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Degem malaysia promotion of investment

Notes: 1. A proxy may but need not be a member of the Company and the provisions of Section 1 b of the Companies Act, shall not apply to the Company. In the case of a corporate body, the proxy appointed must be in accordance with the Memorandum and Articles of Association, and the instrument appointing a proxy shall be given under the Companys Common Seal or under the hand of an officer or attorney duly authorised.

There was no issuance of new shares during the year. The proposed Resolution No. This authority unless revoked or varied at a general meeting will expire at the next AGM. At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate has been sought, the Company would make an announcement in respect of the purpose and utilisation of proceeds arising from such issue.

This authority will, unless revoked or varied by the Company in General Meeting, expire at the next Annual General Meeting. For further information, please refer to the Circular to Shareholders dated 26 May which is circulated together with this Annual Report. Resolution in respect of the Proposed Amendment to the Companys Articles of Association The Special Resolution proposed under item 7 c , if passed, will update Article of the Companys Articles of Association to facilitate the implementation of Electronic Dividend Payment eDividend in line with the directive from Bursa Malaysia Securities Berhad pertaining to eDividend.

Chuah Teong Aung 2. Tel: Fax: Registered Office No. Tel: Fax: Email: info degembhd. Based on issued and paid up share capital of ,, of RM0. In , he left Redec Travel to start his own business in trading, property and investment in Saudi Arabia and Singapore. After returning to Malaysia in , he formed Misbah Group of Companies, specializes in travel, property investment and development business in He presently sits on the board of several other private limited companies.

Dato Hasan bin M. Taib does not hold any directorship in any other public corporation other than DeGem Berhad. He is a member of the Remuneration Committee. He obtained a diploma in Financial Accounting from Tunku Abdul Rahman College in and started his career as an audit assistant with a local audit firm before joining the Group in He is now responsible for the financial and administrative matters of the Group. He is actively involved in all major decision making of the Group. He started his career working as a goldsmith in He is responsible for the manufacturing divisions of the Group as well as in enforcing quality control during manufacturing and on-the-job training to craftsmen in the Group.

He is actively involved in all the major decision making of the Group. He has more than 20 years experience in the jewellery business. He joined a subsidiary of the Group in and is a qualified gemologist since , having studied gemology from the Gemological Institute of America.

He is currently in charge of the purchasing and marketing operations of the Group. He is actively involved in all the decision making of the Group. Bhd, a subsidiary of the Group in He is also actively involved in the daily operation and decision making of the Group. She began her career with Malaysia Industrial Development Authority MIDA , the Malaysian governments principal agency for the promotion and coordination of industrial development in the country as an Economist where she worked for 35 years.

In her 35 years of service, she has held various key positions in MIDA as well as in some of the countrys strategic council, notably her pivotal role as National Project Director in the formulation of Malaysias first industrial Master Plan and as a member of the Industrial Coordination Council in the implementation of the Second Industrial Master Plan.

He is a member of the Audit, Nomination and Remuneration Committees. He is a first grade engineer certified by Tenaga Nasional Berhad and also a chartered engineer certified by the Institute of Electrical Engineering, United Kingdom. He was attached with ABB, Sweden as an engineer in and was promoted to project manager before he left in Subsequently, he and his partner established TEG Engineering Sdn Bhd in , a company that is principally involved in electrical, mechanical and civil engineering activities.

She is a member of the Audit Committee. DeGem Berhad. For the financial year ended 31 December , the Company had purchased a total of , units of its own shares and all of the units purchased have been retained as Treasury Shares. There were no cancellations or re-sale of treasury shares during the financial year. As at 30 April , the Company had purchased a total of 1,, units of its own shares and the details of purchases made showing the monthly breakdown are as follows:.

Stronger Financial Performance Despite Recession Year Despite the global economic downturn affecting the first half of the financial year , the Group has managed to achieve satisfactory results in FY Profit before taxation was, however, higher at RM The Group registered a higher net profit attributable to shareholders of RM The Group shareholders fund has further strengthened to RM Net assets per share increased further to RM1.

The total debt to equity ratio remained at a healthy level, fairly close to the previous financial year end of 0. More Resilient Consumer Sentiment Than Expected Overall, the demand for basic jewellery item remained resilient; the spending allocation for this jewellery has not been compromised significantly.

Improved market sentiment and strong demand for fine jewellery towards the end of have contributed to impressive earnings performance in Prudent Financial Management The Group has focused on cash conservation, except for selected products range that witnessed robust demand from consumer. The Groups financial liquidity remained healthy with positive operating cash inflow of RM4. The investing cash outflow has reduced sharply to RM2. Overall, the cash balance as at end of FY was RM Share buyback programme The Group embarked on a share buyback programme in 20 November to manage its capital structure actively, given the Groups strong cash flow and financial position.

As at 1 May , a total of 1,, ordinary shares have been bought from the open market to improve the Company earnings per share and return on equity. The Group believes that DeGem Berhads prevailing share price is trading at a discount to its intrinsic value and its share buyback programme aims to enhance the shareholders value in the long term. More Stable Outlook Moving Forward Towards the end of , the market witnessed a broad recovery in the prices of raw material.

The recovery of global equity markets, improved consumer sentiment, a more stable economy recovery outlook and job prospects, is expected to instil stronger confidence for the jewellery industry and will eventually augur well for the Group performance in the ensuing year. Acknowledgement On behalf of the Board, I would like to extend my heartfelt gratitude to our shareholders, bankers, customers, business partners and regulatory authorities for their continued support, guidance and assistance extended to the Group.

The Board would like to express its appreciation to the management and employee of the Group for their hard work and dedication. Set out below is a statement of how the Group has applied the principles laid down in the Code and the extent of the Groups compliance with the best practices of the Code throughout the financial year ended 31 December The Group practices a division of responsibility between the Executive and Non-Executive Directors.

The Executive Directors are responsible for implementing the policies and decisions of the Board, to oversee operations and to coordinate the development and implementation of business and corporate strategies. The role of the Independent Non-Executive Directors is particularly important in providing an independent view, advice and judgment to ensure that the interests of minority shareholders and the general public are given due consideration in the decision-making progress.

In addition, Mr. Leou Thiam Lai continues to act as the Senior Independent Non-Executive Director serving as an alternative for shareholders to convey their concerns and seek clarifications from the Board. Supply of Information The Board is provided with appropriate and timely information to enable it to discharge its duties effectively. Every Director has unhindered access to the advice and services of the Company Secretary.

The Directors in the furtherance of their duties may seek independent professional advice at the Companys expense. Directors over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section of the Companies Act The composition of the Board complies with the Listing Requirements of the Bursa Malaysia Securities Berhad Bursa Securities that require at least two 2 directors or one-third of the total number of directors, whichever is the higher, to be independent.

The profile of each Director is presented on pages 11 to Board Balance The Chairman is primarily responsible for the working of the Board and to ensure that all Directors, executive and non-executive alike, are enabled and encouraged to play their full part in its activities. Directors Training The Company recognise the importance of continuous training for Directors to enable them to effectively discharge their duties.

The training programmes which were attended by the Directors during the year are as follows:. All scheduled meetings held during the year were preceded with a formal agenda issued by the Company Secretary. During the financial year ended 31 December , five 5 meetings were held. Dato Hasan Bin M. The Board members are supplied with the relevant documents and information in advance of each meeting so that they have a comprehensive understanding of the matters to be deliberated upon to enable them to arrive at an informed decision.

Senior management and advisers are invited to attend Board meetings, where necessary, to provide additional information and insights on the relevant agenda items tabled at Board meetings. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting. However, in order to ensure that the control of the Group is firmly within the Board, the Board has defined the terms of reference for each Committee.

The ultimate responsibility and decision on all matters deliberated in these Committees, however, rests with the Board. During the financial year, the Nomination Committee had one 1 meeting and this meeting was attended by all members. In this meeting, the Nomination Committee conducted an annual appraisal which covered the assessment of the effectiveness of the composition of the Board, the participation of the Board members, the skill sets and experience of the Directors, effectiveness of the Board as a whole and the various Committees of the Board.

The composition of the Audit Committee complies with the Listing Requirements which requires the Audit Committee to be composed exclusively of Non-Executive Directors, a majority of whom are independent. A summary of the activities of the Committee during the financial year is described in the Audit Committee Report on pages 26 to 30 of this Annual Report. Annually, the Remuneration Committee reviews the remuneration of the Executive Directors to ensure that it commensurate with the market expectation, experience, competencies and the Group performance.

All directors play no part in the decision of their own remuneration. An analysis of the aggregate remuneration paid or payable to all Directors of the Company for the financial year ended 31 December , falls in successive bands of RM50, is set out as follows: Remuneration Bands Executive Directors Non-Executive.

Information about the Group is disseminated through various disclosures and announcements made to the Bursa Securities which includes the quarterly reports, annual reports, press releases. The Group has also established a comprehensive and current website at. Annual General Meetings The Annual General Meeting is the principal forum for dialogue and interaction with all shareholders while the Extraordinary General Meetings are held as and when required. At this AGM, the Board encourages shareholders to participate in the question and answer session.

