Tomei Annual Report 2017 Cover - 50 - Malaysiastock.biz outstanding jewellers across the Asian countries. Tomei was founded in 1968 as a jewellery designer and manufacturer. It then

VISION愿景

CORE VALUES核心价值

MISSION使命

To be theNo 1

PROFITABLE&

EFFICIENTJewellery Company

inMalaysia

by2020

Pioneering in productsuperiority and designcreativity are our leads.

Making sustained effortstowards brand significanceto gain customers’ trust are

our priority.

Service excellence is ourpassion.

Developing a progressiveorganization with dignity is

our ultimate goal.

优质的产品，创新的设计，卓越的服务，杰出的企业。

ACCOUNTABILITY承担责任Akauntabiliti

INTEGRITY诚信

Integriti

PASSION热忱

Sepenuh Hati

TEAMWORK团队精神

Semangat Berpasukan

TABLE OFCONTENTS

12827

Table of Contents

Financial HighlightsCorporate Information

Calendar of EventsCorporate Structure

Corporate Profile

Profile of the Board of DirectorsChairman’s Statement

Profile of Senior ManagementManagement Discussion

and Analysis

Corporate GovernanceOverview Statement

SustainabilityStatement

Audit Committee Report

Nomination Committee StatementStatement on Risk Management& Internal ControlAdditional ComplianceInformation

Directors' ResponsibilityStatement

Financial StatementsList of PropertyShareholdings Analysis

Notice of Annual General MeetingStatement Accompanying Noticeof Annual General MeetingProxy Form

03040507

111620

35

40

425051

119

44

48

116117

126

129

5 YEARS FINANCIALHIGHLIGHTS

Revenue (RM '000)

Profit/(Loss) Before Tax (RM '000)

Profit/(Loss) Attributable to Owners

of the Parent (RM '000)

Total Shareholders' Fund (RM '000)

Net Earnings/(Loss) Per Share (Sen)

Net Tangible Assets Per Share (RM)

Gross Dividend Per Share (Sen)

2017617,02021,282

16,045203,566

11.581.471.00

2013701,907

(3,736)

(4,405)

186,490

(3.18)

1.35

1.00

2014564,799

5,513

1,124

184,674

0.81

1.33

1.00

2015499,341

2,067

(1,722)

185,773

(1.24)

1.34

-

2016472,209

8,053

4,687

190,006

3.38

1.37

-

RM

'000

Year 2013 2014 2015 2016 2017

5,000

0

(5,000)

10,000

15,000

20,000

25,000

Profit/(Loss)Before Tax

14.00

12.00

10.00

8.00

6.00

4.00

2.00

0.00

(2.00)

(4.00) Sen

Net Earnings/(Loss)Per Share

2013 2014 2015 2016 2017 Year

2013 2014 2015 2016 2017 Year

Total Shareholders'Fund

210,000

205,000

200,000

195,000

190,000

185,000

180,000

175,000

170,000 RM

'000

1.20

1.00

0.80

0.60

0.40

0.20

0.00 Sen

Gross DividendPer Share

2013 2014 2015 2016 2017 Year

1.50

1.45

1.40

1.35

1.30

1.25 RM

Net Tangible AssetsPer Share

2013 2014 2015 2016 2017 Year

200,000

400,000

600,000

800,000

2013 Year

2014 2015 2016 2017

RM

'000

Revenue

100,000

300,000

500,000

700,000

0

(5,000)

5,000

10,000

15,000

20,000

RM

'000

2013 2014 2015 2016 2017 Year

Profit/(Loss) Attributableto Owners of the Parent

0

Page 2

TOMEI CONSOLIDATED BERHAD (692959-W)ANNUAL REPORT 2017

CORPORATEINFORMATION

BOARD OF DIRECTORS

Tan Sri Datuk Dr Ng Teck FongGroup Executive Chairman

Yang Mulia Raja Tan Sri Dato’ Seri AmanBin Raja Haji AhmadSenior Independent Non-Executive Director

Datuk Ng Yih PyngGroup Managing Director

Datin Nonadiah Binti AbdullahIndependent Non-Executive Director

Datuk M Chareon Sae Tang @ Tan Whye AunIndependent Non-Executive Director

Mr Lau Tiang HuaIndependent Non-Executive Director

Datin Choong Chow MooiGroup Executive Director

Mr Ng Yih ChenGroup Executive Director

Ms Ng Sheau ChynGroup Executive Director

Ms Ng Sheau YuenGroup Executive Director

AUDIT COMMITTEE

Mr Lau Tiang HuaChairman, Independent Non-Executive Director



RISK MANAGEMENT COMMITTEE

Mr Lau Tiang HuaChairman, Independent Non-Executive Director



Datuk Ng Yih PyngGroup Managing Director

REMUNERATION COMMITTEE

Datuk M Chareon Sae Tang @ Tan Whye AunChairman, Independent Non-Executive Director




NOMINATION COMMITTEE

Datuk M Chareon Sae Tang @ Tan Whye AunChairman, Independent Non-Executive Director




COMPANY SECRETARY

Ms Teoh Kok Jong (LS 04719)

REGISTERED OFFICE

Suite B13A-4, Tower B, Level 13A,Northpoint Offices, Mid Valley City,No. 1, Medan Syed Putra Utara,59200 Kuala Lumpur.Tel: 03-2287 1608Fax: 03-2287 6608

PRINCIPAL PLACE OF BUSINESS

8-1, Jalan 2/131A,Project Jaya Industrial Estate,Batu 6, Jalan Kelang Lama,58200 Kuala Lumpur.Tel: 03-7784 8136Fax: 03-7784 8140Website: www.tomei.com.my

AUDITOR

BDO (AF 0206)Level 8,BDO @ Menara CenTARa,360, Jalan Tuanku Abdul Rahman,50100 Kuala Lumpur.

PRINCIPAL BANKERS

United Overseas Bank (M) Berhad (271809-K)Level 2, Menara UOB,Jalan Raja Laut,50350 Kuala Lumpur.

RHB Bank Berhad (6171-M)Level 7, Tower 3, RHB Centre,Jalan Tun Razak,50400 Kuala Lumpur.

AmBank (M) Berhad (8515-D)Level 12A, Menara Dion,Jalan Sultan Ismail,50250 Kuala Lumpur.

Hong Leong Bank Berhad (97141-X)Ground Floor, Tower A,PJ City Development,15A, Jalan 219, Section 51A,46100 Petaling Jaya,Selangor.

Bank of China (Malaysia) Berhad (511251-V)Grd, Mezz. & 1st Floor, Plaza OSK,25, Jalan Ampang,50450 Kuala Lumpur.

SHARE REGISTRAR

Bina Management (M) Sdn. Bhd. (50164-V)Lot 10, The Highway Centre,Jalan 51/205,46050 Petaling Jaya,Selangor.

STOCK EXCHANGE LISTING

Main Market,Bursa Malaysia Securities Berhad (30632-P)Stock Code: 7230Stock Name: TOMEI

Page 3


CORPORATESTRUCTURE

TOMEI CONSOLIDATED BERHAD (692959-W)

100% Tomei Gold & Jewellery Manufacturing Sdn. Bhd. (184348-V)100% Tomei Gold & Jewellery Holdings (M) Sdn. Bhd. (33551-H)100% Tomei Retail Sdn. Bhd. (701040-P)100% Tomei Marketing Sdn. Bhd. (16772-K)100% Yi Xing Goldsmith Sdn. Bhd. (164963-M)100% Gemas Precious Metals Industries Sdn. Bhd. (426096-W)100% Flawless Skin Care Sdn. Bhd. (1105496-D)100% Emas Assayer Sdn. Bhd. (513267-X) 55% O M Design Sdn. Bhd. (925204-T)

TOMEI RETAIL SDN. BHD. (701040-P)

100% Tomei Signature Sdn. Bhd. (480795-A)100% My Diamond Sdn. Bhd. (555881-V)100% Goldheart Collections Sdn. Bhd. (590949-K)100% Le Lumiere Sdn. Bhd. (758734-W)100% De Beers Diamond Jewellers Sdn. Bhd. (1026561-M)100% MyTomei Sdn. Bhd. (597346-T)100% Cindai Permata Sdn. Bhd. (586915-X)100% Tomei Worldwide Franchise Sdn. Bhd. (649283-T)

TOMEI GOLD & JEWELLERY HOLDINGS (M) SDN. BHD. (33551-H)

100% Tomei (Vietnam) Company Limited (473042000013)

TOMEI GOLD & JEWELLERY MANUFACTURING SDN. BHD. (184348-V)

100% Lumiere 2006 Limited (1068733)


Page 5

CORPORATEPROFILE

Listed on the main board of Bursa Malaysia, Tomei dominates a sizable portion of the Malaysian jewellery market with more than 60 retail outlets under five different brands. These are Tomei, My Diamond, Goldheart, Le Lumiere and De Beers. In addition, Tomei also wholesales its products to other jewellery stores. Tomei’s products are also exported to countries like Singapore, Indonesia, Thailand and Vietnam as well as in the European markets.

In 2013, it became an exclusive distributor of De Beers, reinforcing its stature as among the top jeweller in the market. In addition, it also holds the rights to franchise the De Beers brand for retailing in Singapore, Indonesia, Thailand and Vietnam.

The Group constantly introduces new design of jewellery to the market. It has been prolific in launching new products, unveiling ample of new designs every year which include its signature products such as the Ana-stasia and Chomel for gold jewellery and Eternal Binding for diamond jewellery. The Group also secured the exclusive distributorship of China’s “Batar Jewellery” and Thailand’s “Prima Gold” for the 24k gold segment. For the children market, the Group holds license from Warner Bros. Consumer Products and Sanrio to manufacture and sell gold jewellery in Malaysia based on characters from the Baby Looney Tunes and DC Super Heroes, and Hello Kitty respectively. In order to tap the online segment, the Group introduces www.etomei.com.my. The Group also has the distributorship right for investment precious metal from the Royal Canadian Mint and the Perth Mint.

During the financial year 2017, the Group in collaboration with the World Gold Council managed to launch the Xifu gold jewelleries series in Malaysia displaying its wedding collections of gold jewellery. The Group also partners with Visconti, a world renowned Italian pen maker in launching the world first Visconti-Le Lumiere diamond pen during the year. It also works with the Suisse Pamp to introduce the Icon of Malaysia featuring several Malaysian unique architectures on the Tomei Pamp investment gold wafers.

In the year 2014, the Group secured the exclusive distributorship right to retail Korean skincare products in Malaysia under the brand “The History of Whoo” and “belif”. This marked the Group’s first venture into the lucrative cosmetics and skin care business.

As part of the Group’s continuous effort and commitment to quality, the Group is accredited with ISO in the Quality Management System for its retailing in jewellery from Lloyd’s Register since year 2003.

Due to the Group outstanding achievement in the industries, Tomei has received various accolades of awards year after year. In the year 2016, the Group attained the status of the “World Diamond Mark” Authorized Diamond Dealer, an accreditation programme given to recognize the superiority of the Group’s diamond offering. The Group is proud to be the only jeweller in Malaysia to be given the accreditation of the National Mark for “Malaysian Brand” certification by the SMECorp in Malaysia since 2010. Due to its excellence achievement, the Group has been nominated as the Honouree for the JNA Awards 2017 which was held in Hong Kong to recognize all the outstanding jewellers across the Asian countries.

Tomei was founded in 1968 as a jewellery designer and manufacturer. It then set up its own first retail outlet under the brand name TOMEI in Campbell Shopping Complex in Kuala Lumpur in the early seventies and subsequently it transformed into an integrated jewellery manufacturer and retailer of gold and jewelleries.

Page 7


PROFILE OF THE BOARD OFDIRECTORS

Tan Sri Datuk Dr Ng Teck Fong (Malaysian/Male, 80 years)

Tan Sri Datuk Dr Ng was appointed as Executive Chairman of the Company on 21 April 2006. He graduated with a Bachelor of Science degree in Chemistry from the Taiwan National Cheng Kung University, Taiwan and was conferred the Honorary Doctorate degree in Science by the same university in 2017 in recognition of his extensive contribution to the Malaysian Chinese community. He also received the Honorary Professor title from the Yunnan University of Finance and Economics in the year 2008.

As the founder and Executive Chairman, he has been instrumental in the growth and development of the Group and is responsible for its overall strategic business direction. He brings with him 50 years of experience in the jewellery industry including precious metals and gemstones and is a respected authority in gold, silver, platinum and their alloys as well as other precious stones.

In his dedication to assure products of the highest quality, Tan Sri Datuk Dr Ng assisted the establishment of the Fedmas Assay Office Sdn. Bhd. in Penang, Kuala Lumpur and Johor Bahru for the sole purpose of testing the precious metal content of jewellery and ensuring compliance with national and international standards. He was the President of the Federation of Goldsmiths and Jewellers Association for six years since 1996 and continues to serve as an advisor till now. He is also currently serving several other associations in various capacities. Tan Sri Datuk Dr Ng received the recognition of a Lifetime Achievement presented by the Sin Chew Business Excellence Award 2013 in recognition to his extensive contribution to the business and society. In year 2016, he has won the Malaysia’s highest book award for his work on an encyclopedia titled A Journey Through History: The Chinese and Nation-Building in Malaysia.

