LEEKEE INDUSTRIES (M) SDN - teo seng capital berhad

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTThe directors have pleasure in submitting their report together with the audited financial statements ofthe Group and of the Company for the financial period from 1 April 2012 to 31 December 2012.CHANGE THE END OF THE REPORTING PERIODEffective from this financial period, the Company changed the end of its reporting period from 31March to 31 December to coincide with the end of the reporting period of its ultimate holdingcompany in accordance with the Companies Act, 1965. The financial statements for the currentfinancial period cover 9 months period from 1 April 2012 to 31 December 2012. The financialstatements for the previous financial year cover 12 months period from 1 April 2011 to 31 March2012.PRINCIPAL ACTIVITIESThe Company is principally engaged in the business of investment holding and provision ofmanagement services. The principal activities of the subsidiaries are set out in Note 7 to the financialstatements.There have been no significant changes in the nature of these principal activities during the financialperiod.RESULTSGroupCompanyProfit after tax for the financial period 577,245 2,525,609Attributable to :Owners of the Company 773,244 2,525,609Non-controlling interests (195,999) -RMRM577,245 2,525,609In the opinion of the directors, the results of the operations of the Group and of the Company duringthe financial period have not been substantially affected by any item, transaction or event of amaterial and unusual nature.Page 1

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTDIVIDENDSDividend paid or declared by the Company since the end of the previous financial year were asfollows :A final single tier dividend of 8.75% equivalent to 1.75 sen per ordinary share amounting toRM 3,500,000 which was proposed in respect of the financial year ended 31 March 2012 anddealt with in the previous directors’ report, was approved by the shareholders at the AnnualGeneral Meeting held on 20 September 2012 and subsequently paid on 19 November 2012. Thepayment was made to the shareholders whose name appeared in the Company’s Records ofDepositors on 5 November 2012.The directors do not recommend the payment of any final dividend in respect of the financial periodended 31 December 2012.RESERVES AND PROVISIONSThere was no material transfers to or from reserves and provisions during the financial period save asdisclosed in the financial statements.ISSUES OF SHARES AND DEBENTURESThere was no issue of shares and debentures during the financial period.OPTIONS GRANTED OVER UNISSUED SHARESNo options have been granted by the Company to any person to take up any unissued shares of theCompany during the financial period.HOLDING COMPANIESThe Company is a subsidiary of Advantage Valuations Sdn. Bhd.. The directors regard Leong HupHoldings Sdn. Bhd. (formerly known as Leong Hup Holdings Berhad) as its intermediate holdingcompany and Emerging Glory Sdn. Bhd. as its ultimate holding company. These holding companiesare incorporated in Malaysia.Page 2

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTDIRECTORSThe directors who served since the date of last report are :Tan Sri Lau Tuang NguangLau Jui PengLau Joo HanNam Yok SanNa Yok CheeLoh Wee ChingChoong Keen ShianFrederick Ng Yong ChiangDato’ Koh Low @ Koh Kim ToonDato’ Zainal Bin HassanDIRECTORS’ INTERESTSAccording to the register of directors’ shareholdings, the interests of directors holding office at the endof the financial period in shares in the Company and its related corporations during the financialperiod are as follows :The CompanyBalance At Balance At01.04.2012 Bought Sold 31.12.2012Tan Sri Lau Tuang Nguang - Indirect 11,063,700 108,930,838 (119,781,738) 212,800Lau Jui Peng - Indirect - 119,781,738 (4,200,000) 115,581,738Nam Yok San - Indirect 102,254,001 - - 102,254,001Na Yok Chee - Direct 1,450 - - 1,450- Indirect 102,246,001 - - 102,246,001Immediate Holding Company – Advantage Valuations Sdn. Bhd.Number Of Ordinary Shares Of RM 0.20 EachNumber Of Ordinary Shares Of RM 1.00 EachBalance At Balance At01.04.2012 Bought Sold 31.12.2012Tan Sri Lau Tuang Nguang - Direct 1 - - 1- Indirect - 5,097 (5,097) -Lau Jui Peng - Indirect - 5,097 - 5,097Nam Yok San - Indirect 4,900 - - 4,900Na Yok Chee - Indirect 4,900 - - 4,900Page 3

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTDIRECTORS’ INTERESTS (CONT’D)Intermediate Holding Company – Leong Hup Holdings Sdn. Bhd.(Formerly known as Leong Hup Holdings Berhad)Number Of Ordinary Shares Of RM 1.00 EachBalance At Balance At01.04.2012 Bought Sold 31.12.2012Tan Sri Lau Tuang Nguang - Direct 191,000 - (191,000) -- Indirect 187,800 2 (187,802) -Lau Jui Peng - Direct 30,600 - (30,600) -- Indirect - 2 - 2Lau Joo Han - Direct 20,000 - (20,000) -Ultimate Holding Company – Emerging Glory Sdn. Bhd.Number Of Ordinary Shares Of RM 1.00 EachBalance At Balance At01.04.2012 Bought Sold 31.12.2012Tan Sri Lau Tuang Nguang - Direct - 14,999 - 14,999Lau Jui Peng - Indirect - 20,002 - 20,002Lau Joo Han - Direct - 10,001 - 10,001Other than as disclosed above, none of the directors in office at the end of the financial period hadany other interest in the shares of the Company, or its related corporations during the financial period.DIRECTORS’ BENEFITSSince the end of the previous financial year, none of the directors has received or become entitled toreceive any benefit (other than benefits included in the aggregate amount of emoluments received ordue and receivable by the directors as disclosed in Note 21(a) to the financial statements) by reasonof a contract made by the Company or a related corporation with the director or with a firm of whichthe director is a member, or with a company in which the director has a substantial financial interestsave as disclosed in Note 31(b) to the financial statements.During and at the end of the financial period, no arrangements subsisted to which the Company wasa party, whereby the directors of the Company might acquire benefits by means of the acquisition ofshares in, or debentures of, the Company or any other body corporate.Page 4

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTOTHER STATUTORY INFORMATION(a)Before the financial statements of the Group and of the Company were made out, the directorstook reasonable steps :(i)(ii)to ascertain that proper action had been taken in relation to the writing off of bad debtsand the making of allowance for impairment losses on receivables and have satisfiedthemselves that all known bad debts had been written off and that adequate allowancehad been made for impairment losses on receivables ; andto ensure that any current assets which were unlikely to realise their values as shown inthe accounting records in the ordinary course of business had been written down to anamount which they might be expected so to realise.(b) At the date of this report, the directors are not aware of any circumstances :(i)(ii)(iii)(iv)which would render the amount written off for bad debts or the additional allowance forimpairment losses on receivables in the financial statements of the Group and of theCompany inadequate to any substantial extent ; orwhich would render the values attributed to current assets in the financial statements ofthe Group and of the Company misleading ; orwhich have arisen which would render adherence to the existing method of valuation ofassets or liabilities of the Group and of the Company misleading or inappropriate ; ornot otherwise dealt with in this report or financial statements of the Group and of theCompany which would render any amount stated in the financial statements misleading.(c) At the date of this report, there does not exist :(i)(ii)any charge on the assets of the Group and of the Company which has arisen since theend of the financial period and which secures the liabilities of any other person ; orany contingent liability in respect of the Group and of the Company which has arisensince the end of the financial period.(d) In the opinion of the directors :(i)(ii)no contingent or other liability has become enforceable, or is likely to becomeenforceable within the period of twelve months after the end of the financial period whichwill or may affect the ability of the Group and of the Company to meet their obligationsas and when they fall due ; andno item, transaction or event of a material and unusual nature has arisen in the intervalbetween the end of the financial period and the date of this report which is likely to affectsubstantially the results of the operations of the Group and of the Company for thefinancial period in which this report is made.Page 5

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TDIRECTORS’ REPORTSIGNIFICANT EVENT DURING THE FINANCIAL PERIODThe significant event during the financial period is disclosed in Note 33 to the financial statements.AUDITORSThe auditors, Messrs. Crowe Horwath, have expressed their willingness to continue in office.Signed on behalf of the Board in accordance with a resolution of the directors :LAU JUI PENGDirectorNAM YOK SANDirectorMuar, Johor Darul TakzimDate : 22 April 2013Page 6

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENT BY DIRECTORSWe, the undersigned, being two of the directors of Teo Seng Capital Berhad, do hereby state that, inthe opinion of the directors, the financial statements set out on pages 12 to 100 are drawn up inaccordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 inMalaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at31 December 2012 and of their results and cash flows for the financial period ended on that date.The supplementary information set out in Note 36, which is not part of the financial statements, isprepared in all material respects, in accordance with Guidance on Special Matter No. 1,Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant toBursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute ofAccountants and the directive of Bursa Malaysia Securities Berhad.Signed on behalf of the Board in accordance with a resolution of the directors :LAU JUI PENGDirectorNAM YOK SANDirectorMuar, Johor Darul TakzimDate : 22 April 2013Page 7

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATUTORY DECLARATIONI, NAM YOK SAN, the director primarily responsible for the financial management of Teo SengCapital Berhad, do solemnly and sincerely declare that the financial statements and supplementaryinformation set out on pages 12 to 101 are to the best of my knowledge and belief, correct, and Imake this solemn declaration conscientiously believing the same to be true and by virtue of theprovisions of the Statutory Declarations Act, 1960.Subscribed and solemnly declared bythe abovenamed NAM YOK SAN atMuar in the state of Johor Darul Takzimon 22 April 2013Before me :Commissioner for OathsNAM YOK SANPage 8

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFTEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TREPORT ON THE FINANCIAL STATEMENTSWe have audited the financial statements of Teo Seng Capital Berhad, which comprise statementsof financial position at 31 December 2012 of the Group and of the Company, and statements ofprofit or loss and other comprehensive income, statements of changes in equity and statements ofcash flows of the Group and of the Company for the financial period then ended, and a summary ofsignificant accounting policies and other explanatory information, as set out on pages 12 to 100.Directors’ Responsibility For The Financial StatementsThe directors of the Company are responsible for the preparation of financial statements so as togive a true and fair view in accordance with Financial Reporting Standards and the requirements ofthe Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control asthe directors determine is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with approved standards on auditing in Malaysia. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on our judgement,including the assessment of risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, we consider internal control relevant to theentity’s preparation of financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates madeby 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 basisfor our audit opinion.OpinionIn our opinion, the financial statements give a true and fair view of the financial position of theGroup and of the Company at 31 December 2012 and of their financial performance and cash flowsfor the financial period then ended in accordance with Financial Reporting Standards and therequirements of the Companies Act, 1965 in Malaysia.Page 9

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFTEO SENG CAPITAL BERHAD (CONT’D)(Incorporated In Malaysia)Company No : 732762 - TREPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSIn accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report thefollowing :(a)(b)(c)(d)In our opinion, the accounting and other records and the registers required by the Act to bekept by the Company and its subsidiaries of which we have acted as auditors have beenproperly kept in accordance with the provisions of the Act.We have considered the financial statements and the auditors’ report of subsidiary of whichwe have not acted as auditors, which are indicated in Note 7 to the financial statements.We are satisfied that the financial statements of the subsidiaries that have been consolidatedwith the Company’s financial statements are in form and content appropriate and proper forthe purposes of the preparation of the financial statements of the Group and we have receivedsatisfactory information and explanations required by us for those purposes.The auditors’ reports on the financial statements of the subsidiaries did not contain anyqualification or any adverse comment made under Section 174(3) of the Act.OTHER REPORTING RESPONSIBILITIESThe supplementary information set out in Note 36 on page 101 is disclosed to meet the requirementof Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors areresponsible for the preparation of the supplementary information in accordance with Guidance onSpecial Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context ofDisclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by theMalaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia SecuritiesBerhad. In our opinion, the supplementary information is prepared, in all material respects, inaccordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.Page 10

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFTEO SENG CAPITAL BERHAD (CONT’D)(Incorporated In Malaysia)Company No : 732762 - TOTHER MATTERSThis report is made solely to the members of the Company, as a body, in accordance with Section174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assumeresponsibility to any other person for the content of this report.Crowe HorwathFirm No.: AF 1018Chartered AccountantsNg Kim KiatApproval No.: 2074/10/14 (J)Chartered AccountantMuar, Johor Darul TakzimDate : 22 April 2013Page 11

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2012GroupCompanyNote 31 December 2012 31 March 2012 31 December 2012 31 March 2012RM RM RM RMASSETSNon-Current AssetsProperty, plant and equipment 5 132,006,490 125,181,045 858,081 739,032Investment property 6 462,530 468,336 - -Investment in subsidiaries 7 - - 68,174,607 67,798,407Other investment 8 5,390 6,040 - -Long term receivables 10 - - 3,662,545 -132,474,410 125,655,421 72,695,233 68,537,439Current AssetsInventories 11 41,492,007 34,720,030 - -Trade and other receivables 10 35,805,743 31,514,573 1,323,144 5,374,335Deposits, bank and cash balances 12 17,857,144 21,126,551 176,586 366,264Dividend receivable - - - 500,00095,154,894 87,361,154 1,499,730 6,240,599TOTAL ASSETS 227,629,304 213,016,575 74,194,963 74,778,038The annexed notes form an integral part of these financial statements. Page 12

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF FINANCIAL POSITION AT 31 DECEMBER 2012 (CONT’D)EQUITY AND LIABILITIESGroupCompanyNote 31 December 2012 31 March 2012 31 December 2012 31 March 2012RM RM RM RMEquityShare capital 13 40,000,000 40,000,000 40,000,000 40,000,000Reserves 14 71,207,642 74,002,585 22,830,865 23,805,256Equity Attributable To Owners Of The Company 111,207,642 114,002,585 62,830,865 63,805,256NON-CONTROLLING INTERESTS (21,555) 174,444 - -TOTAL EQUITY 111,186,087 114,177,029 62,830,865 63,805,256Non-Current LiabilitiesBank borrowings 15 2,663,865 3,454,274 - -Hire purchase payables 16 6,181,274 7,102,307 - -Deferred tax liabilities 17 7,016,104 9,380,104 - -15,861,243 19,936,685 - -Current LiabilitiesTrade and other payables 18 24,261,160 23,050,326 11,364,098 10,972,782Bank borrowings 15 67,565,446 48,410,155 - -Hire purchase payables 16 7,960,813 7,303,380 - -Tax payable 794,555 139,000 - -100,581,974 78,902,861 11,364,098 10,972,782TOTAL LIABILITIES 116,443,217 98,839,546 11,364,098 10,972,782TOTAL EQUITY AND LIABILITIES 227,629,304 213,016,575 74,194,963 74,778,038`The annexed notes form an integral part of these financial statements. Page 13

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012GroupCompanyNote 9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 2012 31 March 2012 31 December 2012 31 March 2012RM RM RM RMREVENUE 19 197,535,030 267,287,989 3,784,000 8,682,500INVESTMENT REVENUE 20 71,669 142,450 42,715 63,814OTHER INCOME 1,951,994 1,884,572 - 17,399CHANGES IN INVENTORIES 6,769,284 3,741,799 - -PURCHASE OF TRADING MERCHANDISE, RAW MATERIALS,LIVESTOCKS AND POULTRY FEEDS (153,834,290) (179,429,581) - -STAFF COSTS 22 (18,969,544) (27,937,295) (458,970) (994,985)DEPRECIATION (7,733,853) (9,051,058) (58,844) (80,801)FINANCE COSTS 23 (2,755,423) (3,296,452) (267,060) (336,302)OTHER EXPENSES (21,892,205) (28,821,204) (471,381) (1,084,255)PROFIT BEFORE TAX 24 1,142,662 24,521,220 2,570,460 6,267,370TAX EXPENSE 25 (565,417) (7,384,084) (44,851) 30,454PROFIT AFTER TAX 577,245 17,137,136 2,525,609 6,297,824OTHER COMPREHENSIVE INCOMEItems that may be reclassified subsequently to profit or loss- Fair value changes of available-for-sale financial assets (650) 960 - -- Foreign currency translation (67,537) (18,454) - -TOTAL OTHER COMPREHENSIVE INCOME (68,187) (17,494) - -TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD/YEAR 509,058 17,119,642 2,525,609 6,297,824The annexed notes form an integral part of these financial statements. Page 14