Internal Audit The Board acknowledges that internal audit function is an integral part of an effective system of corporate governance. The internal audit function is currently outsourced to an independent internal audit service company. The Code outlines the requirements for the Internal Auditors to appraise the risk management, internal control and governance processes within the company.

Internal Control The Board also affirms its responsibility for maintaining a sound system of internal control for the Group. The effectiveness of the system of internal control is reviewed by internal auditors, who operated independently from the activities of the Group under the purview of the Audit Committee.

The information on the Groups state of internal control is reported in the Statement on Internal Control on page Relationship with External Auditors To maintain a transparent and professional relationship with the Companys external auditors, the Audit Committee considers the appointment, performance and remuneration of the external auditors before recommending them to the shareholders for re-appointment in the AGM.

The Audit Committee will convene meetings with the external auditors at twice a year without the presence of executive members of the Audit Committee. The Audit Committee assists the Board in ensuring accuracy and adequacy of information by reviewing and recommending for adoption information for disclosure.

Directors Responsibility Statement for Preparing the Financial Statements The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Company and of the Group as at the end of the financial year and of the results and cash flows of the Company and the Group for that period. The Board considers that the Company uses appropriate accounting policies that are consistently applied and supported by reasonable as well as prudent judgments and estimates, and that all applicable approved accounting standards in Malaysia have been followed during the preparation of the financial statements.

The Board is responsible for ensuring that the Company keeps proper accounting records and that such records are disclosed with reasonable accuracy to ensure that the financial statements comply with the Companies Act, The Board has the general responsibility for taking such steps to safeguard the assets of the Group and to detect and prevent fraud as well as other irregularities. The Board views that the transparency in respect of the Directors remuneration has been appropriately dealt with by the band disclosure presented on the previous page.

These processes are embedded as part of the Groups business management processes and form the functional responsibility of all executive directors and the management. Risk management processes are focused towards sales and promotions, customer relationship programs, product quality and human resource. To complement the current risk management processes, the management, with the assistance and facilitation of the internal auditors, has conducted a risk assessment exercise during the financial year.

In this exercise, possible key risks that could affect the achievement of the Groups objectives, corresponding controls and mitigating action plans were identified and documented. The review mechanism is overseen by the Audit Committee. Besides reviewing the system of internal control, the Audit Committee also reviews the financial information and reports produced by the management.

The Audit Committee, in consultation with the management and the Executive Directors, deliberates the integrity of the financial results, annual report and audited financial statements before recommending to the Board for distribution to the shareholders and public investors. In this respect, the Board assumes its responsibility for identifying principal risks and reviewing the adequacy and integrity of the Groups systems of internal control.

In any case, it shall be noted that all risk management systems and systems of internal control could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, a system of internal control and risk management of the Group can only provide reasonable but not absolute assurance against material misstatements, fraud and losses.

The Groups internal audit function is outsourced to external consultants. The outsourced internal auditors assist the Board and the Audit Committee in providing an independent assessment of the adequacy, efficiency and effectiveness of the Groups internal control system. On a quarterly basis, the internal audit function reports its audit findings and recommendations to the Audit Committee. Defined lines of accountability and delegated authority; Management reporting covering operating and financial performance; Monthly monitoring of sales budgets and targets; Operations review meetings are held by the respective divisions to monitor the progress of the operations, deliberate significant issues and formulate corrective measures;.

Physical and electronic security measures for monitoring and ensuring authorized access to the Groups assets and records, complemented by daily inventory and cash counts; and ISO Quality Management System programmes in Inticraft Sdn. Internal quality audits are conducted by the management while annual surveillance audits are conducted by a certification body to provide assurance of compliance with the ISO Quality Management System. However, the Board recognizes that the Groups system of internal control and risk management processes must continuously evolve to meet the changing and challenging business environment.

Therefore, the Board will put in place appropriate action plans to strengthen its system of internal control progressively. The Committee shall include at least one person who is a member of the Malaysian Institute of Accountants or alternatively a person who must have at least 3 years working experience and have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act or is a member of one of the associations of accountants specified in Part II of the said Schedule or alternatively a person who has fulfill such other requirements as prescribed or approved by Bursa Securities.

No alternate director shall be appointed as a member of the Committee. The members of the Committee shall elect from among their number a chairman who is non-executive and independent, as defined above. If one or more members of the Committee resign, die or for any other reason cease to be a member with the result that the Listing Requirements of the Bursa Securities are breached, the Board shall, within three months of the event, appoint such number of new members as may be required to correct the breach.

The Board shall review the term of office of Committee members no less than once every three years. The Committee shall oversee all internal audit functions and is authorised to commission investigations to be conducted by internal audit as it deems fit. The internal auditor shall report directly to the Committee and shall have direct access to the Chairman of the Committee. All proposals by management regarding the appointment, transfer or dismissal of the internal auditor shall require the prior approval of the Committee.

Other Board members and employees may attend any particular meeting only at the Committees invitation, specific to the relevant meeting. However, at least twice a year the Committee shall meet with the External Auditors without executive Board members present. The External Auditors may request a meeting if they consider one necessary. The Committee may report any breaches of the Listing Requirements, which have not been satisfactorily resolved, to the Bursa Securities.

He shall record attendance of all members and invitees and take minutes to record the proceedings of every meeting of the Committee. All minutes of meetings shall be circulated to every member of the Board. The Committee shall prepare an annual report to the Board that provides a summary of the activities of the Committee for inclusion in the Companys annual report.

The Committee shall assist the Board in preparing the following for publication in the Companys annual report: a Statement on the Companys application of the principles set out in Part 1 of the Malaysian Code on Corporate Governance; Statement on the extent of compliance with the Best Practices in Corporate Governance set out in Part 2 of the Malaysian Code on Corporate Governance, specifying reasons for any areas of non-.

The Audit Committee met five 5 times during the financial year ended 31 December Reviewed the disclosure statements on Corporate Governance, Audit Committee Report and the Statement on Internal Control for the financial year ended 31 December and recommended their adoption to the Board; and Considered the impact of any unusual transactions including significant related party transactions.

The cost incurred for the internal audit function in respect of the financial year ended 31 December is RM, The principal responsibility of the internal audit function is to undertake regular and systematic review of the systems of controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Group. The internal auditor undertakes internal audit function based on the audit plan that was reviewed and approved by the Audit Committee.

During the financial year under review, the internal auditor has conducted audit on all operating subsidiaries with recommended improvements to the existing system of controls and submitted his findings to the Audit Committee. These internal audit reports together with responses by management were circulated to all members of the Audit Committee. All internal audit reports were reviewed by the Audit Committee and discussed at Audit Committee Meetings and recommendations were duly acted upon by the management.

As such, the Group seeks to balance its social responsibilities with its obligations to create value for its investors. Welfare of Employees The wellbeing of its employees is paramount to the Groups productivity and is fundamental to the success of the Group. The Group therefore undertakes concerted efforts to groom its employees towards realising their fullest potential. The Group also recognises that a safe and healthy work environment is crucial to the wellbeing of its employees and in optimising their productivity.

In this aspect, the Group continues to fine-tune its health and safety policy to ensure that the environment for its employees, as well as for its customers, visitors and the general public at its premises is free from preventable hazards. Contributions to Community DeGem Berhad continues its involvement in the community to enhance the quality of life of the less fortunate. In addition, the Group also participated in Estee Lauders Breast Cancer Awareness Campaign by sponsoring its product for the Breast Cancer Awareness Gala Dinner, as well as donated part of the proceeds from the sale of pink ribbon pins towards the campaign.

The Group also strived to expand knowledge of its industry by collaborating with certain colleges in sponsoring and training students who are taking industry-related courses. The students will be offered employment opportunity with the Group upon graduation. Protection of Environment DeGem Berhad seeks to protect its environment by ensuring that the waste from its manufacturing activities are properly treated. Where that is not possible, procedures to ensure safe disposal of the waste are in place.

In addition, the Group also actively encourages a culture of recycling and energy saving amongst its employees to minimise any negative impact to the environment. Responsibility to Marketplace DeGem Berhad continues its efforts to ensure that high standards of social responsibility are upheld in its relationship with its stakeholders. KPCS is a process set out by the international diamond industry which is designed to certify the origin of rough diamonds from sources which are free of conflict.

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December Principal activities The Company is principally engaged in investment holding and the provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

There has been no significant change in the nature of these activities during the financial year. Net profit after tax before minority interest Minority interest Net profit after tax and minority interest attributable to the shareholders of the Company Reserves and provisions. There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements. Dividend Since the end of the previous financial year, the Company paid a final ordinary dividend of 2.

The final ordinary dividend recommended by the Directors in respect of the year ended 31 December is 2. Directors of the Company Directors who served since the date of the last report are: Dato Hasan bin M. Directors interests The interest and deemed interest in the shares of the Company and of its related corporations other than wholly-owned subsidiaries of those who were Directors at year end including the interests of the spouses or children of the Directors who themselves are not Directors of the Company as recorded in the Register of Directors Shareholdings are as follows: Number of ordinary shares of RM0.

Number of ordinary shares of RM1 each At At 1. None of the other Directors holding office at 31 December had any interest in the ordinary shares of the Company and of its related corporations during the financial year. Directors benefits Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Issue of shares There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.

