Karex Annual Report, 2014

KAREX BERHAD
(1018579-U)
www.karex.com.my
Karex_AR14_Cover.indd 1
ANNUAL REPORT 2014
KAREX BERHAD (1018579-U)

PTD 7906 & 7907, Taman Pontian Jaya
Batu 34, Jalan Johor
82000 Pontian
Johor, Malaysia
Tel: +607 687 8833
Fax: +607 686 2657
MAKING
OUR
MARK
ANNUAL REPORT 2014
10/24/14 5:56 PM
WHATS
RATIONALE
Karex Berhad is making its mark across the globe
with high quality and innovative products. From
humble beginnings as a family business, Karex has
grown from strength to strength and today is the
largest condom manufacturer in the world. We
produce 4 billion pieces of condoms per year and
supply our condoms to regions across Asia, Africa,
America and Europe. Our products are made to
stringent standards and continue to meet the
changing needs of consumers today.
Karex_AR2014.indb 2
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002 Corporate Information

004 Financial Highlights
008 Chairmans Statement
014 CEOs Statement
024 Board of Directors
026 Profile of Board of Directors
034 CEOs Profile
036 Statement on Corporate Governance
042 Additional Compliance Information
008
Chairmans
Statement
014
CEOs
Statement
INSIDE
044 Audit Committee Report
050 Statement on Risk Management and
Internal Control
052 Financial Statements
109 List of Properties
110 Analysis of Shareholdings
112 Thirty Largest Shareholders
113 Notice of Annual General Meeting

Form of Proxy
Go online to our website at:
www.
KAREX.
com.my
026
Profile of
Board of
Directors
052
Financial
Statements
Karex_AR2014.indb 1
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002
KAREX Berhad
Annual Report 2014
CORPORATE
BOARD OF DIRECTORS
AUDIT COMMITTEE
Tan Sri Dato Seri Utama Arshad bin Ayub

Chairman/Independent Non-Executive Director
Wong Yien Kim

Chairman
Independent Non-Executive Director
Dato Dr. Ong Eng Long @ Ong Siew Chuan

Senior Independent Non-Executive Director
Goh Siang
Senior Executive Director
Goh Leng Kian
Executive Director
Goh Yen Yen
Executive Director

Member
Member
Law Ngee Song
Member
Lam Jiuan Jiuan

Non-Independent Non-Executive Director
Wong Yien Kim
Law Ngee Song
Karex_AR2014.indb 2
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003
Making Our Mark
INFORMATION
REMUNERATION COMMITTEE
MANAGEMENT OFFICE

Chairman
PTD 7906 & 7907, Taman Pontian Jaya

82000 Pontian
Johor
Malaysia
Tel : +607-687 8833
Fax : +607-686 2657
Email : info@karex.com.my
Law Ngee Song

Member
Goh Yen Yen
Member
Executive Director
NOMINATION COMMITTEE
Law Ngee Song
Chairman
Wong Yien Kim
Member
Lam Jiuan Jiuan
Member
COMPANY SECRETARIES
Lim Lee Kuan
(MAICSA 7017753)
Anna Lee Ai Leng
(LS 0009729)
REGISTERED OFFICE
10th Floor, Menara Hap Seng
No. 1 & 3 Jalan P. Ramlee
50250 Kuala Lumpur, Malaysia
Tel : +603-2382 4288
Fax : +603-2382 4170
Karex_AR2014.indb 3
SHARE REGISTRAR
Symphony Share Registrars Sdn. Bhd.
(378993-D)
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Tel : +603-7841 8000
Fax : +603-7841 8151/8152
AUDITORS
Messrs. KPMG [AF 0758]
Chartered Accountants
Level 14, Menara Ansar,
65, Jalan Trus,
80000 Johor Bahru
Johor, Malaysia
Tel : +607-224 2870
Fax : +607-224 8055
BANKERS
Bangkok Bank Public Company Limited
Hong Leong Bank Berhad
HSBC Bank Malaysia Berhad
RHB Bank Berhad
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
Stock Name : KAREX
Stock Code : 5247
10/24/14 5:54 PM
004
KAREX Berhad
Annual Report 2014
FINANCIAL HIGHLIGHTS
Financial year ended 30 June
2012
Financial Performance (RM000)
(i) Revenue
(ii) Profit before tax
(iii) Profit attributable to Owners of the Company
(a)
2013
(a)
2014
188,751
14,530
12,016
231,389
36,144
29,028
285,332
54,428
45,168
163,947
79,094
117,457
223,406
108,397
146,678
289,864
223,332
203,549
91,569
57,375
79,094
99,010
57,375
108,397
51,664
101,250
223,332
3.49
0.23
8.43
0.31
11.77
0.55
(b)
Financial Position (RM000)

Assets
(i) Total tangible assets
(ii) Net assets
(iii) Current assets
Liabilities and Shareholders Funds (RM000)
(i) Current liabilities
(ii) Paid-up share capital
(iii) Shareholders funds
Per Share
(i) Basic earning (sen)*
(ii) Net assets (RM)**
* Based on weighted average number of shares issued
(000)
** Based on number of shares issued (000)
Financial Ratios
(i) Return on total tangible assets(%)
(ii) Return on shareholders funds (%)
(iii) Current ratio (times)
(iv) Gearing ratio (times)
(v) Gearing ratio net of cash (times)
(a)
344,250
344,250
7%
15%
1.28
0.46
0.35
(c)
(c)
344,250
344,250
(c)
(c)
383,696
405,000
13%
27%
1.48
0.47
0.09
16%
20%
3.94
0.10
N/A
(d)
(e)
The figures as stated above for the financial years ended 30 June 2012 to 2013 are consistent with the proforma consolidated financial
information as disclosed in our Prospectus dated 11 October 2013. The proforma consolidation financial information have been prepared
based on the assumption that the acquisition of subsidiaries have been in existence since the financial year 2012 and before the
completion of Initial Public Offerings and Bonus Issue (as detailed in note 24 of the audited financial statements). The accounting
principles and bases applied are consistent with those adopted by Karex Group for the financial year ended 30 June 2014.
(b) The figures for financial year 2014 as stated above are based on a complete years basis, whereas the audited financial statements
reflect the financial results from the effective date of acquisition i.e., 23 September 2013 (refer page 063, Statement of Profit or Loss).
(c) Restated to reflect the retrospective adjustments arising from the bonus issue completed in the financial year ended 30 June 2014 in
accordance with MFRS 133, Earnings per Share
(d)
After the completion of Acquisitions of subsidiaries, Initial Public Offerings and Bonus Issue (as detailed in note 24 of the audited financial
statements).
(e) No disclosure of gearing ratio net of cash (times) as the Group is in a net positive cash flow position as at 30 June 2014.
Karex_AR2014.indb 4
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005
Making Our Mark
Revenue (RM000)
300,000
285,332
Profit before tax (RM000)
60,000
54,428
231,389
200,000
40,000
188,751
100,000
20,000
2012
2013
2014
Profit attributable to Owners

of the Company (RM000)
50,000
45,168
36,144
14,530
2012
2013
2014
Basic earning per share (sen)
15.00
11.77
40,000
10.00
29,028
30,000
20,000
5.00
12,016
8.43
3.49
10,000
0
2012
2013
2014
2012
2013
Net assets per share (RM)
Net assets (RM000)
0.60
300,000
2014
0.55
223,332
0.40
200,000
0.23
108,397
100,000
Karex_AR2014.indb 5
0.20
79,094
2012
0.31
2013
2014
2012
2013
2014
10/24/14 5:54 PM
Karex_AR2014.indb 6
10/24/14 5:54 PM
DRIVING
INNOVATION
We design and develop our primary manufacturing
machines in-house, and this allows us to constantly
customise and produce new products in accordance
with the changing needs of consumers. This in turn
gives us a competitive edge in the market.
Karex_AR2014.indb 7
10/24/14 5:54 PM
008
KAREX Berhad
Annual Report 2014
I am delighted and honored to

welcome you as a shareholder
in Karex and to present to you
the inaugural annual report
following listing of Karex.

Karex_AR2014.indb 8
10/24/14 5:54 PM
009
Making Our Mark
CHAIRMANS
STATEMENT
Dear va
lued sha
reholde
Karex B
rs,
e
r
h
a
d
(
Karex
Main Ma
r
k
e
t
o
f Bursa M) was listed on
Berhad
th
public o on 6 November alaysia Securiti e
ordinaryffering involved 2013. The initia es
l
40,500,0 shares which c 67,500,000
sale of 2 00 new shares omprises of
demand 7,000,000 exist and an offer for
over sub for the initial puing shares. Tota
listing ex scribed by 14.2 blic offering wa l
million a ercise raised c times and the s
lo
t RM1.85
per sharse to RM75
e.
RM75
Million
The listing exercise

raised
Karex_AR2014.indb 9
10/24/14 5:54 PM
010
KAREX Berhad
Annual Report 2014
Chairmans Statement
FINANCIAL PERFORMANCE
Karex recorded a stellar financial performance for the
financial year ended (FYE) 2014, registering a strong
double digit growth for both top and bottom lines.
Our company reported a revenue of RM285.3 million,
representing a 23.3% growth from the last financial year.
The increase in revenue was largely attributed to the higher
condoms sales achieved as a result of new capacity
expansion.
Karex bottom line margin improved remarkably with profit
after tax growing by 55.9% to RM45.2 million from RM29.0
million in the preceding year. This was due to the increase
in sales of better margin products, lower effective tax rate,

favourable latex prices as well as strengthening of US Dollar
against Ringgit Malaysia.
Our company continues to maintain a healthy cash and
cash equivalents of RM85.6 million as a result of the
proceeds raised from IPO as well as good cash flow from
operations. Gearing ratio improved from 0.47 times in the
previous year to 0.10 times in the current year. As at 30
June 2014, Karex is in a net cash position.
Cash and
cash equivalents of
RM85.6
Million
as a result of the proceeds raised

from IPO as well as good cash
flow from operations.
Karex_AR2014.indb 10
10/24/14 5:54 PM
011
Making Our Mark
CORPORATE DEVELOPMENTS
DIVIDEND
During the FYE 2014, the Company proposed a bonus issue

to reward shareholders and to improve the marketability and
tradability of its shares in the market. 135,000,000 bonus
shares were issued on the basis of 1 bonus shares for every
2 Karex shares held. To date, our companys total enlarged
shares issued is 405,000,000 shares.
In conjunction with the dividend policy, the Board is

pleased to propose a final single tier dividend of 2.5 sen
per share for the financial year ended 2014 subject to the
approval of shareholders at the forthcoming Second Annual
General Meeting.
At the same time, Karex has also adopted a dividend policy

where the Company will endeavour to distribute a minimum
of 25% of its annual profit attributable to shareholders with
effect from the FYE 30 June 2014.
PROSPECTS
Lastly, it is my pleasure to inform you that our company

had on 3 October 2014 completed the acquisition of 55%
stake in Global Protection Corp. (GP), owner of the fourth
largest brand in the United States of America. This
acquisition marks the beginning of an exciting journey for
our company towards creating a world renowned brand.
Karex recorded a stellar

financial performance for
the FYE 2014, registering
a strong double digit
growth for both top and
bottom lines.
The global demand for condoms is expected to rise in

tandem with population growth and this will augur well for
Karex as the worlds largest condom manufacturer. Moving
forward, I believe that 2015 will be an exciting year for Karex.
APPRECIATION
Our historical 2014 would not have been possible without the
tireless and concerted effort of all our staff in the Group. I
would also like to extend my heartfelt appreciation to our
customers, business associates, government bodies, analysts
and members of the media for their steadfast support. A
special mention must be accorded to my fellow Board
members for their wisdom and insightfulness throughout the
year. I would like to take this opportunity to thank GP for
making this deal a success and at the same time welcome
them on board. Finally to all our shareholders, thank you for
placing your trust and faith in Karex.
Gearing ratio
0.10
times
Revenue growth
23.3%
10/24/14 5:54 PM
PO
PRO
10/24/14 5:54 PM
OWERING
ODUCTIVITY
Starting off as a family business, today we

have a workforce of 2,138 employees over 3
manufacturing facilities situated across Johor,
Selangor and Hat Yai, Thailand. With the
dedication of our committed employees, we
have reached a milestone capacity to
produce 4 billion pieces of condoms per
annum, making us the largest condom
manufacturer in the world and were not
stopping there.
10/24/14 5:54 PM
014
KAREX Berhad
Annual Report 2014
Against this backdrop, Karex was successfully listed on 6

November 2013 and was one of the best IPO performer on
Bursa Malaysia Securities Berhad in year 2013. Share price
increased by an impressive 126% as at 31 December 2013.
Our overall performance for FYE 2014 was remarkable,
registering a profit after tax of RM45.2 million on the back
of RM285.3 million revenue, with this I will begin my
operational review.
10/24/14 5:54 PM
015
Making Our Mark
CEOs
STATEMENT
126%
Share price
increased
ers,
d
l
o
h
e
r
a
Dear Sh
umption
s
n
o
c
m
o
of
nd
Global co trong on the back is
s
it
remained lation growth and With
.
u
rapid pop continue growing ess
to
ren
expected tened public awa nning
the heigh ms aids family pla lly
a
o
that cond tects against Sexu e will
, ther
s
n
and pro
o
i
t
c
e
f
ms.
ted In
Transmit demand for condo
be huge
10/24/14 5:54 PM
016
KAREX Berhad
Annual Report 2014
CEOs Statement
Operational Review
By 2018, global condom consumption is projected to be
38.2 billion pieces registering a compounded annual growth
rate of 9%. The condom market is largely driven by
emerging economies such as Asia, Middle East and Africa.
The robust economic activity, young demographics and
limited condoms users in these regions provides ample
opportunities for growth. In addition, the two most
populated countries in the world such as China and India
are growing rapidly on the back of a steady economy.
Latex price movement is on a downward trend this year,
hovering around RM5.05/kg for FYE 2014. This represents a
15.6% decline as compared to an average of RM5.98/kg in
FYE 2013. We foresee that latex prices will reduce further
due to the rubber stockpile issue in Thailand, the main
producer of rubber in the world.
Meanwhile, RM/USD exchange rate has also improved by

5.2% from an average of RM3.08/USD in FYE 2013 to an
average of RM3.24/USD in FYE 2014. The lower latex price and
strengthening of US Dollar (USD) against Ringgit Malaysia
(RM) have benefited Karex in terms of margins improvement
for the financial year under review.
RM
3.5
RM/USD Price Movement for the FYE 2013
3.0
Latex Price Chart for the FYE 2013
6.2.13
5.2.13
4.2.13
3.2.13
2.2.13
1.2.13
12.2.12
11.2.12
10.2.12
9.2.12
7.2.12
800
8.2.12
2.5
Sen
RM
3.5
700
RM/USD Price Movement for the FYE 2014
600
500
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
400
6.1.14
5.1.14
4.1.14
3.1.14
2.1.14
1.1.14
12.1.13
11.1.13
10.1.13
Latex Price Chart for the FYE 2014
9.1.13
3.0
600
8.1.13
Sen
7.1.13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
500
During the financial year under review, we have expanded

our manufacturing capacity from 3 billion pieces per annum
to 4 billion pieces per annum via our Port Klang, Selangor
and Hat Yai, Thailand factories. Port Klang being our
smallest factory with a manufacturing capacity of 300 million
pieces of condom now have 500 million additional capacity.
We have purchased the plant next door for expansion
purposes and currently our Port Klang factory stands on a
87,120 sq ft land. Over at Hat Yai factory, we have also
expanded next door, installing 500 million additional
capacity bringing current manufacturing capacity to 1.2
billion pieces per annum from 800 pieces previously on
135,141 sq ft of land.
10/24/14 5:54 PM
017
Making Our Mark
FINANCIAL REVIEW
Karex posted a strong FYE 2014 performance, with revenue growing from RM231.4 million to RM285.3 million, increasing
by 23.3% year-on-year, while the Group recorded a profit from operations of RM55.2 million in the current year,
representing a 43.4% increase from RM38.5 million in the last financial year. The Group recorded an outstanding 3 years
CAGR of 23% on its revenue, 80% on its profit from operations and 94% on its profit after tax.
Profit from Operations (RM million)
Revenue (RM million)
CAGR=23%
300
Profit After Tax (RM million)
CAGR=80%
60
200
40
30
100
20
10
2012
2013
2014
2012
2013
CAGR=94%
50
-10
2014
2012
2013
2014
Condoms remain as the dominant revenue contributor over the last 3 years, contributing towards more than 90% of
revenue. For FYE 2014, condoms contributed 93% of revenue while contribution from catheters decline to 3%, revenue
from probe cover and lubricating jelly stood at 4% as compared to the preceding year. Sales of probe cover remained
stable, while sales of lubricating jelly has been on an upward trend as it serves as a complementary product to condoms.
5%
91%
2012
Catheters
Probe Covers & Lubricating Jelly
Condoms
5%
4%
90%
3%
5%
2013
Catheters
Condoms
93%
4%
2014
Catheters
Condoms
10/24/14 5:54 PM
018
KAREX Berhad
Annual Report 2014
CEOs Statement
In terms of geographical breakdown, Asia region continue to be the revenue driver contributing around 30% of the Groups total
revenue in the last 3 years. Revenue from Europe, America, Africa and Asia regions were 9%, 23%, 33% and 35% respectively for
FYE 2014. The America region registered the highest growth rate among all the regions, growing by 52.8% from the previous
financial year as a result of the new product launch in conjunction with the 2014 FIFA World Cup.
22%
2012
9%
14%
18%
16%
23%
2013
2014
35%
29%
31%
37%
33%
33%
Europe RM29.4m
Asia RM55m
Africa RM62.4m
America RM41.9m
Europe RM32.8m
Asia RM85.2m
Africa RM71.2m
America RM42.2m
Europe RM25.4m
Asia RM101.1m
Africa RM94.3m
America RM64.5m
10/24/14 5:54 PM
Making Our Mark
019
MOVING FORWARD
Our capacity expansion plan, will continue throughout 2015
and 2016. By then, we expect our manufacturing capacity
to reach 6 billion pieces per annum.
To facilitate the expansion plan, we have acquired a piece
of 18 acres land in Pontian, Johor to build a new factory to
cater for the expansion plan. This new factory will embrace
environmental and sustainability measures far beyond those
required by state or national laws.
When the new Pontian factory is completed, it will be our
largest factory in the Group with a manufacturing capacity
of 4 billion pieces per annum. Machines from the old
Pontian factory will be moved to the new Pontian factory in
stages to avoid disruption in our operations. The remaining
2 billion manufacturing capacity will be from Port Klang,
Selangor and Hat Yai, Thailand factory respectively.
Karex is vying for green building certification by the US

