mr. Ong Kheng Swee was appointed as an Independent Non-Executive Director of the Company on 30 January 2002 and has,

therefore served for more than nine (9) years. As at the date of the notice of the 13th AGM, he has served the Company for 11 years.

However, he has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market

Listing Requirements (“MMLR”). The Board, therefore, considers him to be independent and believes that he should be retained as

Independent Non-Executive Director.

(b) Mr. Ong Chin Lin

Mr. Ong Chin Lin was appointed as an Independent Non-Executive Director of the Company on 26 September 2002 and has, therefore

served for more than nine (9) years. As at the date of the notice of the 13th AGM, he has served the Company for 10 years. However,

he has met the independence guidelines as set out in Chapter 1 of the MMLR. The Board, therefore, considers him to be independent

and believes that he should be retained as Independent Non-Executive Director.

iv. Proposed Amendments to Articles of Association of the Company (hereinafter referred to as “the Proposed Amendments”)

(Resolution 10)

The Proposed Amendments are to streamline the Company’s Articles of Association to be aligned with the amendments to the MMLR.

Please refer to Annexure A of the 2012 Annual Report for more information.


cont’d


STATEMENT ACCOMPANYING NOTICE OF THIRTEENTH ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.28(2) of the Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the Directors standing

for re-election are:

(a) Mr. Lim Oon Kok - Article 81 RESOLUTION 3

(b) Mr. Ong Chin Lin - Article 81 RESOLUTION 4

Further details of the above named Directors and their interest in the securities of the Company are set out in the profile of Directors

on pages 3 and 4 of the annual report respectively.


ANNEXURE A

DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Articles of Association of the Company are proposed to be amended in the following manner:

Article No. Existing Articles Proposed Articles

2. - To insert the following word and its meanings after

Article No. 2(dd) as No. 2(ee):

Exempt

Authorised

Nominee

means an authorised nominee

defined under the Depositories

Act which is exempted from

Compliance with the provisions

of subsection 25A(1) of the

Depositories Act.

To re-number the following existing Articles from:

Article No. 2(ee) to Article No. 2(gg)

Article No. 2(gg) to Article No. 2(hh)

Article No. 2(hh) to Article No. 2(ii)

54.2 Every notice calling a general meeting shall specify the

place and the day and hour of the meeting and there

shall appear with reasonable prominence in every such

notice a statement that a member entitled to attend and

vote is entitled to appoint a proxy to attend and vote

instead of him and that a proxy need not be a member

of the Company.

Every notice calling a general meeting shall specify the

place and the day and hour of the meeting and there

shall appear with reasonable prominence in every such

notice a statement that a member entitled to attend

and vote is entitled to appoint not more than two (2)

proxies to attend and vote instead of him and that a

proxy need not be a member of the Company and the

provisions of Section 149(1)(b) of the Act shall not

apply to the Company. There shall be no restriction

as to the qualification of the proxy.

59.1 The Chairman of the Board of Directors shall preside as

Chairman of every general meeting of the Company.

If at any meeting the Chairman is not present within

fifteen minutes after the time appointed for holding the

meeting, or is unwilling to act as Chairman, the members

present shall choose one (1) of the Directors present to

be Chairman, or if no Director is present and willing to

take the chair, the members present shall choose one (1)

of their number present to be Chairman.

(a) The Chairman of the Board of Directors shall

preside as Chairman of every general meeting of

the Company. If at any meeting the Chairman is

not present within fifteen minutes after the time

appointed for holding the meeting, or is unwilling to

act as Chairman, the members present shall choose

one (1) of the Directors present to be Chairman, or

if no Director is present and willing to take the chair,

the members present shall choose one (1) of their

number present to be Chairman.