Tan Sri Datuk Dr Ng does not have directorship in other public companies and listed issuers. His sons, Datuk Ng Yih Pyng and Mr Ng Yih Chen, daughters, Ms Ng Sheau Chyn and Ms Ng Sheau Yuen and daughter-in-law, Datin Choong Chow Mooi are also members of the Board.

Datuk Ng Yih Pyng (Malaysian/Male, 46 years)

Datuk Ng was appointed as Managing Director of the Company on 21 April 2006. He holds a Bachelor of Business Administration degree in Finance in 1990 from Iowa State University in the United States of America (“USA”) and received a Master in Business Administration in Corporate Finance in 1991 from Iowa State University in the USA. Upon graduation, he joined the Group as a Director and is responsible for the overall management and business development of the Group. Datuk Ng is currently the Advisor for the Federation of Goldsmiths and Jewellers Association of Malaysia. He is also the council member of the Chinese Chamber of Commerce & Industry of Kuala Lumpur & Selangor and holds the position of Youth Chairman. In addition he is also elected the council member of The Associated Chinese Chamber of Commerce & Industry Malaysia and serves as the Chairman of its Young Entrepreneurs Committee. Datuk Ng also serves as the committee member for the SMECorp Young Entrepreneurship panel.

Datuk Ng does not have any directorship in other public companies and listed issuers. He is the son to Tan Sri Datuk Dr Ng Teck Fong. His siblings, Mr Ng Yih Chen, Ms Ng Sheau Chyn and Ms Ng Sheau Yuen and spouse Datin Choong Chow Mooi are also members of the Board.

Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad (Malaysian/Male, 72 years)Yang Mulia Raja Tan Sri Dato’ Seri Aman was appointed as Independent Non-Executive Director of the Company on 21 April 2006. He is a member of the Malaysian Institute of Accountants (“MIA”), a Certified Public Accountant and Fellow of the Institute of Chartered Accountant England and Wales. He is also a Fellow of the Institute of Bankers Malaysia. He held various positions in Maybank Group from 1974 to 1985 prior to joining Affin Bank Berhad in 1985 as an Executive Director/Chief Executive Officer (“CEO”). He left Affin Bank Berhad in 1992 to join Perbadanan Usahawan Nasional Berhad as the CEO for one year. He was reappointed as CEO of Affin Bank Berhad in 1995 and retired in 2003.

Yang Mulia Raja Tan Sri Dato’ Seri Aman also sits on the board of Ahmad Zaki Resources Berhad, Affin Holdings Berhad and Affin Investment Bank Berhad. He does not have any family relationship with any director and/or major shareholder of the Company.

Datin Nonadiah Binti Abdullah (Malaysian/Female, 60 years)Datin Nonadiah was appointed as Independent Non-Executive Director of the Company on 21 April 2006. She graduated with a Bachelor of Business (Administration) from the Royal Melbourne Institute of Technology in Australia in 1981 and thereafter obtained a Diploma in Montessori Method of Education, St. Nicholas, London, United Kingdom. She began her career in 1980 with the Public Works Department, Melbourne, Australia as an Accounts Executive. She has also served Bumiputra-Commerce Bank Berhad from 1982 to 1989 and her last position was Manager in Corporate Banking Division. In 1991, she became a licensed Dealer’s Representative and was attached to a stockbroking firm until 1997.

Datin Nonadiah does not have directorship in other public companies and listed issuers. She also does not have any family relationship with any director and/or major shareholder of the Company.

Page 8


Mr Lau Tiang Hua (Malaysian/Male, 65 years)Mr Lau was appointed as Independent Non-Executive Director of the Company on 21 April 2006. He is a member of the Malaysian Institute of Certified Public Accountants (“MICPA”), MIA and Malaysian Institute of Taxation. He articled with Peat Marwick, Mitchell & Co and later served as an Audit Manager with Arthur Young & Co. Thereafter, Mr Lau joined a major newspaper company as its Accountant and was subsequently promoted to the position of General Manager for Finance and Administration. In the year 1985, he established his own accounting practice, JB Lau & Associates, which has since become a member firm of Grant Thornton International Ltd. Mr Lau does not have any directorship in other public companies and listed issuers. He also does not have any family relationship with any other director and/or major shareholder of the Company.

Datuk M Chareon Sae Tang @ Tan Whye Aun (Malaysian/Male, 79 years)Datuk Tang was appointed as Independent Non-Executive Director of the Company on 21 April 2006. He obtained his Bachelor of Law degree from King’s College, University of London and is a Barrister-at-law of the Inner Temple London. He has been in the legal practice since 1968, first as a Legal Assistant in Messrs Shearn & Delamore and later as a Partner at Messrs Chye, Chow Chung & Tang until 1976. At present, he manages his own legal practice, Messrs C.S. Tang & Co. Datuk Tang also sits on the board of Amsteel Corporation Berhad and Lion Corporation Berhad. He does not have any family relationship with any director and/or major shareholder of the Company.

Ms Ng Sheau Yuen (Malaysian/Female, 44 years)Ms Ng was appointed as Executive Director of the Company on 21 April 2006. In 1991, she obtained her Bachelor of Business Administration degree from Iowa State University in the USA and subsequently obtained her Master of Business Administration from the same university in 1993. In 2005, she has also obtained a Diploma in Diamond Grading from the Gemological Institute of America. Upon graduation in 1993, she started her career as lecturer in Sunway College. In 1996, she joined textile dyeing and finishing company, PT Safilindo Permata in Bandung, Indonesia as Assistant Manager. In 2003, she joined the Group as Director in the gold division. Since 2011 her portfolio in licensed Brands has extended from Batar Gold (China), Prima Gold (Thailand) and Warner Bros (Australia), to include De Beers Diamond Jewellers Malaysia (London).Ms Ng does not have any directorship in other public companies and listed issuers. She is the daughter to Tan Sri Datuk Dr Ng Teck Fong. Her siblings, Datuk Ng Yih Pyng, Mr Ng Yih Chen and Ms Ng Sheau Chyn and sister-in-law Datin Choong Chow Mooi are also members of the Board.

Mr Ng Yih Chen (Malaysian/Male, 51 years)Mr Ng was appointed as Executive Director of the Company on 21 April 2006. He obtained a Bachelor of Business Administration degree in Marketing from Iowa State University in the USA in 1988 and further pursued with Gemology at the Gemological Institute of America in 1990 before receiving a Master of Business Administration (Finance) from the University of Hull, United Kingdom in 1996. Upon graduation in 1988, he joined the Group as Director and is currently responsible for specialized sales of the Group. Mr Ng is the organizing chairman for the AEC+6 Gems & Jewellery Association 4th President Summit. He is also the Founding President for both the GIA Alumni Association Malaysia and the Gemologist Society of Malaysia. Due to his extensive involvement in the industry, Mr Ng has been elected as the Vice President for the Federation of Goldsmiths and Jewellers Association of Malaysia and as President for the Goldsmiths & Jewellers Association of Wilayah Persekutuan, Selangor, Negeri Sembilan and Pahang. In addition, he also serves several other associations, both local and international in various capacities.Mr Ng does not have any directorship in other public companies and listed issuers. He is the son to Tan Sri Datuk Dr Ng Teck Fong. His siblings, Datuk Ng Yih Pyng, Ms Ng Sheau Chyn and Ms Ng Sheau Yuen and sister-in-law Datin Choong Chow Mooi are also members of the Board.

Ms Ng Sheau Chyn (Malaysian/Female, 47 years)Ms Ng was appointed as Executive Director of the Company on 21 April 2006. She obtained a Bachelor of Science degree in Computer Engineering as well as a Master degree in Computer Engineering from Iowa State University USA in 1990 and 1991 respectively.She also served as a Research Assistant in the Department of Electrical and Computer Engineering at the same university from 1990 to 1991. Since her return to Malaysia in 1992, she joined the Group as Director and has been responsible for the wholesale and manufacturing operations of the Group.Ms Ng does not have any directorship in other public companies and listed issuers. She is the daughter to Tan Sri Datuk Dr Ng Teck Fong. Her siblings, Datuk Ng Yih Pyng, Mr Ng Yih Chen and Ms Ng Sheau Yuen and sister-in-law Datin Choong Chow Mooi are also members of the Board. Mr Ong Kee Liang, the spouse of Ms Ng is a shareholder of Ong Tiong Yee & Sons Sdn. Bhd. (“OTY”). OTY is involved in retailing of gold and jewelleries.

Datin Choong Chow Mooi (Malaysian/Female, 49 years)Datin Choong was appointed as Executive Director of the Company on 21 April 2006. She graduated with a Bachelor of Business Administration degree from Iowa State University in the USA in 1989 and received a degree in Gemology from the Gemological Institute of America, Santa Monica California in 1991. Since her return to Malaysia, she joined the Group in 1995 as General Manager. She is a trained gemologist and currently responsible for the jewellery division and the skincare division of the Group. In addition, Datin Choong is also overseeing the general administrative issues of the Group and assists in the management of the Group’s retail operation both local and overseas.Datin Choong does not have any directorship in other public companies and listed issuers. She is the spouse to Datuk Ng Yih Pyng. Her father-in-law, Tan Sri Datuk Dr Ng Teck Fong, brother-in-law, Mr Ng Yih Chen, and sisters-in-law Ms Ng Sheau Chyn and Ms Ng Sheau Yuen are also members of the Board.

Notes:-1. Save as disclosed above and in pages 48 - 49, none of the Directors have:- (a) any conflict of interest with the Company; (b) any conviction of offences (other than traffic offences) within the past five (5) years; (c) any sanctions and penalty imposed on them by relevant regulatory bodies during the financial year.

2. The respective Director’s interests in the Company are detailed in page 117 of the Annual Report.

PROFILE OF THE BOARD OF DIRECTORS (continued) Page 9


TAN SRI DATUK DR NG TECK FONGGROUP EXECUTIVE CHAIRMAN

Page 10

TOMEI CONSOLIDATED BERHAD (692959-W)ANNUAL REPORT 2017TOMEI CONSOLIDATED BERHAD (692959-W)ANNUAL REPORT 2017

to ensure that everyone onboard move towards the same direction. The Group’s core value guides the implementation and execution of our business plan and strategy. While revenue growth and profitability remain our top priority, it is always our

aspiration that all business strategy taken must also be built on a responsible business practices, meeting customers’ expectation, continuing developing employees and ensuring that the well-being of employees and communities are not neglected.

AWARD

In recognition of the Group’s excellent achievement particularly in its retail of jewellery business, we have been nominated as an Honoree for the JNA Award 2017 which was held in Hong Kong recently. This highly acclaimed awards was held in recognition of excellent performance among jewellers in the Asian countries.

DIVIDEND

Your Board is pleased to recommend a first and final single tier dividend of 1.0 sen per ordinary share for the financial year ended 31 December 2017 for shareholders’ approval at the forthcoming Annual General Meeting.

BUSINESS SUSTAINABILITY

It has always been the Group’s philosophy to strive for business excellence in a sustainable manner. We believe in a fair treatment to all our stakeholders. The Group has a vision statement which is well communicated to all its employees in order

OUTLOOK

Tomei will continue to work hard in delivering its promises to all its stakeholders. We aspire to become a progressive organization with dignity. Focus should be put in our product, design and service as we strive to build a stronger branding. The path can never be easy as more challenges await us ahead. The Group has put in place a transformation roadmap to assist and to guide the implementation of its business plan to steer the Group ahead.

With all the efforts taken, I am optimistic that the Group will continue to remain profitable for the financial year 2018.

APPRECIATION

It has been a long and fulfilling journey for Tomei as the Company shapes the evolvement of the gold and jewellery industry in Malaysia for the past 50 years equipping Malaysians of their jewellery needs for every special occasion. I am glad that the Company has been able to play its part in nation building as Tomei celebrates its 50th anniversary this year. This is not possible without the support from all our stakeholders.

On behalf of the Board of Directors, I would like to express my sincere appreciation and thanks to all our invaluable customers, bankers, suppliers, government authorities, business associates and shareholders for your continuous support.

My thanks also go to our management and staff for your utmost commitment, dedication and hard work to ensure another successful year.

Last but not least, to my fellow Directors, I thank you for your invaluable advice and support.


On behalf of the Board of Directors of Tomei Consolidated Berhad, it is my pleasure to present to you our Annual Report and Audited Financial Statements for the financial year ended 31 December 2017.

REVIEW OF 2017 FINANCIAL YEAR PERFORMANCE

Financial year 2017 has been very challenging for the retail industry as consumers’ sentiment remained weak. Despite of this, the Group managed to report a healthy growth to its revenue and profitability as a result of its continued efforts to reach out to its customers with more product offerings and at the same time contain operating cost.

It is my pleasure to announce that Tomei in its collaboration with the World Gold Council has managed to bring the coveted wedding jewellery collection series of Xifu to Malaysia. The Xifu collection series are a range of jewelleries designed by among the best designers in the world through a competition held once every two years. Tomei also partners with Visconti, a renowned Italian pen maker to introduce the world first Le Lumiere-Visconti diamond pen, featuring “hearts and arrows” diamond.

Tomei has taken various initiatives to reach our customers through our very own loyalty programme, the Jewel Club. We organized various programmes including tea parties, birthday celebrations, jewellery fairs and investments seminars among others for our customers. Through these engagement initiatives, we understand the customers’ needs and able to serve them better.