Treasury shares The Company by a resolution passed in an Extraordinary General Meeting held on 17 June , obtained an approval from the shareholders of the Company to repurchase its own ordinary shares. The Directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company repurchased , ordinary shares of RM0.

The total consideration paid for the repurchase was RM, The repurchase transactions were fully financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, Of the total ,, issued and fully paid ordinary shares of RM0.

The treasury shares are held at a carrying amount of RM, None of the treasury shares held are resold or cancelled during the year ended 31 December Other statutory information Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i ii all known bad debts have been written off and adequate provision made for doubtful debts, and all current assets have been stated at the lower of cost and net realisable value.

At the date of this report, the Directors are not aware of any circumstances: i that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or that would render the value attributed to the current assets in the Group and in the Company financial statements misleading, or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

Other statutory information At the date of this report, there does not exist: i ii any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 December have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. Significant events The significant events are disclosed in Note 29 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:. Total non-current assets Inventories Receivables, deposits and prepayments Current tax assets Cash and cash equivalents 9 10 Total current assets Total assets Equity Share capital Share premium Foreign currency translation reserve Treasury shares Retained earnings Total equity attributable to shareholders of the Company Minority interest Total equity.

Group Revenue Cost of sales Note 18 RM ,, ,, 64,, 4,, 38,, 6,, 19 20 22 23,, 1,, 22,, 6,, 15,, RM ,, ,, 66,, 2,, 39,, 8,, 21,, 1,, 20,, 5,, 14,, Company RM 4,, 4,, 1,, 26, 2,, 1,, 1,, , , Distributable Retained earnings RM 14,, , 2,, 11,, , 2,, 10,, Note Total RM 92,, , 2,, 89,, , , 2,, 87,, Group Cash generated from operations continued Interest paid Income taxes paid Interest received Dividend received Net cash generated from operating activities RM 12,, 1,, 7,, , 4,, RM 31,, 1,, 5,, 86, 24,, Cash flows from investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment Net cash used in investing activities , 2,, 2,, 2,, 75, 1,, , , 3,, 1,, 3,, , 20,, 23,, 54, 7,, 7,, 2,, 6,, , 8,, 8,, , 12,, 20,, 2,, 1,, , 4,, 2,, , 2,, 2,, 10,, 12,, , 1,, , Cash and cash equivalents Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:.

Group Note 11 11 16 RM 15,, 10,, 1,, 23,, RM 10,, 10,, 20,, Acquisition of property, plant and equipment During the year, the Group acquired property, plant and equipment with an aggregate cost of RM2,, - RM7,, of which RM, - RM, , were acquired by means of hire purchase arrangements. The financial statements of the Company as at and for the year ended 31 December do not include other entities. The Company is principally engaged in investment holding and the provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

The holding company during the financial year was Legion Master Sdn. The financial statements were approved by the Board of Directors on 19 April Basis of preparation a Statement of compliance These financial statements have been prepared in accordance with Financial Reporting Standards FRS , accounting principles generally accepted and the Companies Act, in Malaysia. Basis of preparation contd a Statement of compliance contd.

The Group and Company plan to apply the abovementioned standards, amendments and interpretations from the annual period beginning 1 January for those standards, amendments or interpretations that will be effective for annual periods beginning on or after 1 July or 1 January , except for FRS 4, Amendments to FRS 2, IC Interpretation 11, IC Interpretation 13 and IC Interpretation 14 which are not applicable to the Group or to the Company.

The Group and Company plan to apply those standards, amendments or interpretations that will be effective for annual periods beginning 1 January for those standards, amendments or interpretations that will be effective beginning on or after 1 March , 1 July and 1 January , except for Amendments to FRS 2, IC Interpretation 12, IC Interpretation 15, IC Interpretation 16 and IC Interpretation 17 which are not applicable to the Group or to the Company.

The impacts and disclosures as required by FRS The amendments to FRS remove the transitional provision that exempted an entity from separating the liability and equity components of a compound instrument issued before 1 January As a result of the amendments, an entity shall separate a compound financial instrument into its liability and equity components when the entity first applies FRS , Financial Instruments: Recognition and Measurement. The initial application of other standards, amendments and interpretations, which will be applied perpetually, is not expected to have any material financial impact to the current and prior years financial statements upon their first adoption.

Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are disclosed below: i FRS 8, Operating Segments FRS 8 replaces FRS , Segment Reporting and requires the identification and reporting of operating segments based on internal reports that are regularly reviewed by the chief operating decision maker of the Group in order to allocate resources to the segment and to assess its performance.

Currently, the Group presents segment information in respect of its geographical segments see Note Improvements to FRSs contain various amendments that result in accounting changes for presentation, recognition or measurement and disclosure purposes which will become effective for the Group and the Companys financial statements for the year ending 31 December Amendment that has a material impact is: FRS , Leases The amendments clarify the classification of lease of land and require entities with existing leases of land and buildings to reassess the classification of land as finance or operating lease.

Leasehold land which in substance is a finance lease will be reclassified to property, plant and equipment. The adoption of these amendments will result in a change in accounting policy which will be applied retrospectively in accordance with the transitional provisions. This change in accounting policy will result in the reclassification of lease of land amounting to RM1,, as at 31 December from prepaid lease payments to property, plant and equipment.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have a significant effect on the amounts recognised in the financial statements, other than those disclosed in Note 7 impairment test on goodwill.

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by Group entities, unless otherwise stated. Control exists when the Group has the ability to exercise its power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries are stated in the Companys balance sheet at cost less impairment losses.

Minority interests in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interests and the equity shareholders of the Company. Where losses applicable to the minority exceed the minoritys interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Groups interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses.

If the subsidiary subsequently reports profits, the Groups interest is allocated all such profits until the minoritys share of losses previously absorbed by the Group has been recovered. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Groups interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Significant accounting policies contd b Foreign currency i Foreign currency transactions. Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in the income statements. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions. Foreign currency differences are recognised in translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statement as part of the gain or loss on sale.

Derivative financial instruments such as foreign exchange contracts are used as hedges to manage operational exposures to foreign exchange risks. The Group does not hold derivative instruments for trading purposes. The difference between the forward exchange contracts and the prevailing exchange rates would be recognised in the income statements upon realisation of receipts or payments, or upon maturity, whichever is earlier.

Significant accounting policies contd d Property, plant and equipment i Recognition and measurement Freehold land is stated at cost. Other items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items major components of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income or other operating expenses respectively in the income statements.

The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statements as incurred. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

Depreciation methods, useful lives and residual values are reassessed at the balance sheet date. Significant accounting policies contd d Property, plant and equipment contd iv Change in estimates. During the year ended 31 December , the Group conducted a review over the useful life of its renovations of trading subsidiaries, which resulted in changes in the expected usage of the non-current asset see Note 3.

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid lease payments. Payments made under operating leases are recognised in the income statements on a straight-line basis over the term of the lease.

Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. For acquisitions prior to 1 January , goodwill represents the excess of the cost of the acquisition over the Groups interest in the fair values of the net identifiable assets and liabilities.

For the business acquisitions beginning from 1 January , goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Any excess of the Groups interest in the net fair value of acquirees identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statement. Goodwill is tested for impairment annually and whenever there is an indication that it may be impaired.

Significant accounting policies contd g Investment properties Investment property carried at cost Investment properties are properties which are owned to earn rental income or for capital appreciation or for both. These include land other than leasehold land held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties.

Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in accounting policy note 2 d. Depreciation is charged to the income statements on a straight-line basis over the estimated useful life of 50 years for buildings.

The cost of inventories is based on the first-in, first-out method, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts. Receivables are not held for the purpose of trading. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any.

Significant accounting policies contd k Impairment of assets. The carrying amounts of assets, except for financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill, recoverable amount is estimated usually at each reporting date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets the cash-generating unit. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses are recognised in the income statements. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit groups of units on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have determined, net of depreciation or amortisation, if no impairment loss has been recognised. Reversal of impairment losses are credited to the income statements in the year in which the reversals are recognised.

The corresponding obligations relating to the remaining capital payments are treated as a liability. The interest element of the hire purchase agreements is amortised over the period of the agreements on the sum of digits method. Significant accounting policies contd n Payables. Payables, including amounts due to subsidiaries and holding company, are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity.

The Group accrues for the liability under the programme and recognises in the income statement the amount equal to the points earned multiplied by the applicable rates. Upon redemption by members or expiration of the points award, the accrual is reduced and revenue is recognised accordingly. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income, over the lease term on a straight-line basis. Significant accounting policies contd q Employee benefits Short term employee benefits.

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Groups contribution to the statutory pension funds are charged to the income statements in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Tax expense is recognised in the income statements except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Significant accounting policies contd t Tax expense contd Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit tax loss.

Upload document Create flashcards. Flashcards Collections. Documents Last activity. Add to Add to collection s Add to saved. In this action, the Plaintiffs sued the Defendants for passing-off. The Defendants had also counterclaimed against the Plaintiffs for passing-off. Background Facts Based on the evidence and written submissions submitted by the parties the background facts can be summarized as follows: No. Date Fact 1. T business would be further expanded and listed on the stock exchange.