Green Building Council making it part of an elite group of
300 manufacturing facilities in Asia that are certified or
waiting for certification through its rating tool, called
Leadership in Energy and Environmental Design, or LEED. In
addition, the factory is aspiring to attain certification under
the Malaysian Green Building Index (GBI) for the industrial
category.
The extensive plans for conservation of resources will
undoubtedly result in higher productivity and lower costs to
the consumers.
Reducing the environmental footprint of the new Pontian
factory requires serious consideration by all design
professionals engaged on the project from the planners,
architects, environmentally sustainable design consultants,
structural engineers, mechanical and electrical engineers as
well as the process engineers. At the heart of each decision
throughout the design process was the aim of reducing
Karexs dependence on natural resources.
10/24/14 5:54 PM
020
KAREX Berhad
Annual Report 2014
CEOs Statement
The new factory will sport an ambitious one megawatt roof

mounted solar array significantly reducing its reliance on
power from the grid.
Passive cooling is enabled by sun-shading fins incorporated
as key architectural elements to lower the heat load on the
building fabric, thus reducing cooling / conditioning
requirements while allowing penetration of daylight. Whereas
the choice of the refrigerants used in cooling systems as
well as the agents in firefighting systems is strictly governed
by their low impact on the environment particularly ozone
depletion and global warming potential.
Consumption of potable water is significantly reduced by
the collection of rainwater and condensate water from
cooling process to be used for flushing toilets and cleaning
purposes. No potable water is used for landscape irrigation
which is taken care of by the reuse of water recycled from
treated wastewater.
Besides applying for the GBI and LEED certifications, Karex
is also moving more of the Groups operations towards
automation especially in this new Pontian factory to improve
overall efficiency. Additionally, this new factory is also
poised to be the centre of innovation for Karex as the
Group strives towards building better products and

technology for their customers.
We made announcement on August 2014 to acquire a 55%
stake in Global Protection Corp. (GP). GP is the owner of
the ONE brand condoms, the fourth largest brand in the
US. With over 1,000 customers and access to more than
25,000 stores in the US and Canada, we believe that the
acquisition of GP will serve as a complement to our existing
own brand manufacturing products. In addition, the
distribution agreement will grant Karex the exclusive rights
to become the sole distributor of ONE brand condom as
well as selected condom brands in certain countries in Asia
(including China), North Africa and selected countries in the
Middle East.
I am now pleased to inform that Karex has successfully
completed the acquisition on 3 October 2014. ONE is an
established brand in US and Canada since 2004, and has
been very well-received especially by the younger
generation today due to its unique product innovations and
creative marketing techniques. We are very excited to be
given this opportunity to work along with GP, we believe
that this is only the beginning towards a greater journey for
us in Karex.
10/24/14 5:54 PM
Making Our Mark
021
CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a public listed company, Karex is aware of its
commitment towards sound corporate governance and
accountability, responsible business management, adhere to
the sensitivities of the community around and remain
conscious to environmental needs and creating sustainable
economic growth.
Karex aims to contribute and provide real benefit to the
community to make the community as a whole a better
place to live and conduct business. During the year under
review, we have supported benevolent and charitable
causes on an ad hoc basis through monetary assistance
and sponsorship to promote community activities. In
addition, we have also made financial contributions in
support of several charitable events and will continue to
promote CSR based on our corporate philosophy of
supporting our community. Besides that. Karex collaborated
with the local charitable association to provide working
opportunity to the less fortunate.
We also believe in providing single parent families and low
income group with love, motivation and hope to improve
their lives through education. Through various education
funds, Karex has committed to assist these target groups
on an on-going basis.
APPRECIATION
On behalf of the Board of directors, management and
employees at Karex, I would like to extend my gratitude
towards our valued customers and business associates for
their continuous support throughout these years. To our
bankers, financiers, advisors, institutional and retail investors,
we thank you for your confidence in Karex. We will commit
ourselves to create sustainable shareholder value and solid
financial performance. My heartfelt appreciation also goes to
our Board of Directors for their guidance, advice and insight
in steering the company forward.
10/24/14 5:55 PM
10/24/14 5:55 PM
DELIVERING
QUANTITY
Our products are designed for pleasure and total reliability.
Our condoms, catheters and other medical products are
manufactured and tested to the highest standards of quality
to ensure maximum protection, safety and customer
satisfaction.
10/24/14 5:55 PM
024
KAREX Berhad
Annual Report 2014
BOARD OF
DIRECTORS
10/24/14 5:55 PM
025
Making Our Mark
From left to right:
Dato Dr. Ong Eng Long @ Ong Siew Chuan, Lam Jiuan Jiuan, Goh
Siang, Law Ngee Song, Goh Leng Kian, Tan Sri Dato Seri Utama
Arshad bin Ayub, Wong Yien Kim, Goh Yen Yen
10/24/14 5:55 PM
026
KAREX Berhad
Annual Report 2014
Profile of Board of Directors

Malaysian, aged 86
Tan Sri Dato Seri Utama Arshad was appointed to the
Board on 30 November 2012 as our Chairman and
Independent Non-Executive Director. He is the Chairman of
the Remuneration Committee and a member of the Audit
Committee.
Tan Sri Dato Seri Utama Arshad has a distinguished career
in the Malaysian Civil Service, where he have held various
senior positions in various Ministries in the Malaysian
Government from 1958 till 1983, including serving as Deputy
Governor of Bank Negara Malaysia (1975 1977), Deputy
Director General in the Economic Planning Unit of the Prime
Ministers Department (1977 1978) and as Secretary General
in the Ministry of Primary Industries (1978), Ministry of
Agriculture (1979 1981) and Ministry of Land and Regional
Development (1981 1983). He was also a Member of
Justice Haruns Salaries Commission for statutory bodies.
Presently, Tan Sri Dato Seri Utama Arshad sits on the Board
of Directors of the various public listed companies namely
Malayan Flour Mills Berhad, Tomypak Holdings Berhad, KULIM
(M) Berhad, Top Glove Corporation Berhad and Bistari Johor
Berhad. He is also a member of the Board of PFM Capital
Sdn Bhd, Ladang MOCCIS Sdn Bhd, Zalaraz Sdn Bhd
(a family company) and Nakagawa Rubber Industries Sdn Bhd.
He has attended all the Board Meetings held during the
financial year ended 30 June 2014. He does not have any
family relationship with any Director and/or Major Shareholder
of the Company and has no conflict of interest with the
Company. He has not been convicted of any offences within
the past 10 years other than traffic offences, if any.
The details of his interest in the securities of the Company is
set out in the Analysis of Shareholdings on page 111 of this
Annual Report.
Tan Sri Dato Seri Utama Arshad is Chairman of Board

Directors of University Malaya, Pro Chancellor of Universiti
Teknologi MARA (UiTM), Chancellor of KPJ Healthcare
University College (KPJUC) and Chancellor of INTI
International University (INTI IU). He is a Governor of Tuanku
Jaafar College, Chairman of PINTAR Foundation, Trustee of
AmanahRaya Berhad Foundation, Chairman of Bistari Johor
Berhad, Chairman of Lembaga Bersekutu Pemegang
Amanah Pengajian Tinggi Islam Malaysia, Director of Lion
Education Foundation, Patron of Arshad Ayub Foundation,
Adviser of Yayasan Budiman (YBUiTM) and a member of
Tun Razak Foundation, Pak Rashid Foundation, Lung
Foundation of Malaysia and Advisor of Malaysian Malay
Businessman And Industrialists Association (PERDASAMA).
Tan Sri Dato Seri Utama Arshad graduated with a Diploma
in Agriculture from College of Agriculture, Serdang, Selangor
in 1954 and later obtained a Bachelor of Science (Honours)
Economics and Statistics from University of Wales,
Aberystwyth, United Kingdom in 1958. In 1964, he obtained
a postgraduate Diploma in Business Administration from
Management Development Institute (now IMD), Lausanne,
Switzerland.
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027
Making Our Mark
Goh Siang
Malaysian, aged 64
Senior Executive Director
Goh Siang was appointed to the Board on 30 November
2012 as our Senior Executive Director. He has over 35
years of experience in the rubber and latex industry.
Goh Siang has gained substantial amount of experience
since 1976 via his engagement with the General Rubber
Goods Division in Dunlop Ltd, Manchester, UK, for two (2)
years. After his stint in the UK, Goh Siang joined Ban Seng
Hong Sdn Bhd as a General Manager in 1978, where he
was in charge of overseeing the production of Standard
Malaysian Rubber and marketing function of the company.
Since 1990, Goh Siang has been with our Group. He is
involved in the planning, organising and charting our
Groups direction in the manufacturing, sales and marketing
of condoms and other medical disposable products
worldwide; the marketing and logistic of international
business transactions; and the planning and organising of
latex condom and catheter manufacturing plants.
Goh Siang graduated with a Bachelor of Science Degree
with Honours in Chemical Engineering and a Master of
Science in Polymer Technology from the Loughborough
University of Technology, UK in 1975.
financial year ended 30 June 2014. Goh Leng Kian, Goh
Yen Yen and Lam Jiuan Jiuan are his siblings. He has not
been convicted of any offences within the past 10 years
other than traffic offences, if any.
The details of his interest in the securities of the Company
is set out in the Analysis of Shareholdings on page 111 of
this Annual Report.
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028
KAREX Berhad
Annual Report 2014
10/24/14 5:55 PM
Making Our Mark
Goh Leng Kian

Malaysian, aged 59
Executive Director, Technical and R&D
Goh Leng Kian was appointed to the Board on 27
September 2012 as our Executive Director in Technical
and R&D. His specialist experience in the condom and
latex dipping industries spans over 20 years.
Goh Leng Kians experience includes the establishment
of the condom and catheter manufacturing plants,
exposing him to a wide spectrum of roles including the
supervision and management for the detail design,
construction, installation, commissioning and testing of
all related equipment, systems as well as the facilities of
the projects. He also has over 30 years of experience in
the rubber and latex industry.
Goh Leng Kians career started in 1980 with Ban Seng
Hong Sdn Bhd as a Mechanical Engineer, where he is in
charge of the engineering unit for the companys rubber
processing facilities. He joined our Group in 1988. He is
Goh Yen Yen

Malaysian, aged 71
Executive Director, Administration
Goh Yen Yen was appointed to the Board on 30
November 2012 as our Executive Director in
Administration with over 20 years of experience in
handling human resource, finance and administration
system, internal quality auditing and also hands-on
experience in budget, control and overhead cost and
capital expenditure. She is a member of the
Remuneration Committee.
029
currently responsible for overseeing our Groups

manufacturing facilities, including production and
technical matters. This includes the construction and
development of our condom dipping lines, ET and foiling
machines, R&D activities such as improving the dipping
process, new automation to improve production efficiency
and product quality and overall yield of the factories as
well as sourcing of new packaging machinery.
Goh Leng Kian graduated with a Bachelor of Science
Degree with Honours in Mechanical Engineering from the
Loughborough University of Technology, UK in 1979.
financial year ended 30 June 2014. Goh Siang, Goh Yen
Yen and Lam Jiuan Jiuan are his siblings. He has not
The details of his interest in the securities of the
Company is set out in the Analysis of Shareholdings on
page 111 of this Annual Report.
She graduated with a Bachelor Degree of Art in

Geography with Honours from the University of Malaya in
1969. Prior to joining Karex in 1996, she was a teacher
in various secondary schools in Johor for 26 years.
She has attended all the Board Meetings held during the
financial year ended 30 June 2014. Goh Siang, Goh
Leng Kian and Lam Jiuan Jiuan are her siblings. She
has not been convicted of any offences within the past
10 years other than traffic offences, if any.
The details of her interest in the securities of the Company
is set out in the Analysis of Shareholdings on page 111 of
this Annual Report.
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030
KAREX Berhad
Annual Report 2014

Lam Jiuan Jiuan
Australian, aged 62
Lam Jiuan Jiuan was appointed to the Board on 30
November 2012 as our Non-Independent Non-Executive
Director. She is the Chairperson of the Risk Management
Committee and a member of the Nomination Committee.
She brings with her, a vast 35 years of experience from
the financial and corporate management industry.
Lam Jiuan Jiuan started out in 1976, where she joined
the Commercial Banking Company of Sydney, as a
management trainee, where she gained a wide spectrum
of retail banking experience before moving on to join
Tricontinental Australia Limited in 1978. In 1979, she
moved to Hong Kong and joined Toronto Dominion Bank
in its Asia and Australasia Division as a Regional Credit
Manager, responsible for credit approvals of banks/
corporate and monitoring country limits. In 1986, she
joined the Canadian Imperial Bank of Commerce for three
(3) years as the Corporate Marketing Manager in charge
of major public listed companies and as well as corporate
company accounts. In 1989, she joined Barclays Bank
PLC and she is currently a senior banker in Barclays
Bank PLCs international private banking division.
She graduated with a Bachelor of Economics majoring in
Accounting and Commercial Laws from the University of
Sydney, Australia in 1976. She is also a Fellow of
Certified Public Accountant Australia as well as a member
of the Hong Kong Registered Financial Planners.
She has attended all the Board Meetings held during the
financial year ended 30 June 2014. Goh Siang, Goh Yen
Yen and Goh Leng Kian are her siblings. She has not
The details of her interest in the securities of the
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031
Making Our Mark
Wong Yien Kim

Malaysian, aged 60
Wong Yien Kim was appointed to the Board on 30
November 2012 as our Independent Non-Executive
Director. He is the Chairman of the Audit Committee and
member of the Nomination Committee.
He recently retired as Senior General Manager Finance
of Kumpulan Perangsang Selangor Berhad. He was also
the Vice President, Finance of Kumpulan Darul Ehsan
Berhad from 1 January 2000 to 9 May 2011. In addition,
between 2007 to 2013, he served as a member of the
Board, the audit committee and the investment
committee of Taliworks Corporation Berhad.
Wong Yien Kim has been a member of the Malaysian
Institute of Accountants and the Institute of Chartered
Accountants England and Wales since 1982.
financial year ended 30 June 2014. He does not have
any family relationship with any Director and/or Major
Shareholder of the Company and has no conflict of
interest with the Company. He has not been convicted
of any offences within the past 10 years other than
traffic offences, if any.
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032
KAREX Berhad
Annual Report 2014

Law Ngee Song
Malaysian, aged 48
Law Ngee Song was appointed to the Board on 30
November 2012 as our Independent Non-Executive
Director. He is the Chairman of the Nomination
Committee, a member of the Audit Committee and
Remuneration Committee.
Law Ngee Song graduated from Australia National
University with a Bachelor of Commerce degree and
Bachelor of Laws degree in 1987 and 1989 respectively.
He was admitted as Advocate and Solicitor, High Court
of Malaya in 1991.
Law Ngee Song practiced as a legal assistant in Allen &
Gledhill from 1991 to 1995 and was subsequently
promoted to partner of the firm in 1995. He joined Nik,
Saghir & Ismail in 1996 and has been a partner since.
Law Ngee Song has been on the board of directors of
Evergreen Fibreboard Berhad since 2007 and has been
serving as the chairman of the board since 2010. He is
also a non-executive independent director of AngloEastern Plantations PLC, a company listed on the
London Stock Exchange.
financial year ended 30 June 2014. He does not have
any family relationship with any Director and/or Major
Shareholder of the Company and has no conflict of
interest with the Company. He has not been convicted
of any offences within the past 10 years other than
traffic offences, if any.
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Making Our Mark
033

Malaysian, aged 70
Dato Dr. Ong Eng Long was appointed to the Board on 29 July
2013 as our Independent Non-Executive Director and also a
member of the Audit Committee and Risk Management
Committee. He graduated from University of Malaya with a
Bachelor of Science (Hons) Degree in 1969 and obtained a PhD
from Queen Mary College, London in 1973.
He started off at the Rubber Research Institute of Malaysia
(RRIM) as a Senior Research Officer in 1973. He has held
different positions in RRIM up to 1998 when it merged with two
(2) other organisations to form the Malaysian Rubber Board.
He was the former Deputy Director General of the Malaysian
Rubber Board from 1998 to May 2001 and the former Deputy
CEO of Malaysian Rubber Export Promotion Council from 2001
to 2008.
Dato Dr. Ong Eng Long has been the Technical Adviser for
Kossan Rubber Industries Bhd since July 2008, the Chairman of
ISO/TC 157 Non-Systemic Contraceptives and STI Barrier
Prophylactics since 2007 and the Chairman of ISO/TC 45 SC4
Rubber Products Other Than Hoses since 2005. ISO/TC 157 is
the technical committee that is responsible for, amongst others,
the international condom standards while ISO/TC 45 is responsible
for, also amongst others, international rubber glove standards. He
has been involved with standards development for the past two
(2) decades. Dato Dr. Ong has more than 150 publications in
areas of rubber physics and latex dipped products.
Dato Dr. Ong Eng Long is the President of both Institute of
Chemistry, Malaysia and the Malaysian Rubber Product
Manufacturers Association.
financial year ended 30 June 2014. He does not have any
family relationship with any Director and/or Major Shareholder
of the Company and has no conflict of interest with the
Company. He has not been convicted of any offences within
the past 10 years other than traffic offences, if any.
The details of his interest in the securities of the Company is
set out in the Analysis of Shareholdings on page 111 of this
Annual Report.
10/24/14 5:55 PM
034
KAREX Berhad
Annual Report 2014
CEOs
PROFILE
Goh Miah Kiat
Malaysian, aged 36
Chief Executive Officer
Goh Miah Kiat was appointed as our Chief Executive Officer
on 29 July 2013. He became an integral part of our Group
since 1999 and for over 10 years, he has been overseeing
the marketing and logistics, international business dealings,
brand development and coordination activities. He is a
member of the Risk Management Committee.
Goh Miah Kiat has been acting as a representative of
Malaysia in TC 157 (the technical committee for the
standardisation of non-systemic contraceptives and STI
barrier prophylactics) since year 2000.
Throughout his career, Goh Miah Kiat has actively contributed
to the development and promotion of condoms in Malaysia.
He played a part in the development of the following:
1. Global Condom Standard, ISO 4074;
2. MS ISO 16037:2010 in association with SIRIM,
Malaysia; and
3. ISCR/TC 8 - Non-Systematic Contraceptives and STI
Barrier Prophylactics that contributed the development
of the Malaysian Condom Standard
Goh Miah Kiat graduated with a Bachelors Degree in
Economics and Management from the University of Sydney
in 1999. He is currently a member of the Board of Trustee,
member of the Marketing Committee and member of the
Scholarship Committee in the Malaysian Rubber Export
Promotional Council.
He is the nephew of Goh Siang, Goh Yen Yen, Goh Leng
Kian and Lam Jiuan Jiuan, the Board members of the
Company.
The details of his interest in the securities of the Company
is set out on page 112 of this Annual Report.
10/24/14 5:55 PM
Making Our Mark
035
10/24/14 5:55 PM
036
KAREX Berhad
Annual Report 2014
STATEMENT ON
CORPORATE GOVERNANCE
The Board of Directors (the Board) of Karex Berhad (Karex
or The Company) has adopted the principles and the best
practices prescribed in the Malaysian Code on Corporate
Governance 2012 (the Code) in managing and directing the
board matters and business of the Group for the financial
year. It believes that good corporate governance would result
in sustainable long term growth, safeguard the interest of all
stakeholders, and enhance shareholders value and the
Companys financial performance.
In drafting this Statement, the Board has conducted a review
to benchmark its current practices and proceedings against
the principles and recommendations in the Code. The result
of this review is used as the basis for the Board in describing
the application of the Principles and the extent of compliance
with the Best Practices advocated in the Code.
The Board has set the management authority limit and

retained its authority of approval on significant matters. The
Board has also formalised its responsibilities and functions as
well as the division of responsibilities and powers between
the Board and Management and the Board Committees in its
Board Charter. This Board Charter also provides a basis to
the Board in assessing its own performance and that of its
individual directors.
BOARD OF DIRECTORS
It is the overall governance responsibilities of the Board to
lead and control the Group. The Board plans the strategic
direction, development and control of the Group and has
embraced the responsibilities listed in the Code, which
facilitate effective discharge of the Boards stewardship and
fiduciary responsibilities. The Executive Directors and Chief
Executive Officer (CEO) are responsible for making and
implementing operational and corporate decisions while the
Non-Executive Directors balance the board accountability by
providing their independent views, advice and judgment in
safeguarding the interests of the shareholders.
The Board supports gender diversity and female participation

in the board. Presently, the Board has two (2) female directors.
The Board has noted the various board policies recommended
in the Code and would define and adopt these policies in due
course in order to further strengthen its governance
functionality.
The Board observes the Directors Code of Conduct
established by the Companies Commission of Malaysia
(CCM) which can be viewed from CCMs website at www.
ssm.com.my.
There is a clear division of responsibilities between the