(b) Without prejudice to any other power which

the Chairman may have under the provisions

of these Articles or at common law and subject

to the Act and Listing Requirements, the

Chairman may take such action as he thinks fit

to promote the orderly conduct of the business

of all general meetings as specified in the notice

of such meetings and the Chairman’s decision

on matters of procedure or arising incidentally

from the business of such meetings shall be

final, as shall be his determination as to whether

any matter is of such a nature.


ANNEXURE Acont’d

DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION cont’d

The Articles of Association of the Company are proposed to be amended in the following manner: cont’d


66.1 Last paragraph of existing Article 66.1: Amending the last paragraph of existing Article 66.1 as

follows:

The instrument appointing a proxy shall be deemed

to confer authority to demand or join in demanding a

poll, and for the purpose of this Article, a demand by a

person as proxy for a member shall be deemed to be the

same as a demand by the member.

The instrument appointing a proxy shall be deemed

to confer authority to demand or join in demanding a

poll, and for the purpose of this Article, a demand by a

person as proxy for a member shall be deemed to be the

same as a demand by the member. A proxy appointed

to attend and vote at a meeting of the Company

shall have the same rights as the member to speak

at the meeting.

73. Where a Member of the Company is an authorised

nominee as defined under the Central Depositories Act,

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.

Where a Member of the Company is an authorised

nominee as defined under the Central Depositories

Act, it may appoint not more than two (2) proxies in

respect of each securities account it holds with ordinary

shares of the Company standing to the credit of the said

securities account.

Where a Member of the Company is an Exempt

Authorised Nominee which holds ordinary shares in

the Company for multiple beneficial owners in one

securities account (“Omnibus Account”), there is no

limit to the number of proxies which the Exempt

Authorised Nominee may appoint in respect of each

Omnibus Account it holds.

Where a Member or authorised nominee appoints

two (2) proxies, or where an Exempt Authorised

Nominee appoints two (2) or more proxies, the

appointments shall be invalid unless he specifies

the proportions of his holdings to be represented by

each proxy.


ANNEXURE Acont’d

DETAILS OF THE PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION cont’d

The Articles of Association of the Company are proposed to be amended in the following manner: cont’d


135 Any dividend or other moneys payable in respect of a share may be paid by cheque sent by post at the risk of the person to whom it is sent to the registered address in Malaysia of the person entitled or, if two (2) or more persons are the holders of the share or are jointly entitled to it by reason of the death or the bankruptcy of the holder, to the registered address in Malaysia of that one of those persons who is first named in the Register or to such person and to such address as the person or persons entitled may in writing direct. Every cheque shall be made payable to the order of the person or persons entitled or to such other person as the person or persons entitled may in writing direct and payment of the cheque shall be a good discharge to the Company. Any joint holder or other person jointly entitled to a share as aforesaid may give receipts for any dividend or other moneys payable in respect of the share. The Company has no responsibility for sums delayed in the post or in the course of transfer or where it has complied with directions give in accordance with this Article.

Any dividend, interest or other monies payable in cash in respect of a share may be paid by direct debit, bank transfer, cheque, dividend warrant or such other electronics transfer methods as may be introduced or required by the Exchange from time to time, and in the case of a cheque or dividend warrant for such payment, to send:

(a) by post, by courier or by hand to the registered address of the person entitled as appearing in the Record of Depositors; or

(b) by post, by courier or by hand to the registered address of the person becoming entitled to the share by reason of the death, bankruptcy or mental disorder of the holder or by operation of law or if such address has not been supplied, to such address to which such cheque or warrant might have been posted if the death, bankruptcy, mental disorder or operation of law had not occurred; or

(c) by post, by courier or by hand to such address as the person entitled may direct in writing but the Company shall be entitled to send such cheque or dividend warrant to such other address or by such other means stated in Article 135 notwithstanding such direction.