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012 (CONT’D)GroupCompanyNote 9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 2012 31 March 2012 31 December 2012 31 March 2012RM RM RM RMPROFIT AFTER TAX ATTRIBUTABLE TO :Owners of the Company 773,244 17,262,160 2,525,609 6,297,824Non-Controlling Interests (195,999) (125,024) - -577,245 17,137,136 2,525,609 6,297,824TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO :Owners of the Company 705,057 17,244,666 2,525,609 6,297,824Non-Controlling Interests (195,999) (125,024) - -509,058 17,119,642 2,525,609 6,297,824EARNINGS PER ORDINARY SHARE (SEN)Basic 26 0.39 8.63`The annexed notes form an integral part of these financial statements. Page 15

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012GroupAttributable to Owners of the CompanyNon-DistributableDistributableForeignExchange Reverse Attributable ToShare Fair Value Translation Acquisition Revaluation Retained Owners Of The Non-ControllingNote Share Capital Premium Reserve Reserve Reserve Reserve Profits Company Interests Total EquityRM RM RM RM RM RM RM RM RM RMAt 1 April 2011 40,000,000 8,010,827 2,056 (14,566) (26,078,000) 4,031,856 73,605,746 99,557,919 - 99,557,919Profit after tax for thefinancial year - - - - - - 17,262,160 17,262,160 (125,024) 17,137,136Other comprehensiveincome for the financialyear, net of tax :- Fair value changes ofavailable-for-sale financialassets - - 960 - - - - 960 - 960- Foreign currency translation - - - (18,454) - - - (18,454) - (18,454)Total comprehensiveincome/(expenses) forthe financial year - - 960 (18,454) - - 17,262,160 17,244,666 (125,024) 17,119,642Contributions by anddistributions to ownersof the Company :- Acquisition ofsubsidiaries - - - - - - - - 299,468 299,468- Dividendsby the Company 28 - - - - - - (2,800,000) (2,800,000) - (2,800,000)At 31 March 2012 40,000,000 8,010,827 3,016 (33,020) (26,078,000) 4,031,856 88,067,906 114,002,585 174,444 114,177,029The annexed notes form an integral part of these financial statements. Page 16

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012 (CONT’D)GroupAttributable to Owners of the CompanyNon-DistributableDistributableForeignExchange Reverse Attributable ToShare Fair Value Translation Acquisition Revaluation Retained Owners Of The Non-ControllingNote Share Capital Premium Reserve Reserve Reserve Reserve Profits Company Interests Total EquityRM RM RM RM RM RM RM RM RM RMAt 31 March 2012 / 1 April 2012 40,000,000 8,010,827 3,016 (33,020) (26,078,000) 4,031,856 88,067,906 114,002,585 174,444 114,177,029Profit after tax for thefinancial period - - - - - - 773,244 773,244 (195,999) 577,245Other comprehensiveincome for the financialperiod, net of tax :- Fair value changes ofavailable-for-sale financialassets - - (650) - - - - (650) - (650)- Foreign currency translation - - - (67,537) - - - (67,537) - (67,537)Total comprehensiveincome/(expenses) forthe financial period - - (650) (67,537) - - 773,244 705,057 (195,999) 509,058Contributions by anddistributions to ownersof the Company :- Dividendsby the Company 28 - - - - - - (3,500,000) (3,500,000) - (3,500,000)At 31 December 2012 40,000,000 8,010,827 2,366 (100,557) (26,078,000) 4,031,856 85,341,150 111,207,642 (21,555) 111,186,087The annexed notes form an integral part of these financial statements. Page 17

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012 (CONT’D)CompanyAttributable To Owners Of The CompanyNon-DistributableDistributableNote Share Capital Share Premium Retained Profits Total EquityRM RM RM RMAt 1 April 2011 40,000,000 8,010,827 12,296,605 60,307,432Profit after tax/Total comprehensive income for the financial year - - 6,297,824 6,297,824Contributions by and distributions to owners of the Company :- Dividends 28 - - (2,800,000) (2,800,000)At 31 March 2012 / 1 April 2012 40,000,000 8,010,827 15,794,429 63,805,256Profit after tax/Total comprehensive income for the financial period - - 2,525,609 2,525,609Contributions by and distributions to owners of the Company :- Dividends 28 - - (3,500,000) (3,500,000)At 31 December 2012 40,000,000 8,010,827 14,820,038 62,830,865The annexed notes form an integral part of these financial statements. Page 18

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TSTATEMENTS OF CASH FLOWSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 2012GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 2012 31 March 2012 31 December 2012 31 March 2012RM RM RM RMCASH FLOWS FROM OPERATING ACTIVITIESProfit before tax 1,142,662 24,521,220 2,570,460 6,267,370Adjustments for :Allowance for slow moving inventories 15,476 - - -Allowance for impairment losses on 247,027 214,682 - -trade receivablesBad debts written off 11,204 - - -Depreciation - property, plant andequipment 7,728,047 9,043,282 58,844 80,801Depreciation - investment property 5,806 7,776 - -Dividend income (150) (280) (3,514,000) (8,322,500)Fair value gain on derivatives - (948) - -Gain on disposal of property, plant andequipment (133,275) (502,180) - -Goodwill on consolidation written off 288,215 627,279 - -Inventories written off 17,765 30,456 - -Property, plant and equipment written off 315,713 78,266 - -Reversal of allowance for slow movinginventories - (4,104) - -Reversal of allowance for impairment losseson trade receivables (421,490) (162,667) - -Unrealised loss/(gain) on foreign exchange 30,812 (57,014) - -Interest expenses 2,755,423 3,296,452 267,060 336,302Interest income (71,669) (142,450) (42,715) (63,814)OPERATING PROFIT/(LOSS) BEFOREWORKING CAPITAL CHANGES 11,931,566 36,949,770 (660,351) (1,701,841)Changes In Working CapitalInventories (6,805,218) (3,712,145) - (3,815,715)Trade and other receivables (2,178,307) (4,714,979) 360,296 -Trade and other payables 1,097,769 2,072,596 352,570 1,621,849CASH GENERATED FROM/(ABSORBED INTO)OPERATIONS 4,045,810 30,595,242 52,515 (3,895,707)Interest paid (2,755,423) (3,296,452) (267,060) (336,302)Interest received 71,669 142,450 42,715 63,814Tax paid (4,240,328) (7,285,629) (16,501) (256,433)NET CASH (USED IN)/FROM OPERATINGACTIVITIES (2,878,272) 20,155,611 (188,331) (4,424,628)CARRIED FORWARD (2,878,272) 20,155,611 (188,331) (4,424,628)The annexed notes form an integral part of these financial statements. Page 19

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20121. GENERAL INFORMATIONThe Company is a public company limited by shares and is incorporated under the CompaniesAct, 1965 in Malaysia. The domicile of the Company is Malaysia and is listed on the MainMarket of the Bursa Malaysia Securities Berhad.The registered office and principal place of business are as follows :Registered office : 201-203, Jalan Abdullah84000 MuarJohor Darul TakzimPrincipal place of business : Lot PTD 25740, Batu 4Jalan Air Hitam83700 Yong PengJohor Darul TakzimThe financial statements were authorised for issue by the Board of Directors in accordance witha resolution of the directors dated 22 April 2013.2. PRINCIPAL ACTIVITIESThe Company is principally engaged in the business of investment holding and provision ofmanagement services. The principal activities of the subsidiaries are set out in Note 7. Therehave been no significant changes in the nature of these principal activities during the financialperiod.3. HOLDING COMPANIESThe Company is a subsidiary of Advantage Valuations Sdn. Bhd.. The directors regard LeongHup Holdings Sdn. Bhd. (formerly known as Leong Hup Holdings Berhad) as its intermediateholding company and Emerging Glory Sdn. Bhd. as its ultimate holding company. These holdingcompanies are incorporated in Malaysia.Page 21

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS4.1 Basis of Preparation of Financial Statements(a)(b)(c)The financial statements of the Group and of the Company have been prepared inaccordance with Financial Reporting Standards (“FRSs”) and the requirements of theCompanies Act, 1965 in Malaysia. At the beginning of the current financial period,the Group and the Company have adopted new FRSs which are mandatory forfinancial period beginning on or after 1 April 2012 as disclosed in Note 4.3.The financial statements of the Group and of the Company have been preparedunder the historical cost convention, unless otherwise indicated in the summary ofsignificant accounting policies.The preparation of financial statements requires management to make judgements,estimates and assumptions that affect the application of accounting policies and thereported amounts of assets, liabilities, income and expenses. Actual results maydiffer from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate is revisedand in any future periods affected.In particular, information about significant areas of estimation uncertainty and criticaljudgement in applying accounting policies that have the most significant effect on theamount recognised in the financial statements are described in Note 4.6.Page 22

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies(a)Subsidiaries and basis of consolidation(i)SubsidiariesSubsidiaries are entities over which the Group has the ability to control thefinancial and operating policies so as to obtain benefits from their activities. Theexistence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the Group has such powerover another entity.In the Company’s separate financial statements, investments in subsidiariesare stated at cost less impairment losses. On disposal of such investments, thedifference between net disposal proceeds and their carrying amounts isrecognised in profit or loss.(ii)Basis of consolidationThe consolidated financial statements include the financial statements of theCompany and its subsidiaries made up to 31 December 2012.Subsidiaries are consolidated from the date on which control is transferred tothe Group up to the effective date on which control ceases, as appropriate.Intragroup transactions, balances, income and expenses are eliminated onconsolidation. Where necessary, adjustments are made to the financialstatements of subsidiaries to ensure consistency of accounting policies withthose of the Group.Non-controlling interests are presented within equity in the consolidatedstatement of financial position, separately from the equity attributable to ownersof the Company. Transactions with non-controlling interests are accounted foras transactions with owners and are recognised directly in equity. Profit or lossand each component of other comprehensive income are attributed to theowners of the parent and to the non-controlling interests. Total comprehensiveincome is attributed to non-controlling interests even if this results in the noncontrollinginterests having a deficit balance.At the end of each reporting period, the carrying amount of non-controllinginterests is the amount of those interests at initial recognition plus the noncontrollinginterests’ share of subsequent changes in equity.Page 23

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(a)Subsidiaries and basis of consolidation (cont’d)(ii) Basis of consolidation (cont’d)All changes in the parent’s ownership interest in a subsidiary that do not resultin a loss of control are accounted for as equity transactions. Any differencebetween the amount by which the non-controlling interest is adjusted and thefair value of consideration paid or received is recognised directly in equity andattributed to owners of the parent.Upon loss of control of a subsidiary, the profit or loss on disposal is calculatedas the difference between :(i)the aggregate of the fair value of the consideration received and the fairvalue of any retained interest in the former subsidiary ; and(ii) the previous carrying amount of the assets (including goodwill), andliabilities of the former subsidiary and any non-controlling interests.Amounts previously recognised in other comprehensive income in relation to theformer subsidiary are accounted for (i.e. reclassified to profit or loss ortransferred directly to retained profits) in the same manner as would be requiredif the relevant assets or liabilities were disposed of. The fair value of anyinvestments retained in the former subsidiary at the date when control is lost isregarded as the fair value on initial recognition for subsequent accounting underFRS 139 or, when applicable, the cost on initial recognition of an investment inan associate or a jointly controlled entity.Business combinations from 1 April 2011 onwardsAcquisitions of businesses are accounted for using the acquisition method.Under the acquisition method, the consideration transferred for acquisition of asubsidiary is the fair value of the assets transferred, liabilities incurred and theequity interests issued by the Group at the acquisition date. The considerationtransferred includes the fair value of any asset or liability resulting from acontingent consideration arrangement. Acquisition-related costs, other than thecosts to issue debt or equity securities, are recognised in profit or loss whenincurred.Page 24

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(a)Subsidiaries and basis of consolidation (cont’d)(ii) Basis of consolidation (cont’d)Business combinations from 1 April 2011 onwards (cont’d)In a business combination achieved in stages, previously held equity interests inthe acquiree are remeasured to fair value at the acquisition date and anycorresponding gain or loss is recognised in profit or loss.Non-controlling interests in the acquiree may be initially measured either at fairvalue or at the non-controlling interests’ proportionate share of the fair value ofthe acquiree’s identifiable net assets at the date of acquisition. The choice ofmeasurement basis is made on a transaction-by-transaction basis.The Group has applied the FRS 3 (Revised) in accounting for businesscombinations from 1 April 2011 onwards. The change in accounting policy hasbeen applied prospectively in accordance with the transitional provisionsprovided by the standard.Business combinations before 1 April 2011All subsidiaries are consolidated using the purchase method. At the date ofacquisition, the fair values of the subsidiaries’ net assets are determined andthese values are reflected in the consolidated financial statements. The cost ofacquisition is measured at the aggregate of the fair values, at the date ofexchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plusany costs directly attributable to the business combination.Non-controlling interests are initially measured at their share of the fair values ofthe identifiable assets and liabilities of the acquiree as at the date of acquisition.Page 25

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(b)GoodwillGoodwill is measured at cost less accumulated impairment losses, if any. Thecarrying amount of goodwill is reviewed for impairment annually. The impairmentvalue of goodwill is recognised immediately in profit or loss. An impairment lossrecognised for goodwill is not reversed in a subsequent period.Business combinations from 1 April 2011 onwardsUnder the acquisition method, any excess of the sum of the fair value of theconsideration transferred in the business combination, the amount of non-controllinginterests recognised and the fair value of the Group’s previously held equity interestin the acquiree (if any), over the net fair value of the acquiree’s identifiable assetsand liabilities at the date of acquisition is recorded as goodwill.Where the latter amount exceeds the former, after reassessment, the excessrepresents a bargain purchase gain and is recognised as a gain in profit or loss.Business combinations before 1 April 2011Under the purchase method, goodwill represents the excess of the fair value of thepurchase consideration over the Group’s share of the fair values of the identifiableassets, liabilities and contingent liabilities of the subsidiaries at the date ofacquisition.If, after reassessment, the Group’s interest in the fair values of the identifiable netassets of the subsidiaries exceeds the cost of the business combinations, the excessis recognised as income immediately in profit or loss.Page 26