During the financial year, our Group reported an increase in revenue of 31% to RM617.020 million compared to last financial year. On the back of this higher revenue, the Group pre-tax profit improved from RM8.053 million last year to RM21.282 million for the current financial year.

CHAIRMAN’SSTATEMENT

Page 11


to ensure that everyone onboard move towards the same direction. The Group’s core value guides the implementation and execution of our business plan and strategy. While revenue growth and profitability remain our top priority, it is always our

aspiration that all business strategy taken must also be built on a responsible business practices, meeting customers’ expectation, continuing developing employees and ensuring that the well-being of employees and communities are not neglected.

AWARD

In recognition of the Group’s excellent achievement particularly in its retail of jewellery business, we have been nominated as an Honoree for the JNA Award 2017 which was held in Hong Kong recently. This highly acclaimed awards was held in recognition of excellent performance among jewellers in the Asian countries.

DIVIDEND

Your Board is pleased to recommend a first and final single tier dividend of 1.0 sen per ordinary share for the financial year ended 31 December 2017 for shareholders’ approval at the forthcoming Annual General Meeting.

BUSINESS SUSTAINABILITY

It has always been the Group’s philosophy to strive for business excellence in a sustainable manner. We believe in a fair treatment to all our stakeholders. The Group has a vision statement which is well communicated to all its employees in order

OUTLOOK

Tomei will continue to work hard in delivering its promises to all its stakeholders. We aspire to become a progressive organization with dignity. Focus should be put in our product, design and service as we strive to build a stronger branding. The path can never be easy as more challenges await us ahead. The Group has put in place a transformation roadmap to assist and to guide the implementation of its business plan to steer the Group ahead.

With all the efforts taken, I am optimistic that the Group will continue to remain profitable for the financial year 2018.

APPRECIATION

It has been a long and fulfilling journey for Tomei as the Company shapes the evolvement of the gold and jewellery industry in Malaysia for the past 50 years equipping Malaysians of their jewellery needs for every special occasion. I am glad that the Company has been able to play its part in nation building as Tomei celebrates its 50th anniversary this year. This is not possible without the support from all our stakeholders.

On behalf of the Board of Directors, I would like to express my sincere appreciation and thanks to all our invaluable customers, bankers, suppliers, government authorities, business associates and shareholders for your continuous support.

My thanks also go to our management and staff for your utmost commitment, dedication and hard work to ensure another successful year.

Last but not least, to my fellow Directors, I thank you for your invaluable advice and support.


CHAIRMAN’S STATEMENT (continued)Page 12


本人谨代表多美集团（ T o m e i Consolidated Berhad）董事部，欣然为股东们提呈本集团及旗下公司截至2017年12月31日的财务年报和已审计的财务报告。

回顾2017年财政年的表现

由于消费情绪持续低迷，2017财政年对零售市场来说是个充满挑战的一年。尽管如此，本集团仍成功为营业额和盈利录得健康成长，这主要归功于集团为客户提供更多样化的产品, 同时遏制营运成本。

我很荣幸地宣布，多美和世界黄金协会（World Gold Council）携手合作，把囍福结婚金饰系列引进马来西亚。囍福系列通过两年一度的国际设计大赛，集合全球最优秀的设计师打造而成的作品。多美也和意大利著名的奢华钢笔制造商维斯康蒂（Visconti）合作，推出全球首个采用心箭钻石（‘hearts and arrows’）打造的Le Lumiere-Visconti 钻石钢笔品牌。

透过我们专属的客户忠诚计划Jewel Club，多美采取多项举措来接触客户和维持良好关系，包括为客户举办不同的活动，如茶会、生日庆祝会、珠宝展览和投资讲座会。通过这些互动活动，我们更了解客户的需求，进而为他们提供更好的服务。

在此财政年，本集团的总营业额达到6亿1702万令吉，比上财年增加31%。在表现强劲的营业额带动下，本集团税前盈利从去年的805万3000令吉，大幅增涨到本财政年的2128万令吉。

业务持续发展

保持业务持续性稳步发展，是集团一直以来奉行的经营理念，我们也承诺公平对待诸位权益持有人。集团全体员工都清楚公司的愿景和长远目标，因此我们得以同心协力往一样的方向迈进。我们相信，由集团的核心价值带领着团队前进，定能完美落实公司的业务计划和策略。

集团首要任务是要确保业务持续成长，但我们坚持公司的业务方针必须以诚信为本，公司的策略和计划都要透过负责任的商业做法来执行，绝不辜负客户的期许。同时，我们将持续员工发展计划，确保员工和社区的福祉不被忽视。

奖项

本集团在零售领域创下的辉煌成绩获得国际业界的肯定，我们很荣幸成为2017年度JNA大奖的入围者，并在香港获颁亚洲年度卓越零售商入围奖项。JNA大奖是国际珠宝业界最享负盛名的奖项之一。

股息

截至2017年12月31日，董事局建议派发每股1仙的单层终期股息，在此建议将在来临的股东常年大会中提呈与批准。

展望

多美立志成为一家稳步前进并受人尊敬的企业。我们将持续专注提供更好的产品、设计和服务，致力打造一个更强大的品牌。走过50载的光辉历程，多美将继续带着无惧无畏的开创精神，开拓更美好的将来，迈向另一个高峰。多美定会继续悉心尽力，履行向众股东许下的承诺。

集团将透过转型计划多元化业务，我乐观相信集团将在2018财政年继续保持盈利。

鸣谢

多美集团一步一脚印走过漫长的岁月，历程中累积丰富的经验和硕果，过去50年来陪伴着马来西亚金饰和珠宝行业走过不同时代的进化。这些年来，多美不忘初衷，尽心尽力地满足马来西亚人民在特别的节庆上对珠宝的需求。多美在今年迎来50金禧年庆，我很高兴公司这些年来在国家建设上扮演好本分。此等辉煌成就，若没有众股东的支持，绝对不会成功。

本人谨代表董事局向尊贵的客户、银行家、供应商、政府机构、商业伙伴和股东们表达真诚的谢意，感谢大家继续给予的支持和信任。

本人也要衷心感谢本集团的管理层及雇员，为了确保本集团在新的一年里再铸辉煌所作出的承诺、奉献和奋斗。

最后，本人要感谢诸位董事提供的宝贵意见和支持。

丹斯里拿督吴德芳博士集团执行主席

主席献词Page 13


Bagi pihak Lembaga Pengarah Tomei Consolidated Berhad, saya dengan sukacitanya membentangkan Laporan Tahunan dan Penyata Kewangan yang diaudit bagi tahun kewangan berakhir 31 Disember 2017.

PENILAIAN PRESTASI TAHUN KEWANGAN 2017

Tahun kewangan 2017 agak mencabar kerana sentimen pengguna terhadap pasaran runcit masih lemah. Walaupun begitu, Kumpulan berjaya mencatat pertumbuhan yang sihat dalam perolehan dan keuntungannya lantaran daripada usaha yang berterusan untuk menjangkau serta menyediakan lebih banyak tawaran produk kepada para pelanggan dan pada masa yang sama mengawal kos operasinya.

Saya berbesar hati mengumumkan bahawa Tomei dengan kerjasama “World Gold Council” telah berjaya membawa Siri Koleksi barangan kemas perkhawinan Xifu ke Malaysia. Siri Koleksi Xifu adalah hasil produk yang direka oleh antara pereka terbaik dari seluruh dunia melalui Pertandingan Antarabangsa yang diadakan setiap dua tahun. Tomei turut bekerjasama dengan Visconti, pembuat pena mewah yang terkenal di Itali untuk memperkenalkan pen berlian “Le Lumiere-Visconti” yang pertama di dunia, menampilkan berlian “hearts and arrows”.

Tomei telah mengambil pelbagai inisiatif untuk menjalin dan mengekalkan hubungan yang baik dengan pelanggan melalui program kesetiaan pelanggan kami, “Jewel Club”. Kami menganjur pelbagai program untuk pelanggan termasuk jamuan teh, sambutan hari jadi, pameran barangan kemas dan ceramah pelaburan. Melalui inisiatif penglibatan pelangan ini, kami lebih memahami keperluan pelanggan kami, seterusnya dapat memberikan perkhidmatan yang lebih baik.

Dalam tahun kewangan semasa, jumlah perolehan Kumpulan mencecah RM617.020 juta dengan peningkatan sebanyak 31% berbanding tahun kewangan sebelumnya. Berdasarkan perolehan yang lebih kukuh, keuntungan sebelum cukai Kumpulan melonjak daripada RM8.053 juta pada tahun sebelumnya kepada RM21.282 juta bagi tahun kewangan semasa.

KEMAMPANAN PERNIAGAAN

Falsafah Kumpulan sentiasa berlandaskan pencapaian kecemerlangan perniagaan yang mampan dan layanan yang saksama kepada semua pihak berkepentingan. Visi Kumpulan difahami sepenuhnya oleh kesemua pekerjanya agar semua pihak dapat mengambil langkah menuju ke arah yang sama. Nilai teras yang diamalkan oleh Kumpulan menjadi asas panduan kepada perlaksanaan pelan dan strategi perniagaan kami. Walaupun pertumbuhan perolehan dan keuntungan merupakan keutamaan Kumpulan, namun kami beraspirasi agar semua strategi perniagaan harus berlandaskan amalan perniagaan yang beretika, memenuhi jangkaan para pelanggan, pembangunaan pekerja yang berterusan manakala kesejahteraan pekerja dan komuniti tidak diabaikan.

ANUGERAH

Sebagai pengiktirafan kepada pencapaian Kumpulan yang cemerlang dalam industri peruncitan barangan kemas, kami telah dicalon dan disenaraiakhir untuk memenangi Anugerah JNA 2017 yang diadakan di Hong Kong baru-baru ini. Pemberian anugerah berprestij ini adalah bertujuan sebagai pengiktirafan kepada pencapaian cemerlang antara peruncit barangan kemas di kalangan negara-negara Asia.

DIVIDEN

Bagi tahun kewangan berakhir 31 Disember 2017, Lembaga Pengarah dengan sukacitanya mencadangkan pengagihan dividen pertama dan akhir “single tier” sebanyak 1.0 sen untuk sesaham biasa untuk persetujuan kelulusan para pemegang saham di Mesyuarat Agung Tahunan yang akan datang.

PROSPEK MASA HADAPAN

Tomei akan bekerja kuat demi memenuhi mandatnya kepada semua pihak berkepentingan. Kami bertekad untuk menjadi syarikat yang mantap dan disegani. Kami akan terus memberi tumpuan dalam mempelbagaikan produk, reka bentuk, dan perkhidmatan yang lebih baik, demi menjadi jenama yang lebih terkenal. Laluan ini tidak mudah dan pelbagai cabaran bakal menanti. Kumpulan telah memperkenalkan satu pelan tindakan transformasi untuk membantu dan memandu perlaksanaan pelan perniagaannya demi memacu pertumbuhan Kumpulan di masa hadapan.

Saya yakin bahawa Kumpulan akan terus mengekalkan keuntungan bagi tahun kewangan 2018.

PENGHARGAAN

Tomei telah mengharungi satu perjalanan yang panjang lagi bermakna melalui penglibatannya yang mencorak perubahan industri emas dan barangan kemas di Malaysia sepanjang 50 tahun yang lalu dan melengkapkan rakyat Malaysia terhadap keperluan barangan kemas mereka bagi setiap sambutan. Tomei akan menyambut Ulang Tahun Ke-50 pada tahun ini. Saya berasa gembira sekali kerana Kumpulan Tomei dapat memainkan peranannya dalam pembangunan negara. Pencapaian cemerlang ini tidak mungkin dicapai tanpa sokongan semua pihak berkepentingan.

Saya mewakili pihak Lembaga Pengarah ingin mengucapkan penghargaan ikhlas dan terima kasih kepada para pelanggan, pihak bank, pembekal, pihak berkuasa kerajaan, rakan niaga dan pemegang saham atas sokongan berterusan anda.

Saya juga ingin mengucapkan terima kasih kepada pihak pengurusan dan kakitangan Tomei atas komitmen, dedikasi dan ketekunan anda untuk memastikan satu lagi tahun yang cemerlang.

Akhir sekali, saya ingin mengucapkan terima kasih atas nasihat dan sokongan yang tidak ternilai yang diberikan oleh rakan-rakan pengarah.

TAN SRI DATUK DR NG TECK FONGPENGERUSI KUMPULAN EKSEKUTIF

PENYATAPENGERUSI

Page 14


KEMAMPANAN PERNIAGAAN

Falsafah Kumpulan sentiasa berlandaskan pencapaian kecemerlangan perniagaan yang mampan dan layanan yang saksama kepada semua pihak berkepentingan. Visi Kumpulan difahami sepenuhnya oleh kesemua pekerjanya agar semua pihak dapat mengambil langkah menuju ke arah yang sama. Nilai teras yang diamalkan oleh Kumpulan menjadi asas panduan kepada perlaksanaan pelan dan strategi perniagaan kami. Walaupun pertumbuhan perolehan dan keuntungan merupakan keutamaan Kumpulan, namun kami beraspirasi agar semua strategi perniagaan harus berlandaskan amalan perniagaan yang beretika, memenuhi jangkaan para pelanggan, pembangunaan pekerja yang berterusan manakala kesejahteraan pekerja dan komuniti tidak diabaikan.