Chairman, Executive Directors and CEO to ensure that there
is a balance of power and authority. The Chairman position
is held by an Independent Non-Executive Director. The
Chairman is responsible for the board effectiveness and
conduct whilst the Executive Directors and CEO have the
overall responsibilities over the Groups operating units,
organisational effectiveness and implementation of Board
policies and decisions.
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037
Making Our Mark
BOARD COMPOSITION AND COMMITTEES

The present composition of the Board includes sufficient
number of independent, executive and non-executive directors
as prescribed by the requirements of paragraph 15.02 of the
Main Market Listing Requirements of Bursa Malaysia Securities
Berhad (MMLR) to facilitate effective and independent
decision making and balance of power. Presently, the Board
has eight (8) members comprising three (3) Executive
Directors, four (4) Independent Non-Executive Directors and
one (1) Non-Independent Non-Executive Director. The Boards
composition complies with MMLR which require one-third of
Board members to be independent directors to reflect fairly
the interests of the minority shareholders of the Company.
The Board Members have diverse backgrounds and
experiences in various fields. Collectively, they bring a broad
range of skills, experience and knowledge relevant to directing
and managing the Groups businesses. Descriptions of the
background of each director are presented on page 026 to
033 as well as published on the corporate website www.
karex.com.my for shareholders reference.
The Board has delegated specific responsibilities to the
respective committees of the Board namely the Audit
Committee, Nomination Committee and Remuneration
Committee. In addition, subsequent to the current financial
year, the Board has formed the Risk Management Committee
to oversee and implement the risk management framework in
the Group. Terms of reference of the Risk Management
Committee will be defined accordingly to empower this
committee to carry out its functions effectively.
The Board Committees deliberate and examine issues in
accordance to their terms of reference and report to the
Board on significant matters that require the Boards attention
and approval.
Audit Committee (AC)

The AC comprises solely Independent Non-Executive
Directors. The responsibilities, composition, terms of reference
and activities of the Committee are outlined in this Annual
Report under the section of Audit Committee Report.
Nomination Committee (NC)

The NC is established and maintained to ensure that there
are formal and transparent procedures for the appointment of
new directors to the Board and for the performance appraisal
of directors. The current members comprising majority of

Independent Non-Executive Directors are as follows:
Chairman : Law Ngee Song
Member
: Wong Yien Kim
Member
: Lam Jiuan Jiuan
Functionally, the NC is responsible for reviewing and making
recommendation of any appointments to the Board for
approval based on the size of the Board, the mix of skills and
experience and other qualities of the candidates. The NC
assists the Board in reviewing the composition of the board
members annually and ensures that the current composition
of the board functions competently.
During the financial year, NC conducted a meeting on 14
November 2013. In this meeting, the NC:
i.
ii.
Reviewed and adopted the terms of reference of the

Committee; and
Reviewed and recommend to the Board for appointment
of an additional member in the Committee.
The NC will administer and review the first annual performance

and its assessment criteria for the Board, Board Committee
and individual director in the coming financial year.
Remuneration Committee (RC)

The RC is responsible for reviewing and recommending to
the Board the remuneration policy and remuneration packages
of Directors. The members of RC are as follows:
Chairman : Tan Sri Dato Seri Utama Arshad bin Ayub
Member
: Law Ngee Song
Member
: Goh Yen Yen
The remuneration packages of the Companys Executive and
Non-Executive Directors are determined by the Board as a
whole. The respective Directors shall abstain from participating
in the decision making in respect of his or her remuneration.
RC meeting is held at least once a year. During the financial
year, one (1) RC meeting was held on 14 November 2013 to
adopt its terms of reference and to review the directors fees
and meeting allowance.
10/24/14 5:55 PM
038
KAREX Berhad
Annual Report 2014
Statement on
Corporate Governance
Re-election of Directors
The Companys Articles of Association stipulates that all
Board members who are appointed by the Board shall retire
and be subject to election by shareholders at the immediate
Annual General Meeting.
The Companys Articles of Association also provides that at
least one-third (1/3) of the Directors shall retire by rotation at
each Annual General Meeting and that all Directors shall retire
once in every three (3) years. A retiring Director shall be
eligible for re-election.
Directors who are above seventy (70) years of age are
required to offer themselves for re-appointment annually in
accordance with Section 129(6) of the Companies Act, 1965.
THE COMPANY SECRETARY

All Board Members have unrestricted access to the advice
and services of the Company Secretary for the purposes of
the Boards affairs and the business. The appointment and
removal of Company Secretary or Secretaries of the Board
shall be the prerogative of the Board as a whole. The
Company Secretary appointed should be suitably qualified
and competent in order to support the Board in carrying out
its role and responsibilities.
The Company Secretary is responsible for ensuring that
Board procedures are followed, the applicable rules and
regulations for the conduct of the affairs of the Board are
complied with and all matters associated with the maintenance
of the Board are performed effectively.
In addition, the Company Secretary ensures minutes are duly
entered into the books for all resolutions and proceedings of
all meetings of the Board. These minutes of meetings record
the decisions taken and the views of individual Board
Members. Such minutes are signed by Chairman of the
meeting at which the proceedings are held or by the Chairman
of the next succeeding meeting.
SUPPLY OF INFORMATION
The agenda for Board meetings and the relevant reports and
information for the Boards consideration are forwarded to all
members prior to the Board meetings. Management is invited
to provide further information and clarification on issues
raised by the Board Members during their deliberations and
decision makings in the meetings.
The Board has unrestricted and timely access to all information

necessary for the discharge of its responsibilities. All Directors
also have access to the services and advice of management
staff and other independent professionals, at the expense of
the Group in the discharge of their duties.
BOARD INDEPENDENCE
Independence is important for ensuring objectivity and
fairness in boards decision making. All Independent Directors
of the Board comply with the criteria of independent directors
as prescribed in MMLR.
The roles and responsibilities of the Chairman and Executive
Directors are separated and the Chairman of the Board is an
Independent Director.
In accordance with the best practices in corporate governance,
the Board has identified Dato Dr. Ong Eng Long @ Ong Siew
Chuan, a member of the Audit Committee as the Senior
Independent Non-Executive Director of the Board to whom
concerns of shareholders and other stakeholder may be
conveyed.
Going forward, in order to uphold independence of
Independent Directors, the Board has adopted the following
policies:i.
Subject to Board justification and shareholders approval,

tenure of Independent Directors should not exceed a
cumulative term of nine (9) years; and
ii. Annual assessment of independence of its Independent

Directors focusing on events that would affect the ability
of Independent Directors to continue bringing independent
and objective judgment to board deliberation and the
regulatory definition of Independent Directors.
An Independent Director may continue to serve the Board
subject to re-designation of the Independent Director as a
Non-Independent Director. In the event the Board intends to
retain the Independent Director as an Independent Director
after servicing a cumulative term of nine (9) years, the Board
will provide justification for its decision and seek shareholders
approval.
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039
Making Our Mark
BOARD COMMITMENT
The underlying factors of Directors commitment to the Group
are devotion of time and continuous improvement of
knowledge and skill sets.
The Board meets at least every quarter and on other
occasions, as and when necessary, to inter-alia approve
quarterly financial results, statutory financial statements, the
Annual Report, business plans and budgets as well as to
review the performance of the company and its operating
subsidiaries, governance matters and other business
development matters. Board papers are circulated to the
Board members prior to the Board meetings so as to provide
the Directors with relevant and timely information to enable
them to have proper deliberation on issues raised during
Board meetings and to discharge their individual responsibilities
with reasonable due care, skills and diligence. Individual
members of the Board are required to inform the Board
before accepting the new appointment and to communicate
the time he/she expects to spend of the new appointment.
During the financial year, the Board met three (3) times and
details of each directors attendance are as follows:-
Directors
Number of
meetings attended
Tan Sri Dato Seri Utama Arshad bin

Ayub (Chairman, Independent
Non-Executive Director)
3/3
Dato Dr. Ong Eng Long @

Ong Siew Chuan (Senior Independent
Goh Siang (Senior Executive Director)
Goh Leng Kian (Executive Director)
Goh Yen Yen (Executive Director)
Lam Jiuan Jiuan (Non-Independent
Wong Yien Kim (Independent
Law Ngee Song (Independent
3/3
During the financial year, the Directors have attended the

following conferences and training programmes:
Directors
Training/Seminars/Forum
Tan Sri Dato Seri

Utama Arshad bin
Ayub
Nominating Committee Program

organised by Bursa Malaysia
Dato Dr. Ong Eng

Long @ Ong Siew
Chuan
Mandatory Accreditation
Programme Asian Latex Conference
- Kochi, India Global Rubber
Conference Palembang, Indonesia 3rd National
Rubber Economic Conference
(NREC) 2013 - Kuala Lumpur.
Goh Siang
Mandatory Accreditation Programme

G l o b a l R u b b e r C o n f e r e n c e ,
Palembang, Indonesia
Goh Leng Kian

Awareness on Malaysian Medical
Device Act 2012
Goh Yen Yen

GST Seminar for LMW
Lam Jiuan Jiuan
Wong Yien Kim
Managing Value and Accelerating

Growth
Law Ngee Song
Nominating Committee Program

organised by Bursa Malaysia
3/3
3/3
3/3
3/3
3/3
3/3
The Directors recognise the needs to attend training to

enable them to discharge their duties effectively. The training
needs of each Director would be identified and proposed by
the individual Directors or NC.
Barclays Asia Forum

Understanding Balance Sheet
Multi Asset Class Funds at Barclays
Barclays H1 Investment Roadshow
Withers Seminar- International
Probate When is a Will not a Will
Withers UK budget
Cross Border Compliance Training
Singapore
Cross Border Compliance Training
China
Credit Workshop
Citizenship Lens training
All Directors have completed the Mandatory Accreditation

Program as required by Bursa Malaysia Securities Berhad.
10/24/14 5:55 PM
040
KAREX Berhad
Annual Report 2014
Statement on
Corporate Governance
DIRECTORS REMUNERATION
Executive Directors are remunerated based on the Groups
performance, market conditions and their responsibilities
whilst the remuneration of the Non-Executive Directors is
determined in accordance with their experience and level of
responsibilities assumed in committees and the board.
The aggregate remuneration of the Directors of the Company
for the year ended 30 June 2014 is as follows:Executive Non-Executive
Director
Director
(RM000)
(RM000)
Salaries, Bonus,
EPF, Others
Fees
Other Emoluments
Total
985
55
275
1,040
275
The number of Directors whose income falls within the

following bands is set out as follows:
Remuneration Band
50,000 and below
50,000 to 100,000
200,000 to 300,000
400,000 to 500,000
Executive
Directors
Non-Executive
1
2
4
1
As part of the Audit Committee review processes, the Audit

Committee has obtained assurance from the External Auditors
confirming that they are, and have been, independent
throughout the conduct of the audit engagement in accordance
with the terms of all relevant professional and regulatory
requirements.
Annually, the Audit Committee also reviews the appointment,
performance and remuneration of the External Auditors before
recommending them to the shareholders for re-appointment
in the AGM. The Audit Committee would convene meeting
with the External Auditors and Internal Auditors without the
presence of the Executive Directors and employees of the
Group as and when necessary.
RISK MANAGEMENT
The Board acknowledges that a sound risk management
framework is an integral part of good management practices.
Risk is inherent in all business activities. The risk management
objective of the Board is to ensure that there are structural
means to identify, prioritise and manage the risks involved in
all the Groups activities and to balance between the cost of
managing and treating risks, and the anticipated benefits that
will be derived.
Quarterly management meetings are called and used by the
Executive Directors and CEO as a mean of communication
and feedback channel which facilitate whistleblowing apart
from reviewing, monitoring and deciding on the business
development, changes and actions to ensure businesses are
under control, at these meetings.
FINANCIAL REPORTING
The Board is responsible to ensure that the quarterly financial
reporting and announcements of the Company presents a
true and fair view and assessment of the Groups financial
position, performance and prospects. The Board ensures that
the Groups financial statements are drawn up in accordance
with the provisions of the Companies Act, 1965 and applicable
approved accounting standards. The Board is assisted by the
Audit Committee in reviewing and scrutinising the information
in terms of the overall accuracy, adequacy and completeness
of disclosure and ensuring the Groups financial statements
comply with applicable financial reporting standards.
The Board has established an internal audit function which is

currently outsourced to a professional firm. Functionally, the
Internal Auditors report to the Audit Committee directly and
they are responsible for conducting reviews and appraisals of
the effectiveness of the governance, risk management and
internal controls and processes within the Group. Further
details of the Groups state of risk management and internal
control systems are reported in the Statement on Risk
Management and Internal Control on pages 050 to 051.
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Making Our Mark
CORPORATE DISCLOSURE
SHAREHOLDERS RIGHT
Corporate disclosure and information are important for

investors and shareholders. The Board is advised by the
management, the Company Secretary and the External and
Internal Auditors on the contents and timing of disclosure
requirements of the MMLR on the financial results and
various announcements. The management is invited to attend
the Board and Audit Committee meetings and to provide
explanations to the Board on the operations of the Group.
Transparency and accountability are important in

communication of the Groups performance and major
developments with the Companys shareholders, stakeholders
and investors. Accordingly, the Board ensures that there is
timely release of quarterly financial results, circulars, Annual
Reports, corporate announcement and press releases. In
addition to the various announcements made during the
period, information on the Company is available on the
Companys website at www.karex.com.my. The Board would
also respond to meetings with institutional shareholders,
analysts and members of the press to convey information
regarding the Groups performance and strategic direction as
and when requested.
The Group leverages on its corporate website to disseminate

and add depth to its communication with the public. News
alert feature in the website is available for public community.
All registered Karexs web users of this alert will be notified
of the Groups latest news. The board charter was formalised
and published on its present corporate website.
SUSTAINABILITY
Promoting sustainability is the corporate responsibilities of
the Group. The Board requires its business units to promote
appropriate environmentally friendly practices in the Group
within business, industry and regulatory environment in which
the Groups businesses operate in. Towards this end, the
Group is constructing the first largest green condom
manufacturing facility in the world.
Going forward, the Group will carry on more efforts to further
increase its commitment to corporate social responsibility for
its employees.
General meeting is an important avenue through which

shareholders can exercise their rights. The Board would
ensure suitability of venue and timing, effective publicity of
general meeting event, the quality of the annual report as well
as undertake other measures to encourage shareholders
attendance and participation in the meetings. Shareholders
are reminded that they have the right to demand a poll vote
at general meetings. Also, poll voting is mandated for related
party transactions that require specific shareholders approval.
COMPLIANCE STATEMENT
The Board has taken steps to ensure that the Group has
implemented as far as possible the Principles and
Recommendations of the MCCG 2012 in all material aspects,
save as disclosed therein.
This statement is issued in accordance with a resolution of
the Board dated 22 September 2014.
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042
KAREX Berhad
Annual Report 2014
ADDITIONAL COMPLIANCE INFORMATION

The following information is provided in accordance with Paragraph 9.25 of the Main Market Listing Requirements (MMLR)
of Bursa Malaysia Securities Berhad as set out in Appendix 9C for the financial year ended 30 June 2014 (financial year),
unless otherwise stated:
1. Utilisation of Proceeds
The gross proceeds raised from the Public Issue amounting to RM74.93 million. As at 30 September 2014, the status of
the utilisation of the proceeds raised from the Public Issue are as follows:-
Purposes
Proposed
utilisation
RM000
Actual
utilisation
RM000
Deviations
RM000
Balance
RM000
Intended
timeframe
for utilisation
Research and
Development
Capital expenditure
Working capital
Repayment of bank
borrowing
Listing expenses
4,000
41,750
13,675
(1,209)
(16,448)
(3,192)
(728)(2)
2,791
25,302
9,755
Within 36 months
Within 36 months
Within 36 months
10,000
5,500
(10,000)
(6,228)
728(2)
Within 6 months
Within 6 months
Total gross proceeds
74,925
(37,077)
(1)
(2)
37,848
The proposed utilisation of proceeds as disclosed above should be read in conjunction with the Prospectus of the
Company dated 11 October 2013.
Actual listing expenses incurred were more than the estimated listing expenses by approximately RM0.7 million
mainly due to higher professional fee charges as well as other incidental costs incurred in connection to the listing
exercise. In accordance to the Prospectus dated 11 October 2013, the excess of listing expenses shall be funded
out of the portion allocated for working capital purposes.
2. Share Buy-Back
The Company did not have a scheme to buy back its own shares during the financial year.
3. Options, Warrants or Convertible Securities
The Company did not have options, warrants or convertible securities during the financial year.
4. Depository Receipt programme
The Company did not sponsor any depository receipt programme during the financial year.
5. Sanctions and/or Penalties
There were no public sanctions and/or penalties imposed on the Company or its subsidiaries, Directors or Management
by the relevant regulatory bodies during the financial year.
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Making Our Mark
6. Non-Audit Fees
The amount of non-audit fees paid to external auditors by the Group and the Company respectively for the financial year
are as follows:Group/Company
RM000
Non-audit fees paid to KPMG Malaysia
455
Services rendered by KPMG are not prohibited by regulatory and other professional requirements, and are based on
globally practiced guidelines on auditors independence.
7. Variation of Results
There was no deviation of 10% or more between the results of the financial year ended 30 June 2014 as per the audited
financial statements and the unaudited results previously announced.
8. Profit Guarantee
The Company did not make any arrangement during the financial year which requires profit guarantee.
9. Material Contracts Involving Directors and Major Shareholders Interests
There was no material contracts entered into by the Company and/or its subsidiaries involving Directors and Major
Shareholders interests subsisting as at 30 June 2014.
10. Recurrent Related Party Transactions
The recurrent related party transaction of revenue nature incurred by the Group for the financial year did not exceed the
threshold prescribed under Paragraph 10.09(1) of the MMLR.
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044
KAREX Berhad
Annual Report 2014
AUDIT
COMMITTEE
REPORT
The Board of Directors of Karex Berhad (the Board) is

pleased to present the Audit Committee Report for the
financial year ended 30 June 2014.
The AC met three (3) times during the financial year ended
30 June 2014 and the details of their attendance are as
follows:
Name of Director
COMPOSITION AND MEETINGS