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(c)Property, plant and equipment and depreciationItems of property, plant and equipment are stated at cost or valuation less anyaccumulated depreciation and any accumulated impairment losses.Cost includes expenditures that are directly attributable to the acquisition of the assetand any other costs directly attributable to bringing the asset to working condition forits intended use, and the costs of dismantling and removing the items and restoringthe site on which they are located. The cost of self-constructed assets also includesthe cost of materials and direct labour. Purchased software that is integral to thefunctionality of the related equipment is capitalised as part of that equipment.The cost of replacing part of an item of property, plant and equipment is recognisedin the carrying amount of the item, if it is probable that the future economic benefitsembodied within the part will flow to the Group and its cost can be measured reliably.The carrying amount of the replaced part is derecognised. The costs of the day-todayservicing of property, plant and equipment are recognised in profit or loss asincurred.When significant parts of an item of property, plant and equipment have differentuseful lives, they are accounted for as separate items (major components) ofproperty, plant and equipment.Freehold land, farm and poultry buildings are stated at cost or revalued amounts,being the fair value at the date of revaluation, less any subsequent accumulateddepreciation and subsequent accumulated impairment losses.For freehold land and factory buildings, revaluations are performed with sufficientregularity such that the carrying amount does not differ materially from that whichwould be determined using fair values at the reporting date.Surpluses arising on revaluation are recognised in other comprehensive income andaccumulated in equity under the revaluation reserve. Any deficit arising fromrevaluation is charged against the revaluation reserve to the extent of a previoussurplus held in the revaluation reserve for the same property, plant and equipment.In all other cases, a decrease in carrying amount is charged to profit or loss.Subsequent to revaluation, any addition is stated at cost whilst disposal is stated atcost or valuation as appropriate.Page 27

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(c)Property, plant and equipment and depreciation (cont’d)Freehold land is not depreciated whilst capital work-in-progress are not depreciateduntil they are completed and put into use. Leased assets are depreciated over theshorter of the lease term and their useful lives unless it is reasonably certain that theGroup will obtain ownership by the end of the lease term. Other property, plant andequipment are depreciated on a straight-line basis to write off the cost of each assetto its residual value over the estimated useful lives. Depreciation of an asset doesnot cease when the asset becomes idle or is retired from active use unless the assetis fully depreciated. The principal annual rates of depreciation used are as follows :Leasehold landOver the lease period(93 years)Farm and poultry buildings 2% - 20%Factory buildings 1% - 2%Plant and machinery 5% - 20%Fish pond and equipment 2% - 10%Egg layer conveyor and cages system 5%Motor vehicles, electrical installation, furniture, fittings,equipment, renovation and hostel 2% - 33.3%The residual values, useful lives and depreciation method are reviewed at the end ofeach reporting period to ensure that the amount, method and period of depreciationare consistent with previous estimates and the expected pattern of consumption ofthe future economic benefits embodied in the items of property, plant and equipment.The carrying amounts of property, plant and equipment are reviewed for impairmentwhen events or changes circumstances indicate that the carrying amounts may notbe recoverable. The policy for the recognition and measurement of impairmentlosses is in accordance with Note 4.2(f)(ii).An item of property, plant and equipment is derecognised upon disposal or when nofuture economic benefits are expected from its use. The difference between the netdisposal proceeds, if any, and the carrying amount is recognised in profit or loss andthe unutilised portion of the revaluation surplus on that item, if any, is transferreddirectly to retained profits.Page 28

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(d)Assets under hire purchaseAssets acquired under hire purchase are capitalised in the financial statements andare depreciated in accordance with the policy set out in Note 4.2(c) above. Each hirepurchase payment is allocated between the liability and finance charges so as toachieve a constant rate on the finance balance outstanding. Finance charges arerecognised in profit or loss over the period of the respective hire purchaseagreements.(e)Investment propertyInvestment property is property held either to earn rental income or for capitalappreciation or for both. Initially, investment property is measured at cost includingtransaction costs, less accumulated depreciation and impairment losses, consistentwith the accounting policy for property, plant and equipment.Investment property is derecognised when they have either disposed of or when theinvestment property is permanently withdrawn from use and no future economicbenefit is expected from its disposal. Any gains or losses on the retirement ordisposal of an investment property are recognised in profit or loss in the year inwhich they arise.The annual depreciation rate for building is 1.62% calculated on the straight-linebasis based on the remaining lease period.The residual values and depreciation method of investment property are reviewed atthe end of reporting period, with the effect of any changes in estimates accounted forprospectively.Page 29

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(f)Impairment(i)Impairment of financial assetsAll financial assets (other than those categorised at fair value through profit orloss), are assessed at the end of each reporting period whether there is anyobjective evidence of impairment as a result of one or more events having animpact on the estimated future cash flows of the asset.An impairment loss in respect of held-to-maturity investments and loans andreceivables financial assets is recognised in profit or loss and is measured asthe difference between the asset’s carrying amount and the present value ofestimated future cash flows, discounted at the financial asset’s original effectiveinterest rate.An impairment loss in respect of available-for-sale financial assets isrecognised in profit or loss and is measured as the difference between its cost(net of any principal payment and amortisation) and its current fair value, lessany impairment loss previously recognised in the fair value reserve. In addition,the cumulative loss recognised in other comprehensive income andaccumulated in equity under fair value reserve, is reclassified from equity toprofit or loss.With the exception of available-for-sale equity instruments, if, in a subsequentperiod, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised,the previously recognised impairment loss is reversed through profit or loss tothe extent that the carrying amount of the investment at the date theimpairment is reversed does not exceed what the amortised cost would havebeen had the impairment not been recognised. In respect of available-for-saleequity instruments, impairment losses previously recognised in profit or lossare not reversed through profit or loss. Any increase in fair value subsequent toan impairment loss made is recognised in other comprehensive income.For available-for-sale debt investments, impairment losses are subsequentlyreversed in profit or loss if an increase in the fair value of the investment can beobjectively related to an event occurring after the recognition of the impairmentloss in profit or loss.Page 30

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(f)Impairment (cont’d)(ii)Impairment of non-financial assetsThe carrying amounts of assets, other than those to which FRS 136 –Impairment of Assets does not apply, are reviewed at the end of each reportingperiod for impairment when there is an indication that the assets might beimpaired. Impairment is measured by comparing the carrying amounts of theassets with their recoverable amounts. The recoverable amount of the assets isthe higher of the assets’ fair value less costs to sell and their value-in-use,which is measured by reference to discounted future cash flow.An impairment loss is recognised in profit or loss immediately unless the assetis carried at its revalued amount. Any impairment loss of a revalued asset istreated as a revaluation decrease to the extent of a previously recognisedrevaluation surplus for the same asset.In respect of assets other than goodwill, and when there is a change in theestimates used to determine the recoverable amount, a subsequent increase inthe recoverable amount of an asset is treated as a reversal of the previousimpairment loss and is recognised to the extent of the carrying amount of theasset that would have been determined (net of amortisation and depreciation)had no impairment loss been recognised. The reversal is recognised in profit orloss immediately, unless the asset is carried at its revalued amount. A reversalof an impairment loss on a revalued asset is credited to other comprehensiveincome. However, to the extent that an impairment loss on the same revaluedasset was previously recognised as an expense in the statements ofcomprehensive income, a reversal of that impairment loss is recognised asincome in the statements of comprehensive income.Page 31

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(g)InventoriesInventories are stated at the lower of cost and net realisable value. Cost isdetermined on the weighted average or first-in-first-out bases, as applicable.Layer, pullet and fishes inventories are stated at cost (determined on “weightedaverage” method) adjusted for amortisation (calculated based on their economiclives less net realisable value). Costs of layer, pullet and fishes inventories comprisethe original purchase price plus growing cost, which include costs of raw materials,direct labour and a proportion of farm overheads.Costs of eggs include costs of raw materials, direct labour and an appropriateproportion of farm overheads. Costs of egg trays and work-in-progress comprise thecosts of raw materials, direct labour and a proportion of factory overheads.Costs of poultry feeds, trading merchandise, raw materials (determined on “first-infirst-out”method), consumable supplies and medication (determined on “weightedaverage” method), comprise the original purchase price plus the costs incurred inbringing the inventories to their present location and condition.Net realisable value represents the estimated selling price in the ordinary course ofbusiness less selling and distribution costs and all other estimated costs tocompletion.Where necessary, due allowance is made for all damaged, obsolete and slowmoving items. The Group writes down its obsolete or slow moving inventories basedon assessment of the condition and the future demand for the inventories. Theseinventories are written down when events or changes in circumstances indicate thatthe carrying amounts may not be recovered.The Group writes down its obsolete or slow moving inventories based onassessment of the condition and the future demand for the inventories. Theseinventories are written down when events or changes in circumstances indicate thatthe carrying amounts may not be recovered.Page 32

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(h)Financial instrumentsFinancial instruments are recognised in the statements of financial position when theGroup has become a party to the contractual provisions of the instruments.Financial instruments are classified as liabilities or equity in accordance with thesubstance of the contractual arrangement. Interest, dividends, gains and lossesrelating to a financial instrument classified as a liability, are reported as an expenseor income. Distributions to holders of financial instruments classified as equity arecharged directly to equity.Financial instruments are offset when the Group has a legally enforceable right tooffset and intends to settle either on a net basis or to realise the asset and settle theliability simultaneously.A financial instrument is recognised initially, at its fair value plus, in the case of afinancial instrument not at fair value through profit or loss, transaction costs that aredirectly attributable to the acquisition or issue of the financial instrument.Financial instruments recognised in the statements of financial position are disclosedin the individual policy statement associated with each item.(i)Financial assetsOn initial recognition, financial assets are classified as either financial assets atfair value through profit or loss, held-to-maturity investments, loans andreceivables financial assets, or available-for-sale financial assets, asappropriate.• Financial assets at fair value through profit or lossFinancial assets are classified as financial assets at fair value through profitor loss when the financial asset is either held for trading or is designated toeliminate or significantly reduce a measurement or recognition inconsistencythat would otherwise arise. Derivatives are also classified as held for tradingunless they are designated as hedges.Financial assets at fair value through profit or loss are stated at fair value,with any gains or losses arising on remeasurement recognised in profit orloss. Dividend income from this category of financial assets is recognised inprofit or loss when the Group’s right to receive payment is established.Page 33

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(h)Financial instruments (cont’d)(i)Financial assets (cont’d)• Held-to-maturity investmentsHeld-to-maturity investments are non-derivative financial assets with fixed ordeterminable payments and fixed maturities that the management has thepositive intention and ability to hold to maturity. Held-to-maturity investmentsare measured at amortised cost using the effective interest method less anyimpairment loss, with revenue recognised on an effective yield basis.• Loans and receivables financial assetsTrade receivables and other receivables that have fixed or determinablepayments that are not quoted in an active market are classified as loans andreceivables financial assets. Loans and receivables financial assets aremeasured at amortised cost using the effective interest method, less anyimpairment loss. Interest income is recognised by applying the effectiveinterest rate, except for short-term receivables when the recognition ofinterest would be immaterial.• Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that aredesignated in this category or are not classified in any of the othercategories.After initial recognition, available-for-sale financial assets are remeasured totheir fair values at the end of each reporting period. Gains and losses arisingfrom changes in fair value are recognised in other comprehensive incomeand accumulated in the fair value reserve, with the exception of impairmentlosses. On derecognition, the cumulative gain or loss previouslyaccumulated in the fair value reserve is reclassified from equity into profit orloss. Interest calculated for a debt instrument using the effective interestmethod is recognised in profit or loss.Dividends on available-for-sale equity instruments are recognised in profit orloss when the Group’s right to receive payments is established.Investments in equity instruments whose fair value cannot be reliablymeasured are measured at cost less accumulated impairment losses, if any.Page 34

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(h)Financial instruments (cont’d)(ii)Financial liabilitiesAll financial liabilities are initially at fair value plus directly attributabletransaction costs and subsequently measured at amortised cost using theeffective interest method other than those categorised as fair value throughprofit or loss.Fair value through profit or loss category comprises financial liabilities that areeither held for trading or are designated to eliminate or significantly reduce ameasurement or recognition inconsistency that would otherwise arise.Derivatives are also classified as held for trading unless they are designated ashedges.(iii) Equity instrumentsInstruments classified as equity are measured at cost and are not remeasuredsubsequently.Ordinary sharesIncremental costs directly attributable to the issue of new shares or options areshown in equity as a deduction, net of tax, from proceeds.Dividends on ordinary shares are recognised as liabilities when approved forappropriation.(iv) Financial guarantee contractsA financial guarantee contract is a contract that requires the issuer to makespecified payments to reimburse the holder for a loss it incurs because aspecific debtor fails to make payment when due.Financial guarantee contracts are recognised initially as liabilities at fair value,net of transaction costs. Subsequent to initial recognition, financial guaranteecontracts are recognised as income in profit or loss over the period of theguarantee or, when there is no specific contractual period, recognised in profitor loss upon discharge of the guarantee. If the debtor fails to make paymentrelating to a financial guarantee contract when it is due and the Company, asthe issuer, is required to reimburse the holder for the associated loss, theliability is measured at the higher of the best estimate of the expenditurerequired to settle the present obligation at the end of the reporting period andthe amount initially recognised less cumulative amortisation.Page 35

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(i)Borrowing costsBorrowing costs, directly attributable to the acquisition and construction of property,plant and equipment are capitalised as part of the cost of those assets, until suchtime as the assets are ready for their intended use or sale. Capitalisation ofborrowing costs is suspended during the extended periods in which activedevelopment is interrupted.All other borrowing costs are recognised in profit or loss as expenses in the period inwhich they incurred.(j)Income taxIncome tax for the year comprises current and deferred tax.Current tax is the expected amount of income taxes payable in respect of the taxableprofit for the year and is measured using the tax rates that have been enacted orsubstantively enacted at the end of the reporting period.Deferred tax is provided in full, using the liability method, on temporary differencesarising between the tax bases of assets and liabilities and their carrying amounts inthe financial statements.Deferred tax liabilities are recognised for all taxable temporary differences other thanthose that arise from goodwill or excess of the acquirer’s interest in the net fair valueof the acquiree’s identifiable assets, liabilities and contingent liabilities over thebusiness combination costs or from the initial recognition of an asset or liability in atransaction which is not a business combination and at the time of the transaction,affects neither accounting profit nor taxable profit.Deferred tax assets are recognised for all deductible temporary differences, unusedtax losses and unused tax credits to the extent that it is probable that future taxableprofits will be available against which the deductible temporary differences, unusedtax losses and unused tax credits can be utilised. The carrying amounts of deferredtax assets are reviewed at the end of each reporting period and reduced to theextent that it is no longer probable that sufficient future taxable profits will beavailable to allow all or part of the deferred tax assets to be utilised.Deferred tax assets and liabilities are measured at the tax rates that are expected toapply in the period when the asset is realised or the liability is settled, based on thetax rates that have been enacted or substantively enacted at the end of the reportingperiod.Page 36

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(j)Income tax (cont’d)Deferred tax assets and liabilities are offset when there is a legally enforceable rightto set off current tax assets against current tax liabilities and when the deferredincome taxes relate to the same taxation authority.Deferred tax relating to items recognised outside profit or loss is recognised outsideprofit or loss. Deferred tax items are recognised in correlation to the underlyingtransactions either in other comprehensive income or directly in equity and deferredtax arising from a business combination is included in the resulting goodwill orexcess of the acquirer’s interest in the net fair value of the acquiree’s identifiableassets, liabilities and contingent liabilities over the business combination costs.(k)Cash and cash equivalentsCash and cash equivalents comprise cash in hand, bank balances, demanddeposits, deposits pledged with financial institutions, bank overdrafts and short-term,highly liquid investments that are readily convertible to known amounts of cash andwhich are subject to an insignificant risk of changes in value.(l)Revenue recognitionRevenue is measured at the fair value of the consideration received or receivableand represents amounts receivable for goods and services provided in the normalcourse of business, net of returns and trade discounts after eliminating sales withinthe Group.(i)Sale of goodsRevenue is recognised when the following conditions are satisfied :• the Group has transferred to the buyer the significant risks and rewards ofownership of the goods ;• the Group retains neither continuing managerial involvement to the degreeusually associated with ownership nor effective control over the goods sold ;• the amount of revenue can be measured reliably ;• it is probable that the economic benefits associated with the transactions willflow to the entity ; and• the cost incurred or to be incurred in respect of the transaction can bemeasured reliably.Page 37