ANUGERAH

Sebagai pengiktirafan kepada pencapaian Kumpulan yang cemerlang dalam industri peruncitan barangan kemas, kami telah dicalon dan disenaraiakhir untuk memenangi Anugerah JNA 2017 yang diadakan di Hong Kong baru-baru ini. Pemberian anugerah berprestij ini adalah bertujuan sebagai pengiktirafan kepada pencapaian cemerlang antara peruncit barangan kemas di kalangan negara-negara Asia.

DIVIDEN

Bagi tahun kewangan berakhir 31 Disember 2017, Lembaga Pengarah dengan sukacitanya mencadangkan pengagihan dividen pertama dan akhir “single tier” sebanyak 1.0 sen untuk sesaham biasa untuk persetujuan kelulusan para pemegang saham di Mesyuarat Agung Tahunan yang akan datang.

PROSPEK MASA HADAPAN

Tomei akan bekerja kuat demi memenuhi mandatnya kepada semua pihak berkepentingan. Kami bertekad untuk menjadi syarikat yang mantap dan disegani. Kami akan terus memberi tumpuan dalam mempelbagaikan produk, reka bentuk, dan perkhidmatan yang lebih baik, demi menjadi jenama yang lebih terkenal. Laluan ini tidak mudah dan pelbagai cabaran bakal menanti. Kumpulan telah memperkenalkan satu pelan tindakan transformasi untuk membantu dan memandu perlaksanaan pelan perniagaannya demi memacu pertumbuhan Kumpulan di masa hadapan.

Saya yakin bahawa Kumpulan akan terus mengekalkan keuntungan bagi tahun kewangan 2018.

PENGHARGAAN

Tomei telah mengharungi satu perjalanan yang panjang lagi bermakna melalui penglibatannya yang mencorak perubahan industri emas dan barangan kemas di Malaysia sepanjang 50 tahun yang lalu dan melengkapkan rakyat Malaysia terhadap keperluan barangan kemas mereka bagi setiap sambutan. Tomei akan menyambut Ulang Tahun Ke-50 pada tahun ini. Saya berasa gembira sekali kerana Kumpulan Tomei dapat memainkan peranannya dalam pembangunan negara. Pencapaian cemerlang ini tidak mungkin dicapai tanpa sokongan semua pihak berkepentingan.

Saya mewakili pihak Lembaga Pengarah ingin mengucapkan penghargaan ikhlas dan terima kasih kepada para pelanggan, pihak bank, pembekal, pihak berkuasa kerajaan, rakan niaga dan pemegang saham atas sokongan berterusan anda.

Saya juga ingin mengucapkan terima kasih kepada pihak pengurusan dan kakitangan Tomei atas komitmen, dedikasi dan ketekunan anda untuk memastikan satu lagi tahun yang cemerlang.

Akhir sekali, saya ingin mengucapkan terima kasih atas nasihat dan sokongan yang tidak ternilai yang diberikan oleh rakan-rakan pengarah.

TAN SRI DATUK DR NG TECK FONGPENGERUSI KUMPULAN EKSEKUTIF

PENYATA PENGERUSI (sambungan) Page 15


PROFILE OFSENIOR MANAGEMENT

Tan Syn Wooi (Malaysian/Male, 45 years) Group Financial ControllerMr Tan joined the Group in the year 2005 and was appointed as the Group Financial Controller for the Group on 21 April 2006. He graduated with a Bachelor of Accounting (Hons) from Universiti Malaya in 1996. He is also a member of MICPA and MIA. Mr Tan is responsible for the overall financial management and reporting of the Group. Currently he is also overseeing the implementation of a business intelligence unit within the Group. Mr Tan has more than twenty (20) years of working experience in the accounting profession. Prior to joining the Group, Mr Tan was the Group Accountant for the Lion Group of Companies and was subsequently attached to a telecommunication company as Finance Manager.Lu Bee Lee (Malaysian/Female, 57 years) General Manager, Retail OperationMs Lu joined the Group in the year 1991 and has been tasked to facilitate the daily retail operation of Tomei before being subsequently promoted to the position of Retail Operation and Personnel Manager and then as the Assistant General Manager, Retail Operation. In the year 2014, she was again promoted as the General Manager, Retail Operation and has been responsible in formulating strategy for the total retail operation of the Group in Malaysia. Prior to joining the Group, Ms Lu was the Marketing Manager for Wayrex Sdn Bhd, a fashion boutique in Malaysia.Hiew Fui Lin (Malaysian/Female, 44 years) Assistant General Manager, Corporate PlanningMs Hiew joined the Group in the year 2006 as a Senior Manager in Business Development Department, handling the outlet expansion in local and oversea market. She is currently holding the position of Assistant General Manager in Corporate Planning Department since January 2015. Her role is to formulate and implement Business Strategies for Tomei Group, manages the Project Management Office (PMO) to continuously review and enhance the Group’s infrastructure and work processes.She holds a Master of Business Administration (MBA) – Entrepreneurship/ Entrepreneurial Studies from Asia e University (AeU) in 2015. Prior to joining Tomei Group, she was the Franchise Development Manager in Focus Point Vision Care Group handling the recruitment of franchisees and franchise outlet operations.Leau Lee Meng (Malaysian/Female, 48 years) Assistant General Manager, Group Risk & Internal AuditMs Leau obtained her Diploma in Management (majoring in internal auditing) with Merit from Malaysian Institute of Management. She is a Professional/Chartered Member of The Institute of Internal Auditors Malaysia. She started her career with Kassim Chan as an external auditor before moving on to Branch Operations and Group Internal Audit Department of PacificMas Berhad (formerly known as The Pacific Bank Berhad). In 2004, she was managing the Group Internal Audit Department of PacificMas Berhad. She joined the Group in year 2006 as Senior Manager, Internal Audit. In 2012, she spearheaded the risk management function of the Group within the ambit of the Risk Management Framework approved by the Risk Management Committee. In 2016, she also facilitated the process enhancement on various operations within the Group to improve on its efficiency, effectiveness and productivity.Cheong Ngat Ching (Malaysian/Female, 48 years) Assistant General Manager, Learning and DevelopmentMs Cheong joined the Group in 2005 as the Senior Manager - Human Resources and was responsible for setting up and overseeing the Human Resources functions for Malaysia, China and Vietnam. She left in 2015 to take up a role in the Human Resources functions for a British Pharmaceutical Company before rejoined the Group in 2017 as the Head of Learning and Development. Ms Cheong is responsible for the people’s transformation in the organization specifically in the development and implementation of Learning and Development Roadmap and programmes. Her roles entailed talent and leadership development and the introduction of in-house E-learning. Ms Cheong’s past experience as Human Resources practitioner includes being in service for more than 10 years in various industries including the Sunway Group and Sony Video (M) Sdn. Bhd.. Ms Cheong graduated from Tuanku Abdul Rahman College in 1992, with Diploma in Commerce and Diploma in Human Resources Management in 1998 from University Malaya CCE. She is also an ICSA(UK) graduate and is an ACIS with MAICSA. In 2017, she was certified with the Australian, Cert IV in Workplace and Business Coaching.

Notes:1. Save as disclosed above, none of the Senior Management have:- (a) any conflict of interest with the Company; (b) any conviction of offences (other than traffic offences) within the past five (5) years; (c) any sanctions and penalty imposed on them by relevant regulatory bodies during the financial year; (d) any relationship with any of the directors and/or major shareholders of the Company; and (e) any directorship in other public companies and/or listed issuers.

Page 16


OVERVIEW

Our Group is an integrated manufacturer and retailer of gold, jewellery and diamonds. Our operations are principally located in Malaysia. We also have manufacturing operations in the Socialist Republic of Vietnam. Our products are marketed under various brands namely Tomei, Le Lumiere, My Diamond and Goldheart. We are also the authorized distributor for De Beers diamond products in Malaysia. We also sell investment precious metals. As of today, we have 64 retail jewellery outlets in Malaysia catering to the needs of our different group of customers.

MANAGEMENTDISCUSSION

AND ANALYSIS

!

No. of Retail Outlets

Page 20


Besides retailing, we also sell our manufactured products to other retailers both in Malaysia and overseas including Singapore, Vietnam, Indonesia, Thailand and Germany.

In addition to our jewellery business, the group is also in the business of retailing of cosmetic and skin care products under the Korean brands of “The History of Whoo” and “belif” in Malaysia. Currently we operates 10 cosmetic stores and concession counters in Malaysia.

OBJECTIVES & STRATEGIES

Our Group aspires to pioneer in product superiority and design creativity while making sustained efforts towards building brand significance in gaining customers’ trust. Our goal is to develop a progressive organization with integrity and dignity and passionately delivering excellent service to customers.

belif

The History of Whoo

No. of Retail Outlets

MANAGEMENT DISCUSSION AND ANALYSIS (continued) Page 21


For the past 50 years we have been working tirelessly in expanding the Group’s operations from a small gold jewellery manufacturer into one of the largest jewellery retail chain stores in Malaysia. We take pride in our achievement and will be celebrating our golden jubilee this year. The operating environment today is no longer the same as before. We are now faced with greater and new challenges. The Group needs to evolve and change with time to keep up with customers’ preference. On the back of these changes, the Group has embarked on a transformation roadmap to take the business to the next level of growth. We have set our target to continue increasing our market share through more new product development, active customer engagement, strategic collaboration and repositioning of our brands. Our designers constantly develop and introduce new products with design that reflects current market expectation and trend. Ana-stasia and Chomel, our exclusive gold collections have been receiving overwhelming response from customers, while our very own Le Lumiere series of jewellery collections promoting on excellent cut diamond have been much sought after.

The retail environment in Malaysia remained sluggish and customers’ sentiments has yet to pick up despite better economic growth compared to previous years. For the past few years, the Group has been rationalizing its operations to improve efficiency and profitability by controlling cost and at the same time closing non-performing retail outlets. As a result, we have reduced the number of jewellery outlets in Malaysia to 64 from 70 outlets a few years ago. Despite the consolidation effort, our team continues to explore for new and better locations to relocate or open new retail outlet. Hence, in the current year, we have setup new retail outlets in several prominent locations such as Genting Premium Outlets, Mytown Cheras and Paradigm Mall Johor Bahru while certain non-strategic retail outlets that did not meet our brand positioning were relocated. Further to retain existing customers and to attract new ones, our retail outlets undergo periodical refurbishment and upgrading to keep up with current market taste and trend.

To cater to the millennials and other younger customers who are savy in online shopping, we have started e-tailing business via our own webstore, www.etomei.com.my. We also sell our products on other marketplaces such as Lazada and Shopee.

It is the Group’s strategy to continue to introduce new products to the market. In this regard, we have successfully launched the Xifu wedding jewellery collections in Malaysia. We also introduced the world’s first Le Lumiere-Visconti diamond pen in collaboration with the renowned Italian pen maker, Visconti. Tomei also carries several renowned international brands such as Batar Jewellery and Prima Gold. In the children segment, we are licensed to manufacture and retail gold jewellery based on characters from DC Super Heroes, Baby Looney Tunes and Hello Kitty.

MANAGEMENT DISCUSSION AND ANALYSIS (continued)Page 22


In addition, we are among the first in the market to introduce investment products to our customers. We are the official distributor for the Royal Canadian Maple Leaf and the Australian Kangaroo in Malaysia. In collaboration with Pamp Suisse SA, we have introduced the Tomei Pamp Suisse-Icon of Malaysia featuring various local landmarks for each different weight denomination.

Our venture into the skincare and cosmetics business is view as complimentary to our jewellery business as both the products share a common target customer profile. With additional products offering, we have the advantage of cross selling our products to our existing customers while creating synergy in the operation. Leveraging on our extensive experience in the retail industry, we have been able to undertake this new venture with little difficulties. We expect the skincare and cosmetic business to contribute positively to the Group’s result going forward.

CORPORATE DEVELOPMENT

During the year, the Group has reduced its stake in its loss making China operation from 55% to only 19%. The decision to reduce our shareholding is taken with a view to reposition our focus to the Malaysian operation. At the same time, we have granted our partners in China to use the brand “TOMEI” on their retail jewellery products in China.

Our operation in the Socialist Republic of Vietnam also has been consolidated to concentrate only in manufacturing of gold jewellery, taking advantage of the cheaper production cost there.

KEY PERFORMANCE INDICATORS

Summary of key financial performance indicators are provided in the section titled “5 years financial highlights” in this Annual Report.

Tomei is the only company in Malaysia to be accredited with the status “World Diamond Mark” Authorized Diamond Dealer. The accreditation is given for our excellent record for customer services in the diamond industry and for our effort to continue promoting and educating the public on diamond and in recognition of our responsible sourcing of diamond from only legitimate suppliers.

Our retailing operation has also been accredited with ISO in the Quality Management System for the retailing business from Llyod’s Register in recognition of our commitment to quality and services.