As at the date of this Annual Report, the Audit Committee
(AC) comprises four (4) Directors as follows:
Chairman
Wong Yien Kim
Members
Attendance
Wong Yien Kim

Chairman
3/3

Member
3/3

Member
2/2
Law Ngee Song

Member
3/3
Law Ngee Song

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045
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046
KAREX Berhad
Annual Report 2014
Audit Committee Report

The AC Chairman, Wong Yien Kim, is a fellow member of the
Malaysian Institute of Accountants and the Institute of
Chartered Accountants England and Wales. Accordingly, the
Company complies with Paragraph 15.09(1)(c)(ii)(bb) of the
Main Market Listing Requirements (MMLR).
2. Meetings

The Board assesses the performance of the AC and its

members through an annual Board Committee effectiveness
evaluation and is satisfied that they are able to discharge
their functions, duties and responsibilities in accordance with
the Terms of Reference (TOR) of the AC which are available
on Karexs website, thereby supporting the Board in ensuring
appropriate Corporate Governance (CG) standards within
the Group.
The AC shall meet at least four (4) times in each financial

year or more frequently as circumstances required with
notice of issues to be discussed or shall record its
conclusions in discharging its duties and responsibilities.
The quorum for a meeting shall be no less than two (2)
members, provided that the majority of members present
shall be Independent Non-Executive Directors.
Upon request of any member of the Committee, the

external auditors or internal auditors, the Chairman of the
Committee shall convene a meeting of the Committee to
consider matters which should be brought to the attention
of the directors or shareholders.
Details of the members of the AC are contained in the Profile of

Directors as set out on pages 026 to 033 of this Annual Report.
The AC may invite any member from the Management, the

head of finance and the representatives of the internal
auditors and the external auditors to attend the meeting.
The Committee should also meet with the external auditors
without Executive Board members present at least twice a
year.
The Company Secretary is responsible for distributing the

agenda of the meetings and relevant information to the AC
members well in advance of their meetings, and recording
the proceedings of the AC meetings.
Minutes of each meeting shall be kept and distributed to

each member of the AC.
SUMMARY OF TERMS OF REFERENCE

1. Composition

The members of the AC shall be appointed by the Board

and consists of at least three members. All the Committee
members must be non-executive directors, with a
majority of them being independent directors to fully
comply with paragraph 15.09 of the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad.
All members of the Audit Committee should be financially
literate and at least one of the members of the Committee
must:
a. be a member of the Malaysian Institute of
Accountants; or
b. have at least three (3) years working experience and
must have passed the examinations specified in
Part 1 of the 1st Schedule of the Accountants
Act, 1967; or
must be a member of the associates of
accountants specified in Part II of the 1st
Schedule of the Accountants Act, 1967; and
c. fulfill such other qualifications and/or experience as
approved by Bursa Malaysia Securities Berhad.
In the event of any vacancy in the Audit Committee, the

Company shall fill in the vacancy not later than three (3)
months.
3. Key Functions and Responsibilities

The key functions and responsibilities of the AC are as

follows:
a. Risk Management & Internal Control
i.
Review the adequacy of and to provide

independent assurance to the Board on the
effectiveness of the Companys risk management
and risk assurance process.
ii.
Evaluate the quality and effectiveness of the

Companys Internal Control system and
management information systems, including
compliance with applicable laws, rules, corporate
governance requirements and guidelines.
iii. Recommend to the Board the Directors

Statement on Risk Management and Internal
Control and any changes to the said Statement.
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Making Our Mark
b. Financial Reporting
i.
Any changes in or implementation of

accounting policies and practices;
Significant or material adjustments with
financial impact arising from the audit;
Significant unusual events or exceptional
activities;
F i n a n c i a l d e c i s i o n - m a k i n g w i t h t h e
presumptions of significant judgments;
The going concern assumptions; and
The appropriateness of managements
selection of accounting policies and
disclosures in compliance with approved
accounting standards, stock exchange and
other regulatory requirements.
ii.
ii.
Recommend the appointment or re-appointment

of the external auditors and audit fee to your
Board, after reviewing the suitability, resources,
competency and independence of external
auditors and the accounting firm.
Make appropriate recommendations to your
Board on matters of resignation, dismissal or
cessation of office of the external auditors and
secure the reason of such resignation, dismissal
or cessation of office.
i.
Review the adequacy of the scope, functions,

competency, resources and authority of the
internal audit function in carrying out its work.
ii.
Review the risk-based internal audit plans and

programmes.
iii. Ensure co-ordination between the internal and

external auditors.
iv. Review the major findings reported by internal
audit and follow up on managements
implementation of the recommended actions.
v.
Annually assess performance of services provided

by the internal audit function.
e. Significant Related Party Transactions

Review and recommend to the Board matters

regarding Significant Related Party Transactions
including disclosures, values of mandates and
situations involving potential conflict of interest that
may arise within the Company, including any
transaction, procedure or course of conduct that
raises questions on management integrity.
f.
Other Matters
Propose best practices on disclosure in financial

results and annual reports of the Company in line
with the principles set out in the Malaysian Code
of Corporate Governance, other applicable laws,
rules, directives and guidelines.
c. External Audit
i.
d. Internal Audit
Review the quarterly results and annual financial

statements before recommendation to the Board
for approval for release to Bursa Malaysia
Securities Berhad, focusing particularly on:
i.
To report to Bursa Malaysia Securities Berhad, if

the AC views that a matter resulting in a breach
of the MMLR reported by the AC to the Board
has not been satisfactorily resolved by the Board.
ii.
To highlight such matters as the AC considers

appropriate or as defined by the Board from time
to time.
iii. To announce to Bursa Malaysia Securities

Berhad, if there is any related party transactions
which exceed the Shareholder Mandate and
provide full reason and detailed explanations.
iii. Review and discuss the nature and scope of the

external audit strategy and plan for the year.
iv. Review and discuss issues arising from external
auditors interim and final letters of recommendation
to management, including management responses
and the external auditors evaluation of the system
of internal control and any other matters the
external auditor may wish to discuss (in the
absence of Management, if required).
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048
KAREX Berhad
Annual Report 2014
Audit Committee Report

4. Rights
The AC is accorded with the following rights in the
performance of its duties and responsibilities:i.
has the explicit authority to investigate any matter

within its terms of reference;
ii.
has full and unrestricted access to any information

and resources which are required to perform its
duties;
iii. be able to obtain, if it considers necessary, external

independent professional advice;
iv. be able to invite outsiders with relevant experience
and expertise to attend meeting if necessary;
v. be able to convene meetings with the external
auditors, internal auditors or both, excluding the
attendance of other Directors and employees,
whenever deemed necessary;
vi. be given full report upon completion of the internal
audit reviews to be taken from time to time;
vii. has direct communication channels with the external
auditors and internal auditors;
viii. be able to make prompt reports to Bursa Malaysia
Securities Berhad or such other names(s) as may
be adopted by Bursa Malaysia Securities Berhad,
when the AC is of the view that a matter reported
by it to the Board of Directors has not been
satisfactorily resolved resulting in a breach of the
MMLR; and
ix. be authorised to pass resolutions in writing and by
circular provided always that such resolution(s) shall
be executed by all members. Any such resolution(s)
may consist of several documents in like form, each
signed by one or more members of the AC.
SUMMARY OF ACTIVITIES OF THE AC

In accordance with the Terms of Reference of the AC, the
following activities were undertaken by the AC during the
financial year ended 30 June 2014, including the deliberation
on and review of:
i.
the unaudited quarterly financial statements of the Group

to ensure adherence to the regulatory reporting
requirements and appropriate resolution prior to
submission to the Board of Directors for approval.
ii. the audit plan of the external auditors in terms of their

scope of audit prior to their commencement of their
annual audit.
iii. the related party transactions to ensure that they were
not detrimental to the interests of the minority
shareholders.
iv. t h e i n t e r n a l a u d i t r e p o r t w h i c h o u t l i n e d t h e
recommendations towards correcting areas of weaknesses
and ensured that there were management action plans
established for the implementation of the internal auditors
recommendations.
v. the adequacy and effectiveness of the Groups internal
control system and report to the Board.
vi. the adequacy of the scope, functions, competency and
resources of the internal audit function, and the internal
audit programme and results of the internal audit process
to ensure the appropriate actions are taken of the
recommendations of the internal audit function.
vii. the necessary trainings attended by members of the AC,
which are as set out on page 039 of this Annual Report.
5. Review of AC
The Board shall review the term of office and performance
of the AC and each of its members at least once every
three (3) years to determine whether the AC and its
members have carried out their duties in accordance
with their terms of reference.
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049
Subsequent to financial year ended 30 June 2014, the AC

carried out the following activities, including the deliberation
on and review of:
i.
the annual audited financial statements of the Company

and of the Group prior to the submission to the Board
of Directors for consideration and approval.
ii.
the AC report, Statement of Corporate Governance and

Statement of Risk Management and Internal Control
before recommending to the Board of Directors for their
approval, for inclusion in the Annual Report.
iii. the audit reports from the external auditors in relation to

audit and accounting matters arising from the statutory
audit; matters arising from the audit of the Group in
meetings with the external auditors without the presence
of the executive Board members and management.
iv. the re-appointment of external auditors and their audit
fees, after taking into consideration the independence
and objectivity of the external auditors and the cost
effectiveness of their audit, before the recommendation
to the Board of Directors for approval.
INTERNAL AUDIT FUNCTION

The Groups internal audit function is outsourced to an
independent professional firm named IA Essential Sdn. Bhd.
to assist the AC in discharging its duties and responsibilities
in respect of reviewing the adequacy and effectiveness of the
Groups risk management and internal control systems.
The internal audit function is independent and not related to
the Groups External Auditors. The Internal Auditors evaluates
significant processes and assess their effectiveness. During the
financial year ended 30 June 2014, the areas audited are in
accordance with the internal audit plan approved by AC.
Internal audit reports were issued to the AC and tabled in the
AC meetings on quarterly basis. The reports were also issued
to the respective operations management, incorporating audit
recommendations and managements responses with regards
to any audit findings on the weaknesses in the systems and
controls of the operations. The Internal Auditors also follows
up with management on the implementation of the agreed
audit recommendations. The total costs incurred for internal
audit function of the Group for the financial year ended 30
June 2014 was amounted to RM45,500.
The report is made in accordance with the resolution of the
Board of Directors dated 22 September 2014.
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050
KAREX Berhad
Annual Report 2014
STATEMENT ON RISK MANAGEMENT

AND INTERNAL CONTROL
The Board of Directors (the Board) is pleased to present its
Statement on Risk Management and Internal Control for the
financial year ended 30 June 2014. This Statement is prepared
pursuant to paragraph 15.26(b) of the Main Market Listing
Requirements and is guided by the Statement on Risk
Management and Internal Control Guidelines for Directors
of Listed Issuers (the Guideline) endorsed by Bursa
Malaysia Securities Berhad.
BOARDS RESPONSIBILITY
The Board acknowledges their responsibility to maintain a
sound and effective risk management framework and internal
control system in order to safeguard the shareholders
investment and Groups assets. The Board also understands
the principal risks of the business that the Group is engaged
in and accepts that business decisions require the balancing
of risk and return in order to maximise return to the
shareholders.
Principally, the Guideline suggests the Board to:
Embed risk management in all aspects of the Groups
activities, which also encompasses subsidiaries of the
Company; and
Review risk management framework, processes,
responsibilities and assessing whether the present policies
and systems provide reasonable assurance that risk is
managed appropriately.
RISK MANAGEMENT AND INTERNAL CONTROLS

The Groups risk management is driven by Executive Directors,
Chief Executive Officer (CEO) and senior management of
the Group. These executives and management are responsible
for identifying, evaluating, monitoring and managing risks and
have embedded and carried out these risk management
processes as part of their operating and business management
processes.
Upon listing, management has conducted a risk assessment
focusing on the expansion of plants capacities and automation
and the new products development and markets. Several
action points were concluded in this assessment and the
outcomes of the risks were reported to the Board. In addition,
subsequent to the current financial year, the Board has
formed the Risk Management Committee to oversee and
implement the risk management framework in the Group. The
Risk Management Committee will conduct periodic meetings
to ensure that risk matters relevant to the Group are identified,

evaluated and managed properly to mitigate those risks
affecting the achievements of the Groups business objectives.
At operational level, the CEO and the respective heads of
department conduct quarterly management meetings with the
management members. The objective of these meetings is to
ensure that decisions, business objectives and operational
performance targets are communicated, understood and
executed by the line management. These meetings also
enable senior management to monitor and enforce controls at
the line management levels and strategise action plans to
address operational issues.
In term of the management quality control, the key subsidiaries
of the Group continue to maintain the certification under the
ISO9001:2008 and ISO13485:2003 Quality Management
Systems (QMS). The QMS forms the fundamental basis of
the operational procedures in production processes. Internal
quality audits are carried out and independent surveillance
audits are conducted by external certification body to provide
assurance of compliance with the ISO requirements.
The Board recognises the importance of maintaining a control
conscious culture throughout the Group. The Groups
organisation chart outlines the responsibilities, accountability
and hierarchical structure of reporting lines. The structure
establishes a clear reporting line for approval and authority
limits of the Board, top executives, CEO and heads of
department for the transactions undertaken in the Group.
BOARD REVIEW MECHANISM

The Audit Committee is instituted by the Board to ensure the
objectivity of the review of the systems of internal control in
the Group. In order to enhance the effectiveness of the risk
management and internal control system, the Audit Committee
is assisted by an external consultant, IA Essential Sdn. Bhd.
(Internal Auditor), who is independent of the Groups
activities or operations to assess the adequacy and
effectiveness of control of the selected key functions on
quarterly basis. In addition, the Audit Committee obtains
feedbacks from the External Auditors on the risk and control
issues identified during the course of their statutory audit.
Areas for improvement identified by the auditors are addressed
by the Board and Audit Committee to ensure that the integrity
of internal controls can be enhanced in the future. None of
the weaknesses have resulted in any material losses,
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contingencies or uncertainties that would require mention in

the Companys Annual Report. Management continues to
take measures to strengthen the internal control environment
from time to time based on the recommendation proposed by
the auditors.
The Audit Committee reviews and deliberates on the interim
financial results and the annual financial statements, through
necessary enquiries with the management during the
presentation by the management on a quarterly and annual
basis, and via their understanding of the Groups business
development and financial performance of the subsidiaries, as
well as comments received from both external and internal
auditors, if any. Thereafter, the interim and annual financial
results/statements are recommended to the Board for review
and release to the public.
MANAGEMENT RESPONSIBILITIES AND ASSURANCE

In accordance to the Bursas Guidelines, management is
responsible to the Board for:
identifying risks relevant to the business of the Groups
objectives and strategies;
designing, implementing and monitoring the risk
management framework in accordance with the Groups
strategic vision and overall risk appetite; and
identifying changes to risk or emerging risks, responding
appropriately and promptly bringing these to the attention
of the Board.
The Board has received assurance from the CEO and Chief
Financial Officer that to the best of their knowledge that the
Groups risk management and internal control systems are
operating adequately and effectively, in all material aspects.
BOARD ASSURANCE AND LIMITATION

The Board confirms that the process for identifying, evaluating
and managing significant risks in the Group is on-going. For
the financial year under review, there was no material loss
resulted from significant control weaknesses. The Board is
satisfied that the existing level of systems of internal control
and risk management are adequate and effective to enable
the Group to attain a balanced achievement of its business
objectives and operation efficiency and effectiveness.
While, the Board wishes to reiterate that risk management

and systems of internal control would be continuously
improved in line with the evolving business development, it
should 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, these systems of internal control and risk
management in the Group could only provide reasonable but
not absolute assurance against material misstatements,
frauds and losses.
REVIEW OF STATEMENT ON RISK MANAGEMENT AND

INTERNAL CONTROL BY EXTERNAL AUDITORS
The external auditors have reviewed this Statement on Risk
Management and Internal Control pursuant to the scope set
out in Recommended Practice Guide (RPG) 5 (Revised),
Guidance for Auditors on Engagements to Report on the
Statement on Risk Management and Internal Control included
in the Annual Report issued by the Malaysian Institute of
Accountants (MIA) for inclusion in the annual report of the
Group for the year ended 30 June 2014, and reported to the
Board that nothing has come to their attention that cause
them to believe that the statement intended to be included in
the annual report of the Group, in all material respects:
a.
has not been prepared in accordance with the disclosures

required by paragraphs 41 and 42 of the Statement on
Risk Management and Internal Control: Guidelines for
Directors of Listed Issuers, or
b. is factually inaccurate.
RPG 5 (Revised) does not require the external auditors to
consider whether the Directors Statement on Risk
Management and Internal Control covers all risks and controls,
or to form an opinion on the adequacy and effectiveness of
the Groups risk management and internal control system
including the assessment and opinion by the Board of
Directors and management thereon. The auditors are also not
required to consider whether the processes described to deal
with material internal control aspects of any significant
problems disclosed in the annual report will, in fact, remedy
the problems.
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FINANCIAL
STATEMENTS
054 Directors Report
058 Statement by Directors
059 Statutory Declaration
060 Independent Auditors Report
062 Statements of Financial Position
063 Statements of Profit or Loss
064 Statements of Profit or Loss and Other Comprehensive Income
065 Consolidated Statement of Changes in Equity
066 Statement of Changes in Equity
067 Statements of Cash Flows
069 Notes to the Financial Statements
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054
KAREX Berhad
Annual Report 2014
DIRECTORS REPORT
For the year ended 30 June 2014
The Directors have pleasure in presenting their report and the audited financial statements of the Group and of the Company
for the financial year ended 30 June 2014.
PRINCIPAL ACTIVITIES
The principal activity of the Company consists of investment holding. The principal activities of the subsidiaries are disclosed in
Note 4 to the financial statements. There has been no significant change in the nature of these activities during the financial year.
RESULTS
Profit for the year
Group
RM000
Company
RM000
34,585
15,981
RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed
in the financial statements.
DIVIDENDS
No dividend has been paid by the Company since the end of the previous financial period.
The Directors proposed a final single tier dividend of 2.5 sen per ordinary share totalling RM10,125,000, subject to the
approval of the shareholders at the forthcoming Annual General Meeting. These financial statements do not reflect this
proposed final dividend, which will be accounted for in the shareholders equity as an appropriation of retained earnings in
the year ending 30 June 2015.
DIRECTORS OF THE COMPANY

Directors who served since the date of the last report are:
Tan Sri Dato Seri Arshad bin Ayub
Mr. Goh Siang
Mr. Goh Leng Kian
Ms. Goh Yen Yen
Ms. Lam Jiuan Jiuan
Mr. Wong Yien Kim
Mr. Law Ngee Song
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DIRECTORS INTERESTS IN SHARES