For this purpose a company would be acquired to consolidate all the businesses and to be listed. It was also decided that the retail jewellery business would move toward a change in concept from primarily traditional goldsmiths to jewelers dealing in high end fine jewellery aimed at the luxury market. Early Delta Riviera Sdn Bhd was acquired for the purpose of consolidating the well known retail jewellery businesses known under and by reference to the name P.

T and listing the same on the stock exchange. The 2nd Defendant was a traditional goldsmith dealing primarily with yellow gold. The 3rd Defendant used a full company name all in capital letters on its signboard. The 1st Plaintiff discovered the existence of the 1st Defendant through the contents of this letter. Parties thereafter co-existed 1st Plaintiff through its subsidiary commenced operation of a retail jewellery outlet in Bangsar Baru under and by reference to the DeGem Trade Name.

No Chinese characters appeared on the signboard. This outlet did not adopt the image of a traditional goldsmith but adopted a modern upmarket image dealing more with white gold and diamonds. This was the first nationwide advertisement by the Defendants that the Plaintiffs were aware of. Attempts to negotiate a settlement however were not successful. This outlet dealt with jewellery and gemstones. The 2nd Defendant operated the outlet in Plaza Angsana and Sutera Mall outlet dealt more with white gold and the Plaza Angsana outlet dealt more with yellow gold.

August The Plaintiffs commenced this suit. Mid The 1st Plaintiff received a fax from FedEx regarding a package. The fax was intended for the 4th Defendant. This outlet still deals with primarily white gold and gemstone. The Law I now turn to the question of passing off.

It is therefore wrong for a trader to conduct his business as to lead to the belief that his goods or business is the business of another. The misrepresentation is as such that the defendant's product is of the kind that enjoy the reputation and goodwill attached to the trade name in which the plaintiffs, jointly and severally, have a property right. The difficulties in a passing-off action, as always, arise in applying this well known principles to the facts of the individual case see Habib Bank Ltd v Habib Bank Zurich [] RPC 1.

It is trite law that the first element which needs to be established in a passing-off action is goodwill. A useful passage with regards to the meaning of goodwill, Lord Lindley in the case of A. In that connection, I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers and agreed absence from competition, or any of these things, and there may be others which do not occur to me.

In this wide sense, goodwill is inseparable from the business to which it adds value, and in my opinion, exist where the business is carried on. Such business may be carried on in one place or country or in several, and if in several there may be several businesses, each having a goodwill of its own.

In support of its arguments, learned counsel for the Defendant referred to a number of authorities. Normally the issue is decided by the answer to this question: of whom is the indicia whether it be a name, mark or get up distinctive? Guided by the above authorities, the question of who owns the goodwill which is attached to the jewellery business operated under and by reference to the DeGem Trade Name is a question of fact.

T Jewellers Sdn Bhd. The 1st Plaintiff has 7 designers and 63 craftsmen with a maximum capacity of 3, units per month… …The designing and manufacture of such high end, fine jewellery and gem accessories is carried out by the 1st Plaintiff through its various subsidiaries including Inticraft Sdn Bhd in Malaysia who have acquired the skill, craftsmen and machinery to do so.. Thus, the 1st Plaintiff through its authorized subsidiaries or licensees are essentially designers, manufacturers and retailers of high end jewellery, fine 28 jewellery, gem accessories and jewellery related services which high end jewellery, fine jewellery, gem accessories and jewellery related services are offered under and by reference to the DeGem Trade Name and the DeGem Trade Mark.

In relation to this, the Annual Reports of the 1st Plaintiff pg to Bundles B4 to B6 shows that: a the reports include the performance of the whole group which includes the three subsidiaries; b The Board of the 1st Plaintiff is responsible for the corporate governance and the overall performance of the Group [see e. In the light of the above evidence, it seems to me that the 1st Plaintiff operates its jewellery business under and by reference to the DeGem Trade Name through its subsidiaries and that by reason of the manner in which the advertisements and business is conducted, the DeGem Retail Name is in fact distinctive of the 1st Plaintiff and it is the 1st Plaintiff and not its subsidiaries who own the goodwill in the jewellery business as identified by the DeGem Trade Name.

In fact, the Defendants also never adduced any evidence that the DeGem Trade Name is in fact distinctive of the three subsidiaries and not the 1st Plaintiff. In my judgment, learned counsel for the Defendant was not correct when he submitted that because the activities are carried on through subsidiaries, the 1st Plaintiff cannot own the goodwill.

There are a number of authorities on this point. In the Australian case of Fletcher Challenge Ltd. The liquor cases, that is, all those entitled for the time being to use champagne, sherry, whisky or advocaat for their [roducts are clear authority for the principle that goodwill can be shared and that a trading house that does little more than act as the central agent for a number of proprietors can properly represent those 31 proprietors by seeking the enforce shared or joint goodwill.

That I accept as trite law. But what the plaintiffs in the instant case are contending is that the third plaintiff, albeit a holding company, is seeking the declaration not just as a holding company, but in its own right, first as a manufacturer of the tiles under licence from Hunter Douglas and subsequently as the owner of the shared goodwill in the tile trade of the Multi Resources Group of Companies. This I hold they are entitled to do. On the facts of the present case, the 1st Plaintiff does conduct a business through its subsidiaries in the jewellery business, which business is identified with the 1st Plaintiff and in respect of which the 1st Plaintiff owns goodwill.

It is trite law that the obvious ways to show goodwill are to prove extensive sales, promotional and advertising activities all over the country. To support his contention, learned counsel referred to the following authorities. The basic rule is that each may use that name, etc. In that case, the court ruled at p. However, the plaintiffs have not shown whether or not the name is similarly wellknown in Ipoh. Furthermore, the plaintiffs have not shown that the defendants are offering the same kind of food that the plaintiffs are serving.

The fundamental principle of law involved in such an action is that nobody has any right to represent his goods as the goods of somebody 34 else. Asian Organisation Ltd. The total annual revenue in respect of the retail outlets bearing the DeGem Trade Name and offering for sale products bearing the DeGem Trade Mark in Malaysia are as follows: Year An n u a l R e ve n u e o f t h e De G e m G ro u p o f Companies [RM] 83,, , , ,, ,, ,, ,, ,, ,, 35 From the evidence adduced, it is clear that the DeGem Corporate Name has been used extensively since [i.

In light of the evidence adduced, it is clear that by virtue of the success of the 1st Plaintiff and its group, by , the 1st Plaintiff was already known nationwide and the DeGem Corporate Name was already distinctive of the 1st Plaintiff before PW2 in his evidence in chief explained the adoption of DeGem as the trade name and trade mark for a new concept of retail jewelry outlets which essentially deals with high end, fine jewelry targeted at the luxury market.

This concept was first thought of in In , after the listing, the 1st Plaintiff decided to proceed with this. In the 1st Plaintiff started implementing this concept. In this regard, PW2 said that it was in that a decision was made to adopt DeGem [which was the corporate name of the 1st Plaintiff] as the trade name for the outlets which were to bear the above concept and as the trade mark for the products to be sold therein.

This has been explained by PW1 in cross examination. However it is pertinent to note that when launched in , both outlets bore the DeGem Trade Name and offered and sold its products under and by reference to the DeGem Trade Mark. In this regard the Plaintiffs tendered: i an advertisement published in The Star on 8.

The above clearly establishes that the two outlets launched in operated under and by reference to the DeGem Trade Name. This is clear from the cash bills issued at Berjaya Times Square which appear at pages , , , Bundle B4 and the cash bills issued at One Utama which appear at pages , , , , , , , to Bundle B4. These may be summarised as follows: 1. T Jewellers Sdn Bhd] 2. This outlet is operated by the 1st Plaintiff its subsidiary P.

T Jewellers Ampang Sdn Bhd. Below are representations of signboards of the DeGem Retail Outlets in which its trade name is used: The evidence also shows that the majority of products sold at the DeGem Retail Outlets comprise gemstones and diamonds set in precious metal such as platinum, white gold and yellow gold. The 1st Plaintiff has adduced evidence that since whether directly or through its subsidiaries it has extensively sold and offered for sale at its retail outlets and widely promoted and advertised nationwide its DeGem Products under and by reference to the DeGem Trade Name and the DeGem Trade Mark.

Goodwill of the 2nd Plaintiff White jewellery would comprise of platinum and white gold. Further as platinum was much more prestigious than white gold, we decided to emphasise platinum over white gold. Based on the documentary evidence adduced during trial it is noted that the majority of the advertisements and articles are published in print media which is published and distributed nationwide.

The advertisements in the media advertising the said events and invoices relating thereto appear at pg , , , , , , , , Bundle B7. It is also clear from the above evidence that the 2nd Plaintiff and its outlets are known to the trade and public as part of the DeGem Group and associated with the 1st Plaintiff. There is evidence that in , the Defendants retail outlets in Johor Bahru used the full company name as it trade name on its signboards.

The photograph at page Bundle B16 shows the signboard of the 1st Defendant bearing the full company name and Chinese character. In this regard DW2 admitted in cross examination that this was the signboard of the 1st Defendant. In addition, the 1st Defendants receipts at pages Bundle B16 shows the use of a full company name and a full Chinese translation thereof.

Some of the receipts also bear the DeGem logo. Thus, it can be concluded that the 1st Defendant retail outlets were traditional goldsmith. PW14 testified that the 1st Defendant were traditional goldsmiths and dealt primarily with yellow gold. It is relevant to note that the view of the ROC was that there would be no confusion as the corporate names of the 1st Plaintiff and 1st Defendant in full could be distinguished.