Every cheque or warrant may be made payable:

i. to the order of the person entitled; or

ii. to the order of the person entitled by reason of the death, bankruptcy or mental disorder of the holder or by operation of law; or

iii. to the order of such other person as the person entitled may in writing direct or direct to be sent to,

but nothing in Article 135 shall prevent such cheque or warrant from being made payable in such other manner as the Company would be entitled to in respect of such cheque or warrant including (without limitation), in the case of the death of the holder of the share in respect of which the dividend or other monies to be paid by the cheque or warrant are payable making such cheque or warrant payable to the estate of such holder if the Company thinks appropriate. Such cheque or warrant shall be a good discharge to the Company. The Company shall not be responsible for any loss of any such cheque or warrant (whether in the post, while being delivered by courier or by hand, after delivery to the relevant address or person or otherwise).


SHARE BUY-BACK STATEMENTIN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS’ APPROVALFOR SHARE BUY-BACK BY THE COMPANY (“PROPOSED SHARE BUY-BACK”)

1. DISCLAIMER STATEMENT

Bursa Malaysia Securities Berhad (“Bursa Securities”) has not perused this Share Buy-Back Statement prior to its issuance

as it is an exempt statement. Bursa Securities takes no responsibility for the contents of this statement, makes no

representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever

arising from or in reliance upon the whole or any part of the contents of this Share Buy-Back Statement.

2. INTRODUCTION

At the Annual General Meeting of Yi-Lai Berhad (“YLB” or “the Company”) held on 21 May 2012, YLB obtained the renewal

of shareholders’ approval for the Company to purchase and/or hold up to ten percent (10%) of the total issued and paid-up

share capital of the Company through Bursa Securities. Pursuant to the Listing Requirements of the Bursa Securities, this

approval will expire at the conclusion of the forthcoming Thirteenth Annual General Meeting (“13th AGM”) of the Company

scheduled to be held on 21 May 2013.

On 10 April 2013, YLB announced its intention to seek renewal of shareholders’ approval for the Proposed Share Buy-Back at

the forthcoming 13th AGM.

The purpose of this Statement is to provide you with the relevant information on the Proposed Share Buy-Back and to seek

the renewal of your approval for the Proposed Share Buy-Back by your approval of the ordinary resolution to be tabled at

the forthcoming 13th AGM to be convened on 21 May 2013, notice of which is set out on pages 68 to 71 of the Company’s

Annual Report 2012.

3. PURCHASES AND CANCELLATION OF SHARES AND RESALE OF TREASURY SHARES MADE PURSUANT TO THE EXISTING

APPROVAL

The total number of YLB Shares purchased by the Company and held as Treasury Shares for the previous twelve (12) months

preceding the date of this Statement, i.e. up to and including 29 March 2013 was 679,000. All the YLB Shares purchased have

been retained as treasury shares, and the total number of YLB Shares retained as Treasury Shares as at 29 March 2013 was

4,960,000. There was no re-sale of Treasury Shares or cancellation of shares during the financial year ended 31 December

2012 and up to 29 March 2013.

The Company did not purchase its own shares during the financial year ended 31 December 2012.

4. PROPOSED RENEWAL OF APPROVAL FOR SHARE BUY-BACK

As at 29 March 2013, the total issued and paid-up share capital of YLB is RM80,000,000 comprising 160,000,000 ordinary

shares of RM0.50 each. The maximum number of YLB Shares which may be purchased by the Company will be ten percent

(10%) of the existing issued and paid-up share capital of the Company or 16,000,000 YLB Shares.

The Board of Directors of YLB proposes to seek the renewal of approval from the shareholders of YLB to purchase, hold,

cancel, distribute or resell up to a maximum of ten percent (10%) of the issued and paid-up share capital of YLB or the

equivalent of 16,000,000 ordinary shares as at 29 March 2013 through the Bursa Securities subject to the compliance with

the Listing Requirements and any other relevant authorities and upon such terms and conditions that in the opinion of the

Directors will be in the interest of the Company.