TOMEI PAMP SUISSE-ICON OF MALAYSIA

CANADIAN MAPLE LEAF & AUSTRALIAN KANGAROO SERIES

TOMEI Icons of Malaysia “NationalMonument” Gold Wafer 20 Gram, 999.9Fine Gold

TOMEI Icons of Malaysia “Petronas TwinTower” Gold Wafer 100 Gram, 999.9Fine Gold

TOMEI Icons of Malaysia “Penang Bridge”Gold Wafer 10 Gram, 999.9 Fine Gold



Tomei is also the only jeweller in Malaysia to have obtained the status of National Mark for the “Malaysian Brand” certification from SMECorp in recognition of its product superiority and significant branding.

REVENUE & PROFITABILITY

The Group reported an increase in revenue of 31% to RM617.020 million for the financial year under review as compared to RM472.209 million reported for last financial year mainly due to increase in demand for its products. In line with this improvement, its profit before tax (“PBT”) increased to RM21.282 million compared to RM8.053 million last year.

Retail division

Our retail division reported a 27% increase in revenue to RM450.336 million compared to last year mainly due to higher sales volume. Following the increase in sales, the PBT grew from RM4.481 million last year to RM24.405 million for the current financial year.

The Group’s revenue performanceRM million

630

610

590

570

550

530

510

490

470

450472.209

617.020

31%

2016 2017

Retail division’s revenue performance

2016

2017

0 100 200 300 400

450.336

355.517

500RMmillion



Manufacturing & Wholesale division

Our Manufacturing & Wholesale division reported a 43% increase in revenue to RM166.684 million compared to last year. However, due to the write down of certain inventories, it reported a lower PBT of RM4.027 million for the financial year compared to RM5.423 million recorded in the last financial year.

GROSS PROFIT & GROSS MARGIN

Following the improvement in revenue, our Group’s gross profit for the financial year under review has increased from RM131.199 million achieved for the last financial year to RM147.097 million this year. However, the gross margin of 24% is lower than 28% reported last year following minor change in sales composition that leans towards yellow gold during the year.

OPERATING EXPENSES

Operating expenses for the financial year under review increased by 6% from RM115.093 million to RM121.563 million mainly due to higher variable cost from the higher revenue reported. Due to the positive results from the rationalization exercise carried out from closing down non performing non-strategic outlets while at the same time controlling and reducing operating overheads, the quantum of increase in operating expenses is much lower than the increase in revenue.

FINANCE COST

Finance cost for the financial year under review of RM11.023 million approximates that of last financial year. The finance cost incurred is mainly on borrowings taken by the Group to finance its working capital and purchase of assets.

CAPITAL EXPENDITURE

During the financial year under review, we have incurred capital expenditure of RM7.729 million mainly for the renovation and refurbishment of new and/or existing retail outlets in order to provide a fresh and conducive shopping ambience for our customers.

Manufacturing & Wholesale division’s revenue performanceRM million

180

160

140

120

100

80

60

40

20

0

116.692

2016 2017

166.684



LIQUIDITY AND FINANCIAL RESOURCES

During the financial year under review, we reported a surplus cash flows of RM6.920 million mainly attributable from positive operating cash flows and financing cash flows of RM5.904 million and RM8.053 million respectively. The positive operating cash flows are mainly derived from the current year profitability while the positive financing cash flows are mainly due to additional drawdown of loan to finance its operations. The Group’s cash flows used in investing activities of RM7.037 million are mainly used for capital expenditure. As at the end of the financial year under review, the Group has a total cash and bank balances of RM12.048 million while the utilization of bank overdrafts stood at RM37.258 million.

BORROWINGS & GEARING

Our borrowings are mainly used for working capital especially in purchasing of stocks. Most of our borrowings are in the form of trade lines, bank overdrafts and revolving credits. Longer term financing such as term loans and hire purchases are used to finance capital expenditure. As at the end of the financial year under review, total borrowings stood at RM180.063 million as compared to RM174.686 million as at the end of last financial year.

The Group monitors its capital management on the basis of the net gearing ratio. The ratio is calculated as the total debt net of cash and cash equivalents to total equity. The Group reported net gearing ratio of 0.83 as at the end of the financial year under review, a decrease by 0.04 as compared to last financial year.

RISKS AND CHALLENGES

Our retail segment currently contributed approximately 73% of the total Group revenue. As a result, the Group revenue is very sensitive towards the general retail market sentiment. We view the market condition as among the major risk faced by the Group as consumers tend to be more cautious and change their spending pattern in anticipation of any changes to the economy outlook. Our financial performance may be significantly impacted by the fluctuation of international gold price. This fluctuation poses a risk to our profitability as any adverse movement could affect our profit margin. We are also exposed to the risk of fluctuation in foreign currency as most of our raw materials are purchased in US Dollar while our retail sales are in Ringgit.

We view these risks as part of the challenges in managing our business. We will continue to execute a proactive strategy in addressing these risks including closer monitoring of the market situation and trends and putting in place selected hedging procedures to protect our financial position.

PROSPECT

The retail business has undergone major changes following the change in customer’s spending behaviour. The availability of mobile communication has shifted some of the traditional retail business to the online platform. Customers become more knowledgeable as information is easily available. Today, shopping has become an emotionally attached experience whereby customers want to be pampered and provided with information. Tomei is quick to respond to this changing landscape and has put in place its business strategy to address this changing customer needs.

We expect all our business plans which are being rolled out by stages are sufficient to address the concern of the changing business environment and are optimistic that the Group is in a comfortable position to take up the challenge and to sustain our profitability in the next financial year.



CORPORATEGOVERNANCE

OVERVIEWSTATEMENT

Your Board of Directors recognizes the importance of sound corporate governance and will continue to enhance its role in ensuring that the highest standard of corporate governance is practised throughout the Group. The principles and best practices set out in the Malaysian Code on Corporate Governance 2017 (“Code”) and pursuant to para 15.25 of the Bursa Malaysia Listing Requirement have been complied by the Group wherever possible in observing the highest standard of transparency, accountability and integrity unless otherwise stated.

Your Board is pleased to provide an overview of the application of the Principles set out in the application of the Code by the Group during the period under review. Details of the application of the principles of the Code are found in the Corporate Governance Report which can be found at the Company's website at www.tomei.com.my.

PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS

1. BOARD ROLES AND RESPONSIBILITIES

Board responsibilities

During the period under review, your Board took full responsibility and retained full and effective control over the affairs of the Group. Your Board’s primary focus is on the overall strategic planning including business plan and annual budget, performing quarterly review of business and financial performance, reviewing risk management, ensuring effective internal controls are in place as well as ensuring legal and statutory compliance.

The Independent Non-Executive Directors further strengthen your Board in providing unbiased and independent view, advice and judgement. They also contribute to the formulation of policies and decision making through their expertise and experience.

Page 27


In addition to the above, your Board’s more specific responsibilities include the following:-

Board Charter

Your Board’s functions are laid out in a Board Charter which is made public through the Group’s website at www.tomei.com.my to guide your Board in discharging its duties and responsibilities effectively. The Board Charter is reviewed periodically and amended when necessary to reflect the changes on conduct of your Board.

Code of Conduct

Your Board has developed an ethical standard for the Group through a code of conduct and ensures its compliance by your Board and all the employees within the Group. This includes a strategic vision statement and core values to guide the Company in its daily operation. Your Board reviews the code of conduct regularly to ensure that new requirements and suggestion of best practices are being updated and incorporated into the code.

Board meetings

Your Board meets regularly at least four (4) times a year at quarterly intervals with additional meetings to be convened as and when required. Prior to each meeting, every Director is given the complete agenda and a set of Board Papers for each agenda item well in advance so that your Directors have ample time to review matters to be deliberated at the meeting and to facilitate informed decision making by your Directors.

During the financial year ended 31 December 2017, there were five (5) Board Meetings held and the details of attendance are as follows:-

Executive Directors AttendanceTan Sri Datuk Dr Ng Teck Fong 5/5Datuk Ng Yih Pyng 5/5Datin Choong Chow Mooi 5/5Ng Yih Chen 5/5Ng Sheau Chyn 5/5Ng Sheau Yuen 5/5

Independent Non-Executive Directors AttendanceYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad 5/5Datin Nonadiah Binti Abdullah 5/5Datuk M Chareon Sae Tang @ Tan Whye Aun 5/5Lau Tiang Hua 5/5

In addition, the Executive Directors meet regularly to discuss the corporate strategy, the business operations and the results of the business units within the Group.

Board Committees

In order to ensure the effectiveness in the periodic monitoring, deliberating and safeguarding of shareholders’ interest, your Board has delegated certain of its responsibilities to the Board Committees which operates within clearly defined terms of reference to carry out these responsibilities in a supporting role to your Board.

These Committees comprising members of your Board are empowered to deliberate and examine issues delegated to them and report back to your Board with their recommendations and comments.

a)b)

c)d)e)f)

g)h)

Reviewing and approving the strategic business plan of the Group;Monitoring corporate performance and the conduct of the Group’s business and ensuring compliance to best practices and principles of corporate governance through the Audit Committee;Identifying and implementing appropriate systems to manage principal risks through the Risk Management Committee;Ensuring succession planning for top management;Ensuring a transparent Board nomination and remuneration process;Reviewing the adequacy and integrity of the Group’s internal control system and management information system for compliance with applicable standards and laws and regulations;Developing and implementing an investor relation program or shareholders’ communications policy for the Company; andDeveloping an ethical standard for the Group through code of conduct and ensure its compliance.

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued)Page 28


At present, your Board is assisted by four (4) Board Committees as provided below:-

1) Audit Committee 2) Nomination Committee 3) Remuneration Committee 4) Risk Management Committee

The term of reference of the respective Board Committees are being disclosed at Company’s website at www.tomei.com.my.

1. Audit Committee

In accordance with the Best Practices under the Code, the Audit Committee (“AC”) comprises three (3) members made up of Independent Non-Executive Directors:-

Name DesignationLau Tiang Hua ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad MemberDatuk M Chareon Sae Tang @ Tan Whye Aun Member

The principal function of the AC is to assist your Board in the effective discharge of its fiduciary responsibilities in relation to corporate governance, ensure timely and accurate financial reporting, proper implementation of risk management policies and strategies in relation to the Group’s business strategies and the development of sound internal control system and effective risk management framework.

In accordance with the best practices under the Code, the AC presents its report set out on pages 40 to 41 of this Annual Report.

2. Nomination Committee

The Nomination Committee comprises four (4) members made up of Independent Non-Executive Directors:-

Name DesignationDatuk M Chareon Sae Tang @ Tan Whye Aun ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad MemberDatin Nonadiah Binti Abdullah MemberLau Tiang Hua Member

The principal function of the Nomination Committee is to assist your Board in evaluating the effectiveness and composition of your Board members including assessing the performance of each board members, their independence, retirement and re-election.

In accordance with the best practices under the Code, the Nomination Committee Statement is presented on pages 42 to 43 of this Annual Report.

3. Remuneration Committee

The Remuneration Committee comprises four (4) members, made up of independent Non-Executive Directors and have the following term of reference as provided below:-

Name DesignationDatuk M Chareon Sae Tang @ Tan Whye Aun ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad MemberDatin Nonadiah Binti Abdullah MemberLau Tiang Hua Member

The Committee’s duties and responsibilities are:-

a)

b)

c)

To ensure that a transparent and formal procedure is established in the development and assessment of the level of compensation that would be sufficient to attract and retain good caliber Directors;To review the composition of the various types of components of remuneration package such as fees, allowances, basic salaries, bonuses and other benefits-in-kind for Directors; andTo ensure that the components of the Directors’ remuneration package are linked to performance, responsibility levels and is comparable with market norm.

CORPORATE GOVERNANCE OVERVIEW STATEMENT (continued) Page 29


4. Risk Management Committee

The Risk Management Committee comprises four (4) members, majority of whom are Independent Non-Executive Directors:-

Name DesignationLau Tiang Hua ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad MemberDatuk M Chareon Sae Tang @ Tan Whye Aun MemberDatuk Ng Yih Pyng Member

The Committee’s duties and responsibilities are:-

a) b) c)d)

The Risk Management Committee shall hold at least one (1) meeting in each financial year.

Supply of information

Your Board has full and unrestricted access to information concerning the Group from the senior management and the external auditors to enable them to discharge their duties effectively. Your Board may also seek advice of external independent professionals at the Group’s expense.

All information on meetings is disseminated to your Board at least seven (7) days before the date of meeting to enable your Board to make an informed decision. Relevant personnel of the Group could be summoned to the Board meeting to further brief your Board as and when required.

Your Board has direct access to the advice and services of a Company Secretary who is responsible to advise your Board on matter concerning compliance and governance of the Company. The Company Secretary also ensures that all Board procedures are followed and that applicable laws and regulations are complied with. The appointment and removal of the Company Secretary lies within the power of the Board.

Directors’ training

All Directors of the Group have attended the Mandatory Accreditation Program prescribed by Bursa Malaysia Securities Berhad (“Bursa Securities”). In addition, your Board is regularly being briefed on the Group’s operation and takes proactive steps to visit both manufacturing and retailing operation to gain in depth understanding of the business at least once during their tenure in office.

Your Board through the Nomination Committee assesses the training needs of all the Directors. The Directors are encouraged to attend talks, seminars, workshops and conferences to update and enhance their skills and knowledge to enable them to carry out their roles as director effectively, more specifically in discharging their responsibilities towards corporate governance and regulatory compliances.

Details of trainings attended by the directors are provided in the Nomination Committee Statement.