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(l)Revenue recognition (cont’d)(ii)Management fee incomeManagement fee income from subsidiaries is recognised on accrual basis uponservices rendered.(iii) Dividend incomeDividend income is recognised when the shareholder’s right to receive paymentis established.(iv) Interest incomeInterest income is recognised on a time proportion basis using the effectiveinterest method.(v)Rental incomeRental income is recognised on accrual basis unless collectability is in doubt, inwhich case the recognition of such income is suspended. Subsequent tosuspension, income is recognised on the receipt basis until all arrears havebeen paid.(m) Employee benefits(i)Short-term benefitsWages, salaries, paid annual leave, paid sick leave, bonuses, social securitycosts and non-monetary benefits are recognised as expenses in the profit orloss in the period in which the associated services are rendered by employeesof the Group.(ii)Defined contribution plansAs required by law, companies in Malaysia make contributions to the statepension scheme, the Employees Provident Fund (“EPF”). Some of the Group’sforeign subsidiaries make contributions to their respective countries’ statutorypension schemes. Such contributions are recognised as an expense in theprofit or loss in the period to which they relate. Once the contributions havebeen paid, the Group has no further liability in respect of the definedcontribution plans.Page 38

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(n)Related partiesA party is related to an entity (referred to as the ‘reporting entity’) if :(i)A person or a close member of that person’s family is related to a reportingentity if that person :(I) has control or joint control over the reporting entity ;(II)has significant influence over the reporting entity ; or(III) is a member of the key management personnel of the reporting entity or ofa parent of the reporting entity.(ii) An entity is related to a reporting entity if any of the following conditions applies :(I)(II)The entity and the reporting entity are members of the same group (whichmeans that each parent, subsidiary and fellow subsidiary is related to theothers).One entity is an associate or joint venture of the other entity (or anassociate or joint venture of a member of a group of which the other entityis a member).(III) Both entities are joint ventures of the same third party.(IV) One entity is a joint venture of a third entity and the other entity is anassociate of the third entity.(V)The entity is a post-employment benefit plan for the benefit of employees ofeither the reporting entity or an entity related to the reporting entity. If thereporting entity is itself such a plan, the sponsoring employers are alsorelated to the reporting entity.(VI) The entity is controlled or jointly controlled by a person identified in (i)above.(VII) A person identified in (i)(I) above has significant influence over the entity oris a member of the key management personnel of the entity (or a parent ofthe entity).Close members of the family of a person are those family members who may beexpected to influence, or be influenced by, that person in their dealings with theentity.Page 39

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(o)Functional and foreign currencies(i)Functional and presentation currencyThe individual financial statements of each entity in the Group are presented inthe currency of the primary economic environment in which the entity operates,which is the functional currency.The consolidated financial statements are presented in Ringgit Malaysia(“RM”), which is the Company’s functional and presentation currency.(ii)Transactions and balancesTransactions in foreign currencies are converted into the respective functionalcurrencies on initial recognition, using the exchange rates approximating thoseruling at the transaction dates. Monetary assets and liabilities at the end of thereporting period are translated at the rates ruling as of that date. Non-monetaryassets and liabilities are translated using exchange rates that existed when thevalues were determined. All exchange differences are recognised in profit orloss except for differences arising from the translation of available-for-saleequity instruments which are recognised in other comprehensive income.(iii) Foreign operationsAssets and liabilities of foreign operations are translated to RM at the rates ofexchange ruling at the end of the reporting period. Revenues and expenses offoreign operations are translated at exchange rates ruling at the dates of thetransactions. All exchange differences arising from translation are taken directlyto other comprehensive income and accumulated in equity under thetranslation reserve. On the disposal of a foreign operation, the cumulativeamount recognised in other comprehensive income relating to that particularforeign operation is reclassified from equity to profit or loss.Goodwill and fair value adjustments arising from the acquisition of foreignoperations are treated as assets and liabilities of the foreign operations and arerecorded in the functional currency of the foreign operations and translated atthe closing rate at the end of the reporting period.Page 40

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.2 Summary of Significant Accounting Policies (Cont’d)(p)Operating segmentsAn operating segment is a component of the Group that engages in businessactivities from which it may earn revenues and incur expenses, including revenuesand expenses that relate to transactions with any of the Group’s other components.An operating segment’s operating results are reviewed regularly by the chiefoperating decision maker to make decisions about resources to be allocated to thesegment and assess its performance, and for which discrete financial information isavailable.Page 41

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.3 During the current financial period, the Group has adopted the following new accountingstandards and interpretations (including the consequential amendments) :FRSs and IC Interpretations (including the Consequential Amendments)FRS 124 (Revised): Related party DisclosuresAmendments to FRS 1 : Severe Hyperinflation and Removal of Fixed Dates for(Revised)First-time AdoptersAmendments to FRS 7 : Disclosures – Transfers of Financial AssetsAmendments to FRS 101 : Presentation of Items of Other Comprehensive Income(Revised)Amendments to FRS 112 : Recovery of Underlying AssetsIC Interpretation 19Amendments toIC Interpretation 14: Extinguishing Financial Liabilities with Equity Instruments: Prepayments of a Minimum Funding RequirementThe adoption of the above accounting standards and interpretations (including theconsequential amendments) did not have any material impact on the Group’s financialstatements, other than the following :(a) FRS 124 (Revised) simplifies the definition of a related party and introduces a partialexemption from the disclosure requirements for government-related entities. Theapplication of this revised standard has resulted in the identification of related partiesthat were not identified as related parties under the previous standard. There will beno financial impact on the financial statements of the Group upon its initial applicationbut may impact its future disclosures.(b) The amendments to FRS 7 (Transfers of Financial Assets) intend to provide greatertransparency around risk exposures of transactions when a financial asset istransferred but the transferor retains some level of continuing exposure in the asset.The amendments also require disclosures where transfers of financial assets are notevenly distributed throughout the period. There will be no financial impact on thefinancial statements of the Group upon its initial application but may impact its futuredisclosures.Page 42

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.3 (CONT’D)(c) The Group has adopted in advance the amendments to FRS 101 : Presentation ofItems of Other Comprehensive Income which are originally effective for annualperiods beginning on or after 1 July 2012. The amendments require items presentedin other comprehensive income section to be grouped based on whether they arepotentially re-classifiable to profit or loss subsequently (i.e. those that might bereclassified and those that will not be reclassified). Income tax on items of othercomprehensive income is required to be allocated on the same basis. This earlyadoption has no financial impact on the financial statements other than the newpresentation format of the other comprehensive income section in the statements ofprofit or loss and other comprehensive income.Page 43

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.4 The Group has not applied in advance the following accounting standards andinterpretations (including the consequential amendments) that have been issued by theMalaysian Accounting Standards Board (“MASB”) but are not yet effective for the currentfinancial period :FRSs and IC Interpretations(including the Consequential Amendments)Effective dateFRS 9 : Financial Instruments 1 January 2015FRS 10 : Consolidated Financial Statements 1 January 2013FRS 11 : Joint Arrangements 1 January 2013FRS 12 : Disclosure of Interests in Other Entities 1 January 2013FRS 13 : Fair Value Measurement 1 January 2013FRS 119 (Revised) : Employee Benefits 1 January 2013FRS 127 (2011) : Separate Financial Statements 1 January 2013FRS 128 (2011) : Investments in Associates and Joint 1 January 2013VenturesAmendments to FRS 1 : Government Loans 1 January 2013(Revised)Amendments to FRS 7 : Disclosures – Offsetting Financial Assets 1 January 2013and Financial LiabilitiesAmendments to FRS 9 : Mandatory Effective Date of FRS 9 and 1 January 2015Transition DisclosuresAmendments to FRS 10, : Transition Guidance 1 January 2013FRS 11 and FRS 12Amendments to FRS 10, : Investment Entities 1 January 2014FRS 12 and FRS 127Amendments to FRS 132 : Offsetting Financial Assets and Financial 1 January 2014LiabilitiesAnnual Improvements to FRSs (2012) 1 January 2013IC Interpretation 20 : Stripping Costs in the Production Phase 1 January 2013of a Surface MinePage 44

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.4 The above accounting standards and interpretations (including the consequentialamendments) are not relevant to the Group’s operations except as follows :(a) FRS 9 replaces the parts of FRS 139 that relate to the classification andmeasurement of financial instruments. FRS 9 divides all financial assets into 2categories – those measured at amortised cost and those measured at fair value,based on the entity’s business model for managing its financial assets and thecontractual cash flow characteristics of the instruments. For financial liabilities, thestandard retains most of the FRS 139 requirement. An entity choosing to measure afinancial liability at fair value will present the portion of the change in its fair value dueto changes in the entity’s own credit risk in other comprehensive income rather thanwithin profit or loss. Accordingly, there will be no financial impact on the financialstatements of the Group upon its initial application but may impact its futuredisclosures.(b) FRS 10 replaces the consolidation guidance in FRS 127 and IC Interpretation 112.Under FRS 10, there is only one basis for consolidation, which is control. Extensiveguidance has been provided in the standard to assist in the determination of control.Accordingly, there will be no material financial impact on the financial statements ofthe Group upon its initial application but may impact its future disclosures.(c) FRS 12 is applicable to entities that have interests in subsidiaries, joint arrangements,associates and/or unconsolidated structured entities. FRS 12 is a disclosure standardand the disclosure requirements in this standard are more extensive than those in thecurrent standards. Accordingly, there will be no financial impact on the financialstatements of the Group upon its initial application but may impact its futuredisclosures.(d) FRS 13 defines fair value, provides guidance on how to determine fair value andrequires disclosures about fair value measurements. The scope of FRS 13 is broad; itapplies to both financial instrument items and non-financial instrument items for whichother FRSs require or permit fair value measurements and disclosures about fairvalue measurements, except in specified circumstances. In general, the disclosurerequirements in FRS 13 are more extensive than those required in the currentstandards and therefore there will be no financial impact on the financial statementsof the Group upon its initial application but may impact its future disclosures.Page 45

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.5 Malaysian Financial Reporting Standards (MFRSs)On 19 November 2011, MASB issued a new MASB approved accounting framework, theMalaysian Financial Reporting Standards (“MFRSs”) that are equivalent to InternationalFinancial Reporting Standards.The MFRSs are to be applied by all Entities Other Than Private Entities for annual periodsbeginning on or after 1 January 2012, with the exception of entities that are within thescope of MFRS 141 (Agriculture) and IC Interpretation 15 (Agreements for Construction ofReal Estate), including its parent, significant investor and venturer (herein called“Transitioning Entities”).On 30 June 2012, MASB announced that the Transitioning Entities are allowed to deferthe adoption of the MFRSs to annual periods beginning on or after 1 January 2014 afterwhich the MFRSs will become mandatory. The Group falls within the definition ofTransitioning Entities and has opted to prepare its first MFRSs financial statements for thefinancial year ending 31 December 2014.In representing its first MFRSs financial statements, the Group will quantify the financialeffects of the differences between the current FRSs and MFRSs. The Group hascommenced transitioning its accounting policies and financial reporting from the currentFRSs to MFRSs. However, the Group has not completed its quantification of the financialeffects of the differences between FRSs and MFRSs due to the ongoing assessment bythe management. The majority of the adjustments required on transition will be made,retrospectively, against opening retained profits.The Group expects to be in a position to fully comply with the requirements of MFRSs forthe financial year ending 31 December 2014.Page 46

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.6 Critical Accounting Estimates and JudgementsEstimates and judgements are continually evaluated by the directors and managementand are based on historical experience and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances. The estimates andjudgements that affect the application of the Group’s accounting policies and disclosures,and have a significant risk of causing a material adjustment to the carrying amounts ofassets, liabilities, income and expenses are discussed below :(a)Depreciation of property, plant and equipmentThe estimates for the residual values, useful lives and related depreciation chargesfor the property, plant and equipment are based on commercial factors which couldchange significantly as a result of technical innovations and competitors’ actions inresponse to the market conditions.The Group anticipates that the residual values of its property, plant and equipmentwill be insignificant. As a result, residual values are not being taken intoconsideration for the computation of the depreciable amount.Changes in the expected level of usage and technological development could impactthe economic useful lives and the residual values of these assets, therefore futuredepreciation charges could be revised.(b)Income taxThere are certain transactions and computations for which the ultimate taxdetermination may be different from the initial estimate. The Group recognises taxliabilities based on its understanding of the prevailing tax laws and estimates ofwhether such taxes will be due in the ordinary course of business. Where the finaltax outcome of these matters is different from the amounts that were initiallyrecognised, such difference will impact the income tax and deferred tax provisions, inthe year in which such determination is made.(c)Impairment of non-financial assetsWhen the recoverable amount of an asset is determined based on the estimate ofthe value-in-use of the cash-generating unit to which the asset is allocated, themanagement is required to make an estimate of the expected future cash flows fromthe cash-generating unit and also to apply a suitable discount rate in order todetermine the present value of those cash flows.Page 47

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.6 Critical Accounting Estimates and Judgements (Cont’d)(d)Write-down of inventories – Non-livestocksReviews are made periodically by management on damaged, obsolete and slowmoving inventories. These reviews require judgement and estimates. Possiblechanges in these estimates could result in revisions to the valuation of inventories.(e)Classification between investment property and owner-occupied propertiesThe Group determines whether a property qualifies as an investment property, andhas developed a criteria in making that judgement. Investment property is a propertyheld to earn rentals or for capital appreciation or both. Therefore, the Groupconsiders whether a property generates cash flows largely independent of the otherassets held by the Group.Some properties comprise a portion that is held to earn rentals or for capitalappreciation and another portion that is held for use in the production or supply ofgoods or services or for administrative purposes. If these portions could be soldseparately (or leased out separately under a finance lease), the Group accounts forthe portions separately. If the portions could not be sold separately, the property isan investment property only if an insignificant portion is held for use in the productionor supply of goods or services or for administrative purposes.Judgement is made on an individual property basis to determine whether ancillaryservices are so significant that a property does not qualify as investment property.(f)Impairment of trade and other receivablesAn impairment loss is recognised when there is objective evidence that a financialasset is impaired. Management specifically reviews its loans and receivablesfinancial assets and analyses historical bad debts, customer concentrations,customer creditworthiness, current economic trends and changes in the customerpayment terms when making a judgement to evaluate the adequacy of the allowancefor impairment losses. Where there is objective evidence of impairment, the amountand timing of future cash flows are estimated based on historical loss experience forassets with similar credit risk characteristics. If the expectation is different from theestimation, such difference will impact the carrying amount of receivables.Page 48