The renewed authority for the Proposed Share Buy-Back will be effective immediately upon the passing of the ordinary

resolution and will continue to be in force until:

i. the conclusion of the next Annual General Meeting of the Company at which time it shall lapse unless by an ordinary

resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

ii. the expiration of the period within which the next Annual General Meeting after that is required by law to be held; or



cont’d

4. PROPOSED RENEWAL OF APPROVAL FOR SHARE BUY-BACK cont’d

The renewed authority for the Proposed Share Buy-Back will be effective immediately upon the passing of the ordinary

resolution and will continue to be in force until: cont’d

iii. revoked or varied by ordinary resolution passed by the shareholders of the Company in general meeting;

whichever is the earliest.

5. RATIONALE FOR THE PROPOSED SHARE BUY-BACK

The Proposed Share Buy-Back will enable YLB to utilise any of its surplus financial resources to purchase its own shares from

the market. It may stabilise the supply and demand of its shares traded on the Main Market of Bursa Securities and thereby

support its fundamental value. Further, this is expected to enhance shareholder value in the event that such purchased

shares are cancelled as the resultant reduction in the issued and paid-up share capital of YLB is expected to increase the

earnings per share (“EPS”), thereby making the shares more attractive to investors.

In addition, the purchased shares may be held as Treasury Shares and distributed to shareholders as dividend and/or resold

in the open market with the intention of realising a potential capital appreciation on the shares without affecting the total

issued and paid-up share capital of the Company.

6. QUANTUM AND FUNDING

The actual number of YLB Shares which may be purchased and the timing of the purchase(s) will depend on, inter-alia,

market conditions, the availability of retained profits/share premium and financial resources of the Company as well as Bursa

Securities requirement to maintain the necessary shareholding spread and minimum issued and paid-up share capital.

Pursuant to the Listing Requirements, we will purchase YLB Shares entirely out of our retained profits and/or the share

premium account. Therefore, the Board proposes that the maximum amount of funds to be used for any purchase of our

own shares will not exceed the aggregate of our retained profits and share premium account.

The audited retained profits and share premium account of the Company as at 31 December 2012 is RM7,149,404 and

RM24,376,066 respectively. Based on the latest unaudited management accounts as at 31 March 2013, the retained profits

and share premium account of the Company amounted to approximately RM7,208,679 and RM24,376,066 respectively.

The Proposed Share Buy-Back will be financed through internally generated funds and/or borrowings and shall be made

out of the retained profits and/or share premium of the Company. In the event the purchase is funded by borrowings, the

Company expects that it will be capable of repaying such borrowings and that such funding is not expected to have any

material effect on the cash flow of the Company.

The Proposed Share Buy-Back will reduce the cash of the Company by an amount dependent on the purchase price of the

YLB Shares and the actual number of YLB Shares bought back.

7. POTENTIAL ADVANTAGES AND DISADVANTAGES OF THE PROPOSED SHARE BUY-BACK

The financial resources of YLB may increase pursuant to the resale of the purchased shares held as Treasury Shares at

prices higher than the purchase price. The other advantages of the Proposed Share Buy-Back are outlined in item 5 of this

Statement.

However, the Proposed Share Buy-Back, if implemented, would reduce the financial resources of the Company. This may

result in the Company foregoing future investment opportunities and/or any income that may be derived from alternative

uses of such funds.

Nevertheless, the Directors will be mindful of the interests of YLB and its shareholders in implementing the Proposed Share

Buy-Back.


8. EFFECT OF THE PROPOSED SHARE BUY-BACK

8.1 Share Capital

Assuming the Proposed Share Buy-Back is carried out up to 10% of the existing issued and paid-up share capital of YLB

of 160,000,000 ordinary shares of RM0.50 each as at 29 March 2013, the number of YLB Shares allowed to be purchased

by the Company is 16,000,000 shares.