2. BOARD COMPOSITION

Composition and diversity

The Group is led by your Board of Directors which comprises ten (10) members of whom six (6) are Executive Directors and four (4) are Independent Non-Executive Directors. Your Board consists of members from a wide range of discipline and background, providing an in-depth and diversity in experience to the Group’s operation. All Independent Non-Executive Directors are free from any material business dealings and other relationship with the Group and therefore play a crucial role in corporate accountability with their independent, unbiased views, advice and judgement in the decision making process.

The profiles of the members of your Board are set out on page 8 to 9 of the Annual Report.

The Board does not have a specific policy on gender, ethnicity and age group for the appointment of its Board of Directors. Nevertheless, the current composition of the Board does reflect a mix diversity of gender, ethnicity and age among its Directors.

To review periodic management report on risk exposure, risk portfolio and management strategies;To ensure adequacy of infrastructure, resources and systems for effective risk management;To assess adequacy of policies and framework for identifying, measuring, monitoring and controlling risks; andTo review the extent to which these measures are operating effectively.



Board independence

The Nomination Committee assesses the independence of Directors annually in accordance to the criteria on independence set out in the Main Market Listing Requirements of Bursa Securities. Each director submits a declaration on their interest in the Company to the Nomination Committee on annual basis for its review before making recommendation to your Board.

The details of assessment of Directors are provided in the Nomination Committee Statement as set out on pages 42 to 43 on this Annual Report.

Board re-election and re-appointment

The Nomination Committee also assesses and evaluates the Directors individually to determine on their status of independence, mix set of skills and experience before deciding on the selection and nomination of directors for their respective re-election or re-appointment.

In accordance to the recommendation of the Code, all independent directors shall not hold office for a tenure of more than nine (9) years. However, the said independent director may continue to serve as a non-independent director subject to the approval by the Company’s shareholders at the Annual General Meeting (“AGM”). All the four (4) independent directors of the Company have exceeded the tenure of ninth (9) years of service with the Company. The Board through the Nomination Committee has assessed and satisfied with the independence of the independent directors and has recommended for them to continue serving in their current capacity. Therefore they will submit themselves for re-appointment by the shareholders in the coming AGM.

None of the Directors hold more than 5 directorships in listed issuer in Malaysia.

Segregation of role

Tan Sri Datuk Dr Ng Teck Fong, the Group Executive Chairman, plays a crucial role in providing overall business direction while the implementation falls under the leadership and responsibility of your Group Managing Director, Datuk Ng Yih Pyng. This segregation of role is vital to ensure a balance of power and authority.

In accordance to the best practice, at least half of the Board members must comprise of independent directors. However in our case, more than half of our Board members are made up of non- independent executive directors. Your Independent Directors have considered this anomaly and are of the opinion that that there is no undue risk involved as all related party transactions are diligently reviewed by the AC in accordance with the Main Market Listing Requirements of Bursa Securities before they are tabled to your Board for approval based on the AC’s recommendation.



3. DIRECTORS AND SENIOR MANAGEMENT REMUNERATION

The Company’s remuneration policy for Directors and senior management is tailored towards attracting and retaining Directors and senior management with relevant experience and expertise needed to assist in managing the Group effectively. The Remuneration Committee carries out the annual review of the overall remuneration for Directors and key senior management officers whereupon recommendations are submitted to your Board for approval.

The details of your Directors’ remuneration paid/payable to all Directors of the Company for the financial year ended 31 December 2017 are set out as follows:-

The Directors’ fees payable is subject to the approval of the shareholders at the forthcoming AGM of the Company.

The remuneration paid to the top five senior management officers of the Group for the financial year ended 31 December 2017 are RM1,328,588.00.

Company level2017EXECUTIVE DIRECTORTan Sri Datuk Dr Ng Teck Fong Datuk Ng Yih Pyng Datin Choong Chow MooiNg Yih Chen Ng Sheau Chyn Ng Sheau Yuen Sub-total NON-EXECUTIVE DIRECTORYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji AhmadDatin Nonadiah Binti AbdullahDatuk M Chareon Sae Tang @ Tan Whye AunLau Tiang HuaSub-totalGrand Total

Fees

22,500

10,800

10,800

10,800

10,800

10,800

76,500

54,000

45,000

54,000

63,000

216,000 292,500

Group Level2017EXECUTIVE DIRECTORTan Sri Datuk Dr Ng Teck FongDatuk Ng Yih Pyng Datin Choong Chow MooiNg Yih Chen Ng Sheau Chyn Ng Sheau Yuen Sub-total

NON-EXECUTIVE DIRECTORYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji AhmadDatin Nonadiah Binti AbdullahDatuk M Chareon Sae Tang @ Tan Whye AunLau Tiang HuaSub-totalTotal

Remuneration

882,000595,840501,760454,720454,720454,720

3,343,760

3,343,760

Fees

22,50010,80010,80010,80010,80010,80076,500

54,00045,00054,00063,000

216,000292,500

Total

932,500

634,640

536,510489,470

489,470

475,420

3,558,010

54,000

45,000

54,000

63,000

216,0003,774,010

Benefits-in-kind

28,000 28,000

23,95023,950

23,950 9,900137,750

137,750



PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT

1. FINANCIAL REPORTING

Your Board is responsible for ensuring that the financial statements for the financial year which have been drawn up in accordance with the Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows of the Group and of the Company for the financial year then ended.

In preparing the financial statements, your Board has used appropriate and relevant accounting policies that are consistently used and supported by reasonable as well as prudent judgements and estimates and that all applicable approved MFRSs and IFRSs have been complied with.

Your Board is responsible for ensuring that the Group and the Company keep proper accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with MFRSs, IFRSs and the provisions of the Companies Act 2016 in Malaysia.

Your Board also has the general responsibility for taking such steps as are reasonably opened to them to safeguard the assets of the Group, to detect and prevent fraud and other irregularities.

The Directors’ Responsibility Statement in relation of the Audited Financial Statements for the year ended 31 December 2017 is set out in the Financial Statements section of this Annual Report.

2. AUDIT COMMITTEE AND EXTERNAL AUDITORS

The AC assists your Board in scrutinizing the information for disclosure to ensure its accuracy, adequacy and completeness.

The Company’s external auditors continue to provide their independent opinion to shareholders on the Group’s and the Company’s financial statements. Your Board maintains a formal and transparent relationship with the auditors to meet their professional requirements.

The AC discusses with the external auditors on both the audit plan and their scope of audit before the commencement of audit work. The AC is also being briefed by the auditor on their audit report upon the completion of audit. In addition, the AC meets up with the external auditors at least two (2) times a year without the presence of the Management to discuss and obtain feedback on sensitive audit issues.

In determining the independence of the external auditors, the AC has reviewed all aspects of relationships between the Group and the external auditors including the processes, policies and safeguards relating to audit independence and agreed on the audit strategy and the audit fee. The external auditors also declare their independence to the AC during their audit planning.

The AC has considered the non-audit services provided by the external auditors and its affiliated companies and is satisfied that the provision of those non-audit services during the year does not compromise the external auditors’ independence.

The external auditors are also invited to attend the Company’s AGM and are available to take questions from the shareholders on issues pertaining to their audit report.

The detailed role of the AC in relation to the external auditors is described in the AC Report section on pages 40 to 41 of this Annual Report.



3. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

Your Board acknowledges its overall responsibility for maintaining a sound system of internal control and risk management to safeguard shareholders’ investment and the Group’s and the Company’s assets.

The Group’s internal audit function is carried out by the in-house Internal Auditor which reports directly to the AC. Details of the internal audit function are provided in the AC Report set out on pages 40 to 41 of this Annual Report.

The Group has a whistle blowing policy which is implemented throughout the Group. The policy provides an avenue for its employees and other stakeholders including shareholders, suppliers and customers to report genuine concerns on acts committed by employees and/or directors arising from unethical behavior, malpractices, illegal acts or failure to comply with regulatory requirements without fear of reprisal provided they act in good faith when reporting such concerns.

The policy is made available on the Company’s website at www.tomei.com.my.

The Statement on Risk Management & Internal Control as set out on pages 44 to 47 of this Annual Report provides an overview of the risk management and state of internal control within the Group.

PRINCIPLE C: INTERGRITY IN CORPORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

1. COMMUNICATION WITH STAKEHOLDERS

Your Board recognizes the importance of maintaining transparency and accountability to its stakeholders and is committed to provide the highest possible level of disclosure to ensure integrity and consistency of the financial reports.

Your Board keeps stakeholders informed via announcements, timely release of quarterly financial results, press releases, annual reports and circulars to shareholders.

As there may be instances where stakeholders may prefer to express their concerns to an independent director, your Board has appointed Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad as the Senior Independent Non-Executive Director to whom concerns may be directed.

Information of the Group is also accessible through the Company’s website at www.tomei.com.my which is updated on regular basis and the Directors welcome feedback channeled through this website. Information available on the website includes among others the Group’s Annual Reports, quarterly financial announcements, major and significant announcements and press releases on latest corporate development of the Group.

Your Board also takes effort to meet up with investors on regular basis to provide up to date information about the Group.

2. CONDUCT OF GENERAL MEETINGS

The AGM serves as the principal forum for dialogue and communication between your Directors and the shareholders. At the AGM, shareholders are given direct access to your Board and are encouraged to participate in its proceedings and seek clarification on the performance of the Group.

The Company implements a poll voting for all the resolutions set out in the Notice of AGM via electronic means at the AGM to expedite verification and counting of votes. In addition, the Company appoints one (1) scrutineer to validate the votes casted at the AGM.

3. PROMOTES SUSTAINABILITY

Your Board is committed to promote sustainability of its business which are aligned and embedded into the Group’s day to day business activities. In promoting the sustainability, the Group integrates good practices in the area of economic, environmental and social into its business culture. Details on areas of sustainability are provided in the Sustainability Statement on pages 35 to 39 of this Annual Report.

STATEMENT ON COMPLIANCE WITH THE BEST PRACTICES OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017

Having reviewed the governance structure and practices of the Group, your Board considers that it has complied with the best practices as set out in the Code unless otherwise stated as well as the items set out in Part A of Appendix 9C of the Listing Requirements of Bursa Securities in relation to the requirement of a separate disclosure in the Annual Report.

This Corporate Governance Overview Statement is made in accordance with the resolution of the Board of Directors dated 5 April 2018.



TOMEI is built upon its corporate vision of emphasizing on the sustainability of its products, branding, customers and progressive organization. In line with our corporate vision, our approach has been tailored in meeting and promoting sustainability of various aspects of our business including the economy environment and social aspects. It has been our policy that all business decisions are evaluated after taking into consideration the interest of all stakeholders in order to promote a conducive and sustainable business environment. The Group has developed a Code of Conduct to guide the implementation of its business decision based on these principles.

Tomei’s sustainability pillars are focused on the following four areas:1) Responsible business practices2) Meeting customers’ expectation3) Developing employees4) Well-being of employees and communities

MANAGING AREA OF SUSTAINABILITY

1. Responsible Business Practices

Quality product offerings

Tomei received the accreditation of the National Mark for “Malaysian Brand” certification from the SMECorp in Malaysia since the year 2010. This accreditation is given in recognition of the quality of products offered by Tomei and the significant strength of its branding in the market.

Responsible sourcing

Tomei has being accredited with the status of “World Diamond Mark” Authorized Diamond Dealer in Malaysia since the year 2016. World Diamond Marks represents the ultimate mark of “Confidence, Trust and Credibility” to influence customers’ diamond buying decision. This reinforces our commitment to provide the best service and product design to our customers. It also assures our customers that all diamonds purchased from Tomei are sourced from only legitimate source and ensure that all diamonds are natural (not laboratory made, synthetic, treated or conflicted diamond) without compromising on its quality.

Quality management system

As part of the Group’s continuous effort and commitment to quality, the Group is accredited with ISO 9001:2015 in the Quality Management System for its retailing in gold and jewellery products from Lloyd’s Register. This accreditation which has been given to the Group since the year 2003 speaks of the Group’s strategic decision to improve its overall performance and provide a sound basis for sustainable development initiatives.

By implementing this International Standard, the benefits are as follows:- a)

b) c) d)

Confidentiality of customer’s information

Tomei subscribes to the importance of data privacy of its customers and has taken steps to ensure that all customers’ information that come into its possession are managed strictly as required by the Personal Data Protection Act, 2010.

Pricing transparency

Tomei promotes transparency in its products pricing whereby all its products come with price tag attached. We adhere strictly to the Competition Act, 2010 and therefore do not subscribe to any form of price fixing mechanism. Tomei retail gold price is published in the local daily while in the shop front, the gold price are clearly and properly displayed to inform customers of the current selling price.

SUSTAINABILITYSTATEMENT

the ability to consistently provide products and services that meet customers’ and applicable statutory and regulatory requirements;facilitating opportunities to enhance customers’ satisfaction;addressing risk and opportunities associated with its context and objectives; andthe ability to demonstrate conformity to specified quality management system requirements.

Page 35


2. Meeting customers’ expectation

New product launch

Tomei is instrumental in bringing new products to the market from time to time in line with its latest collection series. Every year, Tomei introduces ample of new jewellery designs to the market catering to different festivities and celebration in Malaysia.