At this juncture, it is pertinent to note that the advertisements produced all show that it was only after that De GEM the 1st Defendant was used on its own in the advertisements. There can hardly be said to be substantial and extensive use nationwide. Descriptive Word Further, to support his contention, learned counsel for the Defendants referred to a number of authorities. In the case of Lifestyle 1. In accepting that words could be regarded descriptive even though there are no such words in the English language, the Court of Appeal stated at p.

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INVESTMENT BANKING SALARY UK 2021

The Audit Committee, in consultation with the management and the Executive Directors, deliberates the integrity of the financial results, annual report and audited financial statements before recommending to the Board for distribution to the shareholders and public investors. In this respect, the Board assumes its responsibility for identifying principal risks and reviewing the adequacy and integrity of the Groups systems of internal control.

In any case, it shall be noted that all risk management systems and systems of internal control could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, a system of internal control and risk management of the Group can only provide reasonable but not absolute assurance against material misstatements, fraud and losses.

The Groups internal audit function is outsourced to external consultants. The outsourced internal auditors assist the Board and the Audit Committee in providing an independent assessment of the adequacy, efficiency and effectiveness of the Groups internal control system.

On a quarterly basis, the internal audit function reports its audit findings and recommendations to the Audit Committee. Defined lines of accountability and delegated authority; Management reporting covering operating and financial performance; Monthly monitoring of sales budgets and targets; Operations review meetings are held by the respective divisions to monitor the progress of the operations, deliberate significant issues and formulate corrective measures;.

Physical and electronic security measures for monitoring and ensuring authorized access to the Groups assets and records, complemented by daily inventory and cash counts; and ISO Quality Management System programmes in Inticraft Sdn. Internal quality audits are conducted by the management while annual surveillance audits are conducted by a certification body to provide assurance of compliance with the ISO Quality Management System.

However, the Board recognizes that the Groups system of internal control and risk management processes must continuously evolve to meet the changing and challenging business environment. Therefore, the Board will put in place appropriate action plans to strengthen its system of internal control progressively.

The Committee shall include at least one person who is a member of the Malaysian Institute of Accountants or alternatively a person who must have at least 3 years working experience and have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act or is a member of one of the associations of accountants specified in Part II of the said Schedule or alternatively a person who has fulfill such other requirements as prescribed or approved by Bursa Securities.

No alternate director shall be appointed as a member of the Committee. The members of the Committee shall elect from among their number a chairman who is non-executive and independent, as defined above. If one or more members of the Committee resign, die or for any other reason cease to be a member with the result that the Listing Requirements of the Bursa Securities are breached, the Board shall, within three months of the event, appoint such number of new members as may be required to correct the breach.

The Board shall review the term of office of Committee members no less than once every three years. The Committee shall oversee all internal audit functions and is authorised to commission investigations to be conducted by internal audit as it deems fit. The internal auditor shall report directly to the Committee and shall have direct access to the Chairman of the Committee.

All proposals by management regarding the appointment, transfer or dismissal of the internal auditor shall require the prior approval of the Committee. Other Board members and employees may attend any particular meeting only at the Committees invitation, specific to the relevant meeting. However, at least twice a year the Committee shall meet with the External Auditors without executive Board members present.

The External Auditors may request a meeting if they consider one necessary. The Committee may report any breaches of the Listing Requirements, which have not been satisfactorily resolved, to the Bursa Securities. He shall record attendance of all members and invitees and take minutes to record the proceedings of every meeting of the Committee. All minutes of meetings shall be circulated to every member of the Board. The Committee shall prepare an annual report to the Board that provides a summary of the activities of the Committee for inclusion in the Companys annual report.

The Committee shall assist the Board in preparing the following for publication in the Companys annual report: a Statement on the Companys application of the principles set out in Part 1 of the Malaysian Code on Corporate Governance; Statement on the extent of compliance with the Best Practices in Corporate Governance set out in Part 2 of the Malaysian Code on Corporate Governance, specifying reasons for any areas of non-.

The Audit Committee met five 5 times during the financial year ended 31 December Reviewed the disclosure statements on Corporate Governance, Audit Committee Report and the Statement on Internal Control for the financial year ended 31 December and recommended their adoption to the Board; and Considered the impact of any unusual transactions including significant related party transactions. The cost incurred for the internal audit function in respect of the financial year ended 31 December is RM, The principal responsibility of the internal audit function is to undertake regular and systematic review of the systems of controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively in the Group.

The internal auditor undertakes internal audit function based on the audit plan that was reviewed and approved by the Audit Committee. During the financial year under review, the internal auditor has conducted audit on all operating subsidiaries with recommended improvements to the existing system of controls and submitted his findings to the Audit Committee. These internal audit reports together with responses by management were circulated to all members of the Audit Committee.

All internal audit reports were reviewed by the Audit Committee and discussed at Audit Committee Meetings and recommendations were duly acted upon by the management. As such, the Group seeks to balance its social responsibilities with its obligations to create value for its investors. Welfare of Employees The wellbeing of its employees is paramount to the Groups productivity and is fundamental to the success of the Group.

The Group therefore undertakes concerted efforts to groom its employees towards realising their fullest potential. The Group also recognises that a safe and healthy work environment is crucial to the wellbeing of its employees and in optimising their productivity. In this aspect, the Group continues to fine-tune its health and safety policy to ensure that the environment for its employees, as well as for its customers, visitors and the general public at its premises is free from preventable hazards.

Contributions to Community DeGem Berhad continues its involvement in the community to enhance the quality of life of the less fortunate. In addition, the Group also participated in Estee Lauders Breast Cancer Awareness Campaign by sponsoring its product for the Breast Cancer Awareness Gala Dinner, as well as donated part of the proceeds from the sale of pink ribbon pins towards the campaign.

The Group also strived to expand knowledge of its industry by collaborating with certain colleges in sponsoring and training students who are taking industry-related courses. The students will be offered employment opportunity with the Group upon graduation. Protection of Environment DeGem Berhad seeks to protect its environment by ensuring that the waste from its manufacturing activities are properly treated. Where that is not possible, procedures to ensure safe disposal of the waste are in place.

In addition, the Group also actively encourages a culture of recycling and energy saving amongst its employees to minimise any negative impact to the environment. Responsibility to Marketplace DeGem Berhad continues its efforts to ensure that high standards of social responsibility are upheld in its relationship with its stakeholders.

KPCS is a process set out by the international diamond industry which is designed to certify the origin of rough diamonds from sources which are free of conflict. The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December Principal activities The Company is principally engaged in investment holding and the provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

There has been no significant change in the nature of these activities during the financial year. Net profit after tax before minority interest Minority interest Net profit after tax and minority interest attributable to the shareholders of the Company Reserves and provisions.

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements. Dividend Since the end of the previous financial year, the Company paid a final ordinary dividend of 2. The final ordinary dividend recommended by the Directors in respect of the year ended 31 December is 2. Directors of the Company Directors who served since the date of the last report are: Dato Hasan bin M.

Directors interests The interest and deemed interest in the shares of the Company and of its related corporations other than wholly-owned subsidiaries of those who were Directors at year end including the interests of the spouses or children of the Directors who themselves are not Directors of the Company as recorded in the Register of Directors Shareholdings are as follows: Number of ordinary shares of RM0.

Number of ordinary shares of RM1 each At At 1. None of the other Directors holding office at 31 December had any interest in the ordinary shares of the Company and of its related corporations during the financial year. Directors benefits Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Issue of shares There were no changes in the authorised, issued and paid-up capital of the Company during the financial year. Treasury shares The Company by a resolution passed in an Extraordinary General Meeting held on 17 June , obtained an approval from the shareholders of the Company to repurchase its own ordinary shares.

The Directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. During the financial year, the Company repurchased , ordinary shares of RM0. The total consideration paid for the repurchase was RM, The repurchase transactions were fully financed by internally generated funds.

The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, Of the total ,, issued and fully paid ordinary shares of RM0. The treasury shares are held at a carrying amount of RM, None of the treasury shares held are resold or cancelled during the year ended 31 December Other statutory information Before the balance sheets and income statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i ii all known bad debts have been written off and adequate provision made for doubtful debts, and all current assets have been stated at the lower of cost and net realisable value.

At the date of this report, the Directors are not aware of any circumstances: i that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or that would render the value attributed to the current assets in the Group and in the Company financial statements misleading, or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

Other statutory information At the date of this report, there does not exist: i ii any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 December have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. Significant events The significant events are disclosed in Note 29 to the financial statements.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:. Total non-current assets Inventories Receivables, deposits and prepayments Current tax assets Cash and cash equivalents 9 10 Total current assets Total assets Equity Share capital Share premium Foreign currency translation reserve Treasury shares Retained earnings Total equity attributable to shareholders of the Company Minority interest Total equity.