The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned
subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of the Directors
who themselves are not Directors of the Company) as recorded in the Register of Directors Shareholdings are as follows:
Number of ordinary share of RM0.25 each
Name of Directors
Interest
Company
Tan Sri Dato Seri Arshad Direct
bin Ayub
Dato Dr. Ong Eng Long
Direct
@ Ong Siew Chuan
Mr. Goh Siang
Direct
Deemed(1)
Mr. Goh Leng Kian
Direct
Deemed(1)
Ms. Goh Yen Yen
Direct
Deemed(1)
Ms. Lam Jiuan Jiuan
Direct
Deemed(2)
Mr. Wong Yien Kim
Direct
Mr. Law Ngee Song
Direct
At
1 July 2013/
Date of
appointment
Before
listing*
Adjustments
after
listing**
Bonus
issue***
Sold
At
30 June
2014
100,000
50,000
150,000
100,000
50,000
150,000
10,280,586
94,500,000
14,080,586
94,500,000
10,830,543
94,500,000
8,930,543
98,300,000
(3,275,000)
(3,275,000)
(3,275,000)
(3,275,000)
100,000
100,000
3,502,793
47,250,000
5,402,795
47,250,000
3,777,771
47,250,000
2,827,771
49,150,000
50,000
50,000
(50,000)
10,508,379
141,750,000
16,208,385
141,750,000
11,333,314
141,750,000
8,483,314
147,450,000
100,000
150,000
* Incorporates effects of Acquisitions (see Note 23(i)) and Transfer of Shares

** Incorporates effects of Acquisitions, Transfer of Shares and the Initial Public Offering (IPO)
*** Bonus issue credited as fully paid up shares on the basis of 1 Bonus Share for every 2 shares held by the Companys
shareholders
(1) Deemed interested by virtue of his/her equity interest in Karex One Limited
(2) Deemed interested by virtue of her equity interest in AJNA Holdings Limited and Karex One Limited
By virtue of their substantial interests in the shares of the Company, Mr. Goh Siang, Mr. Goh Leng Kian, Ms. Goh Yen Yen
and Ms. Lam Jiuan Jiuan are also deemed interested in the ordinary shares of the wholly-owned subsidiaries during the
financial year to the extent that Karex Berhad has an interest.
DIRECTORS BENEFITS
Since the end of the previous financial period, no Director of the Company has received nor become entitled to receive any
benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as
shown in the financial statements 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 other than certain Directors who have
significant financial interest in companies which traded with certain companies in the Group in the ordinary course of business.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body
corporate.
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056
KAREX Berhad
Annual Report 2014
Directors Report
ISSUE OF SHARES
During the financial year, the Company issued:
a) 229,499,992 new ordinary shares of RM0.25 each at par as the total consideration of RM57,375,000 for Acquisitions
disclosed in Note 23(i);
b) 40,500,000 new ordinary shares of RM0.25 each as part of the Initial Public Offering at RM1.85 per ordinary share; and
c) Bonus issue of 135,000,000 new ordinary shares of RM0.25 each (Bonus Share) credited as fully paid up on the basis
of one (1) bonus share for every two (2) shares held by the shareholders of the Company.
There were no other changes in the authorised, issued and paid-up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES

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

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
i)
all known bad debts have been written off and adequate provision has been made for doubtful debts, and
ii)
any current assets which were unlikely to be realised in the ordinary course of business have been written down to an
amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
i)
that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group
and in the Company inadequate to any substantial extent, or
ii)
that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
of the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial
statements of the Group and of the Company misleading.
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057
OTHER STATUTORY INFORMATION

At the date of this report, there does not exist:
i)
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will
or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 30
June 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has
any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.
AUDITORS
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Goh Leng Kian
Goh Yen Yen
Johor Bahru
Date: 22 September 2014
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058
KAREX Berhad
Annual Report 2014
STATEMENT BY DIRECTORS
pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 062 to 107 are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia
so as to give a true and fair view of the financial position of the Group and of the Company as of 30 June 2014 and of their
financial performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 25 on page 108 to the financial statements has been compiled
in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute
of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Goh Leng Kian
Goh Yen Yen
Johor Bahru
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059
STATUTORY DECLARATION
pursuant to Section 169(16) of the Companies Act, 1965
I, Goh Chok Siang, the officer primarily responsible for the financial management of KAREX BERHAD, do solemnly and
sincerely declare that the financial statements set out on pages 062 to 108 are, to the best of my knowledge and belief,
correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of
the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named in Johor Bahru in the State of Johor on 22 September 2014.
Goh Chok Siang
Before me:
NORANI BT HJ KHALID
Commissioner For Oaths
J-140
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060
KAREX Berhad
Annual Report 2014
INDEPENDENT AUDITORS REPORT

to the members of Karex Berhad (Company No. 1018579-U) (Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Karex Berhad, which comprise the statements of financial position as at 30 June
2014 of the Group and of the Company, and the statements of profit or loss, profit or loss and other comprehensive income,
changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant
accounting policies and other explanatory information, as set out on pages 062 to 107.
Directors Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entitys preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of
30 June 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and
its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and the auditors reports of the subsidiary of which we have not acted as auditors,
which are indicated in Note 4 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements
of the Group and we have received satisfactory information and explanations required by us for those purposes.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
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OTHER REPORTING RESPONSIBILITIES

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set
out in Note 25 on page 108 to the financial statements has been compiled by the Company as required by the Bursa Malaysia
Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International
Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such
information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and
presented based on the format prescribed by Bursa Malaysia Securities Berhad.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act,
1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG
Firm Number: AF 0758
Chartered Accountants
Tan Teck Eng

Approval Number: 2986/05/16 (J)
Chartered Accountant
Johor Bahru
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062
KAREX Berhad
Annual Report 2014
STATEMENTS OF FINANCIAL POSITION

As at 30 June 2014
Note
Group
2014
RM000
2014
RM000
2013
RM000
3
4
5
86,173
142
124,028
86,315
124,028
40,470
77,487
85,592
32,357
49,534
945
*
Total current assets
203,549
81,891
945
Total assets
289,864
205,919
945
Equity
Share capital
Reserves
101,250
122,082
101,250
104,400
*
(632)
Assets
Property, plant and equipment
Investments in subsidiaries
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
6
7
8
Company
Total equity attributable to owners of the Company/Total equity
223,332
205,650
(632)
Liabilities
Loans and borrowings (secured)
Deferred tax liabilities
10
5
10,380
4,488
14,868
38,887
11,214
1,563
173
96
1,577
Total current liabilities
51,664
269
1,577
Total liabilities
66,532
269
1,577
289,864
205,919
945
Total non-current liabilities

Trade and other payables, including derivatives
Loans and borrowings (secured)
Taxation
Total equity and liabilities
11
10
* Represent RM2.00
The accompanying notes form an integral part of the financial statements.
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STATEMENTS OF PROFIT OR LOSS

Note
Group
1.7.2013(1)
to
30.6.2014
RM000
1.7.2013
to
30.6.2014
RM000
Company
27.9.2012
to
30.6.2013
RM000
Revenue
Goods sold
Dividend income
219,927
17,371
Cost of goods sold
219,927
(155,952)
17,371
Gross profit
Other income
Distribution expenses
Administrative expenses
Other expenses
63,975
365
(9,125)
(9,926)
(3,519)
17,371
(865)
(1,961)
(632)
Results from operating activities
41,770
14,545
(632)
Finance income
Finance costs
1,332
(1,561)
1,565
(229)
1,565
Net finance (costs)/income

Profit/(Loss) before tax
12
41,541
16,110
(632)
Tax expense
13
(6,956)
(129)
34,585
15,981
(632)
Profit/(Loss) for the year/period
Basic and diluted earnings per ordinary share (sen)
(1)
14
11.36
As the Acquisitions (as detailed in note 23 (i)) were completed on 23 September 2013, the Group did not consolidate the
financial performance of these subsidiaries from 23 September 2013 to 30 September 2013 due to impracticability of an
accounting cut-off date other than month end and the effect is not significant to the results for financial year ended 30
June 2014. The Group has consolidated the results from 1 October 2013 onwards. If the Group has existed since the last
financial year, management estimate that the consolidated results would be as disclosed in note 23 (ii).
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064
KAREX Berhad
Annual Report 2014
STATEMENTS OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME
Group
1.7.2013(1)
to
30.6.2014
RM000
1.7.2013
to
30.6.2014
RM000
Company
27.9.2012
to
30.6.2013
RM000
34,585
15,981
(632)
(922)
Total comprehensive income/(expense)

for the year/period
33,663
15,981
(632)
Total comprehensive income/(expense) attributable to:

Owners of the Company/
Total comprehensive income/(expense) for the year/period
33,663
15,981
(632)
Profit/(Loss) for the year/period

Other comprehensive expense, net of tax
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences for foreign operations/
Other comprehensive expense for the year, net of tax
(1)
As the Acquisitions (as detailed in note 23(i)) were completed on 23 September 2013, the Group did not consolidate the
financial performance of these subsidiaries from 23 September 2013 to 30 September 2013 due to impracticability of an
accounting cut-off date other than month end and the effect is not significant to the results for financial year ended 30
June 2014. The Group has consolidated the results from 1 October 2013 onwards. If the Group has existed since the last
financial year, management estimate that the consolidated results would be as disclosed in note 23(ii).
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Attributable to owners of the Company
Non-distributable
Merger Translation
reserve
reserve
RM000
RM000
(Accumulated
losses)/
Distributable
Retained
Other
earnings
reserve
RM000
RM000
Total
equity
RM000
Share
capital
RM000
Share
premium
RM000
(632)
(632)
57,375
10,125
33,750
64,800
(5,510)
(33,750)
63,511
120,886
74,925
(5,510)
101,250
25,540
63,511
190,301
Foreign currency translation differences

for foreign operations/
Total other comprehensive expense
for the year
Profit for the year
(922)
34,585
(922)
34,585
Total comprehensive (expense)/

income for the year
Transfer of reserve
(922)
718
34,585
(718)
33,663
101,250
25,540
63,511
(922)
718
33,235
223,332
Note
Group
At 1 July 2013
Contributions by and distributions to
owners of the Company
Effect arising from the Acquisitions
Public issue of shares
Share issue expenses
Bonus Issue
Total transactions with owners
of the Company
At 30 June 2014
23(i)
* This represent RM2.00 for 8 ordinary shares of RM0.25 each.
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066
KAREX Berhad
Annual Report 2014
STATEMENT OF CHANGES IN EQUITY

Note
Attributable to owners of the Company

(Accumulated
losses)/
Non-distributable
Distributable
Retained
Merger
Share
Share
earnings
reserve
premium
capital
RM000
RM000
RM000
RM000
Total
equity
RM000
Company
At date of incorporation
Loss and total comprehensive
expense for the period
(632)
(632)
At 30 June 2013
(632)
(632)
57,375
10,125
33,750
64,800
(5,510)
(33,750)
63,511
120,886
74,925
(5,510)
101,250
25,540
63,511
190,301
15,981
15,981
101,250
25,540
63,511
15,349
205,650
Contributions by and distributions

to owners of the Company
Effect arising from the
Acquisitions
Public issue of shares
Share issue expenses
Bonus Issue
Total transactions with owners
of the Company
Profit and total comprehensive
income for the year
At 30 June 2014
23(i)
* This represent RM2.00 for 8 ordinary shares of RM0.25 each.
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STATEMENTS OF CASH FLOWS

Note
Group
1.7.2013
to
30.6.2014
RM000
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
CASH FLOWS FROM OPERATING ACTIVITIES

41,541
16,110
(632)
2,006
5,132
72
1,561
(93)
720
(1,332)
328
(1,565)
49,935
5,322
(19,239)
(2,903)
14,545
(34,109)
(1,404)
(632)
(945)
1,577
Cash generated from/(used in) operations

Tax paid
33,115
(7,539)
(20,968)
(33)
Net cash from/(used in) operating activities
25,576
(21,001)
(9,914)
19,151
129
1,332
1,120
10,698
1,120

Adjustments for:Allowance for slow moving inventories
Depreciation
Fair value loss on derivative instruments
Finance costs
Gain on disposal of property, plant and equipment
Impairment loss on trade receivables
Interest income
Unrealised loss on foreign exchange
Operating
Changes
Changes
Changes
profit/(loss) before changes in working capital

in inventories
in trade and other receivables
in trade and other payables
CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of:
property, plant and equipment
subsidiaries, net cash and cash equivalents acquired
Proceeds from disposal of property, plant and equipment
Interest received
Net cash from investing activities
16
23(i)
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068
KAREX Berhad
Annual Report 2014
Statements of Cash Flows

Group
1.7.2013
to
30.6.2014
RM000
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid
Repayments of:
term loans
finance lease liabilities
bankers acceptance
Drawdown of term loans
Proceed from public issue of shares
Payment for share issue expenses
Increase in pledged deposits with licensed banks
(1,796)
(2,116)
(1,476)
(24,487)
2,246
74,925
(5,510)
(827)
74,925
(5,510)
Net cash from financing activities
40,959
69,415
(53)
77,180
49,534
Effect of exchange rate fluctuations on cash held

Net increase in cash and cash equivalents
Cash and cash equivalents at 1 July/date of incorporation
Cash and cash equivalents at 30 June
*
77,180
*
49,534
*
*
Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:
Cash and bank balances
Fixed deposits with licensed banks
Deposits with other corporation
29,237
11,343
45,012
2,407
2,115
45,012
Less: Pledged deposits
85,592
(8,412)
49,534
77,180
49,534
* Represent RM2.00
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069
NOTES TO THE FINANCIAL STATEMENTS

Karex Berhad is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of
Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered office of the Company are
as follows:
Principal place of business
PTD 7906 & 7907
Taman Pontian Jaya
82000 Pontian
Johor
Malaysia
Registered office
10th Floor, Menara Hap Seng
No. 1 & 3, Jalan P. Ramlee
50250 Kuala Lumpur
Malaysia
The consolidated financial statements of the Company as at and for the year ended 30 June 2014 comprise the Company
and its subsidiaries (together referred to as the Group and individually referred to as Group entities). The financial
statements of the Company as at and for the financial year ended 30 June 2014 do not include other entities.
The principal activity of the Company consists of investment holding. The principal activities of the subsidiaries are disclosed
in Note 4.
These financial statements were authorised for issue by the Board of Directors on 22 September 2014.
1. BASIS OF PREPARATION
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRS), International Financial Reporting Standards and the Companies Act, 1965
in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (MASB) but have not been adopted by the Group and the Company:
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014
Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities
Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities
Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities
Amendments to MFRS 132, Financial Instruments: Presentation Offsetting Financial Assets and Financial
Liabilities
Amendments to MFRS 136, Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets
Amendments to MFRS 139, Financial Instruments: Recognition and Measurement Novation of Derivatives and
Continuation of Hedge Accounting
IC Interpretation 21, Levies
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070
KAREX Berhad
Annual Report 2014
Notes to the Financial Statements

1. BASIS OF PREPARATION (CONTINUED)
(a) Statement of compliance (continued)
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014
Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements
2011-2013 Cycle)
Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 119, Employee Benefits Defined Benefit Plans: Employee Contributions
Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)

MFRS 14, Regulatory Deferral Accounts

Amendments to MFRS 116 and MFRS 138, Clarification of Acceptable Methods of Depreciation and Amortisation
Amendments to MFRS 11, Accounting for Acquisitions of Interests in Joint Operations
Amendments to MFRS 116 and MFRS 141, Agriculture: Bearer Plants
MFRS 15, Revenue from Contracts with Customers
MFRSs, Interpretations and amendments effective from a date yet to be confirmed

MFRS 9, Financial Instruments (2009)

MFRS 9, Financial Instruments (2010)
MFRS 9, Financial Instruments Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139
Amendments to MFRS 7, Financial Instruments: Disclosures Mandatory Effective Date of MFRS 9 and Transition
Disclosures
The Group and the Company plan to apply the abovementioned standards, amendments and interpretations in the
respective financial year when the above standards, amendments and interpretations become effective.
The initial application of these standards, amendments and interpretations are not expected to have any material
financial impacts to the current and prior periods financial statements of the Group and the Company upon their first
adoption except as mentioned below:
MFRS 15, Revenue from Contracts with Customers
The adoption of MFRS 15 may result in a change in the accounting for revenue by the Group and the Company.
The Group and the Company are currently assessing the impact of adopting MFRS 15.
(b) Basis of measurement
These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.
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071
1. BASIS OF PREPARATION
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Companys functional currency. All
financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
(d) Use of estimates and judgements
The preparation of the financial statements in conformity with MFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that
have significant effect on the amounts recognised in the financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial
statements and have been applied consistently by the Group entities, unless otherwise stated.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases.
Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity.
Potential voting rights are considered when assessing control only when such rights are substantive.
The Group considers it has de facto power over an investee when, despite not having the majority of voting
rights, it has the current ability to direct the activities of the investee that significantly affect the investees return.
Investments in subsidiaries are measured in the Companys statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments
includes transaction costs.
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072
KAREX Berhad
Annual Report 2014

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of consolidation (continued)
(ii) Business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;
less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquirees identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs
in connection with a business combination are expensed as incurred.
(iii) Acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as
equity transactions between the Group and its non-controlling interest holders. Any difference between the
Groups share of net assets before and after the change, and any consideration received or paid, is adjusted
to or against Group reserves.
(iv) Restructuring among common shareholders

During a restructuring where the combining entities are controlled by the same parties both before and after
the combination, book value accounting is applied. The assets and liabilities acquired are recognised in the
consolidated financial statements at their respective carrying amounts without restatement. The difference
between the cost of acquisition and the nominal value of the shares acquired together with any other reserves
of the combining entities are taken to merger reserve (or adjusted against any suitable reserve in the case of
debit differences). The other components of equity of the acquired entities are added to the same components
within group equity.
(v) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former
subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary
from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is
recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is
measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted
investee or as an available-for-sale financial asset depending on the level of influence retained.
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(a) Basis of consolidation
(vi) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable
directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of
financial position and statement of changes in equity within equity, separately from equity attributable to the
owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated
statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the
comprehensive income for the year between non-controlling interests and owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to have a deficit balance.
(vii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the
reporting date, except for those that are measured at fair value are retranslated to the functional currency at
the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a
hedge of currency risk, which are recognised in other comprehensive income.
(ii) Operations denominated in functional currencies other than Ringgit Malaysia
The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill
and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the
reporting period, which are treated as assets and liabilities of the Company. The income and expenses of
foreign operations, excluding foreign operations in hyperinflationary economies, are translated to RM at exchange
rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign
currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned subsidiary, then
the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a
foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount
in the FCTR related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
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(b) Foreign currency (continued)
(ii) Operations denominated in functional currencies other than Ringgit Malaysia (continued)

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.
When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign
operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount
is reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a
foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses
arising from such a monetary item are considered to form part of a net investment in a foreign operation and
are recognised in other comprehensive income, and are presented in the FCTR in equity.
(c) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when,
the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial instrument.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and
only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract
is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is
recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.
(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:
Financial assets
(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including
derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument) or financial assets that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair
values cannot be reliably measured are measured at cost.
Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair
values with the gain or loss recognised in profit or loss.
(b) Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an active market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost using
the effective interest method.
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(c) Financial instruments
(ii) Financial instrument categories and subsequent measurement