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20124. ACCOUNTING POLICIES AND STANDARDS (CONT’D)4.6 Critical Accounting Estimates and Judgements (Cont’d)(g)Revaluation of propertiesCertain properties of the Group are reported at valuation which is based onvaluations performed by independent professional valuers.The independent professional valuers have exercised judgement in determiningdiscount rates, estimates of future cash flows, capitalisation rate, terminal year value,market freehold rental and other factors used in the valuation process. Also,judgement has been applied in estimating prices for less readily observable externalparameters. Other factors such as model assumptions, market dislocations andunexpected correlations can also materially affect these estimates and the resultingvaluation estimates.(h)Impairment of available-for-sale financial assetsThe Group reviews its available-for-sale financial assets at the end of each reportingperiod to assess whether they are impaired. The Group also records impairment losson available-for-sale equity investments when there has been a significant orprolonged decline in the fair value below their cost. The determination of what is“significant” or “prolonged” requires judgement. In making this judgement, the Groupevaluates, among other factors, historical share price movements and the durationand extent to which the fair value of an investment is less than its cost.(i)Fair value estimates for certain financial assets and liabilitiesThe Group carries certain financial assets and liabilities at fair value, which requiresextensive use of accounting estimates and judgement. While significant componentsof fair value measurement were determined using verifiable objective evidence, theamount of changes in fair value would differ if the Group uses different valuationmethodologies. Any changes in fair value of these assets and liabilities would affectprofit and/or equity.Page 49

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENTGroup - At 31 December 2012Motor vehicles,electricalinstallation,furniture, fittings,* Freehold land, * Leasehold land, Egg layer equipment,farm and freehold land and Plant and Fish pond and conveyor and renovation Capitalpoultry buildings factory buildings machinery equipment cages system and hostel work-in-progress TotalRM RM RM RM RM RM RM RMAt cost / valuationAt 1 April 2012 71,702,766 14,577,107 41,195,442 425,611 33,076,082 28,676,587 1,595,261 191,248,856Additions 3,814,459 - 1,244,576 407 2,835,264 2,449,704 5,106,568 15,450,978Disposals (1,043,627) - (4,500) - - (361,728) - (1,409,855)Write off - - - - (1,648,994) (31,237) - (1,680,231)Acquisition of subsidiary 604,400 - - - - - - 604,400Reclassification 587,299 - 921,538 229,000 1,775,691 54,785 (3,568,313) -Foreign exchange difference - - - - - 35,851 - 35,851At 31 December 2012 75,665,297 14,577,107 43,357,056 655,018 36,038,043 30,823,962 3,133,516 204,249,999Representing :At valuation - 10,512,166 - - - - - 10,512,166At cost 75,665,297 4,064,941 43,357,056 655,018 36,038,043 30,823,962 3,133,516 193,737,83375,665,297 14,577,107 43,357,056 655,018 36,038,043 30,823,962 3,133,516 204,249,999Less : Accumulated depreciationAt 1 April 2012 19,788,008 478,438 19,412,069 - 10,924,383 15,464,913 - 66,067,811Charge for the financial period 1,776,038 130,287 1,940,084 35,059 1,311,156 2,535,423 - 7,728,047Disposals - - (3,338) - - (195,796) - (199,134)Write off - - - - (1,353,226) (11,292) - (1,364,518)Foreign exchange difference - - - - - 11,303 - 11,303At 31 December 2012 21,564,046 608,725 21,348,815 35,059 10,882,313 17,804,551 - 72,243,509Representing :At valuation - 405,042 - - - - - 405,042At cost 21,564,046 203,683 21,348,815 35,059 10,882,313 17,804,551 - 71,838,46721,564,046 608,725 21,348,815 35,059 10,882,313 17,804,551 - 72,243,509Page 50

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Group - At 31 December 2012 (cont'd)Motor vehicles,electricalinstallation,furniture, fittings,* Freehold land, * Leasehold land, Egg layer equipment,farm and freehold land and Plant and Fish pond and conveyor and renovation Capitalpoultry buildings factory buildings machinery equipment cages system and hostel work-in-progress TotalRM RM RM RM RM RM RM RMCarrying amountAt 31 December 2012 54,101,251 13,968,382 22,008,241 619,959 25,155,730 13,019,411 3,133,516 132,006,490Representing :At valuation - 10,107,124 - - - - - 10,107,124At cost 54,101,251 3,861,258 22,008,241 619,959 25,155,730 13,019,411 3,133,516 121,899,36654,101,251 13,968,382 22,008,241 619,959 25,155,730 13,019,411 3,133,516 132,006,490Page 51

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)* The freehold land, leasehold land, farm and poultry buildings and factory buildings of theGroup consists of :Freehold land, farm and poultry buildingsLeasehold land, freehold land and factory buildingsFarm andFreehold poultry Freehold Leasehold Factoryland buildings Total land land buildings TotalRM RM RM RM RM RM RMAt cost / valuationAt 1 April 2012 17,642,539 54,060,227 71,702,766 4,548,130 1,878,243 8,150,734 14,577,107Additions 2,953,908 860,551 3,814,459 - - - -Disposals (1,043,627) - (1,043,627) - - - -Acquisition of subsidiary 604,400 - 604,400 - - - -Reclassification - 587,299 587,299 - - - -At 31 December 2012 20,157,220 55,508,077 75,665,297 4,548,130 1,878,243 8,150,734 14,577,107Representing :At valuation - - - 4,343,530 - 6,168,636 10,512,166At cost 20,157,220 55,508,077 75,665,297 204,600 1,878,243 1,982,098 4,064,94120,157,220 55,508,077 75,665,297 4,548,130 1,878,243 8,150,734 14,577,107Less : AccumulateddepreciationAt 1 April 2012 - 19,788,008 19,788,008 - 66,653 411,785 478,438Charge for the financialperiod - 1,776,038 1,776,038 - 15,381 114,906 130,287At 31 December 2012 - 21,564,046 21,564,046 - 82,034 526,691 608,725Representing :At valuation - - - - - 405,042 405,042At cost - 21,564,046 21,564,046 - 82,034 121,649 203,683- 21,564,046 21,564,046 - 82,034 526,691 608,725Carrying amountAt 31 December 2012 20,157,220 33,944,031 54,101,251 4,548,130 1,796,209 7,624,043 13,968,382Representing :At valuation - - - 4,343,530 - 5,763,594 10,107,124At cost 20,157,220 33,944,031 54,101,251 204,600 1,796,209 1,860,449 3,861,25820,157,220 33,944,031 54,101,251 4,548,130 1,796,209 7,624,043 13,968,382Page 52

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Group - At 31 March 2012Motor vehicles,electricalinstallation,furniture, fittings,* Freehold land, * Leasehold land, Egg layer equipment,farm and freehold land and Plant and Fish pond and conveyor and renovation Capitalpoultry buildings factory buildings machinery equipment cages system and hostel work-in-progress TotalRM RM RM RM RM RM RM RMAt cost / valuationAt 1 April 2011 62,647,601 13,446,482 32,295,751 - 28,869,268 22,718,739 2,289,161 162,267,002Additions 3,671,080 - 775,389 113,286 4,165,371 5,198,852 15,226,062 29,150,040Disposals (638,175) - - - - (541,007) - (1,179,182)Write off - - - - (1,061,957) (187,687) - (1,249,644)Acquisition of subsidiaries - 1,130,625 340,360 - - 778,647 - 2,249,632Reclassification 6,022,260 - 7,783,942 312,325 1,103,400 698,035 (15,919,962) -Foreign exchange difference - - - - - 11,008 - 11,008At 31 March 2012 71,702,766 14,577,107 41,195,442 425,611 33,076,082 28,676,587 1,595,261 191,248,856Representing :At valuation - 10,512,166 - - - - - 10,512,166At cost 71,702,766 4,064,941 41,195,442 425,611 33,076,082 28,676,587 1,595,261 180,736,69071,702,766 14,577,107 41,195,442 425,611 33,076,082 28,676,587 1,595,261 191,248,856Less : Accumulated depreciationAt 1 April 2011 17,580,286 284,630 17,067,022 - 10,395,782 12,776,738 - 58,104,458Charge for the financial year 2,208,343 172,329 2,195,898 - 1,549,756 2,916,956 - 9,043,282Disposals - - - - - (408,641) - (408,641)Write off - - - - (1,021,155) (150,223) - (1,171,378)Acquisition of subsidiaries - 21,479 127,979 - - 346,924 - 496,382Reclassification (621) - 21,170 - - (20,549) - -Foreign exchange difference - - - - - 3,708 - 3,708At 31 March 2012 19,788,008 478,438 19,412,069 - 10,924,383 15,464,913 - 66,067,811Representing :At valuation - 325,650 - - - - - 325,650At cost 19,788,008 152,788 19,412,069 - 10,924,383 15,464,913 - 65,742,16119,788,008 478,438 19,412,069 - 10,924,383 15,464,913 - 66,067,811Page 53

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Group - At 31 March 2012 (cont'd)Motor vehicles,electricalinstallation,furniture, fittings,* Freehold land, * Leasehold land, Egg layer equipment,farm and freehold land and Plant and Fish pond and conveyor and renovation Capitalpoultry buildings factory buildings machinery equipment cages system and hostel work-in-progress TotalRM RM RM RM RM RM RM RMCarrying amountAt 31 March 2012 51,914,758 14,098,669 21,783,373 425,611 22,151,699 13,211,674 1,595,261 125,181,045Representing :At valuation - 10,186,516 - - - - - 10,186,516At cost 51,914,758 3,912,153 21,783,373 425,611 22,151,699 13,211,674 1,595,261 114,994,52951,914,758 14,098,669 21,783,373 425,611 22,151,699 13,211,674 1,595,261 125,181,045Page 54

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)* The freehold land, leasehold land, farm and poultry buildings and factory buildings of theGroup consists of :Freehold land, farm and poultry buildingsLeasehold land, freehold land and factory buildingsFarm andFreehold poultry Freehold Leasehold Factoryland buildings Total land land buildings TotalRM RM RM RM RM RM RMAt cost / valuationAt 1 April 2011 15,712,992 46,934,609 62,647,601 4,343,530 1,878,243 7,224,709 13,446,482Additions 2,567,722 1,103,358 3,671,080 - - - -Disposals (638,175) - (638,175) - - - -Acquisition of subsidiaries - - - 204,600 - 926,025 1,130,625Reclassification - 6,022,260 6,022,260 - - - -At 31 March 2012 17,642,539 54,060,227 71,702,766 4,548,130 1,878,243 8,150,734 14,577,107Representing :At valuation - - - 4,343,530 - 6,168,636 10,512,166At cost 17,642,539 54,060,227 71,702,766 204,600 1,878,243 1,982,098 4,064,94117,642,539 54,060,227 71,702,766 4,548,130 1,878,243 8,150,734 14,577,107Less : AccumulateddepreciationAt 1 April 2011 - 17,580,286 17,580,286 - 45,997 238,633 284,630Charge for the financialyear - 2,208,343 2,208,343 - 20,656 151,673 172,329Acquisition of subsidiaries - - - - - 21,479 21,479Reclassification - (621) (621) - - - -At 31 March 2012 - 19,788,008 19,788,008 - 66,653 411,785 478,438Representing :At valuation - - - - - 325,650 325,650At cost - 19,788,008 19,788,008 - 66,653 86,135 152,788- 19,788,008 19,788,008 - 66,653 411,785 478,438Carrying amountAt 31 March 2012 17,642,539 34,272,219 51,914,758 4,548,130 1,811,590 7,738,949 14,098,669Representing :At valuation - - - 4,343,530 - 5,842,986 10,186,516At cost 17,642,539 34,272,219 51,914,758 204,600 1,811,590 1,895,963 3,912,15317,642,539 34,272,219 51,914,758 4,548,130 1,811,590 7,738,949 14,098,669Page 55

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)Company - At 31 December 2012Office Capitalequipment work-in-progress TotalRM RM RMAt costAt 1 April 2012 819,833 - 819,833Additions 87,123 90,770 177,893At 31 December 2012 906,956 90,770 997,726Less : Accumulated depreciationAt 1 April 2012 80,801 - 80,801Charge for the financial period 58,844 - 58,844At 31 December 2012 139,645 - 139,645Carrying amountAt 31 December 2012 767,311 90,770 858,081Company - At 31 March 2012Office Capitalequipment work-in-progress TotalRM RM RMAt costAt 1 April 2011 - 662,412 662,412Additions 157,421 - 157,421Reclassification 662,412 (662,412) -At 31 March 2012 819,833 - 819,833Less : Accumulated depreciationAt 1 April 2011 - - -Charge for the financial year 80,801 - 80,801At 31 March 2012 80,801 - 80,801Carrying amountAt 31 March 2012 739,032 - 739,032Page 56

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)(a) The freehold land and factory buildings of certain subsidiaries were last revalued by thedirectors on 31 March 2009 based on a valuation carried out by an independent firm ofprofessional valuers. The valuation was based on market value using comparison and costmethods of valuation.(b) Had the Group’s revalued property, plant and equipment been carried under the costmodel, the carrying amount would have been as follows :Group31 December 31 March2012 2012RMRMCarrying AmountFreehold land 1,483,205 1,483,205Factory buildings 4,275,307 4,331,6525,758,512 5,814,857(c) Certain property, plant and equipment of certain subsidiaries with carrying amount ofRM 5,428,885 (31 March 2012 : RM 9,254,323) are charged against banking facilities (Note15(a)).(d) The following property, plant and equipment are subject to hire purchase instalment plans(Note 16) :Group31 December 31 March2012 2012RMRMCarrying AmountPlant and machinery 7,992,119 8,134,335Egg layer conveyor and cages system 13,894,416 11,845,500Motor vehicles 4,806,563 5,047,186Capital work-in-progress 612,990 319,56427,306,088 25,346,585These leased assets have been pledged as security for the related finance lease liabilitiesof the Group.(e) Motor vehicles with carrying amount of RM 21,401 (31 March 2012 : RM 162,942) are heldin trust and registered under third party’s name.Page 57

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20125. PROPERTY, PLANT AND EQUIPMENT (CONT’D)(f) Purchase of property, plant and equipment are as follows :GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMAggregate cost of property, plantand equipment acquired 15,450,978 29,150,040 177,893 157,421Finance via hire purchase (6,212,990) (12,441,345) - -Unpaid balance included undersundry payables (Note 18(d)) (1,211,602) (1,729,064) (38,746) -Cash paid in respect of acquisitionin previous financial year 1,726,064 1,289,501 - -Cash paid during the financialperiod/year 9,752,450 16,269,132 139,147 157,4216. INVESTMENT PROPERTYGroup31 December 31 March2012 2012RMRMAt CostAt 1 April 480,000 480,000At 31 December / March 480,000 480,000Less : Accumulated DepreciationAt 1 April 11,664 3,888Charge for the financial period/year 5,806 7,776At 31 December / March 17,470 11,664Carrying Amount 462,530 468,336Included in the above is :Leasehold shophouse 462,530 468,336Page 58

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20127. INVESTMENTS IN SUBSIDIARIESCompany31 December 31 March2012 2012RMRMUnquoted shares, at cost- in Malaysia 67,934,602 67,558,402- outside Malaysia 240,005 240,00568,174,607 67,798,407The details of the subsidiaries are shown as below :Country ofPercentage ofName of company incorporation Principal activities ownership31 December 31 March2012 2012Direct subsidiaries :Teo Seng Farming Malaysia Investment holding and poultry 100% 100%Sdn. Bhd.farming.Teo Seng Feedmill Malaysia Manufacturing and marketing 100% 100%Sdn. Bhd.of animal feeds.Success Century Sdn. Bhd. Malaysia Poultry farming. 100% 100%Ritma Prestasi Sdn. Bhd. Malaysia Distribution of pet food, 100% 100%medicine and other animalhealth related products.Teo Seng Paper Products Malaysia Manufacturing and marketing 100% 100%Sdn. Bhd.of egg trays.Liberal Energy Sdn. Bhd. Malaysia General trading and generation 100% 100%of energy by establishment ofbio gas plants.Pioneer Prosperity Malaysia Dormant. 100% -Sdn. Bhd.* Premium Egg Products Singapore Wholesaler, importers, exporters 100% 100%Pte. Ltd.of daily products.* Audited by other firms of chartered accountants.Page 59