Group Revenue Cost of sales Note 18 RM ,, ,, 64,, 4,, 38,, 6,, 19 20 22 23,, 1,, 22,, 6,, 15,, RM ,, ,, 66,, 2,, 39,, 8,, 21,, 1,, 20,, 5,, 14,, Company RM 4,, 4,, 1,, 26, 2,, 1,, 1,, , , Distributable Retained earnings RM 14,, , 2,, 11,, , 2,, 10,, Note Total RM 92,, , 2,, 89,, , , 2,, 87,, Group Cash generated from operations continued Interest paid Income taxes paid Interest received Dividend received Net cash generated from operating activities RM 12,, 1,, 7,, , 4,, RM 31,, 1,, 5,, 86, 24,, Cash flows from investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment Net cash used in investing activities , 2,, 2,, 2,, 75, 1,, , , 3,, 1,, 3,, , 20,, 23,, 54, 7,, 7,, 2,, 6,, , 8,, 8,, , 12,, 20,, 2,, 1,, , 4,, 2,, , 2,, 2,, 10,, 12,, , 1,, , Cash and cash equivalents Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:.

Group Note 11 11 16 RM 15,, 10,, 1,, 23,, RM 10,, 10,, 20,, Acquisition of property, plant and equipment During the year, the Group acquired property, plant and equipment with an aggregate cost of RM2,, - RM7,, of which RM, - RM, , were acquired by means of hire purchase arrangements.

The financial statements of the Company as at and for the year ended 31 December do not include other entities. The Company is principally engaged in investment holding and the provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. The holding company during the financial year was Legion Master Sdn. The financial statements were approved by the Board of Directors on 19 April Basis of preparation a Statement of compliance These financial statements have been prepared in accordance with Financial Reporting Standards FRS , accounting principles generally accepted and the Companies Act, in Malaysia.

Basis of preparation contd a Statement of compliance contd. The Group and Company plan to apply the abovementioned standards, amendments and interpretations from the annual period beginning 1 January for those standards, amendments or interpretations that will be effective for annual periods beginning on or after 1 July or 1 January , except for FRS 4, Amendments to FRS 2, IC Interpretation 11, IC Interpretation 13 and IC Interpretation 14 which are not applicable to the Group or to the Company.

The Group and Company plan to apply those standards, amendments or interpretations that will be effective for annual periods beginning 1 January for those standards, amendments or interpretations that will be effective beginning on or after 1 March , 1 July and 1 January , except for Amendments to FRS 2, IC Interpretation 12, IC Interpretation 15, IC Interpretation 16 and IC Interpretation 17 which are not applicable to the Group or to the Company. The impacts and disclosures as required by FRS The amendments to FRS remove the transitional provision that exempted an entity from separating the liability and equity components of a compound instrument issued before 1 January As a result of the amendments, an entity shall separate a compound financial instrument into its liability and equity components when the entity first applies FRS , Financial Instruments: Recognition and Measurement.

The initial application of other standards, amendments and interpretations, which will be applied perpetually, is not expected to have any material financial impact to the current and prior years financial statements upon their first adoption. Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are disclosed below: i FRS 8, Operating Segments FRS 8 replaces FRS , Segment Reporting and requires the identification and reporting of operating segments based on internal reports that are regularly reviewed by the chief operating decision maker of the Group in order to allocate resources to the segment and to assess its performance.

Currently, the Group presents segment information in respect of its geographical segments see Note Improvements to FRSs contain various amendments that result in accounting changes for presentation, recognition or measurement and disclosure purposes which will become effective for the Group and the Companys financial statements for the year ending 31 December Amendment that has a material impact is: FRS , Leases The amendments clarify the classification of lease of land and require entities with existing leases of land and buildings to reassess the classification of land as finance or operating lease.

Leasehold land which in substance is a finance lease will be reclassified to property, plant and equipment. The adoption of these amendments will result in a change in accounting policy which will be applied retrospectively in accordance with the transitional provisions. This change in accounting policy will result in the reclassification of lease of land amounting to RM1,, as at 31 December from prepaid lease payments to property, plant and equipment.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have a significant effect on the amounts recognised in the financial statements, other than those disclosed in Note 7 impairment test on goodwill.

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by Group entities, unless otherwise stated. Control exists when the Group has the ability to exercise its power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Companys balance sheet at cost less impairment losses. Minority interests in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interests and the equity shareholders of the Company.

Where losses applicable to the minority exceed the minoritys interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Groups interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses.

If the subsidiary subsequently reports profits, the Groups interest is allocated all such profits until the minoritys share of losses previously absorbed by the Group has been recovered. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Groups interest in the investee.

Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Significant accounting policies contd b Foreign currency i Foreign currency transactions. Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statements.

The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions. Foreign currency differences are recognised in translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statement as part of the gain or loss on sale.

Derivative financial instruments such as foreign exchange contracts are used as hedges to manage operational exposures to foreign exchange risks. The Group does not hold derivative instruments for trading purposes.

The difference between the forward exchange contracts and the prevailing exchange rates would be recognised in the income statements upon realisation of receipts or payments, or upon maturity, whichever is earlier. Significant accounting policies contd d Property, plant and equipment i Recognition and measurement Freehold land is stated at cost.

Other items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items major components of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income or other operating expenses respectively in the income statements.

The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statements as incurred. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. Depreciation methods, useful lives and residual values are reassessed at the balance sheet date. Significant accounting policies contd d Property, plant and equipment contd iv Change in estimates.

During the year ended 31 December , the Group conducted a review over the useful life of its renovations of trading subsidiaries, which resulted in changes in the expected usage of the non-current asset see Note 3. Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as prepaid lease payments.

Payments made under operating leases are recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

For acquisitions prior to 1 January , goodwill represents the excess of the cost of the acquisition over the Groups interest in the fair values of the net identifiable assets and liabilities. For the business acquisitions beginning from 1 January , goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Any excess of the Groups interest in the net fair value of acquirees identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statement.

Goodwill is tested for impairment annually and whenever there is an indication that it may be impaired. Significant accounting policies contd g Investment properties Investment property carried at cost Investment properties are properties which are owned to earn rental income or for capital appreciation or for both. These include land other than leasehold land held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties.

Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in accounting policy note 2 d. Depreciation is charged to the income statements on a straight-line basis over the estimated useful life of 50 years for buildings.

The cost of inventories is based on the first-in, first-out method, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. The cost of finished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.

Receivables are not held for the purpose of trading. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any. Significant accounting policies contd k Impairment of assets. The carrying amounts of assets, except for financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment.

If any such indication exists, then the assets recoverable amount is estimated. For goodwill, recoverable amount is estimated usually at each reporting date. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets the cash-generating unit.

The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset.

Impairment losses are recognised in the income statements. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit groups of units on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have determined, net of depreciation or amortisation, if no impairment loss has been recognised. Reversal of impairment losses are credited to the income statements in the year in which the reversals are recognised. The corresponding obligations relating to the remaining capital payments are treated as a liability.

The interest element of the hire purchase agreements is amortised over the period of the agreements on the sum of digits method. Significant accounting policies contd n Payables. Payables, including amounts due to subsidiaries and holding company, are measured initially and subsequently at cost.

Payables are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity. The Group accrues for the liability under the programme and recognises in the income statement the amount equal to the points earned multiplied by the applicable rates. Upon redemption by members or expiration of the points award, the accrual is reduced and revenue is recognised accordingly.

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income, over the lease term on a straight-line basis.

Significant accounting policies contd q Employee benefits Short term employee benefits. Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Groups contribution to the statutory pension funds are charged to the income statements in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations. Tax expense is recognised in the income statements except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Significant accounting policies contd t Tax expense contd Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit tax loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax liability is recognised for all taxable temporary differences. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. Plant, equipment and fittings RM 9,, , 96, , 15, 9,, , 63, , 9, 9,, Renovations RM 2,, , , 17, 2,, , , 3, 3,, Motor vehicles RM 3,, , 51, 1, 3,, , , 3,, Total RM 28,, 7,, 96, 1,, 34, 34,, 2,, , , 12, 36,, Total RM 7,, 2,, 44, , 16, 9,, 3,, , , 6, 11,, The Group acquired a building which was under construction during the financial year ended The construction of the building was completed during the financial year ended 31 December The building is pledged as security for borrowing facilities extended by financial institutions to a subsidiary.

The issuance of the strata title for the building is still pending as at 31 December Motor vehicles of the Group with net book value of RM, - RM, are held under hire purchase arrangements as at year end. Property, plant and equipment contd Change in estimates.

During the year ended 31 December , the Group conducted a review over the useful life of its renovations of trading subsidiaries, which resulted in changes in the expected usage of the non-current asset. Renovations, which management previously intended to use for more than ten years, are now expected to remain in use for a period of five years from the date of purchase.

The leasehold land of a subsidiary with a carrying amount of RM1,, - RM1,, is pledged as security for borrowing facilities extended by financial institutions to the subsidiary. Depreciation for the year At 31 December Accumulated depreciation Accumulated impairment loss. Investment properties contd Market value The market value of the investment properties presented on an aggregated basis, is as follows: Market value of investment properties. The Directors estimated the fair values of the Groups investment properties without involvement of independent valuers.

Impairment loss Impairment loss was recognised for an investment property which has ceased to generate rental income in , with costs of RM, Investments in subsidiaries contd Details of the subsidiaries are as follows: Name of company P. Tong Yek Jewellers Sdn. DeGem Masterpiece Sdn. Diamond Mart Sdn. Jewellers Ampang Sdn. DeGem Diamond Collection Sdn. Telenaga Sdn.