In the event that all the shares purchased are to be cancelled, the effect of the Proposed Share Buy-Back on the issued

and paid-up share capital of the Company would be as follows:

No. of Ordinary Shares

of RM0.50 each

Issued and paid-up share capital as at 29 March 2013 160,000,000

Upon completion of the Proposed Share Buy-Back* (assuming all cancelled) (16,000,000)

Reduced share capital after the Proposed Share Buy-Back 144,000,000

* Assuming the Company purchased up to the maximum number of YLB Shares that may be purchased pursuant to the Proposed

Share Buy-Back i.e. 10% of the existing issued and paid-up share capital of the Company.

However, the Proposed Share Buy-Back is not expected to have any effect on the issued and paid-up share capital if all

the shares purchased are to be retained as Treasury Shares, resold or distributed to our shareholders.

8.2 Net Tangible Assets (“NTA”)

If the purchased shares are kept as Treasury Shares, the NTA per share would decrease, unless the cost per share of the

Treasury Shares purchased is below the NTA per share at the relevant point in time. This is because the Treasury Shares,

which are required to be carried at cost, must be offset against equity and therefore would result in a decrease in NTA

of the Company.

Similarly, if the purchased shares are cancelled, the NTA per share of the YLB Group will decrease, unless the cost per

share of the purchased shares is below the NTA per share at the relevant point in time.

In the case where the purchased shares are treated as Treasury Shares and subsequently resold on Bursa Securities, the

NTA per share of the YLB Group will increase if the Company realises a gain from the resale, and vice-versa. If the Treasury

Shares are distributed as share dividends, the NTA of the YLB Group will decrease by the cost of the Treasury Shares.

8.3 Working Capital

The Proposed Share Buy-Back is likely to reduce the working capital of the Group, the quantum of which will depend

on the actual purchase price and number of shares to be bought back.

8.4 Cashflow

The Proposed Share Buy-Back is not expected to be implemented to the extent that it will adversely affect the cashflow

of the Company. The exact effect on the cashflow of the Company will depend on the quantum and price at which the

shares are bought back.

8.5 Earnings

The effects of the Proposed Share Buy-Back on the earnings of our Group are dependent on the purchase prices of YLB

Shares and the effective funding cost or loss in interest income to our Group.

Assuming that the YLB Shares so purchased are retained as treasury shares and subsequently resold, the effects on the

earnings of our Group are dependent on the actual selling price, the number of treasury shares resold, the effective gain

or interest savings arising from the exercise, and the manner in which the proceeds arising therefrom are utilised.

SHARE BUY-BACK STATEMENTIN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS’ APPROVALFOR SHARE BUY-BACK BY THE COMPANY (“PROPOSED SHARE BUY-BACK”)cont’d


8. EFFECT OF THE PROPOSED SHARE BUY-BACK cont’d

8.5 Earnings cont’d

If the YLB Shares so purchased are cancelled, the Proposed Share Buy-Back will increase the EPS of our Group provided

the income foregone and if any, interest expense incurred on the shares purchased are less than the consolidated EPS

before the Proposed Share Buy-Back.

8.6 Directors’ and Substantial Shareholders’ Shareholdings

(i) Directors

Assuming that the Proposed Share Buy-Back is implemented in full and that the YLB Shares are purchased from

shareholders other than our Directors and existing substantial shareholders of the Company, the proforma

effects of the Proposed Share Buy-Back on the shareholdings of the Directors and Persons Connected to the

Directors of YLB as at 29 March 2013, being the most practicable date prior to the printing of this Statement, are

set out as follows:

As at 29 March 2013 After full exercise of Proposed Share Buy-Back

Direct Indirect Direct Indirect

No. of

shares %

No. of

Shares %

No. of

shares %#No. of

Shares %#

Directors

Zabidi Bin Md Zain 9,338,281 6.02 1,524,000 a 0.98 9,338,281 6.48 1,524,000 a 1.06

Lim Oon Kok 35,058,942 22.61 13,161,205 b 8.49 35,058,942 24.35 13,161,205 b 9.14