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20127. INVESTMENTS IN SUBSIDIARIES (CONT’D)Country ofPercentage ofName of company incorporation Principal activities ownership31 December 31 March2012 2012Indirect subsidiaries :Forever Best Supply Malaysia To carry on business in organic 60% 60%Sdn. Bhd.fertiliser, allied products of fertiliser,products of fertiliser of chemicalprocessing and transportation.Laskar Fertiliser Malaysia Dealing in fertiliser, conduct 100% 100%Sdn. Bhd.research on the fertilisers andagricultural business process andto carry on the business of processingof value added products and farmproduces.B-Tech Aquaculture Malaysia General trading and aquaculture, 100% 100%Sdn. Bhd.livestock and poultry activities.(a) On 14 May 2012, the Company entered into a Share Sale Agreement with Mr. Ng ChengNam and certain directors of the Company and/or its subsidiaries, namely Mr. Na HapCheng, Mr. Nam Yok San, Mr. Na Yok Chee, Mr. Nam Hiok Yong, Mr. Lim Meng Bin, Mr.Ng Eng Leng and Mr. Loh Wee Cheng to acquire the entire equity interest, comprising95,000 ordinary shares of RM 1.00 each in Pioneer Prosperity Sdn. Bhd. (“Pioneer”) for atotal cash consideration of RM 376,200 (“Acquisition”).The Acquisition was completed on 12 July 2012. Upon the completion of the Acquisition,Pioneer became a wholly-owned subsidiary of the Company.(b) On 26 April 2012, Teo Seng Feedmill Sdn. Bhd. (“TSFM”), a wholly-owned subsidiary of theCompany, disposed of 100% equity interest in Laskar Fertiliser Sdn. Bhd. (“Laskar”) toForever Best Supply Sdn. Bhd. (“Forever”), a 60% owned indirect subsidiary of theCompany for a total cash consideration of RM 2. As such, Laskar became a 60% ownedindirect subsidiary of the Company.On 2 May 2012, Forever subscribed 99,998 new ordinary shares of RM 1.00 each inLaskar at par for cash.On 27 November 2012, Forever disposed of 100% equity interest in Laskar to Teo SengFarming Sdn. Bhd., a wholly-owned subsidiary of the Company for a total cashconsideration of RM 100,000. As such, Laskar became a wholly-owned indirect subsidiaryof the Company.Page 60

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 20128. OTHER INVESTMENTGroup31 December 31 March2012 2012RMRMQuoted shares in Malaysia - at fair value 5,390 6,040Market value of quoted shares 5,390 6,040Investment in quoted shares of the Group is designated as available-for-sale financial assetsand is measured at fair value.9. GOODWILL ON CONSOLIDATIONGroup31 December 31 March2012 2012RMRMGoodwill arising from acquisition of subsidiaries 288,215 627,279Write-off (288,215) (627,279)At 31 December / March - -10. TRADE AND OTHER RECEIVABLESGroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMNON-CURRENTLong Term ReceivablesAmount due from subsidiaries - - 3,662,545 -Page 61

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201210. TRADE AND OTHER RECEIVABLES (CONT’D)GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMCURRENTTrade ReceivablesAmount due from relatedcompanies 2,893,085 2,227,374 - -Amount due from relatedparties 972,703 3,004,101 - -Other trade receivables 24,173,644 19,525,680 - -28,039,432 24,757,155 - -Less : Allowance forimpairment losses (473,710) (648,173) - -27,565,722 24,108,982 - -Other ReceivablesAmount due from subsidiaries - - 793,808 4,827,451Amount due from relatedcompany 653 - - -Deposits 2,395,402 2,411,975 - -Prepayments 1,237,686 1,283,641 8,517 3,267Tax recoverable 4,385,403 2,418,938 515,267 543,617Sundry receivables 220,877 1,291,037 5,552 -8,240,021 7,405,591 1,323,144 5,374,33535,805,743 31,514,573 1,323,144 5,374,335Allowance for impairment losses :At 1 April (648,173) (680,895) - -Acquisition of subsidiaries - (35,960) - -Additions during the financialperiod/year (247,027) (214,682) - -Write off - 120,697 - -Reversal of allowances no longerrequired 421,490 162,667 - -At 31 December / March (473,710) (648,173) - -Page 62

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201210. TRADE AND OTHER RECEIVABLES (CONT’D)(a) The Group’s normal trade terms range from cash term to 150 days (31 March 2012 : cashterm to 150 days) from the date of invoices. Other credit terms are assessed and approvedon a case-by-case basis.(b) The non-trade amounts due from subsidiaries and related company are unsecured, interestfree and repayable on demand except for the advances of RM 760,808 (31 March 2012 :RM 2,149,718) which bear interest at 3.3% (31 March 2012 : 3.4%) per annum at the endof the reporting period.11. INVENTORIESGroup31 December 31 March2012 2012RMRMAt CostLayers 18,040,836 15,377,944Pullets 6,085,890 5,210,632Fishes 46,271 19,003Raw materials 6,668,081 5,139,587Trading merchandise 7,130,077 6,149,783Poultry feeds 768,215 747,931Egg trays 459,639 326,053Eggs 1,252,585 700,972Medication 599,473 533,672Consumable supplies 485,311 419,907Work-in-progress - 123,44141,536,378 34,748,925Less : Allowance for slow moving inventories (44,371) (28,895)41,492,007 34,720,030None of the inventories is carried at net realisable value.Page 63

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201212. DEPOSITS, BANK AND CASH BALANCESGroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMBank and cash balances 16,801,816 19,769,355 176,586 366,264Fixed deposits placed withlicensed banks 1,055,328 1,357,196 - -17,857,144 21,126,551 176,586 366,264(a) Included in bank balances is an amount of RM 1,320,907 (31 March 2012 : RM 1,343,988)which is held in trust and registered under the name of certain directors.(b) Fixed deposits placed with licensed banks of RM 118,350 (31 March 2012 : RM 118,350) isheld in trust and registered under the name of directors.(c) The average effective interest rate and maturity period of fixed deposits placed withlicensed banks of the Group at the end of the reporting period are 2.8% per annum (31March 2012 : 2.7% per annum) and 30 to 365 days (31 March 2012 : 30 to 365 days)respectively.(d) Fixed deposits placed with licensed banks of the Group of RM 936,978 (31 March 2012 :RM 1,238,846) are pledged against banking facilities (Note 15(a)).13. SHARE CAPITALGroup And Company31 December 2012 31 March 2012Number ofNumber ofshares RM shares RMAuthorised :Ordinary shares of RM 0.20each 250,000,000 50,000,000 250,000,000 50,000,000Issued and fully paid :Ordinary shares of RM 0.20each 200,000,000 40,000,000 200,000,000 40,000,000Page 64

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201214. RESERVESGroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMNon-DistributableFair value reserve 2,366 3,016 - -Foreign exchange translationreserve (100,557) (33,020) - -Revaluation reserve 4,031,856 4,031,856 - -Reverse acquisition reserve (26,078,000) (26,078,000) - -Share premium 8,010,827 8,010,827 8,010,827 8,010,827(14,133,508) (14,065,321) 8,010,827 8,010,827DistributableRetained profits 85,341,150 88,067,906 14,820,038 15,794,42971,207,642 74,002,585 22,830,865 23,805,256(a) Fair value reserveThe fair value reserve represents the cumulative fair value changes (net of tax, whereapplicable) of available-for-sale financial assets until they are disposed of or impaired.(b) Foreign exchange translation reserveThe foreign exchange translation reserve arose from the translation of the financialstatements of foreign subsidiary and is not distributable by way of dividends.(c) Revaluation reserveThe revaluation reserve represent the surpluses arising from the revaluation of certainproperty, plant and equipment, net of deferred tax effect.(d) Share premiumShare premium arose from allotment of ordinary shares at premium net of share issueexpenses.Page 65

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201214. RESERVES (CONT’D)(e) Retained profitsRetained profits are those available for distribution by way of dividends.Finance Act 2007 (Act 683) introduced a single tier company income tax system with effectfrom the Year of Assessment 2008. Under this system, tax on a company’s profit is a finaltax, and dividends paid are exempted from tax in the hands of the shareholders. Unlike theprevious imputation system, the recipient of the dividend would no longer be able to claimany tax credit.Companies without Section 108 tax credit balance will automatically move to a single tiertax system on 1 January 2008.15. BANK BORROWINGSGroup31 December 31 March2012 2012RMRMCurrentSecured - Bank overdrafts 610,588 546,934- Bankers' acceptances 6,471,000 9,500,000- Term loans 756,858 839,221Unsecured - Bankers' acceptances 54,727,000 37,524,000- Revolving credit 5,000,000 -67,565,446 48,410,155Non-currentSecured - Term loans 2,663,865 3,454,27470,229,311 51,864,429Total Bank BorrowingsSecured - Bank overdrafts 610,588 546,934- Bankers' acceptances 6,471,000 9,500,000- Term loans 3,420,723 4,293,495Unsecured - Bankers' acceptances 54,727,000 37,524,000- Revolving credit 5,000,000 -70,229,311 51,864,429Page 66

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201215. BANK BORROWINGS (CONT’D)(a) The secured bank borrowings of the Group are secured by the following :(i) Certain property, plant and equipment of certain subsidiaries (Note 5(c)) ;(ii) Fixed deposits placed with licensed banks of certain subsidiaries (Note 12(d)) ;(iii) Negative pledge on a subsidiary’s assets ;(iv) Guarantee provided by the intermediate holding company and the Company ; and(v) Joint and several guarantee provided by a director of a subsidiary and third party.(b) The unsecured bank borrowings of the Group are as follows :(i) Guaranteed by the intermediate holding company and the Company ; and(ii) Negative pledge on subsidiaries assets.(c) The average effective interest rate (% per annum) at the end of the reporting period forbank borrowings were as follows :Group31 December 31 March2012 2012% %Bank overdrafts 8.3 8.3Bankers' acceptances 4.6 4.4Term loans 6.5 6.7Revolving credit 5.1 -Page 67

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201215. BANK BORROWINGS (CONT’D)(d) The term loans are repayable by 60 to 84 monthly instalments (31 March 2012 : 60 to 84monthly instalments). At the end of the reporting period, they are repayable as follows :Group31 December 31 March2012 2012RMRMCurrentNot later than one year 756,858 839,221Non-currentLater than one year and not later than two years 801,799 808,986Later than two years and not later than five years 1,862,066 2,161,631Later than five years - 483,6572,663,865 3,454,2743,420,723 4,293,495Page 68

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201216. HIRE PURCHASE PAYABLESGroup31 December 31 March2012 2012RMRMMinimum hire purchase paymentsNot later than one year 8,660,573 7,951,766Later than one year and not later than two years 5,296,402 5,729,928Later than two years and not later than five years 1,321,674 1,963,81615,278,649 15,645,510Less : Future finance charges (1,136,562) (1,239,823)Present value of hire purchase payables 14,142,087 14,405,687The net hire purchase payables are repayable as follow :CurrentNot later than one year 7,960,813 7,303,380Non-currentLater than one year and not later than two years 4,954,113 5,299,930Later than two years and not later than five years 1,227,161 1,802,3776,181,274 7,102,30714,142,087 14,405,687(a) The hire purchase payables of the Group of RM 10,747,462 and RM 254,843 (31 March2012 : RM 9,835,593 and RM 480,350) are guaranteed by the Company and intermediateholding company respectively.(b) The effective interest rates of hire purchase payables are ranging from 3.4% to 7.5%(31 March 2012 : 3.8% to 7.5%) per annum.Page 69

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201217. DEFERRED TAX LIABILITIES(a) Recognised deferred tax liabilitiesGroup31 December 31 March2012 2012RMRM(i) Movements of deferred tax liabilitiesAt 1 April 9,380,104 8,729,508Acquisition of subsidiaries - 3,442Recognised in profit or loss (2,310,000) 583,896(Over)/Underprovision in prior years (54,000) 63,258At 31 December / March 7,016,104 9,380,104(ii) Components of deferred tax liabilitiesRevaluation surplus of properties 983,000 1,016,000Excess of capital allowances over correspondingbook depreciation 9,074,104 9,433,104Unused tax losses (1,799,000) (236,000)Unabsorbed capital allowances (1,180,000) (730,000)Other temporary differences (62,000) (103,000)7,016,104 9,380,104(b) Unrecognised deferred tax assetsDeferred tax assets are not recognised in the financial statements for the following itemsunder the liability method :GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMUnused tax losses 2,216,000 1,054,000 - -Unabsorbed capital allowances 1,515,000 1,206,000 592,000 592,0003,731,000 2,260,000 592,000 592,000The deductible temporary differences do not expire under current tax legislation. Deferredtax assets have not been recognised in respect of these items as it is not probable thatfuture taxable profits of the Group and of the Company will be available against which thedeductible temporary differences can be utilised.Page 70

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201218. TRADE AND OTHER PAYABLESGroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMTrade PayablesAmount due to relatedcompanies 1,351,688 1,737,264 - -Amount due to related parties 885,615 1,370,913 - -Other trade payables 12,502,272 11,869,163 - -14,739,575 14,977,340 - -Other PayablesAmount due to directors ofsubsidiaries 161,608 149,012 - -Amount due to intermediateholding company 4,979 73,008 - 67,213Amount due to immediate holdingcompany - 199,997 - 199,997Amount due to subsidiary - - 11,107,927 10,557,474Amount due to related company 21 414 - -Amount due to related parties 462,020 382,487 - -Accruals 4,777,193 2,349,046 206,892 145,335Sundry payables 4,115,764 4,919,022 49,279 2,7639,521,585 8,072,986 11,364,098 10,972,78224,261,160 23,050,326 11,364,098 10,972,782(a) The normal trade terms granted to the Group range from cash term to 90 days (31 March2012 : cash term to 90 days) from the date of invoices.(b) The non-trade amounts due to directors of subsidiaries, intermediate holding company,immediate holding company, related company and related parties are unsecured, interestfree and repayable on demand.(c) The amount due to subsidiary is unsecured, interest free and repayable on demand exceptfor the advances of RM 11,107,927 (31 March 2012 : RM 9,982,475) which bears interestat 3.3% (31 March 2012 : 3.4%) per annum at the end of the reporting period.(d) Included in sundry payables of the Group and of the Company is an amount ofRM 1,211,602 and RM 38,746 (31 March 2012 : RM 1,729,064 and RM NIL) respectivelypayable for the purchase of property, plant and equipment (Note 5(f)).Page 71

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201219. REVENUERevenue of the Group and of the Company comprises the following amounts :GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMSale of goods 197,534,880 267,287,709 - -Dividend income from :Subsidiaries - - 3,514,000 8,322,500Other investments 150 280 - -Management fee - - 270,000 360,000197,535,030 267,287,989 3,784,000 8,682,50020. INVESTMENT REVENUEGroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMInterest income from :Fixed deposits 36,425 68,139 14,052 18,785Advance to subsidiaries - - 28,663 45,029Others 35,244 74,311 - -71,669 142,450 42,715 63,814Page 72