Financial assets
(c) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held
for trading.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair
value cannot be reliably measured are measured at cost. Other financial assets categorised as available-forsale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive
income, except for impairment losses, foreign exchange gains and losses arising from monetary items and
gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in
profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is
reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest
method is recognised in profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 2(h)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value
through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative
that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that
are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price
in an active market for identical instruments whose fair values cannot be reliably measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair
values with the gain or loss recognised in profit or loss.
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with
the original or modified terms of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and is amortised to profit or
loss using a straight-line method over the contractual period or, when there is no specified contractual period,
recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract
becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is
lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.
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(c) Financial instruments (continued)
(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or convention in the marketplace
concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade
date accounting. Trade date accounting refers to:
(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of
a receivable from the buyer for payment on the trade date.
(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from
the financial asset expire or the financial asset is transferred to another party without retaining control or
substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the
carrying amount and the sum of the consideration received (including any new asset obtained less any new liability
assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract
is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying
amount of the financial liability extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
(d) Property, plant and equipment

(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly
attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. The cost of self-constructed assets also
includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance
with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on
qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value
at acquisition date and in accordance to Note 2(p).
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within
other income and other expenses respectively in profit or loss.
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(d) Property, plant and equipment
(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will flow
to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced
component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets
are assessed, and if a component has a useful life that is different from the remainder of that asset, then that
component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the
lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end
of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not
depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Long term leasehold land
Short term leasehold land
Buildings
Plant and machinery
Motor vehicles
Electrical installation, renovation, equipment, furniture and fittings
62
50
50
10 20
6 10
4 10
years
years
years
years
years
years
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period and adjusted
as appropriate.
(e) Leased assets

(i) Finance lease
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership
are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the
lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition,
the asset is accounted for in accordance with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so
as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease
payments are accounted for by revising the minimum lease payments over the remaining term of the lease when
the lease adjustment is confirmed.
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(e) Leased assets (continued)
(i) Finance lease (continued)

Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as
investment property if held to earn rental income or for capital appreciation or for both.
(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership
are classified as operating leases and, except for property interest held under operating lease, the leased assets
are not recognised in the statement of financial position of the Group or the Company. Property interest held
under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as
investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the
lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over
the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
(f) Inventories

Inventories are measured at the lower of cost and net realisable value.
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.
The cost of inventories is measured based on first-in first-out basis, and includes expenditure incurred in acquiring
the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and
condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production
overheads based on normal operating capacity.
(g) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments
which have an insignificant risk of changes in fair value and are used by the Group and the Company in the
management of their short term commitments. For the purpose of the statement of cash flows, cash and cash
equivalents are presented net of bank overdrafts and pledged deposits.
(h) Impairment
(i) Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss and investments in
subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a
result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected
as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument,
a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any
such objective evidence exists, then the impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit
or loss and is measured as the difference between the assets carrying amount and the present value of
estimated future cash flows discounted at the assets original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account.
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(h) Impairment
(i) Financial assets

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured
as the difference between the assets acquisition cost (net of any principal repayment and amortisation) and the
assets current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an
available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in
other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss
and is measured as the difference between the financial assets carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available
for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is
reversed, to the extent that the assets carrying amount does not exceed what the carrying amount would have
been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal
is recognised in profit or loss.
(ii) Other assets
The carrying amounts of other assets (except for inventories, deferred tax assets and assets arising from
employee benefits) are reviewed at the end of each reporting period to determine whether there is any indication
of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill, and
intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is
estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or
cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment
testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which
impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting
purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated
to group of cash-generating units that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds
its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit
(group of cash-generating units) and then to reduce the carrying amount of the other assets in the cashgenerating unit (groups of cash-generating units) on a pro rata basis.
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KAREX Berhad
Annual Report 2014

(h) Impairment (continued)
(ii) Other assets (continued)

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

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from
equity.
(ii) Ordinary shares

Ordinary shares are classified as equity.
(j) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect
of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: 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
or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Unutilised reinvestment allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred
tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax
incentive can be utilised.
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(k) Revenue and other income
(i) Goods sold

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

Dividend income is recognised in profit or loss on the date that the Groups or the Companys right to receive
payment is established, which in the case of quoted securities is the ex-dividend date.
(iii) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest
income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a
qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.
(iv) Rental income

Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives
granted are recognised as an integral part of the total rental income, over the term of the lease.
(l) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset
are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised
as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the
asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for
its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially
all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
(m) Employee benefits

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

The Groups contributions to statutory pension funds are charged to profit or loss in the financial year to which
they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
(iii) Defined benefit plans

The Group provides for post employment retirement benefits, payable to employees under the labour laws
applicable in Thailand in respect of its subsidiary incorporated in Thailand. The liability in respect of employee
benefits is measured, using the projected unit credit method which is calculated in accordance with the actuarial
technique. The present value of the defined benefit obligation is determined by discounting estimated future
cash flows using the yield on AA credit-rated bonds which have terms to maturity approximating the terms of
the related liability. The estimated future cash flows shall reflect employee salaries, turnover rate, mortality rate,
length of service and other factors. Actuarial gains and losses will be recognised as income or expense in the
statement of profit or loss.
As the amount involved is not material to the Group. Accordingly, no further disclosure as required by the
Standard is made.
(n) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (EPS).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding adjusted for own shares held, for the effects of all dilutive potential
ordinary shares, which comprise convertible notes and share options granted to employees.
(o) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups
other components. An operating segments operating results are reviewed regularly by the chief operating decision
maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be
allocated to the segment and to assess its performance, and for which discrete financial information is available.
(p) Fair value measurement

From 1 July 2013, the Group adopted MFRS 13, Fair Value Measurement which prescribed that fair value of an asset
or a liability, except for share-based payment and lease transactions, is determined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes
place either in the principal market or in the absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participants ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
In accordance with the transitional provision of MFRS 13, the Group applied the new fair value measurement
guidance prospectively, and has not provided any comparative fair value information for new disclosures. The
adoption of MFRS 13 has not significantly affected the measurements of the Groups assets or liabilities other than
the additional disclosures.
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3. PROPERTY, PLANT AND EQUIPMENT

Electrical
installation
and Constructionin-progress
renovation
RM000
RM000
Land
and
buildings
RM000
Plant
and
machinery
RM000
Equipment,
furniture
and
fittings
RM000
Motor
vehicles
RM000
At 1 July 2013
Acquisitions (see Note 23(i))
Additions (see Note 16)
Disposals
Transfers
Translation differences
26,581
303
3,444
(162)
77,800
3,749
(177)
3,045
(748)
6,029
1,380
314
(32)
4,962
187
(418)
(26)
10,298
424
84
(82)
5,855
6,509
(6,887)
(106)
131,525
12,552
(595)
(1,156)
At 30 June 2014
30,166
83,669
7,691
4,705
10,724
5,371
142,326
At 1 July 2013
Acquisitions (see Note 23(i))
Depreciation charge
Disposals
Translation differences
2,655
377
(52)
36,053
3,363
(171)
(514)
3,381
476
(18)
2,871
414
(388)
(11)
7,232
502
(17)
52,192
5,132
(559)
(612)
At 30 June 2014
2,980
38,731
3,839
2,886
7,717
56,153
27,186
44,938
3,852
1,819
3,007
5,371
86,173
Total
RM000
Group
At cost
Accumulated depreciation
Carrying amounts
At 30 June 2014

Land and buildings
Included in the carrying amounts of land and buildings are:
Land
Freehold land
Long term leasehold land
Short term leasehold land
Buildings
Group
2014
RM000
12,213
2,313
329
12,331
27,186
Security

The land and buildings and plant and machineries of the Group with a carrying amount of RM32,392,902 are charged to
licensed banks for banking facilities granted as disclosed in Note 10.
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KAREX Berhad
Annual Report 2014

3. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Leased plant and machinery and motor vehicles
At 30 June, the net carrying amounts of leased assets are as follows:

Group
2014
RM000
5,033
1,291
Plant and machinery

Motor vehicles
6,324
Others

Included in property, plant and equipment addition is an interest being capitalised of RM235,061.
4. INVESTMENTS IN SUBSIDIARIES
Company
Unquoted shares, at cost

2014
RM000
2013
RM000
124,028
Details of the subsidiaries are as follows:
Name of entity
Principal activities
Country of
incorporation
Effective ownership
interest and
voting interest
2014
%
2013
%
Direct subsidiaries
Karex Industries Sdn. Bhd.
Manufacture and sale of condoms
Malaysia
100
Hevea Medical Sdn. Bhd.
Manufacturing and sale of condoms,

latex probe covers and latex sleeve
Malaysia
100
Innolatex Sdn. Bhd.
Manufacture and sale of rubber products
Malaysia
100
Innolatex (Thailand) Limited*
Manufacturing and sale of condoms,

rubber finger gloves, hand gloves and/or
rubber products
Thailand
100
Malaysia
100
Subsidiary of Karex Industries Sdn. Bhd.

Uro Technology Sdn. Bhd.
Manufacturing and sale of sterile catheters
* Audited by a member firm of KPMG International.
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5. DEFERRED TAX ASSETS/(LIABILITIES)

Recognised deferred tax assets/(liabilities)
The amounts determined after appropriate offsetting are as follows:

Group
2014
RM000
142
(4,488)
Deferred tax assets

(4,346)

Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax assets
against current tax liabilities and where the deferred taxes relate to the same taxation authority.
Deferred tax assets and liabilities are attributable to the following:

Group
2014
RM000
(5,448)
400
652
50
Property, plant and equipment capital allowances

Inventories
Trade receivables
Others
(4,346)

Movement in temporary differences during the year
At
1 July
2013
RM000
Arising Recognised
in profit
from the
or loss
Acquisitions
(Note 13)
(Note 23(i))
RM000
RM000
At
30 June
2014
RM000
Group
Inventories
Trade receivables
Unutilised business losses
Others
(6,527)
87
352
1,728
32
1,079
313
300
(1,728)
18
(5,448)
400
652
50
(4,328)
(18)
(4,346)
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KAREX Berhad
Annual Report 2014

6. INVENTORIES
Group
2014
RM000
14,305
7,744
15,810
2,611
Raw materials
Work-in-progress
Finished goods
Chemicals and factory supplies
40,470
7. TRADE AND OTHER RECEIVABLES

Group
2014
RM000
2014
RM000
Company
2013
RM000
70,754
84
70,838
6,649
13
32,344
945
6,649
32,357
945
77,487
32,357
945
Trade
Trade receivables
Due from related parties
Non-trade
Other receivables, deposits and prepayments
Due from subsidiaries
The amounts due from related parties are subject to normal trade term.
The amounts due from subsidiaries includes RM10,000,000 of dividends receivable, while the remaining balance are
unsecured, subject to interest at 5.0% (2013: NIL) per annum and repayable upon demand.
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8. CASH AND CASH EQUIVALENTS
Cash and bank balances

Deposits with licensed banks
Deposits with other corporation
Group
2014
RM000
2014
RM000
Company
29,237
11,343
45,012
2,407
2,115
45,012
85,592
49,534
2013
RM000
Deposits with licensed banks of the Group of RM8,412,000 are pledged to bank as security for banking facilities granted
to the Group as disclosed in Note 10.
Deposits with licensed banks of the Group of RM540,485 are held in trust by Directors of the Company/a subsidiary for
the Group.
* Represent RM2.00
9. CAPITAL AND RESERVES

Share capital
Group/Company
2014
RM000
Ordinary shares of RM0.25 each:
Authorised:
At 1 July/date of incorporation
500,000
2013
RM000
100*
Group/Company
Number of ordinary shares
2014
2013
2,000,000,000
200,000
Shares split
200,000
Increase of shares
499,900
1,999,600,000
500,000
500,000
2,000,000,000
2,000,000,000
**
229,499,992
40,500,000
135,000,000
4
4
**
405,000,000
At 30 June
Issued and fully paid:
At 1 July/date of incorporation
Shares split
Issued for Acquisitions
Public issue
Bonus shares issued
At 30 June
**
57,375
10,125
33,750
101,250
* Represent 200,000 ordinary shares of RM0.50 each

** Represent RM2.00
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KAREX Berhad
Annual Report 2014

9. CAPITAL AND RESERVES (CONTINUED)
Reserves
Group
2014
RM000
Company
2014
RM000
2013
RM000
33,235
15,349
(632)
25,540
63,511
(922)
718
25,540
63,511
122,082
104,400
(632)
Distributable
Retained earnings/(Accumulated losses)
Non-distributable
Share premium
Merger reserve
Translation reserve
Other reserve
Ordinary shares
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.
Share premium
Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of
the shares.
Merger reserve
The merger reserve comprises of the differences between the cost of acquisition and the nominal value of shares
acquired together with any other reserves of the combining entities during the restructuring among common shareholders
as stated in the accounting policy Note 2(a)(iv).
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations.
Other reserve
Based on Thailand Law, the other reserve comprises of reserve fund allocated at each distribution of dividend, being at
least 5% of the profit until it reaches 10% of the registered capital of the Company, and claimable upon disposal or
liquidation of the foreign subsidiary by the Group.
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089
10. LOANS AND BORROWINGS (SECURED)

Group
2014
RM000
Current
Term loans
Bankers acceptances
Finance lease liabilities
3,527
6,694
993
11,214
Non-current
Term loans
8,678
1,702
10,380
21,594
The bank borrowings are secured by:

i)
ii)
iii)
iv)
Legal charges over certain landed properties of the Group;

Fixed and floating charges over the Groups certain assets as disclosed in Note 3;
Joint and several guarantee by Directors and a shareholder of the Company; and
Pledge of certain fixed deposits of the Group as disclosed in Note 8.
Significant covenants
A subsidiary of the Group, Karex Industries Sdn. Bhd. is subject to the following covenants:
a. Maintain gearing ratios of not more than 1.5 times or 3.5 times as defined by the respective financial institutions.
b. Net tangible worth of the said subsidiary shall not be less than RM30,000,000.
c. The subsidiary shall not without the banks prior written consent, incur or assume additional indebtedness or
guarantee any indebtedness (except in the ordinary course of business), alter the present ownership structure and
extend loans and advances to the Directors of the Company and its related companies.
d. The subsidiary shall not without the banks prior written consent, declare and pay dividend exceeding 50% of the
profit after tax of each financial year.
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KAREX Berhad
Annual Report 2014

10. LOANS AND BORROWINGS (SECURED) (CONTINUED)
Finance lease liabilities are payable as follows:
Future
minimum
lease
payments
RM000
Interest
RM000
Present
value of
minimum
lease
payments
RM000
1,137
1,814
144
112
993
1,702
2,951
256
2,695
Group
2014
RM000
2014
RM000
2013
RM000
22,636
Other payables and accrued expenses

Due to related parties
12,694
3,485
173
1,577
Derivatives financial liabilities
16,179
72
173
1,577
38,887
173
1,577
Group
2014
Less than one year
Between one and five years
11. TRADE AND OTHER PAYABLES

Company
Trade
Trade payables
Non-trade
The amounts due to related parties are unsecured, interest free and repayable upon demand.
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12. PROFIT/(LOSS) BEFORE TAX

Group
1.7.2013
to
30.6.2014
RM000
Profit/(Loss) before tax is arrived at after charging/(crediting)
Audit fees
KPMG Malaysia
Overseas affiliate of KPMG Malaysia
Allowance for slow moving inventories
Depreciation
Fair value loss on derivative instruments
Loss on foreign exchange:
Realised
Unrealised
Personnel expenses (including key management personnel):
Contributions to state plans
Wages, salaries and others
Rental expense
Gain on disposal of property, plant and equipment
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
175
70
2,006
5,132
72
720
30
409
328
1,147
33,152
1,005
(93)
Key management personnel compensation

The key management personnel compensation are as follows:
Group
1.7.2013
to
30.6.2014
RM000
Directors:
Fees
Remunerations
Benefits
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
275
985
55
275
Total short-term employee benefits
1,315
275
Other key management personnel:

Remunerations
Benefits
1,043
28
1,071
2,386
275
Other key management personnel comprises persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.
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KAREX Berhad
Annual Report 2014

13. TAX EXPENSE

Recognised in profit or loss
Major components of income tax expense include:

Group
1.7.2013
to
30.6.2014
RM000
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
6,938
18
129
6,956
129
RM000
RM000
RM000
41,541
16,110
(632)
Income tax calculated using Malaysian tax rate of 25%

Non-deductible expenses
Non-taxable income
Effect of different tax rates in different jurisdictions
Tax incentives
Effect of changes in tax rate*
10,385
1,604
(217)
(1,944)
(2,646)
(226)
4,028
661
(4,560)
(158)
158
6,956
129
Current tax expense

Deferred tax expense
Reconciliation of tax expense
Tax expense
* The Malaysian Budget 2014 announced the reduction of corporate tax rate to 24% with effect from year of assessment
2016. Consequently, deferred tax assets and liabilities which are expected to reverse in 2016 and beyond are
measured using the tax rate of 24%.
14. BASIC EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 30 June 2014 was based on the profit attributable to ordinary
shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:
Group
2014
RM000
Profit for the year attributable to owners
34,585
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14. BASIC EARNINGS PER ORDINARY SHARE

Weighted average number of ordinary shares

Group
2014
000
304,471
Weighted average number of ordinary shares at 30 June
Group
2014
11.36
Basic earnings per ordinary share (sen)

Diluted earnings per ordinary share
The diluted earnings per share is the same as basic earnings per share as there are no dilutive potential ordinary shares
outstanding.
15. DIVIDENDS

After the reporting period, the following dividend was proposed by the Directors. The dividend will be recognised in
subsequent financial period upon approval by the owners of the Company.
2014 Final, single tier
Sen
per share
Total
amount
RM000
2.5
10,125
16. ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

Acquisition of property, plant and equipment represents:Group
1.7.2013
to
30.6.2014
RM000
Current year additions
Less: Amount financed by finance lease
Interest capitalised
Company
27.9.2012
1.7.2013
to
to
30.6.2013
30.6.2014
RM000
RM000
12,552
(2,403)
(235)
9,914
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KAREX Berhad
Annual Report 2014

17. OPERATING SEGMENTS
Group

The Groups main business activities comprise investment holding, manufacture and sale of condoms, latex probe covers,
sterile catheters and other rubber products. These activities are principally located in Malaysia and Thailand. Intersegment pricing is determined based on negotiated terms.
Performance is measured based on segment profit before tax and interest, as included in the internal management reports
that are reviewed by the Groups Chief Executive Officer (CEO), who is the Groups chief operating decision maker.
Segment profit is used to measure performance as management believes that such information is the most relevant in
evaluating the results of certain segments relative to other entities that operate within these industries.
Segment assets
The total of segment asset is measured based on all assets of a segment, as included in the internal management reports
that are reviewed by the Groups CEO. Segment total asset is used to measure the return of assets of each segment.
Segment profit
Condoms
2014
RM000
Catheters
2014
RM000
Probe
covers,
lubricating
jelly and
others
2014
RM000
40,305
868
3,422
44,595
205,327
6,419
8,181
219,927
(2,006)
(720)
(2,006)
(720)
(4,920)
(1,535)
1,329
(170)
(26)
3
(42)
(5,132)
(1,561)
1,332
229,277
7,841
3,199
240,317
12,048
342
162
12,552
Total
2014
RM000
Included in the measure of segment profit are:

Revenue from external customers
Included in the measure of segment profit are:
Allowance for slow moving inventories
Not included in the measure of segment profit
but provided to Chief Executive Officer:
Depreciation
Finance costs
Finance income
Segment assets
Not included in the measure of segment assets are:
Additions to non-current assets other than
financial instruments and deferred tax assets
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17. OPERATING SEGMENTS

Reconciliations of reportable segment revenues, profit or loss, assets and other material items:
Group
2014
RM000
Profit or loss
Total profit for reportable segments
Finance costs
Finance income
Unallocated expenses:
Corporate expenses
44,595
(1,561)
1,332
Consolidated profit before tax
41,541
(2,825)
Total assets
Total assets for reportable segments
Other non-reportable segment
240,317
49,547
Consolidated total assets
289,864
Major customers
Revenue from one customer exceeding 10% of the Groups revenue is approximately RM26.3 million.
18. FINANCIAL INSTRUMENTS

18.1 Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
(a) Loans and receivables (L&R);
(b) Financial liabilities measured at amortised cost (FL); and
(c) Derivatives used for hedging.
Group
Carrying
amount
RM000
L&R
RM000
FL
RM000
Derivatives
used for
hedging
RM000
77,487
85,592
77,487
85,592
163,079
163,079
(38,887)
(21,594)
(38,815)
(21,594)
(72)
(60,481)
(60,409)
(72)
2014
Financial assets
Trade and other payables, including derivatives
Loan and borrowings
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KAREX Berhad
Annual Report 2014

18. FINANCIAL INSTRUMENTS (CONTINUED)
18.1 Categories of financial instruments (continued)
Company
Carrying
amount
RM000
L&R
RM000
FL
RM000
Derivatives
used for
hedging
RM000
32,357
49,534
32,357
49,534
81,891
81,891
(173)
(173)
2014
Financial assets
Trade and other payables
2013
Financial assets
945
*
945
*
945
945
(1,577)
(1,577)
Other payables
* Represent RM2.00
18.2 Net gains and losses arising from financial instruments
Net gains/(losses) on:

Fair value through profit or loss
Loan and receivables
Financial liabilities measured at amortised cost
Group
2014
RM000
2014
RM000
Company
2013
RM000
(72)
(125)
(1,561)
1,565
(1,758)
1,565
18.3 Financial risk management

The Group has exposure to the following risks from its use of financial instruments:
Credit risk
Liquidity risk
Market risk
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18.4 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. The Groups and the Companys exposure to credit risk arises principally from
its receivables from customers, amounts due from subsidiaries and related parties.
Receivables
Risk management objectives, policies and processes for managing the risk
The Board of Directors is of the view that the exposure to credit risk is managed through the direct involvement
of Executive Directors monitoring on an on-going basis is deemed sufficient.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented
by the carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are
measured at their realisable values. A significant portion of these receivables are regular customers that have been
transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any
receivables having significant balances past due more than 60 days, which are deemed to have higher credit risk,
are monitored individually.
Impairment losses
The Group maintains an ageing analysis in respect of trade receivables and related parties only. The ageing of trade
receivables as at the end of the reporting period was:
2014
Gross
RM000
Individual
impairment
RM000
Net
RM000
51,891
9,995
2,946
8,197
(2,191)
51,891
9,995
2,946
6,006
73,029
(2,191)
70,838
Group
Not past
Past due
Past due
Past due
due
0 30 days
31 60 days
more than 60 days
Included in the past due more than 60 days of the Group is amount receivables from related parties of RM5,754.
In determining whether additional allowance is required to be made, the Group considers financial background of
the customers and related parties, past transactions and other specific reasons causing these balances to be past
due more than 60 days. The customers and related parties are regular customers that have been transacting with
the Group. The Group do not consider it necessary to impair further the receivable amount and is satisfied that
the amount net of allowance can be recovered.
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KAREX Berhad
Annual Report 2014

18.4 Credit risk (continued)
Receivables (continued)
The movements in the allowance for impairment losses of receivables during the financial year were:
Group
2014
RM000
At Acquisitions
Impairment loss recognised
Exchange difference
1,438
720
33
At 30 June
2,191
The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is
satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the
receivable directly.
Inter company balances
The Companys exposure to credit risk arising from unsecured advances provide to its subsidiaries.
The Company monitors the financial positions of subsidiaries in assessing its credit risk.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts
in the statement of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the amounts due from subsidiaries are not
recoverable.
Financial guarantees
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to a subsidiary.
The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary.
The maximum exposure to credit risk amounts to RM5,950,411 (2013: NIL) representing the outstanding banking
facilities of the subsidiary as at the end of the reporting period.
As at the end of the reporting period, there was no indication that the subsidiary would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
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18.5 Liquidity risk
Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they
fall due. The Groups and the Companys exposure to liquidity risk arises principally from its various payables, loans
and borrowings.
The Group and the Company maintains a level of cash and cash equivalents and bank facilities deemed adequate by
the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
Maturity analysis
The table below summarises the maturity profile of the Groups and of the Companys financial liabilities as at the
end of the reporting period based on undiscounted contractual payments:
Carrying
amount
RM000
Contractual
interest
rate/
coupon
%
Contractual
cash flows
RM000
Under
1 year
RM000
12
years
RM000
25
years
RM000
More
than
5 years
RM000
Group
2014
Non-derivative financial liabilities
Secured term loans
38,815
12,205
5.75 6.88
1.25 + BLR
38,815
14,379
38,815
4,176
5,387
2,445
2,371
Secured finance lease liabilities

Secured bankers acceptance
2,695
6,694
1.98 3.75
2.20 4.88
2,886
6,694
1,094
6,694
1,570
222
62,774
50,779
6,957
2,667
2,371
22,876
(22,804)
22,876
(22,804)
62,846
50,851
6,957
2,667
2,371
60,409
Derivative financial liabilities
Forward exchange contracts
(gross settled):
Outflow
Inflow
72
60,481
Company
2014

173
173
173
2013
1,577
1,577
1,577
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KAREX Berhad
Annual Report 2014

18.6 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates that will
affect the Groups and the Companys financial position or cash flows.
Currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other
than the functional currency of the Group. The currencies giving rise to this risk are primarily US Dollar (USD),
Euro Dollar (EURO) and Great Britain Pound (GBP).
The Group uses forward exchange contracts to hedge its foreign currency risk from time to time. Most of the
forward exchange contracts have maturities of less than one year after the end of the reporting period. Where
necessary, the forward exchange contracts are rolled over at maturity.
Exposure to foreign currency risk
The Groups exposure to foreign currency (a currency which is other than the functional currency of the Company)
risk, based on carrying amounts as at the end of the reporting period was:
2014
USD
RM000
Denominated in
EURO
RM000
GBP
RM000
Group
Trade receivables
Other receivables
Trade payables
Other payables
69,949
116
8,825
(11,761)
(1,550)
(5,170)
605
798
(134)
162
(9)
(17,633)
Net exposure
60,409
1,269
(17,480)
Currency risk sensitivity analysis

A 10% strengthening of the Ringgit Malaysia (RM) against the following currencies at the end of the reporting
period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted
sales and purchases.
2014
USD
RM000
Denominated in
EURO
RM000
GBP
RM000
Group
Profit or (loss)
(4,531)
(95)
1,311
A 10% weakening of the RM against the above currencies at the end of the reporting period would have had equal
but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables
remain constant.
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18.6 Market risk
Interest rate risk
The Groups fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest
rates. The Groups variable rate borrowings are exposed to a risk of change in cash flows due to changes in
interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.
There is no formal hedging policy with respect to interest rate exposure. Exposure to interest rate is monitored on
an ongoing basis and the Group endeavours to keep the exposure at an acceptable level.
Exposure to interest rate risk
The interest rate profile of the Groups and the Companys significant interest-bearing financial instruments, based
on carrying amounts as at the end of the reporting period was:
Fixed rate instruments

Financial assets
Floating rate instruments

Group
2014
RM000
2014
RM000
Company
2013
RM000
56,355
(9,389)
47,127
46,966
47,127
(12,205)
Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

The Group and the Company does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss, and the Group and the Company does not designate derivatives as hedging instruments
under a fair valued hedged accounting model. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased/
(decreased) the Group post-tax results by RM91,000. This analysis assumes that all other variables remained
constant.
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KAREX Berhad
Annual Report 2014

18.7 Fair value information
The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings
approximate fair values due to the relatively short term nature of these financial instruments.
The carrying amounts of the finance lease liabilities approximates their fair value as there is no material change in
the interest charged on similar kind of borrowings in the market.
The carrying amount of the floating rate term loans approximates its fair values as its effective interest rate changes
accordingly to movements in the market interest rate.
No disclosure of fair value is made for amounts due from subsidiaries, as it is not practicable to determine their fair
values with sufficient reliability since these balances have no fixed terms of repayment and is repayable upon demand.
It was not practicable to estimate the fair value of the Companys investment in unquoted shares due to the lack
of comparable quoted market prices in an active market and the fair value cannot be reliably measured.
The table below analyses financial instruments carried at fair value for which fair value is disclosed, together with
their fair values and carrying amounts shown in the statement of financial position.
Fair value of
financial instruments
carried at fair value
Level 2
RM000
Total
fair value
Carrying
amount
RM000
RM000
72
72
2014
Group
72
Level 1 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or
liabilities that the entity can access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other then quoted prices included within Level 1 that are observable
for the financial assets or liabilities, either directly or indirectly.
Derivatives
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual
forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate
(based on AA credit-rated bonds).
Level 3 fair value
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
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103
19. CAPITAL MANAGEMENT

The Groups objectives when managing capital is to maintain a strong capital base and safeguard the Groups ability to
continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development
of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio to operate
effectively with minimal external borrowings.
During 2014, the Groups strategy, was to maintain the debt-to-equity ratio at the lower end range within 0.5 to 1.0. The
debt-to-equity ratio at 30 June 2014 was as follows:
Group
2014
RM000
Total borrowings (Note 10)
Less: Cash and cash equivalents (Note 8)
21,594
(85,592)
(63,998)
Total equity
223,332
No disclosure is made for debt-to-equity ratio as the Group is in a net positive cash flow position as at 30 June 2014.
There were no changes in the Groups approach to capital management during the financial year.
20. CAPITAL COMMITMENT

Group
2014
RM000
Authorised but not contracted for
Contracted but not provided for
597
1,577
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KAREX Berhad
Annual Report 2014

21. OPERATING LEASES
Leases as lessee
Group
2014
RM000
Non-cancellable operating rentals are payable as follows:
93
371
1,686
Within one year

Between one and five years
More than five years
2,150
The Group has 3 leasehold agreements for 3 plots of land being used for its factory and warehouse. Under the term of the
agreements, the Company has to pay annual rental fee at the amount and increasing rates stated on the agreements. The
rental fees for year 2014 are RM71,148. The agreements will expire in April 2033, February 2036 and October 2042,
respectively.
22. RELATED PARTIES

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the
Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over
the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party
are subject to common control or common significant influence. Related parties may be individuals or other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility for
planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel
include all the Directors of the Group, and certain members of senior management of the Group.
The Group has related party relationship with its subsidiaries and key management personnel.
Significant related party transactions
The significant related party transactions of the Group and the Company, other than key management personnel
compensation (see Note 12), are as follows:
Group
2014
RM000
2014
RM000
Company
2013
RM000
17,371
445
603
A. Subsidiary
Dividend income
Interest income
B. Entities in which certain Directors/Directors
close family members have substantial financial interest
Sales of goods
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105
23. ACQUISITION OF SUBSIDIARIES

In conjunction with, and as an integral part of the listing of the Companys shares on the Main Market of Bursa Malaysia
Securities Berhad, the Company undertook the following acquisitions of entities in which certain Director and their close
family members have interests:
(i) The acquisitions of Karex Industries Sdn. Bhd. (KISB), Innolatex (Thailand) Limited (ITL), Innolatex Sdn. Bhd.
(ISB) and Hevea Medical Sdn. Bhd. (HMSB) by the Company and Uro Technology Sdn. Bhd. (UTSB) by KISB,
for an aggregated consideration of approximately RM57.4 million were settled via the issuance of 229.5 million shares
of the Company to their respective shareholders on 23 September 2013. Details of the acquisitions are as follows:
(a) The Company acquired the entire issued and paid-up share capital of KISB for a purchase consideration of
RM35,474,998 satisfied via the issuance of 141,899,992 shares of the Company;
(b) The Company acquired the entire issued and paid-up share capital of ITL for a purchase consideration of
(c) The Company acquired the entire issued and paid-up share capital of ISB for a purchase consideration of
(d) The Company acquired the entire issued and paid-up share capital of HMSB for a purchase consideration of
RM3,300,000 satisfied via the issuance of 13,200,000 shares of the Company; and
(e) KISB acquired the remaining 40% equity interest in UTSB not already owned by KISB for a purchase
consideration of RM1,350,000 satisfied via the issuance of 5,400,000 shares of the Company.
(the above transactions are collectively refer to as Acquisitions)
The Acquisitions were completed on 23 September 2013.
Identifiable assets acquired and liabilities assumed:
RM000
Deferred tax assets
Inventories
Tax recoverable
Loan and borrowings
Taxation
79,333
706
47,798
58,676
131
26,736
(45,024)
(5,034)
(40,141)
(2,295)
Net assets acquired

Merger reserve
120,886
(63,511)
Consideration paid by issuance of shares of the Company
57,375
Net cash inflows arising from Acquisitions are as follows:

Cash and cash equivalents acquired
Less: Pledged deposits
26,736
(7,585)
19,151
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KAREX Berhad
Annual Report 2014

23. ACQUISITION OF SUBSIDIARIES (CONTINUED)
(ii) As the Acquisitions were completed on 23 September 2013, the Group did not consolidate the financial performance
of these subsidiaries from 23 September 2013 to 30 September 2013 due to impracticability of an accounting cut-off
date other than month end and the effect is not significant to the results for the financial year ended 30 June 2014.
The Group has consolidated the results from 1 October 2013 onwards.

If the Group has existed since the last financial year, management estimate that the consolidated results would have
been as follows:
2014
RM000
2013
RM000
285,332
(203,703)
231,389
(171,472)
Gross profit
Other income
Distribution expenses
Administrative expenses
Other expenses
81,629
758
(11,558)
(12,488)
(3,111)
59,917
1,988
(9,698)
(10,068)
(3,645)
Results from operating activities
55,230
38,494
Finance income
Finance costs
1,332
(2,134)
150
(2,500)
(802)
(2,350)
Profit before tax

Tax expense
54,428
(9,260)
36,144
(7,116)
Profit for the year
45,168
29,028
Revenue
Cost of goods sold
Net finance costs
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Making Our Mark
24. SIGNIFICANT EVENTS

24.1 In conjunction with, and as an integral part of the listing of the Companys shares on the Main Market of Bursa
Malaysia Securities Berhad, the following listing scheme was undertaken by the Company:
24.1.1 Acquisitions
The acquisitions of KISB, ITL, ISB, HMSB by the Company and the remaining interest of UTSB by KISB,
for an aggregated consideration of approximately RM57.4 million were settled via the issuance of
approximately 229.5 million shares of the Company to their respective shareholders on 23 September 2013.
Details of the Acquisitions are as disclosed in Note 23(i).
24.1.2 Initial Public Offering
The Initial Public Offering (IPO) comprises the Institutional Offering and Retail Offering for a total of
67,500,000 shares of which 27,000,000 shares were offered for sale by the shareholders and Public Issue
of 40,500,000 new shares by the Company.

Listing on Bursa Securities

The Companys entire enlarged issued and paid-up share capital of RM67,500,000 comprising 270,000,000
ordinary shares of RM0.25 each were listed on the Main Market of Bursa Malaysia Securities Berhad on 6
November 2013.
24.2 Bonus Issue

On 31 March 2014, the Company undertook a bonus issue of 135,000,000 new ordinary shares of RM0.25 each
(Bonus Shares) credited as fully paid up on the basis of 1 Bonus Share for every 2 existing shares held.
24.3 Memorandum of Understanding

On 8 August 2014, the Company entered into a Memorandum of Understanding (MoU) with the shareholder of
Global Protection Corp. (GP) for the purpose of the proposed acquisition of 55% of the issued and paid-up share
capital in GP by the Company at a purchase consideration of USD6.6 million.
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KAREX Berhad
Annual Report 2014

25. SUPPLEMENTARY FINANCIAL INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS
OR LOSSES
The breakdown of the retained earnings/(accumulated losses) of the Group and of the Company as at 30 June, into
realised and unrealised profits or losses, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing
Requirements, are as follows:
Group
2014
RM000
2014
RM000
Company
2013
RM000
Total retained earnings/(accumulated losses)

of the Company and its subsidiaries:
realised
unrealised
35,427
(418)
15,349
(632)
Less: Consolidation adjustments
35,009
(1,774)
15,349
(632)
Total retained earnings/(accumulated losses)
33,235
15,349
(632)
The determination of realised and unrealised profits or losses is based on the Guidance of Special Matter No. 1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
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Making Our Mark
LIST OF PROPERTIES
Land area/
built up area
(sq. ft.)
Description/
Existing Use
Date of
acquisition
No.
Address
1.
Lot 594, Persiaran Raja Lumu

Pandamaran Industrial Estate 42000
Port Klang, Selangor
43,560/47,473
3-storey
building
which we use
as office,
factory and
warehouse
20/10/2003
Leasehold 99
years
September
2074
26
2,727
2.
PTD 7906, Taman Pontian Jaya

Batu 34 Jalan Johor 82000 Pontian,
Johor
9,354/5,460
1 storey
semi-detached
building which
we use as
office, factory
and warehouse
5/4/2000
Freehold
21
529
3.

Johor
10,807/5,460
1 storey
semi-detached
building which
we use as
office, factory
and warehouse
5/4/2000
Freehold
21
529
4.
Lot 1235, Benut 82000 Pontian,

Johor
225,418/
Vacant land
10/9/2002
Freehold
813
5.