During the year it has collaborated with the World Gold Council in unveiling the Xifu wedding series of jewellery collection in Malaysia. It also has introduced the world first Le Lumiere-Visconti diamond pen pairing the renowned Italian pen maker with its own hearts and arrows cut diamond.

Wide distribution network

Tomei’s operation covers a wide spectrum of the market ranging from the retail, wholesale as well as the upcoming online channel. It also has a specialized and dedicated team to support its corporate customers in meeting their requirements.

In the retail segment, it has more than 70 stand-alone retail outlets and concession counters all over Malaysia serving its customers from all walks of life in addition to the various fairs and exhibitions held. Its wholesale segment serves various retailers in Malaysia while some of its products are exported to Singapore, Vietnam, Thailand, Indonesia and European countries. In the online segment, customers can access to our products through our own webstore at www.etomei.com.my or other marketplaces such as Lazada and Shopee.

Extensive product range

Tomei carries a wide range of products from yellow gold jewelleries to diamond jewelleries. It also sells platinum, white gold, precious and semi precious stones. In addition, it also offers various ranges of investment precious metals including the Tomei Pamp Suisse collaboration “Icon of Malaysia” gold bar collection, the Canadian Maple Leaf, the Australian Kangaroo and the China Panda. In addition to its existing collections, Tomei also features some famous international brands such as China’s Batar Jewellery and Thailand’s Prima Gold in Malaysia. Tomei is also the sole distributor of De Beers diamond products in Malaysia. For the baby’s and kid’s market, Tomei works with Warners Bros and Sanrio to manufacture and retail gold jewellery based on the characters from DC Super Heroes, Baby Looney Tunes and Hello Kitty. In complementing its jewellery collections, the Group also retails the skin care and cosmetic products.

Enhance shopping experience

In order to provide a fresh shopping experience to our customers, we upgrade all our retail outlets on a periodic basis. Such improvement does uplift and elevate the “feel good” factor for our customers once they step into our premises. We have upgraded all our lightings into LED which not only increases the sparkling of our products but also saves more electricity. During the year we have refurbished 6 retail outlets among all our retail brands.

Retail

WholesaleCorporate

Online

TOMEI’SDISTRIBUTION

NETWORK

SUSTAINABILITY STATEMENT (continued)Page 36


Visual merchandize display (“VMD”) plays a very important role in showcasing our products to customers. The VMD continues to go through constant evolution and fit to the different themes in line with various periodical festivities but at the same time maintain the uniformity of the Group’s concept and brand positioning. This allows customers to feel the mood of prevailing festival such as the Chinese New Year, Valentine’s Day, Deepavali, Hari Raya and Christmas. As part of our strategy to reach out to a large base of customer pool, Tomei has set up its retail stores in major shopping malls in almost every part of the country. Our team surveys and evaluates new locations to identify new potential market which Tomei could penetrate. During the year, we have opened up 3 retail outlets among all our retail brands.

Customer loyalty programme

Tomei has its own customer loyalty programme, the Jewel Club, to reward its customers and continue reaching out to them. As communications can always be done electronically, we managed to reduce the use of paper and printing for our marketing material. This is in line with the Group’s policy of going green and encourages recycling.

Among the rewards enjoyed by our members are:- a) Gift redemptionb) Top spender rewardc) Birthday rewardd) Tea party invitatione) Friend get friend programf ) Special events invitation

3. Developing Employees

Employee’s training and education

The Group has set up the Learning & Development department to focus and identify the training needs of the Group. We believe training & development will help to promote individual success and sustainably increases the overall value to the organization.

Our Learning & Development Roadmap focusing the learning journey for both current staff as well as new recruits and is planned with the organization human capital needs and development in view. The journey starts with identifying of the current and future human resources needs for the organization and then set up the priorities to address its needs. Part of our development journey includes leadership development for the talents of the Group.

Employee’s career advancement

When an employee first steps into TOMEI, we have already set up the career progression path for the staff. In order for the staff to get promoted, they need new and relevant skillset that fit into the new role. We provide the relevant training and opportunity to equip staff and preparing them to move up to the next level. Each training is followed by an assessment to ensure that staff has properly mastered the skillset.

The Group has a systematic appraisal system whereby employees are assessed on their skillset and capabilities. Such appraisal serves as an important tool in identifying employee’s needs and guide for promotion.

The Group also implements a mentorship system whereby senior staffs are required to provide guidance and hand held junior staffs in their daily responsibilities. Such system not only helps new staff to understand their new role better but also creates a stronger bonding and working relationship among the staffs.

Tomei Outlet at AEON Tebrau City Johor Tomei Outlet at Pavilion Kuala Lumpur

SUSTAINABILITY STATEMENT (continued) Page 37


4. Well-being of employees and communities

Safe and conducive working environment

The Group provides a safe and conducive working environment to its staffs where front liners are provided with Company’s uniform to improve staff appearance and confidence in dealing with customers. The Group provides insurance coverage to its staffs to protect them from any mishap and unforeseen eventuality. Our retail outlets are well guarded by qualified security guards and under the surveillance of CCTV at all time as a precaution to avoid or deter robbery and theft incidence.

Employee’s well-being and engagement

Engaging of employees is practiced at all levels of the business hierarchy and cultivated on a regular basis. When employees are engaged at work they feel better connected to the Company. To foster the engagement between the Company and employee, Tomei has organized various activities during the year. Through these initiatives, we managed to foster a culture of employee engagement which is also key in reducing turnover rates and boosting employee retention. Below are some of the employee engagement initiatives that we have implemented.

Healthy and well-motivated employees can have an equally positive impact on the productivity and effectiveness of the business. Tomei has developed various wellness programs which aimed to provide a healthy and joyful working environment for its employees.

TOMEIANCONNECTSESSION

TOMEIANCOMMUNITYFACEBOOK

PAGE

FAMILYDAY

BOWLINGTOURNAMENT

TOMEI HEALTHAWARENESSCAMPAIGN

PEP TALK /MOTIVATION

TALK

TOWNHALL

EMPLOYEEENGAGEMENT

INITIATIVES

TOMEIPREMIERLEAGUE

FESTIVECELEBRATION

BIRTHDAYCELEBRATION

ANNIVERSARYDINNER

Hiking Yoga Zumba

Health Talk

Panel Clinic

Badminton

Gym RoomFacility

Tomei’sWellnessPrograms

CorporateRate for Eye

CareProduct

MedicalCheck-Up

Sta�Purchase

BloodDonation

SUSTAINABILITY STATEMENT (continued)Page 38


Tomei Excellent Education Award

The Group is encouraging and promoting education among its employees’ children by giving out Tomei Excellent Education Award to those who have performed well in their examinations.

Employment opportunity across wide spectrum

The Group in promoting employment opportunities has provided employment to Malaysians regardless of age, gender and ethnicity. Tomei employs more than 1,000 staffs to support its daily operations from almost every single state in Malaysia. The Group does not employ any child or force labour and has met all the minimum wages requirements as required by the law.

Diversity and equal opportunity

Tomei subscribes to the idea of promoting gender equality and having at least 30% female participation in workforce as recommended by the Government. Currently, Tomei’s Board of Directors consists of 40% female while its female employees made up more than 60% of its total workforce.

Support charity programme

During the year, the Group has sent its employees to participate in various charity programme. Among those include cycling and running activities to promote carbon free environment and raising fund for the orphanage. The Group also organized bloods donation campaign whereby 70 employees of Tomei have donated 39 bags of blood for Pusat Darah Negara.

40% Male

Female

Directors

Women Participation in The Group

Employees

40%60% 60%

Male

Female

SUSTAINABILITY STATEMENT (continued) Page 39


1. COMPOSITION

2. ATTENDANCE

3. SUMMARY OF THE WORK OF THE AUDIT COMMITTEE

AUDITCOMMITTEE

REPORTThe Audit Committee is appointed by your Board from amongst its members. The Audit Committee comprised the following three (3) members made up of Independent Non-Executive Directors:-

Name Designation Lau Tiang Hua ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad MemberDatuk M Chareon Sae Tang @ Tan Whye Aun Member

The Audit Committee held five (5) meetings during the financial year ended 31 December 2017 and the attendance of each member is as follows:-

Name AttendanceLau Tiang Hua 5/5Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad 5/5Datuk M Chareon Sae Tang @ Tan Whye Aun 5/5

The following is a summary of the main works undertaken by the Audit Committee during the financial year ended 31 December 2017:- a)b)

c)d)

e)

f )g)

Carried out its duties for the year in accordance with its Terms of Reference;Reviewed the quarterly interim unaudited financial statements with the Management and the annual audited financial statements of the Group with the Management and the external auditors prior to your Board’s approval. Focusing particularly on changes in or implementation of major accounting policy changes and compliance with applicable accounting standards/ other legal requirements, significant matters highlighted including financial reporting issues, significant judgements made by management, significant and unusual events or transactions and how these matters are addressed;Reviewed the impact of new or proposed changes in accounting standards and regulatory requirements to the Group; Held 3 private meetings with the external auditors without the presence of the Management for the purpose of obtaining feedback on sensitive audit issues;Reviewed the audit findings and recommendations made by the external auditors and the Management’s response and follow up actions where appropriate and report the same to your Board;Reviewed and approved the annual Audit Plan to ensure adequate scope and coverage on the activities of the Group; Reviewed the internal audit reports, audit recommendations made and Management’s response to these recommendations and actions taken to improve the system of internal control and procedures as recommended. Where appropriate, the Audit Committee had directed Management to rectify and improve control procedures and workflow processes based on the internal auditor’s recommendations and suggestions for improvement;

Page 40


h)i)j)

k)

l )

m)

The main role of the internal audit is to provide independent and objective assessment of the adequacy and effectiveness of the Group’s risk management, internal control and governance processes established by Management and/or the Board within the Group. This is performed with impartiality, proficiency and due professional care. Internal audit adopts a risk based auditing approach by focusing on reviewing identified high risk areas for compliance with policies and procedures, identifying business risks which have not been appropriately addressed and evaluating the adequacy and effectiveness of internal controls.

The Group has in place an internal audit function and is independent of the activities it reviews. The Head of the Internal Audit Department reports directly to the Audit Committee. The internal audit personnel are free from any relationships and no conflict of interest, which could impair their objectivity and independence. The Internal Audit Department comprised 5 internal auditors and is headed by Mr. Chew Soon Leong. Mr. Chew Soon Leong is a Certified Internal Auditor from the Institute of Internal Auditors, USA, Member of MIA, IIAM and ACCA. He also holds a Bachelor of Science in Applied Accounting from Oxford Brookes University, UK.

The internal audit works are guided by a detailed annual Audit Plan. The annual Audit Plan is approved by the Audit Committee and thereafter updated as and when necessary after prior approval of the Audit Committee. In discharging its function, the Internal Audit Department adopted the International Professional Practices Framework as well as established auditing guidelines/audit programmes to enhance its efficiency and effectiveness.

The following is a summary of the main works undertaken by the Internal Audit Department during the financial year ended 31 December 2017:-

a)b)

c)d)e)

The total cost incurred for the internal audit function in respect of the financial year ended 31 December 2017 stood at RM543,000.

This Audit Committee Report is made in accordance with the resolution of your Board of Directors dated 9 February 2018.

Reviewed the adequacy of the resources of the internal audit function and suggested prioritized audit areas, if necessary;Reported to your Board significant matters deliberated at the Audit Committee meetings;Reviewed related party transactions and conflict of interest situation to ensure such transactions/situation did not disadvantage the Group;Together with the Risk Management Committee, reviewed the risk register compiled by the Head of Risk Management and deliberated on the controls in place to mitigate the risks identified;Reviewed the Statement on Risk Management and Internal Control which provided an overview of the state of internal controls within the Group prior to your Board’s approval for inclusion in the Annual Report. The Statement on Risk Management and Internal Control which had been reviewed by the external auditors is set out on Pages 44 to 47 of this Annual Report; andReviewed the Corporate Governance Overview Statement and Audit Committee Report; and recommended the same for your Board’s approval for inclusion in the Annual Report.

Carried out its duties for the year in accordance with its Internal Audit Charter;Conducted independent reviews and evaluated the risk exposures relating to the Group’s governance, operations and information systems as follows:-- Reliability and integrity of financial and operational information;- Effectiveness and efficiency of operations;- Safeguarding of assets;- Compliance with laws, regulations, contracts, policies and procedures; and- Identification of opportunities to improve the operations and processes.The internal audit works had been carried out according to the Audit Plan approved by the Audit Committee;Discussed audit findings and audit recommendations with Management for resolution and action; andTabled the internal audit reports at the Audit Committee meetings for the deliberation by its members, and to follow up on any suggested actions.