D Rewards Services Sdn. Principal activities Investment holding and trading in gold and jewellery Trading in diamonds and jewellery Investment holding and provision of management services Investment holding and trading in gold and jewellery Investment holding and trading in gold medals and badges Manufacturing and trading in gold and jewellery Property investment Trading in gold and jewellery Trading in diamonds and jewellery Property investment Trading in gold medals and badges Trading in diamonds and jewellery and the operation of a rewards redemption programme Trading in diamonds and jewellery Trading and manufacture of gold and jewellery.

Investments in subsidiaries contd Name of company Jewelmart International Sdn. The auditors report on the financial statements of the subsidiaries contained an emphasis on the reliance of these subsidiaries on the continuing financial support from the Company in order to continue operating as a going concern.

Subsidiaries incorporated during the year. Goodwill has been allocated to the Groups cash-generating units, all operating in Malaysia, according to business segments as follows: Group RM 7,, 2, 7,, The carrying amount of the goodwill was assessed for impairment during the year. The recoverable amount of the goodwill is determined based on the value in use of the subsidiaries.

Based on the assessment of the value in use, the recoverable amount is higher than the carrying amount of the investments in the subsidiaries, and accordingly, an allowance for impairment loss is not recognised. Key assumptions used in value-in-use calculations The recoverable amount was determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a five-year period.

The key assumptions used for each of the cash-generating units value-in-use calculations are as follows: i Gross margin The projected gross margin reflects the average historical gross margin, adjusted for projected market and economic conditions and internal resource efficiency. Goodwill on consolidation contd Sensitivity to changes in assumptions Management recognises that the changes in the demand patterns and taste of customers for the subsidiaries merchandise as well as the possibility of new entrants could have a significant impact on growth rate assumptions.

However, high capital costs could deter potential entrants form capturing a certain market share in the industry. Unless there is a sudden change in the demand patterns, the Group should be able to sustain its growth rate. Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred taxes relate to the same taxation authority. Deferred tax assets and liabilities contd Unrecognised deferred tax assets.

Deferred tax assets have not been recognised in respect of the following items: Group Unabsorbed capital allowances Unutilised tax losses RM , , , RM 86, , , Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.

Movement in temporary differences during the year Recognised in income statement Note 22 RM 63, , , , 62, 1,, At Group Property, plant and equipment Unrealised profits on inventories Allowance for slow-moving inventories Unrealised foreign exchange gain Others. Inventories At cost: Raw materials Work-in-progress Finished goods At net realisable value Finished goods Group RM 9,, 3,, ,, ,, 4,, ,, RM 15,, 2,, ,, ,, 4,, ,, The Murabahah Underwritten Notes Issuance Facility MUNIF notes issued by the Company in financial year was secured by the assignment of the rights, title and interest to the insurance policy of the inventories of certain subsidiaries in Cash and cash equivalents Cash and bank balances Deposits placed with licensed banks.

Group RM 15,, 10,, 25,, RM 10,, 10,, 20,, RM , 2,, 2,, The fixed deposits placed with licensed banks earn interest ranging from 1. Share capital Ordinary shares of RM0. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. This amount represents the acquisition cost for the repurchase of the Companys ordinary shares, net of the proceeds received on their subsequent sale or issuance of the shares repurchased.

The Company by a resolution passed in an Extraordinary General Meeting held on 17 June , obtained an approval from the shareholders of the Company to repurchase its own ordinary shares. Of the total ,, issued and fully paid-up ordinary shares of RM0.

Reserves The descriptions of reserves are as follows: Share premium The share premium of the Group and of the Company represents premium arising from the issuance of ordinary shares of the Company at issue price above par value. Foreign currency translation reserve The foreign currency translation is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groups presentation currency.

It is also used to record the exchange differences arising from monetary items which form part of the Groups net investment in foreign operation, where the monetary items is denominated in either the functional currency of the reporting entity or the foreign operation. Subject to agreement by the Inland Revenue Board, the Company has sufficient Section tax credit to frank all of its retained earnings at 31 December , if paid out as dividends.

The Finance Act introduced a single tier company income tax system with effect from year of assessment As such, the Section tax credit as at 31 December will be available to the Company until such time the credit is fully utilised or upon expiry of the six-year transitional period on 31 December , whichever is earlier. Loans and borrowings This note provides information about the contractual terms of the Groups and the Companys interest-bearing loans and borrowings.

For more information about the Groups and Companys exposure to interest rate risk, see Note Loans and borrowings contd Hire purchase liabilities are payable as follows: Group Less than one year Between one and five years Gross , , , Term loans - secured. The first secured term loan of a subsidiary with an initial principal drawdown of RM4. The first term loan is secured by the following: i ii First party first fixed charge over a property of a subsidiary.

Corporate guarantee by the Company. The second secured term loan of the Company amounting to RM The second term loan is secured by the following : i ii Facilities agreement RM Third party fixed charge over properties of two subsidiaries. The third secured term loan of a subsidiary amounting to RM2. The details of the interest rates are as follows: i ii at 3.

Loans and borrowings contd The third term loan is secured by the following: i ii Facility agreement for RM2. Loan Agreement and deed of assignment over a property of a subsidiary. Bank overdraft - unsecured Bank overdraft of a subsidiary is subject to interest rate of 1. Revolving credit - unsecured The unsecured revolving credit of the Company is subject to interest rate of 4. Hire purchase liabilities Hire purchase liabilities are subject to flat interest rates varying between 2.

These amounts are unsecured, interest free and have no fixed terms of repayments. Interest expense: - hire purchase liabilities - term loans - loan from holding company - revolving credit - Munif Notes. Key management personnel comprises directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entities either directly or indirectly.

Deferred tax expense Origination and reversal of temporary differences - current - prior year Effect of changes in tax rate. Reconciliation of tax expense Group RM 22,, 5,, 70, , 34, 6,, , 19, 6,, RM 20,, 5,, , , 34, , 44, 19, 5,, 3, 10, 5,, RM 1,, , 30, 6, , , , Company RM , 57, 95, 38, 38, Consequently, deferred tax assets and liabilities are measured using these tax rates.

Earnings per share Basic earnings per share The calculation of basic earnings per ordinary share was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares in issue during the financial year: RM 15,, ,, 34, ,, RM 13,, ,, -.

Profit for the year attributable to ordinary equity holders of the Company RM Weighted average number of ordinary shares in issue Effect of shares repurchased Total weighted average number of ordinary shares in issue. The Company does not have any potential dilutive ordinary shares. Accordingly, the diluted earnings per share is not presented. The proposed final dividend has not been accounted for in the financial statements of the Group and of the Company as at 31 December Dividends per ordinary share The calculation of dividends per ordinary share is based on the proposed gross final dividend for the financial year ended 31 December of RM2,, RM3,, on the issued and paid-up share capital excluding treasury shares of ,, ordinary shares of RM0.

Contingent liability Company Guarantees to financial institutions in respect of banking facilities granted to a subsidiary Continuing financial support Sen 6,, Sen 6,, The Company has undertaken to provide financial support to certain subsidiaries to enable them to meet their financial obligations as and when they fall due.

Segmental reporting Segment information is presented in respect of the Groups geographical segments. The primary format, geographical segments is based on the Groups management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms.

The Group operates only in one business segment which is the manufacturing and trading in gold and jewellery. The Groups operation in investment holding and property investment are not of sufficient size to be reported separately. Accordingly, information by business segments is not presented. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are also based on the geographical location of assets. The following table provides an analysis of the Groups revenue, results and depreciation and amortization expense by geographical segment: Segment profit before tax RM RM 21,, , 22,, 17,, 2,, 20,, Segment depreciation and amortization RM RM 2,, , 3,, 1,, , 2,, Segment revenue RM RM ,, 31,, ,, ,, 43,, ,, The following is an analysis of the carrying amount of segment assets, segment liabilities and capital expenditure, analysed by geographical segments.

Segment liabilities RM RM 52,, 12,, 65,, 50,, 26,, 77,, Segment capital expenditure RM RM 1,, , 2,, 7,, 71, 7,, Segment assets RM RM ,, 33,, ,, ,, 32,, ,, Financial instruments Financial risk management objectives and policies The Groups financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Groups business whilst managing its interest rate risks both fair value and cash flow , foreign exchange risk, liquidity risk and credit risk.

The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is and has been throughout the year under review, the Groups policy that no trading in derivative financial instruments shall be undertaken. Credit risk The majority of the Groups debtors are from the retail sector. The Groups retail business does not engage in long term contracts with its customers. Thus, there was no significant concentration of credit risk at balance sheet date other than a trade receivable owing from one major customer of RM4,, RM3,, This concept was first thought of in In , after the listing, the 1st Plaintiff decided to proceed with this.

In the 1st Plaintiff started implementing this concept. In this regard, PW2 said that it was in that a decision was made to adopt DeGem [which was the corporate name of the 1st Plaintiff] as the trade name for the outlets which were to bear the above concept and as the trade mark for the products to be sold therein.