Johor
9,720/5,460
1 storey
semi-detached
building which
we use
as warehouse
22/2/2005
Freehold
21
622
6.
Lot 2767, Jalan Johor 82000

Pontian, Johor
781,335/
Building under
construction
21/10/2010
Freehold
10,508
7.
Lot 591, Persiaran Raja Lumu

Pandamaran Industrial Estate, 42000
Port Klang, Selangor Darul Ehsan
43,560/28,908
1 store
building which
we use
as warehouse
9/3/2012
Leasehold 99
years
September
2074
23
6,483
8.
PTD 8746 Taman Perindustrian

Pontian 82000 Pontian Johor
61,680/
Vacant land
14/10/2005
Leasehold 60
years
November
2056
852
9.
45,047/41,925
Land Slot No.: E1-6 Export
Processing Zone, Southern Industrial
Estate Village 4, Tumbol Chalung,
Amphur Hat Yai, Songkhla
1 storey
building which
we use as
office, factory
and warehouse
30/4/2003
Leasehold 30
years
April
2033
1,203
10.
45,047/29,891
Single storey
building which
we use as
office, factory
and warehouse
9/2/2003
Leasehold 30
years
February
2036
1,030
11.
45,047/57,307
Single storey
building which
we use
as warehouse
1/11/2012
Leasehold 30
years
October
2042
1,890
Tenure
Approximate Net book value

age of buildings at 30 June 2014
Year of expiry
(years)
(RM000)
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KAREX Berhad
Annual Report 2014
ANALYSIS OF SHAREHOLDINGS
AS AT 1 OCTOBER 2014
Authorised Share Capital
: RM500,000,000.00 divided into 2,000,000,000 Ordinary Shares of RM0.25 each
Issued and Paid-up Share Capital : RM101,250,000 divided into 405,000,000 Ordinary Shares of RM0.25 each
Class of Shares
: Ordinary Share of RM0.25 each
Voting Rights
: One vote per ordinary share
Number of Shareholders
: 3,439
DISTRIBUTION OF SHAREHOLDINGS
No. of
Shareholders
No. of
Shareholders
Less than 100

100-1000
1,001-10,000
10,001-100,000
100,001 to less than 5% of issued shares
5% and above of issued shares
54
667
2,039
544
133
2
1.57
19.40
59.29
15.81
3.87
006
1,324
520,498
8,634,948
15,993,857
209,516,059
170,333,314
0.00
0.13
2.13
3.95
51.73
42.06
Total
3,439
100.00
405,000,000
100.00
Size of Shareholdings
No. of
% of Issued
Shares Share Capital
SUBSTANTIAL SHAREHOLDERS
The following are the substantial shareholders of the Company according to the Register of Substantial Shareholders.
Name of Shareholders
Karex One Limited
- HSBC Nominees (Asing) Sdn Bhd (Pledged
securities Account BNP Paribas Wealth
Management Singapore for Karex One Limited)
Lam Yiu Pang Albert
Direct Interest
No. of Shares
141,750,000
35.00
28,583,314
7.06
Indirect Interest
No. of Shares
5,700,000*
1.41
* Deemed interested by virtue of his interest in AJNA Holdings Limited pursuant to Section 6A of the Companies Act, 1965
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Making Our Mark
DIRECTORS SHAREHOLDINGS
Name of Directors
Goh Siang
Goh Leng Kian
Goh Yen Yen
Lam Jiuan Jiuan
Wong Yien Kim
Law Ngee Song
Direct Interest
No. of Shares
150,000
150,000
10,508,379
16,208,385
11,333,314
8,483,314
150,000
%
0.04
0.04
2.59
4.00
2.80
2.09
0.04
Indirect Interest
No. of Shares
141,750,000(1)
141,750,000(1)
141,750,000(1)
147,450,000(2)
35.00
35.00
35.00
36.41
(1)
Deemed interested by virtue of his/her equity interest in Karex One Limited pursuant to Section 6A of the Companies Act,
1965
(2) Deemed interested by virtue of her equity interest in Karex One Limited and AJNA Holdings Limited pursuant to Section
6A of the Companies Act, 1965
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KAREX Berhad
Annual Report 2014
THIRTY LARGEST SHAREHOLDERS

AS AT 1 OCTOBER 2014
No. Name of Shareholders

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
No. of Shares
HSBC NOMINEES (ASING) SDN BHD

PLEDGED SECURITIES ACCOUNT BNP PARIBAS WEALTH MANAGEMENT
SINGAPORE FOR KAREX ONE LIMITED
LAM YIU PANG ALBERT
GOH LENG KIAN
CARTABAN NOMINEES (ASING) SDN BHD
SSBT FUND HG22 FOR SMALLCAP WORLD FUND, INC.
GOH YIN
GOH MIAH KIAT
GOH YEN YEN
GOH AI NOI
MAYBANK NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR LIM BENG GUAN
GOH SIANG
LAM JIUAN JIUAN
HEKTAR SEMANGAT SDN BHD
LIM POH CHUAN
CITIGROUP NOMINEES (TEMPATAN) SDN BHD
EXEMPT AN FOR AIA BHD.
EMPLOYEES PROVIDENT FUND BOARD (AMUNDI)
AJNA HOLDINGS LIMITED
EXEMPT AN FOR J.P. MORGAN BANK LUXEMBOURG S.A.
EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
(NORGES BK LEND)
CIMB GROUP NOMINEES (TEMPATAN) SDN BHD
CIMB BANK BERHAD (EDP 2)
KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (KENANGA)
CIMSEC NOMINEES (TEMPATAN) SDN BHD
CIMB BANK FOR SIEW MUN WAI (MH7236)
OMBAK TEK SDN BHD
SEN BUMIJAYA SDN. BHD.
ALLIANZ LIFE INSURANCE MALAYSIA BERHAD (P)
HLIB NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITIES ACCOUNT FOR LEE SOON KHEAN
MAYBANK NOMINEES (TEMPATAN) SDN BHD
PLEDGED SECURITES ACCOUNT FOR GOH SIANG (514897060156)
CIMB GROUP NOMINEES (TEMPATAN) SDN BHD
CIMB COMMERCE TRUSTEE BERHAD - KENANGA GROWTH FUND
MAYBANK INVESTMENT BANK BERHAD
IVT (9)
DB (MALAYSIA) NOMINEE (ASING) SDN BHD
SSBT FUND W4B0 FOR WASATCH INTERNATIONAL OPPORTUNITIES FUND
SEB LUX FOR ABB CAPITAL SELECTION ASIAN SMALLER COMPANIES FUND
141,750,000
35.00
28,583,314
16,208,385
13,596,000
7.06
4.00
3.36
11,483,320
11,333,377
11,333,314
11,183,314
9,450,000
2.84
2.80
2.80
2.76
2.33
8,508,379
8,483,314
6,620,820
6,000,000
5,849,850
2.10
2.09
1.63
1.48
1.44
5,800,000
1.43
5,700,000
4,603,500
1.41
1.14
4,287,750
1.06
3,573,400
0.88
3,187,950
0.79
3,000,000
0.74
2,721,220
2,700,000
2,098,500
0.67
0.67
0.52
2,061,200
0.51
2,000,000
0.49
1,959,200
0.48
1,760,000
0.43
1,754,100
0.43
1,708,900
0.42
TOTAL
339,299,107
83.78
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113
Making Our Mark
NOTICE OF
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Second Annual General Meeting (AGM) of Karex Berhad
(Karex or Company) will be held at Setia City Convention Centre, No. 1, Jalan Setia Dagang
AG U13/AG, Setia Alam, Seksyen U13, 40170 Shah Alam, Selangor Darul Ehsan on Thursday, 27
November 2014 at 10.00 a.m. for the purpose of considering the following businesses:-
AGENDA
SPECIAL BUSINESS
ORDINARY BUSINESS
To consider and if thought fit, pass the following resolutions with or

without any modifications:
1.

2.
To receive the Audited Financial Statements for the financial

year ended 30 June 2014 together with the Reports of the
Directors and the Auditors thereon.
(Refer to Explanatory Note (a))
To re-elect the following Directors who are retiring in accordance
with the Article 95 the Companys Articles of Association, and
being eligible, have offered themselves for re-election:
(i)
Goh Leng Kian
(Ordinary Resolution 1)
(ii)
Lam Jiuan Jiuan
(iii) Law Ngee Song

3.

5.

6.
Authority to Issue Shares Pursuant to Section 132D of the

Companies Act, 1965 (the Act)
THAT subject to Section 132D of the Act, and approvals of the

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

conclusion of the next Annual General Meeting pursuant to
Section 129(6) of the Companies Act, 1965 and being eligible,
has offered themselves for re-appointment:
(i)


(ii)


(iii) Goh Yen Yen

4.
7.
To approve the payment of Directors fees of RM275,000.00 for

the financial year ended 30 June 2014.
To approve the payment of a final single tier dividend of 2.5 sen
per ordinary share of RM0.25 each for the financial year ended
30 June 2014.
To re-appoint Messrs. KPMG as Auditors of the Company until
the conclusion of the next AGM and authorise the Directors to
fix their remuneration.

8.
To transact any other business of which due notice shall have

been given in accordance with the Companies Act, 1965.
NOTICE OF DIVIDEND ENTITLEMENT

NOTICE IS HEREBY GIVEN THAT subject to the approval of the
shareholders at the Second AGM, a final single tier dividend of 2.5
sen per ordinary share of RM0.25 each for the financial year ended
30 June 2014, if approved, will be paid on 22 December 2014 to
holders of ordinary shares registered in the Record of Depositors of
the Company at the close of business on 12 December 2014.
A depositor shall qualify for entitlement to the dividend only in
respect of:a)
Securities transferred into the Depositors Securities Account

before 4.00 p.m. on 12 December 2014 in respect of transfers;
and
b)
Securities bought on the Bursa Malaysia Securities Berhad

(Bursa Securities) on a cum entitlement basis according to the
Rules of the Bursa Securities.
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114
KAREX Berhad
Annual Report 2014
Notice of
Annual General Meeting
BY ORDER OF THE BOARD
LIM LEE KUAN (MAICSA 7017753)

ANNA LEE AI LENG (LS 0009729)
Company Secretaries
EXPLANATORY NOTES ON ORDINARY AND SPECIAL

BUSINESS
a)

Item 1 of the Agenda

Audited Financial Statements for the financial year ended 30
June 2014.
The Audited Financial Statements under this agenda item is

meant for discussion only as the provision of Section 169(1) of
the Companies Act, 1965 (the Act) does not require a formal
approval of the shareholders and hence this item is not put
forward for voting.
b)
Ordinary Resolutions 4, 5 and 6

Re-appointment of Directors in accordance with Section 129(6)
of the Companies Act, 1965
The re-appointment of Tan Sri Dato Seri Utama Arshad bin

Ayub, Dato Dr. Ong Eng Long @ Ong Siew Chuan and Madam
Goh Yen Yen, persons over the age of 70 years, as Directors
of the Company to hold office until the conclusion of the next
AGM of the Company shall take effect if the proposed
Resolutions 4, 5 and 6 have been passed at the 2nd AGM.
c)

Ordinary Resolution 10
Authority to Issue Shares pursuant to Section 132D of the Act
The proposed Ordinary Resolution 10, if passed, will give

flexibility to the Directors of the Company to issue shares up to
a maximum of ten per centum (10%) of the issued share capital
of the Company at the time of such issuance of shares and for
such purposes as they consider would be in the best interest
of the Company without having to convene separate general
meetings. This authority, unless revoked or varied at a general
meeting, will expire at the conclusion of the next Annual
General Meeting of the Company.
This new mandate, if approved, will provide flexibility to the

Company for any possible fund raising activities, including but
not limited to further placement of shares, for purpose of
funding current and/or future investment projects, working
capital, repayment of borrowings and/or acquisition(s).
Kuala Lumpur
Dated this 4th day of November 2014
Notes:
1.
2.
3.
4.
A member entitled to attend and vote at this meeting is entitled

to appoint a proxy or in the case of a corporation, to appoint
a duly authorised representative to attend and vote in his/her
place. A proxy may but need not be a member of the Company
and the provisions of Section 149(1)(b) of the Companies Act,
1965 shall not apply to the Company.
The Form of Proxy shall be in writing under the hand of the
appointer or of his/her attorney duly authorised in writing. If the
appointer is a corporation, it must be executed under its
common seal or under the hand of its officer or its attorney duly
authorised on its behalf.
A member may appoint two or more proxies to attend and vote
at the general meeting of the Company. Where a member
appoints two or more proxies, the appointment of such proxies
shall not be valid unless the Member specifies the proportion of
his/her shareholding to be represented by each such proxy.
The Form of Proxy, together with the power of attorney (if any)
under which it is signed or a duly notarial certified copy thereof,
must be deposited at the registered office of the Company at
10th Floor, Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee,
50250 Kuala Lumpur, Wilayah Persekutuan not less than fortyeight (48) hours before the time for holding this meeting or any
adjournment thereof.
5.
Where a member of the Company is an exempt authorised

nominee which holds ordinary shares in the Company for
multiple beneficial owners in one securities account (Omnibus
Account), there is no limit to the number of proxies which the
exempt authorised nominee may appoint in respect of each
Omnibus Account it holds.
6.
Depositors whose name appear in the Record of Depositors as

at 21 November 2014 shall be regarded as members of the
Company entitled to attend the AGM or appoint proxies to
attend and vote on his/her behalf in accordance with Articles
55(5) and 55(6) of the Companys Articles of Association.
STATEMENT ACCOMPANYING NOTICE OF 2ND ANNUAL

GENERAL MEETING
Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements
of Bursa Malaysia Securities Berhad, there is no person seeking
election as Director of the Company at this 2nd AGM.
10/24/14 5:55 PM
FORM OF PROXY

Number of Shares Held
CDS Account No.
* I/We
NRIC No./Passport No./Company No

of
being a Member(s) of KAREX BERHAD (1018579-U), hereby appoint #THE
CHAIRMAN OF THE MEETING or
NRIC No./Passport No.
of
or failing him/her
NRIC No./Passport No.
of
as
*my/our proxy to vote for *me/us on *my/our behalf at the Second Annual General Meeting of the Company to be held at Setia City
Convention Centre, No. 1, Jalan Setia Dagang AG U13/AG, Setia Alam, Seksyen U13, 40170 Shah Alam, Selangor Darul Ehsan on Thursday,
27 November 2014 at 10.00 a.m. or at any adjournment thereof and to vote as indicated below:
Ordinary Resolutions
For
To re-elect Mr Goh Leng Kian as Director
To re-elect Madam Lam Jiuan Jiuan as Director
To re-elect Mr Law Ngee Song as Director
To re-appoint Tan Sri Dato Seri Utama Arshad bin Ayub
To re-appoint Dato Dr. Ong Eng Long @ Ong Siew Chuan
To re-appoint Madam Goh Yen Yen
To approve the payment of Directors fees for the financial year ended 30 June 2014
To approve Final Single Tier Dividend
To re-appoint Messrs KPMG as Auditors of the Company
10
Special Business
Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965
Against
Mark either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting
as the proxy thinks fit. If you appoint two proxies and wish them to vote differently this should be specified.
# If you wish to appoint other person(s) to be your proxy/proxies, kindly delete the words The Chairman of the Meeting and insert the
name(s) of the person(s) desired.
* Delete if not applicable.
Signed this

day of
2014
Signature/Common Seal of Shareholder
Notes:
1.
A member entitled to attend and vote at this meeting is entitled to appoint a proxy or in the case of a corporation, to appoint a duly
authorised representative to attend and vote in his/her place. A proxy may but need not be a member of the Company and the
provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2.
The Form of Proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing. If the appointer
is a corporation, it must be executed under its common seal or under the hand of its officer or its attorney duly authorised on its behalf.
3.
A member may appoint two or more proxies to attend and vote at the general meeting of the Company. Where a member appoints two
or more proxies, the appointment of such proxies shall not be valid unless the Member specifies the proportion of his/her shareholding
to be represented by each such proxy.
4.
The Form of Proxy, together with the power of attorney (if any) under which it is signed or a duly notarial certified copy thereof, must
be deposited at the registered office of the Company at 10th Floor, Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur,
Wilayah Persekutuan not less than forty-eight (48) hours before the time for holding this meeting or any adjournment thereof.
5.
Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial
owners in one securities account (Omnibus Account), there is no limit to the number of proxies which the exempt authorised nominee
may appoint in respect of each Omnibus Account it holds.
6.
Depositors whose name appear in the Record of Depositors as at 21 November 2014 shall be regarded as members of the Company
entitled to attend the AGM or appoint proxies to attend and vote on his/her behalf in accordance with Articles 55(5) and 55(6) of the
Companys Articles of Association.
10/24/14 5:55 PM
Fold here
AFFIX STAMP
The Company Secretary

10th Floor, Menara Hap Seng,
No. 1 & 3 Jalan P. Ramlee
50250 Kuala Lumpur
Fold here
10/24/14 5:55 PM
KAREX BERHAD
(Company No. 1018579-U)
(Incorporated in Malaysia under the Companies Act 1965)
ADDENDUM TO THE ANNUAL REPORT 2014
To all Shareholders of Karex Berhad,
Reference is made to the Companys Annual Report 2014, which was despatched to the
shareholders on 4 November 2014.
Please be informed that the Statement of Directors Responsibility was inadvertently
omitted in the Annual Report 2014.
A copy of the Statement is attached herewith as Appendix I for your information.
The omission is much regretted.
This Addendum is dated 6 November 2014.
APPENDIX I
Statement of Directors Responsibility

The Directors are required to prepare the financial statements which give a true and fair
view of the state of affairs of the Company and Group as at end of the financial year and of
their results and cash flows for the financial year then ended.
In preparing the financial statements for the year ended 30 June 2014, the Directors have:
adopted suitable accounting policies and then applied them consistently;

made judgements and estimates that are prudent and reasonable;
ensured applicable accounting standards have been followed, subject to any material
departure and explained in the financial statements; and
prepared the financial statements on the going concern basis unless it is inappropriate
to presume that the Group and the Company will continue in business.
The Directors have responsibility to ensure that proper and adequate accounting records are
kept which disclose with reasonable accuracy the financial position of the Company and
Group, and which enable them to ensure that the financial statements comply with the
provisions of the Companies Act, 1965.
The Directors have general responsibility for taking such reasonable steps to safeguard the
assets of the Company and Group so as to prevent and detect fraud and other irregularities.

Karex Annual Report, 2014

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KAREX BERHAD

ANNUAL REPORT 2014

KAREX BERHAD (1018579-U)

KAREX BERHAD (1018579-U)

002 Corporate Information

Go online to our website at:

Annual Report 2014

Tan Sri Dato Seri Utama Arshad bin Ayub

Wong Yien Kim

Dato Dr. Ong Eng Long @ Ong Siew Chuan

Tan Sri Dato Seri Utama Arshad bin Ayub

Lam Jiuan Jiuan

Making Our Mark

Tan Sri Dato Seri Utama Arshad bin Ayub

PTD 7906 & 7907, Taman Pontian Jaya

Law Ngee Song

Annual Report 2014

Financial Position (RM000)

Making Our Mark

Profit before tax (RM000)

Profit attributable to Owners

Basic earning per share (sen)

Net assets per share (RM)

Net assets (RM000)

Annual Report 2014

I am delighted and honored to

Tan Sri Dato Seri Utama Arshad bin Ayub

Making Our Mark

The listing exercise

Annual Report 2014

in sales of better margin products, lower effective tax rate,

as a result of the proceeds raised

Making Our Mark

During the FYE 2014, the Company proposed a bonus issue

In conjunction with the dividend policy, the Board is

At the same time, Karex has also adopted a dividend policy

Lastly, it is my pleasure to inform you that our company

Karex recorded a stellar

The global demand for condoms is expected to rise in

Starting off as a family business, today we

Annual Report 2014

Against this backdrop, Karex was successfully listed on 6

Making Our Mark

Annual Report 2014

Meanwhile, RM/USD exchange rate has also improved by

RM/USD Price Movement for the FYE 2013

Latex Price Chart for the FYE 2013

RM/USD Price Movement for the FYE 2014

Latex Price Chart for the FYE 2014

During the financial year under review, we have expanded

Making Our Mark

Profit from Operations (RM million)

Revenue (RM million)

Profit After Tax (RM million)

Annual Report 2014

Making Our Mark

Karex is vying for green building certification by the US

Annual Report 2014

The new factory will sport an ambitious one megawatt roof

Group strives towards building better products and

Making Our Mark

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Annual Report 2014

Making Our Mark