Hsieh Yu-Tien 400,006 0.26 - - 400,006 0.28 - -

Ong Kheng Swee - - - - - - - -

Ong Chin Lin - - - - - - - -

Person connected

Liao Feun Chu 4,408,730 2.84 43,811,417 c 28.26 4,408,730 3.06 43,811,417 c 30.42

Dr Anyta Hanim Binti

Anuar - - 10,862,281 d 7.01 - - 10,862,281 d 7.54

Edufocus Computer

Aided Learning

Sdn Bhd@ 1,524,000 0.98 - - 1,524,000 1.06 - -

Lim Yun An* 4,220,172 2.72 - - 4,220,172 2.93 - -

Lim Lih Tyng~ 532,303 0.34 - - 532,303 0.37 - -

Lim Yun Li^ 4,000,000 2.58 - - 4,000,000 2.78 - -

Notes :

# Percentage computed based on the total number of shares in issue of 160,000,000 and after assuming the deduction of a

total of 16,000,000 (being the maximum shares that may be bought back i.e. 10% of the total number of shares issued) shares

bought back and retained as treasury shares as at 29 March 2013.

@ Edufocus Computer Aided Learning Sdn. Bhd. is a company in which Encik Zabidi Bin Md Zain and Dr. Anyta Hanim Binti

Anuar has substantial interest.

* Ms. Lim Yun-An is the daughter of Mr. Lim Oon Kok.

~ Ms. Lim Lih Tyng is the daughter of Mr. Lim Oon Kok.

^ Ms. Lim Yun-Li is the daughter of Mr. Lim Oon Kok.a By virtue of his interest in Edufocus Computer Aided Learning Sdn. Bhd..b By virtue of his interest in the shareholdings of his spouse, Mdm. Liao Feun Chu and his children, Ms. Lim Yun-An, Ms. Lim Lih

Tyng and Ms. Lim Yun-Li.c By virtue of her interest in the shareholdings of her spouse, Mr. Lim Oon Kok and her children, Ms. Lim Yun-An, Ms. Lim Lih

Tyng and Ms. Lim Yun-Li.d By virtue of her interest in Edufocus Computer Aided Learning Sdn. Bhd. and the shareholdings of her spouse, Encik Zabidi Bin

Md Zain.


cont’d



8.6 Directors’ and Substantial Shareholders’ Shareholdings cont’d

(ii) Substantial Shareholders

Assuming that the Proposed Share Buy-Back is implemented in full and that the YLB Shares are pruchased

from shareholders other than our existing substantial shareholders, the proforma effects of the Proposed

Share Buy-Back on the shareholdings of the substantial shareholders and Persons Connected to the

substantial shareholders of YLB as at 29 March 2013, being the most practicable date prior to the printing of

this Statement, are set out as follows :

As at 29 March 2013 After full exercise of Proposed Share Buy-Back

Direct Indirect Direct Indirect

No. of

shares %

No. of

Shares %

No. of

shares %#No. of

Shares %#

Substantial

Shareholders

Zabidi Bin Md Zain 9,338,281 6.02 1,524,000 a 0.98 9,338,281 6.48 1,524,000 a 1.06

Lim Oon Kok 35,058,942 22.61 13,161,205 b 8.49 35,058,942 24.35 13,161,205 b 9.14

Liao Feun Chu 4,408,730 2.84 43,811,417 c 28.26 4,408,730 3.06 43,811,417 c 30.42

Anyta Hanim Binti Anuar - - 10,862,281 d 7.01 - - 10,862,281 d 7.54

Lembaga Tabung Haji 16,000,000 10.32 - - 16,000,000 11.11 - -

Person connected

Edufocus Computer

Aided Learning

Sdn Bhd@ 1,524,000 0.98 - - 1,524,000 1.06 - -

Lim Yun An* 4,220,172 2.72 - - 4,220,172 2.93 - -

Lim Lih Tyng~ 532,303 0.34 - - 532,303 0.37 - -

Lim Yun Li^ 4,000,000 2.58 - - 4,000,000 2.78 - -

Notes :

# Percentage computed based on the total number of shares in issue of 160,000,000 and after assuming the deduction of a

total of 16,000,000 (being the maximum shares that may be bought back i.e. 10% of the total number of shares issued) shares

bought back and retained as treasury shares as at 29 March 2013.