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201221. DIRECTORS’ REMUNERATION(a) The details of remuneration receivable by directors of the Group and of the Companyduring the financial period/year are as follows :GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMExecutive directors of the CompanySalaries and other emoluments 631,100 2,487,900 253,550 484,000Pension costs - defined contributionplan 77,460 179,955 31,290 72,600Social security costs 1,417 2,125 708 1,063709,977 2,669,980 285,548 557,663Non-executive directors of the CompanyFee 180,000 240,000 180,000 240,000Salaries and other emoluments 315,759 1,106,776 - 170,000Pension costs - defined contributionplan 40,797 66,969 - -Social security costs 930 1,240 - -537,486 1,414,985 180,000 410,0001,247,463 4,084,965 465,548 967,663Executive directors of the subsidiariesSalaries and other emoluments 1,561,960 4,197,358 - -Pension costs - defined contributionplan 206,952 389,940 - -Social security costs 3,453 4,553 - -1,772,365 4,591,851 - -Non-executive directors of the subsidiariesFee 54,000 72,000 - -Salaries and other emoluments - 769,000 - -54,000 841,000 - -1,826,365 5,432,851 - -3,073,828 9,517,816 465,548 967,663Page 73

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201221. DIRECTORS’ REMUNERATION (CONT’D)GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMAnalysed as follow :Total executive directors'remuneration 2,482,342 7,261,831 285,548 557,663Total non-executive directors'remuneration 591,486 2,255,985 180,000 410,0003,073,828 9,517,816 465,548 967,663(b) Key management personnel are defined as those persons having authority andresponsibility for planning, directing and controlling the activities of the Group and of theCompany whether directly or indirectly.(c) The number of directors of the Company whose total remuneration of the Group during thefinancial period/year in bands of RM 150,000 is analysed as below :Number Of Directors31 December 31 March2012 2012Executive directors :RM 300,001 - RM 450,000 2 -RM 1,200,001 - RM 1,350,000 - 1RM 1,350,001 - RM 1,500,000 - 1Non-executive directors :RM 1 - RM 150,000 7 4RM 150,001 - RM 300,000 1 2RM 300,001 - RM 450,000 - 1RM 450,001 - RM 600,000 - 1Page 74

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201222. STAFF COSTSGroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMExecutive directors'remuneration (Note 21) 2,482,342 7,261,831 285,548 557,663Other staff costs :Salaries and other emoluments 14,175,938 17,997,652 132,250 375,320Pension costs - defined contributionplan 936,053 1,244,944 22,341 34,887Social security costs 97,508 113,408 1,859 2,479Other staff related expenses 1,277,703 1,319,460 16,972 24,63616,487,202 20,675,464 173,422 437,322Total staff costs 18,969,544 27,937,295 458,970 994,98523. FINANCE COSTSGroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMInterest on :Bank overdrafts 106,781 69,078 - -Bankers' acceptances 1,726,369 2,193,440 - -Hire purchase 684,453 742,620 - -Term loans 173,618 286,714 - -Advance from subsidiary - - 267,060 336,302Others 64,202 4,600 - -2,755,423 3,296,452 267,060 336,302Page 75

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201224. PROFIT BEFORE TAXGroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMThis is arrived at after charging :Allowance for impairment losses ontrade receivables 247,027 214,682 - -Allowance for slow moving inventories 15,476 - - -Auditors' remuneration :Statutory audit :- current 107,979 95,332 18,000 16,000- (over)provision in prior years - (2,072) - -Non-statutory audit :- current 10,000 102,888 10,000 102,888- (over)provision in prior years (20,164) - (20,164) -Bad debts written off 11,204 - - -Depreciation :- property, plant and equipment 7,728,047 9,043,282 58,844 80,801- investment property 5,806 7,776 - -Goodwill on consolidation written off 288,215 627,279 - -Incorporation fee - 1,795 - -Inventories written off 17,765 30,456 - -Property, plant and equipmentwritten off 315,713 78,266 - -Rental of hostel 9,450 12,300 - -Rental of machinery and vehicle - 3,000 - -Rental of premises 205,088 239,061 - -Unrealised loss on foreign exchange 30,812 - - -And crediting :Fair value gain on derivatives - (948) - -Gain on disposal of property, plantand equipment (133,275) (502,180) - -Insurance compensation (310,527) (5,454) - -Rental income (25,745) (35,760) - -Reversal of allowance for slow movinginventories - (4,104) - -Reversal of allowance for impairmentlosses on trade receivables (421,490) (162,667) - -Realised gain on foreign exchange (749,236) (801,581) - (17,399)Unrealised gain on foreign exchange - (57,014) - -Page 76

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201225. TAX EXPENSEGroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RM(a) Components of tax expenseCurrent tax expense :- Malaysian income tax 3,144,000 6,652,000 44,000 22,000- (Over)/Underprovision in prioryears (262,651) 84,930 851 (52,454)2,881,349 6,736,930 44,851 (30,454)Deferred tax expense :- Relating to (reversal)/originationof temporary differences (2,310,000) 583,896 - -- (Over)/Underprovision in prioryears (54,000) 63,258 - -(2,364,000) 647,154 - -Real property gains tax 48,068 - - -565,417 7,384,084 44,851 (30,454)(b) Reconciliation of effective tax rateProfit before tax 1,142,662 24,521,220 2,570,460 6,267,370Tax at Malaysian statutory incometax rate of 25% 286,000 6,130,000 643,000 1,567,000Differential in tax rates 77,000 59,000 - -Tax effect of non-taxable income - (112,000) (879,000) (1,806,000)Tax effect of non-deductibleexpenses 418,000 1,888,896 280,000 261,000Effect of tax incentive (188,000) (905,000) - -Deferred tax assets not recognisedduring the financial period/year 241,000 175,000 - -Real property gains tax 48,068 - - -(Over)/Underprovision in prior years :- current tax expense (262,651) 84,930 851 (52,454)- deferred tax expense (54,000) 63,258 - -565,417 7,384,084 44,851 (30,454)Page 77

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201225. TAX EXPENSE (CONT’D)(c) Subject to the agreement of the Inland Revenue Board, at 31 December / March, the Grouphas unutilised reinvestment allowances of approximately RM 5,300,000 (31 March 2012 :RM 3,400,000) available for offsetting against future taxable profits.26. EARNINGS PER ORDINARY SHARE(a) Basic earnings per ordinary shareBasic earnings per ordinary share is calculated based on profit for the financial period/yearattributable to owners of the Company divided by the weighted average number of ordinaryshares in issue during the financial period/year.Group31 December 31 March2012 2012RMRMProfit attributable to owners of the Company 773,244 17,262,160Units UnitsNumber of ordinary shares in issue at31 December / March 200,000,000 200,000,000Weighted average number of ordinary shares in issue 200,000,000 200,000,000Basic earnings per ordinary share (sen) 0.39 8.63(b) Diluted earnings per ordinary shareThere is no dilutive potential ordinary shares in issue at the end of the reporting period.Page 78

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201227. ACQUISITION OF SUBSIDIARYDuring the financial period, the Group acquired 100% equity interest in Pioneer Prosperity Sdn.Bhd. (“Pioneer”).The fair values of the identifiable assets and liabilities of Pioneer at the date of acquisitionwere :CarryingAmountProperty, plant and equipment 604,400Cash and cash equivalents 93,633Other payables (610,048)Net identifiable assets and liabilities 87,985Add : Goodwill on acquisition 288,215Total purchase consideration 376,200Less : Cash and cash equivalents of subsidiary acquired (93,633)Net cash inflow for acquisition of subsidiary 282,567RMThe acquired subsidiary has contributed the following results to the Group :Loss after tax (2,832)RMPage 79

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201228. DIVIDENDSGroup And Company9 MonthsFinancial FinancialPeriod Ended Year Ended31 December 31 March2012 2012RMRMIn respect of the financial year ended 31 March 2011Final single tier dividend of 7.00% on 200,000,000ordinary shares of RM 0.20 each - 2,800,000In respect of the financial year ended 31 March 2012Final single tier dividend of 8.75% on 200,000,000ordinary shares of RM 0.20 each 3,500,000 -3,500,000 2,800,00029. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the statements of cash flows comprise the followingamounts :GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMDeposits, bank and cashbalances 17,857,144 21,126,551 176,586 366,264Less : Bank overdrafts (610,588) (546,934) - -17,246,556 20,579,617 176,586 366,264Less : Non-cash and cashequivalentsFixed deposits pledgedto banks as collateral (936,978) (1,238,846) - -16,309,578 19,340,771 176,586 366,264Page 80

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201230. CAPITAL COMMITMENTSAt 31 December / March, the Group and the Company had the following capital commitments inrespect of property, plant and equipment :GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMContracted but not provided for 629,000 5,613,000 56,000 -Approved but not contracted for 3,449,000 1,475,000 - -31. RELATED PARTY DISCLOSURES(a) Identities of related partiesIn addition to the information detailed elsewhere in the financial statements, the Group hasrelated party relationships with the following parties :(i) entities within the same group of companies ;(ii) the executive directors who are the key management personnel ; and(iii) entities controlled by certain directors.(b) Other than those disclosed elsewhere in the financial statements, the Group and theCompany also carried out the following significant transactions with the related partiesduring the financial period/year :GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMIntermediate holding company- IT service payable 6,958 9,278 - -- Secretarial fee 6,210 7,680 - -- Internal audit fee :- current - 102,888 - 102,888- overprovision in prioryears (20,164) - (20,164) -Page 81

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201231. RELATED PARTY DISCLOSURES (CONT’D)(b) (CONT’D)GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMSubsidiaries- Dividend incomereceived/receivable - - (3,514,000) (8,322,500)- Interest income - - (28,663) (45,029)- Interest expense - - 267,060 336,302- Management fee - - (270,000) (360,000)Other related companies- Sale of goods (6,802,918) (7,251,450) - -- Purchase of goods 5,494,070 7,228,677 - -- Laboratory charges 48,280 60,707 - -- Transport charges 620 - - -- Upkeep of equipment 153 305 - -- Proceeds from disposal of propertyplant and equipment (2,000) - - -Related parties- with companies where Lau Brothers #are directors/shareholders- Sale of goods (3,841,501) (11,035,107) - -- Purchase of goods 38,225,359 11,010,174 - -- Net proceeds from contractfarm (810,117) - - -- with company where spouse ofMr. Nam Yok San is a director- Transport charges 3,483,060 3,910,285 - -- with company where a directorof subsidiary Mr. Tan Chau Kingis a director- Sale of goods (128,770) (240,317) - -- Transport chargesreceived (11,427) (11,257) - -- Rental of premises 5,400 - - -Page 82

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201231. RELATED PARTY DISCLOSURES (CONT’D)(b) (CONT’D)GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMRelated parties- with Mr. Na Yok Chee,director of the Company- Purchase of property, plantand equipment 172,550 - - -- with Mr. Nam Hiok Yong,director of subsidiaries- Proceeds from disposal of property,plant and equipment - (40,000) - -- Purchase of property, plantand equipment 337,850 - - -# Lau Brothers are Dato’ Lau Bong Wong, Lau Chia Nguang, Datuk Lau Chir Nguan, Dato’Lau Eng Guang, Lau Hai Nguan and Tan Sri Lau Tuang Nguang collectively.(c) Information regarding outstanding balances arising from related party transactions at 31December 2012 / 31 March 2012 are disclosed in Note 10 and Note 18.Page 83

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201231. RELATED PARTY DISCLOSURES (CONT’D)(d) Compensation of key management personnelThe compensation of key management personnel who are the executive directors of theGroup and of the Company are detailed in Note 21(a).GroupCompany9 Months 9 MonthsFinancial Financial Financial FinancialPeriod Ended Year Ended Period Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMSalaries and otheremoluments 2,193,060 6,685,258 253,550 484,000Pension costs - defined contributionplan 284,412 569,895 31,290 72,600Social security costs 4,870 6,678 708 1,0632,482,342 7,261,831 285,548 557,663Page 84

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201232. OPERATING SEGMENTSFor management purposes, the Group is organised into business units based on their productsand services provided.The Group is organised into 3 main business segments as follows :(i)Investment holding.(ii) Trading of pet food, medicine and other related products.(iii) Poultry farming.The Management assesses the performance of the operating segments based on operatingprofit or loss which is measured differently from those disclosed in the consolidated financialstatements.Group financing (including finance costs) and income taxes are managed on a group basis andare not allocated to operating segments.Assets, liabilities and expenses which are common and cannot be meaningfully allocated to theoperating segments are presented under allocated items. Unallocated items comprise mainlyinvestments and related income, loans and borrowings and related expenses, corporate assets(primarily the Company’s headquarters) and head office expenses.Inter-segment sales comprise sale of layers, eggs, animal feeds and egg trays under poultryfarming based on agreed terms between the companies in the Group.Page 85

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201232. OPERATING SEGMENTS (CONT’D)Business SegmentsTrading ofpet food,medicine andInvestment other related Poultryholding products farming Others Eliminations ConsolidatedRM RM RM RM RM RMGroup - 31 December 2012Revenue- External sales - 65,068,949 132,452,550 13,531 - 197,535,030- Inter-segment sales 3,784,000 8,350,123 254,544,585 - (266,678,708) -Total revenue 3,784,000 73,419,072 386,997,135 13,531 (266,678,708) 197,535,030Segment results 2,794,805 4,722,902 (1,559,878) (123,501) (2,005,080) 3,829,248Unallocated corporate expenses (2,832)Investment revenue 71,669Finance costs (2,755,423)Profit before tax 1,142,662Tax expense (565,417)Profit after tax 577,245Segment assets 73,679,696 33,613,284 268,257,079 7,362,151 (161,416,824) 221,495,386Unallocated corporate assets 687,797Income producing assets 1,060,718Tax recoverable 4,385,403Consolidated total assets 227,629,304Segment liabilities 11,364,098 16,408,641 84,985,350 4,746,190 (86,829,659) 30,674,620Unallocated corporate liabilities 602,644Borrowings 84,371,398Tax payable 794,555Consolidated total liabilities 116,443,217Other informationCapital expenditure 177,893 217,953 12,397,365 2,657,767 - 15,450,978Depreciation 58,844 465,991 7,173,959 35,059 - 7,733,853Non-cash items (other thandepreciation) - 158,596 76,857 (152,209) 288,203 371,447Page 86

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201232. OPERATING SEGMENTS (CONT’D)Business Segments (cont’d)Group - 31 March 2012Trading ofpet food,medicine andInvestment other related Poultryholding products farming Others Eliminations ConsolidatedRM RM RM RM RM RMRevenue- External sales - 69,035,794 198,252,195 - - 267,287,989- Inter-segment sales 8,682,500 8,727,840 305,395,168 - (322,805,508) -Total revenue 8,682,500 77,763,634 503,647,363 - (322,805,508) 267,287,989Segment results 6,539,858 5,514,435 27,909,962 58,069 (12,295,256) 27,727,068Unallocated corporate expenses (51,846)Investment revenue 142,450Finance costs (3,296,452)Profit before tax 24,521,220Tax expense (7,384,084)Profit after tax 17,137,136Segment assets 74,234,422 31,383,206 256,893,396 - (158,610,774) 203,900,250Unallocated corporate assets 5,334,151Income producing assets 1,363,236Tax recoverable 2,418,938Consolidated total assets 213,016,575Segment liabilities 10,972,782 16,028,807 84,979,321 - (84,897,674) 27,083,236Unallocated corporate liabilities 5,347,194Borrowings 66,270,116Tax payable 139,000Consolidated total liabilities 98,839,546Other informationCapital expenditure 157,421 1,190,748 28,637,434 1,726,297 (2,561,260) 29,150,640Depreciation 80,801 475,879 8,494,378 - - 9,051,058Non-cash items (other thandepreciation) - 105,685 (873,916) 9,375 982,626 223,770Page 87