This has been explained by PW1 in cross examination. However it is pertinent to note that when launched in , both outlets bore the DeGem Trade Name and offered and sold its products under and by reference to the DeGem Trade Mark. In this regard the Plaintiffs tendered: i an advertisement published in The Star on 8.

The above clearly establishes that the two outlets launched in operated under and by reference to the DeGem Trade Name. This is clear from the cash bills issued at Berjaya Times Square which appear at pages , , , Bundle B4 and the cash bills issued at One Utama which appear at pages , , , , , , , to Bundle B4. These may be summarised as follows: 1. T Jewellers Sdn Bhd] 2. This outlet is operated by the 1st Plaintiff its subsidiary P. T Jewellers Ampang Sdn Bhd.

Below are representations of signboards of the DeGem Retail Outlets in which its trade name is used: The evidence also shows that the majority of products sold at the DeGem Retail Outlets comprise gemstones and diamonds set in precious metal such as platinum, white gold and yellow gold. The 1st Plaintiff has adduced evidence that since whether directly or through its subsidiaries it has extensively sold and offered for sale at its retail outlets and widely promoted and advertised nationwide its DeGem Products under and by reference to the DeGem Trade Name and the DeGem Trade Mark.

Goodwill of the 2nd Plaintiff White jewellery would comprise of platinum and white gold. Further as platinum was much more prestigious than white gold, we decided to emphasise platinum over white gold. Based on the documentary evidence adduced during trial it is noted that the majority of the advertisements and articles are published in print media which is published and distributed nationwide. The advertisements in the media advertising the said events and invoices relating thereto appear at pg , , , , , , , , Bundle B7.

It is also clear from the above evidence that the 2nd Plaintiff and its outlets are known to the trade and public as part of the DeGem Group and associated with the 1st Plaintiff. There is evidence that in , the Defendants retail outlets in Johor Bahru used the full company name as it trade name on its signboards. The photograph at page Bundle B16 shows the signboard of the 1st Defendant bearing the full company name and Chinese character.

In this regard DW2 admitted in cross examination that this was the signboard of the 1st Defendant. In addition, the 1st Defendants receipts at pages Bundle B16 shows the use of a full company name and a full Chinese translation thereof. Some of the receipts also bear the DeGem logo.

Thus, it can be concluded that the 1st Defendant retail outlets were traditional goldsmith. PW14 testified that the 1st Defendant were traditional goldsmiths and dealt primarily with yellow gold. It is relevant to note that the view of the ROC was that there would be no confusion as the corporate names of the 1st Plaintiff and 1st Defendant in full could be distinguished. At this juncture, it is pertinent to note that the advertisements produced all show that it was only after that De GEM the 1st Defendant was used on its own in the advertisements.

There can hardly be said to be substantial and extensive use nationwide. Descriptive Word Further, to support his contention, learned counsel for the Defendants referred to a number of authorities. In the case of Lifestyle 1. In accepting that words could be regarded descriptive even though there are no such words in the English language, the Court of Appeal stated at p.

Both were operating in the same area in Kitchener, Ontario. Notwithstanding evidence of confusion, the High Court refused to continue the ex parte injunction. The plaintiff on the other hand contended that DeGem is clearly a coined word as explained by PW1 in his evidence and is hence not descriptive.

Misrepresentation As set out by Lord Parker in Spalding v Gamage at p The basis of a passing off action being a false representation by the defendant, it must be proven in each case as a fact that the false representation has been made. It may, of course, have been made in express words, but cases of express misrepresentation of this sort are rare.

The more common case is where the representation is implied in the use or imitation of a trade mark, trade name or get-up with which the goods of another are associated in the minds of the public. DW-3 admitted that it had purportedly been found on the eve of the commencement of the trial i.

The Defendant on the other hand argued that the modern approach in tendering a photograph as evidence is that it is no longer necessary for it to be tendered through the photographer, and it is also not necessary for the negatives to be produced.

Generally speaking, there is no need to 60 call the photographer provided that a witness is available who can testify that what is shown on the photograph is a fair and accurate representation of the scene at the relevant time. Calling the photographer will generally only be necessary when no such witness is available or in special cases when technical details of the photographer's art are likely to be in question.

In other words, what is required, in the usual case, of a witness through whom a photograph is to be tendered is first-hand knowledge of what is shown in the photograph rather than first-hand knowledge of the taking of the photograph see JW McElhaney, Trial Notebook 2nd Ed, Litigation Section of the American Bar Association, pp Similarly, Documentary Evidence in Australia by RA Brown 2nd Ed says at p There are generally two methods for proving that things, including photographs, are those taken at the scene, either 1 by tracing custody of the film from the moment of taking until production in court, or 2 by identification of the ultimate print, through oral or other evidence, with the scene recorded see Russell v Russell 4 QSCR in banco ; Schmidt v Schmidt QWN 3 at 5 Barron v Valdmanis, unreported, NSW Sup Ct Meares J, 2 May In that case there was no objection to the 61 authenticity of the photographs tendered by the photographer.

As I have stated earlier, since the Plaintiffs in this case objected to the authenticity of the photograph, in the light of Section 73 of Evidence Act the original must be tendered, namely the negative or the maker of the photograph must be called to prove it.

Thus the photographs are not admissible evidence. Other words, Chinese characters and a logo were also used. The Decision of the Defendants As regards the contention that the Defendants decided in to give prominence to De GEM by reason of its trade mark application on The decision to emphasize De GEM must be seen in the light of this knowledge and the contents of the ROC letter which states the names in full of both parties distinguishes the two parties.

The Chinese Characters The Defendants contended that they have not dropped their Chinese characters. The receipts at pages to Bundle B20 are blank receipts, undated and unissued. They ought to be given no weight as they were clearly not receipts used and issued to the public. The receipts at pages to Bundle B16 show a gradual trend where the Chinese characters are over time given less prominence.

The latest receipts at page B16 dated in does not bear any Chinese characters at all. The Defendants attempted to suggest that that receipt [P] is issued to customers to acknowledge payment but the receipts issued by the outlet to acknowledge receipt of goods from customers for alteration or making new jewellery do bear Chinese characters.

The fact remains that the Defendants admit that in respect of receipts issued to customers to acknowledge payment the chinese characters are not used. They have been dropped. As can be seen from the receipts of the 1stDefendant at pages to B16 dated between to , the 1st Defendant did use the Chinese characters previously.

Apparently the Chinese characters are still used at Plaza Angsana. However the sign at page B20 is clearly not on the outside but inside. This does not detract from the fact that the chinese characters are currently not being used on all the external signboards of all the outlets as can be seen at pages to Bundle B11, pages to Bundle B16 and pages to Bundle B19 [save to ].

However the programmer of the website who inserted the word DeGem Sdn Bhd never gave evidence. It is obvious that the Defendants could have subpoenaed him. Secondly it is clear that the said programmer himself was confused. DW1: Because he believed that this company and the company in KL are the same company. CY: Did Encik Khairul tell you that? DW1: Yes, he believed that they are the same. CY: No. DW1: Yes. Did he explain to you why he put DeGem Sdn.

The plaintiffs applied and the High Court granted an interlocutory injunction in favour of the plaintiffs. Aggrieved, the defendants appealed to the Court of Appeal. Thus, in the light of the above authorities, the plaintiffs need not prove actual confusion. In the words of the Court of Appeal in Yong Sze Fun supra , mere proof of possibility of association would be sufficient.

I now turn to consider the third element in the tort of passing off. Authorities have shown that the plaintiffs in a passing off action, the plaintiffs does not have to prove that he has actually suffered damage by way of loss of business or in any other way.

A probability is enough, so long as the damage is to him in his trade or business. As such it is not necessary to establish actual damage. The Courts will in cases such as this present case readily infer the likelihood of damage. Nationwide or Geographically Limited Jurisdiction In this regard all the advertisements and promotional activities of the Defendants appear local and confined to Johor.

Only one advertisement dated It is negligible and can hardly amount to extensive use nationwide. There is no evidence before this Court that any customers of the Defendants were from beyond Johor. Hence, it is clear from the above that prior to , the Defendants were a small local business whose activities were confined to Johor Baru or if at all Johor. As such I am of the view that any goodwill they may possess is likewise confined to Johor Bahru or if at all Johor. None of the witnesses from the public or even the trade had heard of the Defendants.

C , the Court granted an injunction to restrain 73 the defendant from expanding into Newcastle as they had not established any goodwill there whilst the Plaintiff had. The facts here are of course a little different in that the 1st Plaintiff has acquired goodwill nationwide whilst the Defendants goodwill if any is clearly only within Johor Baru or if at all the State of Johor. Thus the 1st Plaintiff seeks an injunction restraining the Defendants from expanding beyond the State of Johor is allowed.

Whilst each word separately is descriptive, the Plaintiff contended that in combination they are distinctive to the 2nd Plaintiff and have acquired a secondary meaning by reason of the following: a The 2nd Plaintiff has used the combination extensively since as evidence has shown; 74 b There is no evidence of any other party using the same combination in Malaysia [save for the 4th Defendant]. The combination is clearly not common in this country; The combination is clearly not common in this country.

The Registrar did not impose a disclaimer as regards the combination of the two words. As such it confers the exclusive right to use it in combination. From the evidence it is clear that the 4th Defendant knew about 2nd Plaintiff and yet adopted the name.

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