@ Edufocus Computer Aided Learning Sdn. Bhd. is a company in which Encik Zabidi Bin Md Zain and Dr. Anyta Hanim Binti

Anuar has substantial interest.

* Ms. Lim Yun-An is the daughter of Mr. Lim Oon Kok.

~ Ms. Lim Lih Tyng is the daughter of Mr. Lim Oon Kok.

^ Ms. Lim Yun-Li is the daughter of Mr. Lim Oon Kok.a By virtue of his interest in Edufocus Computer Aided Learning Sdn. Bhd..b By virtue of his interest in the shareholdings of his spouse, Mdm. Liao Feun Chu and his children, Ms. Lim Yun-An, Ms. Lim Lih

Tyng and Ms. Lim Yun-Li.c By virtue of her interest in the shareholdings of her spouse, Mr. Lim Oon Kok and her children, Ms. Lim Yun-An, Ms. Lim Lih

Tyng and Ms. Lim Yun-Li.d By virtue of her interest in Edufocus Computer Aided Learning Sdn. Bhd. and the shareholdings of her spouse, Encik Zabidi Bin

Md Zain.

SHARE BUY-BACK STATEMENTIN RELATION TO THE PROPOSED RENEWAL OF SHAREHOLDERS’ APPROVALFOR SHARE BUY-BACK BY THE COMPANY (“PROPOSED SHARE BUY-BACK”)cont’d



cont’d


8.7 Dividends

The Board has proposed a final single tier dividend of 4.0 sen per ordinary share of RM0.50 each in respect of the

financial year ended 31 December 2012 subject to the shareholders’ approval at the forthcoming 13th AGM.

The Proposed Share Buy-Back may reduce the amount of distributable reserves available for dividends. However,

assuming the Proposed Share Buy-Back is implemented in full and YLB’s quantum of dividends is maintained at

historical level, the Share Buy-Back will have the effect of increasing the dividend rate of YLB as a result of the reduction

in the issued and paid-up share capital of YLB.

9. PUBLIC SHAREHOLDING SPREAD

As at 31 December 2012, the public shareholding spread of the Company is 47.53%. The public shareholding spread would

be reduced to approximately 43.26% assuming, the Proposed Share Buy-Back is implemented in full and all the shares

purchased are from public shareholders and are either cancelled or held as Treasury Shares.

The Board is mindful of the public shareholding spread requirement and will continue to be mindful of the requirement

when making any purchase of YLB Shares pursuant to the Proposed Share Buy-Back.

10. IMPLICATIONS RELATING TO THE MALAYSIAN CODE ON TAKE-OVER AND MERGER 2010 (“CODE”)

Pursuant to Part III and Practice Note 9 of the Code, a person together with persons acting in concert with him (if any), who

has obtained control in a company or who holds more than 33% but less than 50% of the voting shares of a company, who as

a result of a purchase of the Company of its own shares, increases his holding in any period of six (6) months by an additional

2% or more of the voting shares of the Company, the person together with persons acting in concert with him (if any) are

obligated to extend a mandatory take-over offer to acquire the remaining shares not already held by them.

The Board is mindful of any potential implications relating to Part II of the Code and in the event that obligations relating to Part

II of the Code is expected to be triggered as a result of the Proposed Renewal of Share Buy-Back, which is an action outside any

group of persons acting in concert’s direct participation, they will apply to the Securities Commission for an exemption from

undertaking a take-over offer for all the remaining shares in YLB not already held by them under Practice Note 9 of the Code.

11. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

Save for the inadvertent increase in the percentage shareholding and/or voting rights of the shareholders as a consequence

of the Proposed Share Buy-Back, none of the Directors and substantial shareholders of the Company or persons connected

to them has any interest, direct or indirect, in the Proposed Share Buy-Back.

12. DIRECTORS’ RECOMMENDATION

The Directors, having considered all aspects of the Proposed Share Buy-Back, are of the opinion that the Proposed Share Buy-

Back is in the best interest of the Company. Accordingly, they recommend that you vote in favour of the ordinary resolution

for the Proposed Share Buy-Back to be tabled at the forthcoming 13th AGM.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

This Statement has been seen and approved by the Board and they collectively and individually accept full responsibility

for the accuracy of the information given and confirm that after making all reasonable enquiries and, to the best of their

knowledge and belief, there are no other facts the omission of which would make any statement herein false or misleading.

This Share Buy-Back Statement is dated 26 April 2013.


(This page has been intentionally left blank)

I/We................................................................................................................................................................................. (NRIC No. .....................................................)

of ...............................................................................................................................................................................................................................................................

being a member/members of YI-LAI BERHAD (“the Company”) do hereby appoint ..................................................................................................

........................................................................................................................................................................................ (NRIC No. .....................................................)

of ..............................................................................................................................................................................................................................................................

or failing him/her, .................................................................................................................................................. (NRIC No. .....................................................)

of .............................................................................................................................................................................................................................................................

or failing him/her, the Chairman of the Meeting, as my/our proxy to vote for me/us on my/our behalf at the Thirteenth Annual

General Meeting of the Company to be held at Lot 7020, Batu 23, Jalan Air Hitam, 81000 Kulaijaya, Johor Darul Ta’zim on Tuesday,

21 May 2013 at 10.00 am and at any adjournment thereof.

Please indicate clearly with an “X” where appropriate against each resolution how you wish your proxy to vote. If no specific

direction to voting is given, the proxy will vote or abstain at his/her discretion.

NO. RESOLUTIONS FOR AGAINST

1 Approval of a final single tier dividend of 4.0 sen per ordinary share of RM0.50 each

2 Approval of Directors’ fees

3 Re-election of retiring Director under Article 81 - Lim Oon Kok

4 Re-election of retiring Director under Article 81 - Ong Chin Lin

5 Re-appointment of KPMG as Auditors and authorise the Directors to fix their remuneration

6 Empower directors to issue shares pursuant to Section 132D of the Companies Act, 1965

7 Approval of Proposed Renewal of Share Buy-Back

8 Retention of Ong Kheng Swee as Independent Non-Executive Director

9 Retention of Ong Chin Lin as Independent Non-Executive Director

10 Proposed Amendments to the Articles of Association of the Company

Signed this day of 2013

Signature of Member(s)

NOTES:

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may

but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be

represented by each proxy.

3. 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 Seal or under the hand of an officer or attorney duly authorised.

(While pending the proposed amendments to YLB’s Articles of Association to be approved at its 13th AGM, YLB expressly allow where a member/

shareholder is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991(“SICDA”) which holds

ordinary shares in YLB 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.)

4. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 7E, Level 7, Menara Ansar, 65, Jalan Trus, 80000 Johor Bahru,

Johor Darul Ta’zim, Malaysia not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

FORM OF PROXY

Number of ordinary shares held

1st Fold Here

Then Fold Here

AFFIX

STAMP

The Company Secretary

YI-LAI BERHAD (516043-K)

Suite 7E, Level 7

Menara Ansar

65 Jalan Trus

80000 Johor Bahru

Johor Darul Ta’zim

Malaysia

Yi-Lai AR2012 cover 65, jalan suria 1, taman malim jaya, 75250 melaka darul azim, malaysia tel : 606-336 7128 fax : 606-336 9128 butterworth office : no. 5, persiaran kerapu, off jalan

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