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201232. OPERATING SEGMENTS (CONT’D)Geographical InformationRevenueNon-Current Assets9 MonthsFinancial FinancialPeriod Ended Year Ended31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMMalaysia 147,013,213 206,143,770 131,636,842 124,732,842Singapore 44,828,726 60,731,857 837,568 922,579Others 5,693,091 412,362 - -197,535,030 267,287,989 132,474,410 125,655,421Major CustomersThere was no revenue from one single customer that contributed to more than 10% of theGroup’s revenue.33. SIGNIFICANT EVENT DURING THE FINANCIAL PERIODOn 10 January 2012, Success Century Sdn. Bhd., a wholly-owned subsidiary of the Company,entered into a Memorandum of Understanding (“MOU”) with directors of related companies, Mr.Lim Meng Bin and Mr. Ng Eng Leng to acquire a piece of vacant freehold land held under Plot Fof Lot 70 (now known as PTD 29431), Mukim of Tanjung Sembrong, District of Batu Pahat,Johor for a total cash consideration of RM 1,876,430.On 27 November 2012, the Company entered into a Sale and Purchase Agreement to acquirethis property. As of the report date, the ownership of the property are yet to be transferred to theCompany pending the full payment of purchase consideration.34. CHANGE THE END OF THE REPORTING PERIODEffective from this financial period, the Company changed the end of its reporting period from 31March to 31 December to coincide with the end of the reporting period of its ultimate holdingcompany in accordance with the Companies Act, 1965. The financial statements for the currentfinancial period cover 9 months period from 1 April 2012 to 31 December 2012. The financialstatements for the previous financial year cover 12 months period from 1 April 2011 to 31 March2012.Page 88

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTSThe Group’s activities are exposed to a variety of market risks (including foreign currency risk,interest rate risk and equity price risk), credit risk and liquidity risk. The Group’s overall financialrisk management policy focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on the Group’s financial performance.35.1 Financial Risk Management PoliciesThe Group’s policies in respect of the major areas of treasury activity are as follows :(a) Market risk(i)Foreign currency riskThe Group is exposed to foreign currency risk on transactions and balances that aredenominated in currencies other than Ringgit Malaysia. The currencies giving rise tothis risk are primarily Singapore Dollar and United States Dollar. Foreign currency riskis monitored closely on an ongoing basis to ensure that the net exposure is at anacceptable level. On occasion, the Group enters into forward foreign exchangecontracts to hedge against its foreign currency risk.Foreign currency exposureGroupSingapore United States RinggitDollar Dollar Others Malaysia TotalRM RM RM RM RMAt 31 December 2012Financial assetsOther investments - - - 5,390 5,390Trade and other receivables 5,496,596 658,209 86,624 21,545,823 27,787,252Deposits, bank and cash balances 3,378,746 25,626 25,540 14,427,232 17,857,1448,875,342 683,835 112,164 35,978,445 45,649,786Financial liabilitiesTrade and other payables (870,596) (2,053,040) - (21,337,524) (24,261,160)Bank borrowings - - - (70,229,311) (70,229,311)Hire purchase payables (202,626) - - (13,939,461) (14,142,087)(1,073,222) (2,053,040) - (105,506,296) (108,632,558)Net financial assets/(liabilities) 7,802,120 (1,369,205) 112,164 (69,527,851) (62,982,772)Less : Net financial (assets)/liabilitiesdenominated in the respectiveentities functional currencies (6,525,440) - - 69,527,851 63,002,411Currency exposure 1,276,680 (1,369,205) 112,164 - 19,639Page 89

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(a) Market risk (cont’d)(i)Foreign currency risk (cont’d)Foreign currency exposure (cont’d)GroupSingapore United States RinggitDollar Dollar Others Malaysia TotalRM RM RM RM RMAt 31 March 2012Financial assetsOther investments - - - 6,040 6,040Trade and other receivables 3,407,333 506,976 - 21,485,710 25,400,019Deposits, bank and cash balances 5,952,895 2,267 23,761 15,147,628 21,126,5519,360,228 509,243 23,761 36,639,378 46,532,610Financial liabilitiesTrade and other payables (697,571) (1,642,574) - (20,710,181) (23,050,326)Bank borrowings - - - (51,864,429) (51,864,429)Hire purchase payables (334,396) - - (14,071,291) (14,405,687)(1,031,967) (1,642,574) - (86,645,901) (89,320,442)Net financial assets/(liabilities) 8,328,261 (1,133,331) 23,761 (50,006,523) (42,787,832)Less : Net financial (assets)/liabilitiesdenominated in the respectiveentities functional currencies (7,220,720) - - 50,006,523 42,785,803Currency exposure 1,107,541 (1,133,331) 23,761 - (2,029)Page 90

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(a) Market risk (cont’d)(i)Foreign currency risk (cont’d)Foreign currency risk sensitivity analysisThe following table details the sensitivity analysis to a reasonably possible change inthe foreign currencies at the end of the reporting period, with all other variables heldconstant :Effects on profit after taxGroup31 December 31 March2012 2012Increase/ Increase/(Decrease) (Decrease)Singapore Dollar- strengthened by 5% 47,876 41,533- weakened by 5% (47,876) (41,533)United States Dollar- strengthened by 5% (51,345) (42,500)- weakened by 5% 51,345 42,500RMRMPage 91

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(a) Market risk (cont’d)(ii)Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in market interest rates. The Group’sexposure to interest rate risk arises mainly from interest-bearing financial assets andliabilities. The Group’s policy is to obtain the most favourable interest rates available.Any surplus funds of the Group will be placed with licensed financial institutions togenerate interest income.Information relating to the Group’s exposure to the interest rate risk of the financialliabilities is disclosed in Note 35.1(c).Interest rate risk sensitivity analysisA 50 basis points increase/decrease in the interest rate at the end of the reportingperiod would have immaterial impact on the profit or loss. This assumes that all othervariables remain constant.(iii) Equity price riskThe Group’s principal exposure to equity price risk arises mainly from changes inquoted investment prices. The Group manages its exposure to equity price risk bymaintaining a portfolio of equities with different risk profiles.Equity price risk sensitivity analysisA 50 basis points increase/decrease in the equity price risk at the end of the reportingperiod would have immaterial impact on the profit or loss. This assumes that all othervariables remain constant.Page 92

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(b) Credit riskThe Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainlyfrom trade and other receivables. The Group manages its exposure to credit risk by theapplication of credit approvals, credit limits and monitoring procedures on an ongoing basis.For other financial assets (including quoted investments, deposits, bank and cashbalances), the Group minimises credit risk by dealing exclusively with high credit ratingcounterparties.The Group establishes an allowance for impairment that represents its estimate of incurredlosses in respect of the trade and other receivables as appropriate. The main componentsof this allowance are a specific loss component that relates to individually significantexposures, and a collective loss component established for groups of similar assets inrespect of losses that have been incurred but not yet identified. Impairment is estimated bymanagement based on prior experience and the current economic environment.The Company’s exposure to credit risk arises from unsecured financial guarantee providedto licensed institutions for credit facilities granted to its subsidiaries. The Company monitorson an ongoing basis the results of the subsidiaries and repayments made by thesubsidiaries.Credit risk concentration profileAt the end of the reporting period, there were no significant concentrations of credit riskother than the trade amounts due from related companies and related parties ofRM 3,865,788 (31 March 2012 : RM 5,231,475).Page 93

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(b) Credit risk (cont’d)Exposure to credit riskAt the end of the reporting period, the Group’s maximum exposure to credit risk isrepresented by :(i)The carrying amount of each class of financial assets recognised in the statements offinancial position.(ii) A nominal amount of RM 82,463,099 (31 March 2012 : RM 63,100,000) relating tofinancial guarantee provided by the Company to licensed institutions for credit facilitiesgranted to its subsidiaries.The exposure of credit risk for Group’s trade receivables (including amount owing byrelated parties) by geographical region is as follows :Group31 December 31 March2012 2012RMRMMalaysia 21,513,558 20,218,284Singapore 5,498,762 3,383,722Others 553,402 506,97627,565,722 24,108,982Page 94

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(b) Credit risk (cont’d)Ageing analysisThe ageing analysis of the Group’s trade receivables at the end of the reporting period is asfollows :Gross Individual Carryingamount impairment amountRM RM RMGroup - 31 December 2012Not past due 24,801,101 - 24,801,101Past due :- less than 3 months 2,406,787 (12,552) 2,394,235- 3 to 6 months 292,767 (20,165) 272,602- over 6 months 538,777 (440,993) 97,78428,039,432 (473,710) 27,565,722Group - 31 March 2012Not past due 22,200,870 - 22,200,870Past due :- less than 3 months 1,787,317 (21,737) 1,765,580- 3 to 6 months 133,332 (19,906) 113,426- over 6 months 635,636 (606,530) 29,10624,757,155 (648,173) 24,108,982At the end of the reporting period, trade receivables that are individually impaired werethose in significant financial difficulties and have defaulted on payments. These receivablesare not secured by any collateral or credit enhancement.Trade receivables that are past due but not impairedThe Group believes that no impairment allowance is necessary in respect of these tradereceivables. They are substantially companies with good collection track record and norecent history of default.Trade receivables that are neither past due nor impairedA significant portion of trade receivables that are neither past due nor impaired are regularcustomers that have been transacting with the Group. The Group use ageing analysis tomonitor the credit quality of the trade receivables. Any receivables having significantbalances past due or more than 150 days, which are deemed to have higher credit risks,are monitored individually.Page 95

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(c) Liquidity riskLiquidity risk arises mainly from general funding and business activities. The Grouppractises prudent risk management by maintaining sufficient cash balances and theavailability of funding through certain committed credit facilities.The following table sets out the maturity profile of the financial liabilities at the end of thereporting period based on contractual undiscounted cash flows (including interest paymentscomputed using contractual rates or, if floating, based on the rates at the end of thereporting period) :AverageContractualeffective Carrying undiscountedinterest rate amount cash flows Within 1 year 1-5 years Over 5 years% RM RM RM RM RMGroup - 31 December 2012Trade and otherpayables - 24,261,160 24,261,160 24,261,160 - -Bank borrowings- Bank overdrafts 8.3 610,588 610,588 610,588 - -- Bankers'acceptances 4.6 61,198,000 61,198,000 61,198,000 - -- Term loans 6.5 3,420,723 3,840,748 927,267 2,913,481 -- Revolving credit 5.1 5,000,000 5,000,000 5,000,000 - -Hire purchasepayables 3.4 to 7.5 14,142,087 15,278,649 8,660,573 6,618,076 -108,632,558 110,189,145 100,657,588 9,531,557 -Group - 31 March 2012Trade and otherpayables - 23,050,326 23,050,326 23,050,326 - -Bank borrowings- Bank overdrafts 8.3 546,934 546,934 546,934 - -- Bankers'acceptances 4.4 47,024,000 47,024,000 47,024,000 - -- Term loans 6.7 4,293,495 4,539,321 947,219 3,108,445 483,657Hire purchasepayables 3.8 to 7.5 14,405,687 15,645,510 7,951,766 7,693,744 -89,320,442 90,806,091 79,520,245 10,802,189 483,657Page 96

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.1 Financial Risk Management Policies (Cont’d)(c) Liquidity risk (cont’d)ContractualundiscountedCarrying amount cash flows Within 1 yearRM RM RMCompany - 31 December 2012Trade and other payables 11,364,098 11,364,098 11,364,098Company - 31 March 2012Trade and other payables 10,972,782 10,972,782 10,972,782.Page 97

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.2 Capital Risk ManagementThe Group manages its capital to ensure that entities within the Group will be able to maintainan optimal capital structure so as to support their businesses and maximise shareholders’ value.The Group manages its capital based on gearing ratio. The Group’s strategies are unchangedfrom the previous financial year. The gearing ratio is calculated as total borrowings divided bytotal equity.There was no change in the Group’s approach to capital management during the financialperiod/year.The gearing ratio of the Group at the end of the reporting period was as follows :Group31 December 31 March2012 2012RMRMHire purchase payables 14,142,087 14,405,687Bank borrowings 70,229,311 51,864,429Total borrowings 84,371,398 66,270,116Total equity 111,186,087 114,177,029Gearing ratio 0.76 0.58Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is requiredto maintain a consolidated shareholders’ equity (total equity attributable to owners of theCompany) equal to or not less than the 25% of the issued and paid-up share capital (excludingtreasury shares) and such shareholder’s equity is not less than RM 40 million. The Companyhas complied with this requirement.Page 98

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.3 Classification of Financial InstrumentsGroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMFinancial assetsAvailable-for-sale financial assetsOther investment, at fair value 5,390 6,040 - -Loans and receivables financial assetsTrade and other receivables 27,787,252 25,400,019 799,360 4,827,451Deposits, bank and cash balances 17,857,144 21,126,551 176,586 366,26445,644,396 46,526,570 975,946 5,193,715Financial liabilitiesOther financial liabilitiesTrade and other payables 24,261,160 23,050,326 11,364,098 10,972,782Bank borrowings 70,229,311 51,864,429 - -Hire purchase payables 14,142,087 14,405,687 - -108,632,558 89,320,442 11,364,098 10,972,782Page 99

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201235. FINANCIAL INSTRUMENTS (CONT’D)35.4 Fair Values of Financial InstrumentsThe carrying amounts of the financial assets and financial liabilities reported in the financialstatements approximated their fair values based on the methods summarised as follows :(i)The carrying amounts of cash and cash equivalents, receivables, payables and short-termbank borrowings approximately their fair values due to the relatively short-term maturity ofthe financial instruments.(ii) The fair value of quoted investments is estimated based on their quoted closing bid prices atthe end of the reporting period.(iii) The carrying amounts of hire purchase payables are reasonably approximate their fairvalues due to insignificant impact of discounting.(iv) The carrying amounts of the term loans approximated their fair values as these instrumentsbear interest at variable rates.35.5 Fair Value HierarchyThe fair values of the financial assets and liabilities are analysed into level 1 to 3 as follows :Level 1 : Fair value measurements derive from quoted prices (unadjusted) in active markets foridentical assets or liabilities.Level 2 : Fair value measurements derive from inputs other than quoted prices included withinlevel 1 that are observable for the asset or liability, either directly or indirectly.Level 3 : Fair value measurements derive from valuation techniques that include inputs for theasset or liability that are not based on observable market data (unobservable inputs).Fair value hierarchy analysisThe Group has carried its quoted investments that are classified as available-for-sale financialassets at their fair values. These financial assets belong to level 1 of the fair value hierarchy.Page 100

TEO SENG CAPITAL BERHAD(Incorporated In Malaysia)Company No : 732762 - TNOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL PERIOD FROM 1 APRIL 2012 TO 31 DECEMBER 201236. SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISEDPROFITS/LOSSESThe breakdown of the retained profits of the Group and the Company at the end of the reportingperiod into realised and unrealised profits are presented in accordance with the directive issuedby Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on SpecialMatter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context ofDisclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued bythe Malaysian Institute of Accountants, as follows :GroupCompany31 December 31 March 31 December 31 March2012 2012 2012 2012RM RM RM RMTotal retained profits :- realised 115,172,169 118,781,052 14,820,038 15,794,429- unrealised (7,046,916) (9,323,090) - -108,125,253 109,457,962 14,820,038 15,794,429Less : Consolidation adjustments (22,784,103) (21,390,056) - -At 31 December / March 85,341,150 88,067,906 14,820,038 15,794,429Page 101