4. SUMMARY OF THE WORK OF THE INTERNAL AUDIT FUNCTION

AUDIT COMMITTEE REPORT (continued) Page 41


NOMINATIONCOMMITTEE

STATEMENTThe Nomination Committee comprises four (4) members made up of Independent Non-Executive Directors and have the following term of reference as provided below:-

Name Designation Datuk M Chareon Sae Tang @ Tan Whye Aun ChairmanYang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad(appointed on 16 November 2017) MemberDatin Nonadiah Binti Abdullah MemberLau Tiang Hua Member

During the financial year ended 31 December 2017, the Nomination Committee has only two (2) meetings which were held on 20 February 2017 and 16 November 2017. The details of attendance of each member of the Nomination Committee held during the financial year are as follows:-

Name AttendanceDatuk M Chareon Sae Tang @ Tan Whye Aun 2/2Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad 1/1Datin Nonadiah Binti Abdullah 2/2Lau Tiang Hua 2/2

Summary activities during the financial year are as follows:-

Review the performance of Directors and Board Committee Each director needs to complete their Performance Evaluation Form on annual basis and submits to the Committee for assessment. The Directors are required to declare their interest in the Company as well as their directorship in other public companies and other listed issuers. In addition, all Directors also need to confirm if there is any sanction or penalty imposed onto them by relevant regulatory bodies during the financial year or offences convicted within the past five (5) years. The Nomination Committee evaluated each director individually taking into consideration their skillsets and commitment required of them to discharge their duty and is satisfied with the performance of all the directors.

The Nomination Committee also evaluated on the needs to establish separate Board Committee to assist the Board on its decision making and continues to review the effectiveness of such committee annually. Upon the recommendation of the Committee, the following Board Committee have been set up with their respective term of reference and to deliberate on their respective areas:-

a) Audit Committee b) Risk Management Committee c) Remuneration Committee


Page 42

Review of the independence of the Directors Your Board of Directors comprises ten (10) members, of whom six (6) are Executive Directors and four (4) are Independent Non-Executive Directors. The Independent Directors has declared their independence and non-conflict of interest with the Company in the Performance Evaluation Form on an annual basis. The Nomination Committee has reviewed and satisfied on the independence of the Independent Directors.

Re-election and re-appointment of director The Nomination Committee has assessed and recommended to your Board of the proposed re-election and re-appointment of relevant directors by the shareholders at the forthcoming Annual General Meeting (“AGM”) of the Company. It assesses and evaluates the Directors individually to determine on their status of independence, mix set of skills and experience before deciding on the selection and nomination of directors for their respective re-election or re-appointment. The Board does not have a specific policy on gender, ethnicity and age group for the appointment of its directors. Nevertheless, the current composition of the Board does reflect a mix diversity of gender, ethnicity and age among its Directors.

According to the Company’s Articles of Association, at least one third of the directors shall retire from office at the AGM, and eligible for re-election provided that each director shall retire once in every three (3) years. In accordance with this, the Nomination Committee has recommended for the following Directors to retire and eligible for re-election by shareholders at the forthcoming AGM of the Company:-

a) Tan Sri Datuk Dr Ng Teck Fong b) Datuk M Chareon Sae Tang @ Tang Whye Aun c) Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad

In accordance to the recommendation of the Malaysian Code of Corporate Governance 2017 (“Code”), all independent directors shall not hold office for a tenure of more than nine (9) years. However, the said independent director may continue to serve as a non-independent director. All the Independent Directors of the Company have hold office in their present capacity exceeding a period of (9) years.

The Nomination Committee has assessed and satisfied with the independence of the Independent Directors and has recommended to the Board for them to continue serving in their current capacity. Therefore they will submit themselves for re-appointment by the shareholders in the coming AGM.

All Directors who are due for retirement have expressed their intention to seek for re-election and re-appointment from the shareholders at the forthcoming AGM of the Company.

Assessment of Audit Committee The Nomination Committee has conducted an assessment on the term of office and performance of the Audit Committee and each of the members individually. The assessment shall be conducted annually in accordance to the paragraph 15.20 of the Bursa Malaysia Listing Requirements. Upon its assessment, the Nomination Committee has satisfied and recommended to the Board that the Audit Committee has performed up to the expectation and in accordance to the term of reference as mandated.

Review the composition of Remuneration Committee The Nomination Committee has reviewed the composition of the Remuneration Committee to ensure that it complies with the Code. In accordance to the Code, the Remuneration Committee shall consist of only non-executive director, majority of them must be independent. The Committee has proposed and recommended to the Board for Yang Mulia Raja Tan Sri Dato’ Seri Aman Bin Raja Haji Ahmad and Datin Nonadiah Binti Abdullah to be appointed as members of the Remuneration Committee in place of Datuk Ng Yih Pyng who has resigned in accordance to the Code.

Training The Nomination Committee has reviewed the training requirement of the directors based on their skills and the ongoing current requirement in order for them to discharge their duty diligently. Upon the assessment, the Committee has recommended for all the Directors and the senior management team of the Company to attend the training titled “Malaysia Code of Corporate Governance Compliance Expectations-What Director needs to know” which was held on 5 April 2018.

NOMINATION COMMITTEE STATEMENT (continued) Page 43


STATEMENT ONRISK MANAGEMENT &

INTERNALCONTROL

Your Board is pleased to present the Statement on Risk Management and Internal Control (“SRMIC”) as required by paragraph 15.26(b) of the Listing Requirements of Bursa Securities, which outlines the nature and scope of risk management and internal control of the Group during the period under review. The SRMIC is prepared in accordance to the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers issued by Bursa Securities (“Guidelines”) and Part III of Principle B, Intended Outcome 9.0, Practices 9.1, 9.2 and 9.3 of Malaysian Code on Corporate Governance 2017 (“MCCG 2017”). Pursuant to the Guidelines and MCCG 2017, your Board is committed to establish a sound risk management framework and internal control system.

The internal control system is designed to manage rather than to eliminate the risk of failure to meet the Group’s business objectives. Therefore, it can only provide reasonable, but not absolute assurance against material misstatement, operational failures, fraud or loss and this is achieved through a combination of directive, preventive, detective and corrective measures.

1. ROLES AND RESPONSIBILITIES FOR RISK MANAGEMENT AND INTERNAL CONTROL

1.1 Board’s roles and responsibilities

1.2 Management’s roles and responsibilities

Your Board’s roles and responsibilities for the governance of risk and controls include:-a) b)

c)d)e)

Your Board has delegated the reviewing process to the Audit Committee and the Risk Management Committee which includes periodic review of the effectiveness of prevailing risk management and internal control in place to mitigate the risks identified, testing of the effectiveness and efficiency of the internal control procedures to ensure the system is viable and robust and identifying new risks and the proposed controls to counter such risks identified.

Management’s roles and responsibilities for the governance of risk and control include:-a) b)c)

d)

e)

Ensuring organizational objectives support and align with the organization’s mission;Embedding system of internal control and risk management in all aspects of the Group’s activities and ensure forms part of its corporate culture;Setting appropriate policies on internal control;Approving the Board’s acceptable risk appetite; andReviewing the adequacy and integrity of internal control and risk management framework, processes, responsibilities and assessing whether they provide reasonable assurance that risks are managed within tolerable ranges.

Identifying risk relevant to the business of the Group and the achievement of its objectives and strategies;Selecting appropriate risk responses that align risks with the organization’s risk appetite;Communicating relevant risk information in a timely manner across the organization, enabling staff, management, and your Board to carry out their responsibilities;Designing, implementing and monitoring the risk management and internal control system in accordance with the Group’s strategic vision and overall risk appetite; andIdentifying changes to risk or emerging risk, taking action as appropriate and promptly bringing up these to the attention of your Board.

Page 44


1.3 Internal Audit’s responsibilities

Your Board puts paramount importance in ensuring that an appropriate risk management and internal control system is established within the organization to govern the conduct within the Group to manage risk and increase the likelihood that its established goals will be achieved and the significant adverse impact from any future event or situation is at an acceptable level. The main key elements and features of risk management and internal control systems are:-

2.1 The Audit Committee

2. ELEMENTS AND FEATURES OF RISK MANAGEMENT AND INTERNAL CONTROL

The Internal Audit department continues to independently, objectively and regularly review key processes, check compliance with policies/procedures, evaluate the adequacy and effectiveness of internal control, risk management and governance processes established by Management and/or the Board within the Group. The annual audit plan, established primarily on a risk based approach, is reviewed and approved by the Audit Committee annually. At its quarterly meetings, the Head of Internal Audit department presented to the Committee for its deliberation, the progress of the Internal Audit Annual Audit Plan 2017, including the status of Internal Audit assignments, key findings from audit reports, audit recommendations by the internal auditors, and the representations made, and the corrective actions taken by Management in addressing and resolving issues and ensured that all issues were adequately addressed on a timely basis. The Head of the Internal Audit Department reports directly to the Audit Committee. Your Board, however, is still responsible for ensuring the adherence of the scope of the internal audit function.

In discharging its function and responsibilities, the internal audit activities are guided by a detailed annual Audit Plan which is approved by the Audit Committee and revised as and when necessary. In addition, the Internal Audit Department adopts International Professional Practice Framework as well as established auditing, guideliness/audit programmes to enhance its efficiency and effectiveness.

The internal audit function provides assessments as to whether risks, which may hinder the Group from achieving its objectives, are being adequately evaluated, managed and controlled. It further evaluates and enhances the effectiveness of the governance, risk management and internal control framework.

The Audit Committee comprises only Independent Non-Executive Directors in order to ensure that it is able to carry out its duty without any interference from the Executive Directors and to provide an unbiased view. The Audit Committee members who bring with them a wide variety of experience and expertise in various disciplines reinforce the effectiveness of their role. The Audit Committee meets on a regular basis and has full and unrestricted access to both the internal and external auditors. The Audit Committee operates within its Terms of Reference and ensures that there are effective risk management and compliance to control procedures in order to provide the level of assurance required by your Board.

The Audit Committee will deliberate on the Internal Audit reports issued by the Internal Audit Department at every quarter and focus on those major findings to ensure corrective actions are taken by Management.

The Audit Committee oversees the Internal Audit Department’s function, its independence, scope of work and resources.

The Audit Committee reviews the Group’s financial reporting process, the system of internal controls and management of risk, the audit process and the Group’s process for monitoring compliance with laws and regulations, as well as such other matters, which may be specifically delegated to the Committee by your Board, from time to time.

The Audit Committee meets with the external auditors at least twice a year without the presence of the Management and Executive Directors to provide an opportunity for the external auditors to highlight sensitive issues arising from the interim and final audits.

The Audit Committee will brief your Board on the significant findings raised by internal and external auditors and instruct the Management to take the appropriate actions to rectify any shortcomings reported.

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued) Page 45


2.2 The Risk Management Committee

2.3 Other Key Areas of Risk Management and Internal Control

The Risk Management Committee comprises Independent Non-Executive Directors and the Group Managing Director. The Risk Management Committee supports your Board in the overall risk management oversight of the Group. The Risk Management Committee discharges its functions by reviewing periodic management reports on risk exposure, risk portfolio and management strategies; ensuring adequacy of infrastructure, resources and systems for effective risk management; assessing adequacy of policies and framework for identifying, measuring, and monitoring and controlling risks; and reviewing the extent to which these are operating effectively.

A Risk Management Framework has been approved by the Risk Management Committee that provides the foundations and arrangements that will embed it throughout the Group. The Framework encompassed the mandate and commitment from the management/line management, the design of Framework for managing risk, the implementation of Risk Management, the monitoring and review of the Framework and continual improvement of the Framework.

All risks identified in the Group are recorded in a Master Risk Register and they are reviewed on a periodic basis in order to ensure that the Master Risk Register is continually seen as relevant and useful throughout the life of the risk management process.

Your Board took cognizance that the critical element of a sound risk management system is monitoring to ensure it is performing as intended. Hence, monitoring are done through on-going activities as it is performed on real-time basis, reacting dynamically to changing conditions and is ingrained in the Group; and by way of a separate evaluation by the Internal Audit Department.

The Group has a clearly defined organization structure with clear defined lines of responsibility and accountability aligned to the current business and operations requirements. Each business division head and departmental head report directly to the Group Managing Director who in turn reports to your Board under a separate agenda at each Board meeting. The Group Managing Director’s Report will encompass significant development in the Group’s business operations as well as development in the industry as a whole.

The Group also has in place a set of Operation Manual which has been reviewed by the Audit Committee and approved by your Board to guide the operation of each business division. The Group maintains a proper and systematic record keeping for a reasonable period of time to safeguard all information of the Group. All business transactions data are computerized to ensure the accuracy and timeliness of information and in compliance with law and regulations.

Management is required to prepare its comprehensive business plan and annual budgets for tabling to your Board for its deliberation and approval. The Audit Committee will monitor the Group’s performance against the approved budgets through the review of quarterly interim financial reports. In their review of quarterly interim financial reports, the Audit Committee will deliberate on all key financial and operating performance. In addition, your Board may call for a review of the strategic planning, budgeting and forecasting of revenue and expenses in the light of changes to the business environment.

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued)Page 46


Your Board through the Audit Committee and the Risk Management Committee has reviewed on the adequacy and effectiveness of the risk management processes and the internal control system on a periodic basis. In reviewing the above, your Board has identified, evaluated and managed significant risk faced by the Group for the financial year under review up to the date of approval of this statement to ensure that its objective and strategies are achieved. In view that all the steps are put in place, your Board is confident that the risk management and internal control system of the Group are sufficient to address any significant failings or weaknesses identified and necessary actions are taken to remedy them.

Your Board remains committed towards maintaining a sound risk management policy and system of internal control which continuously evolves to support both the type of business and size of operation of the Group as well as to cater to the changing external environment. As such, your Board will, when necessary put in place appropriate action plans to further enhance the Group’s system of internal control and ensure that its risk management policy is effective in managing the Group’s risk.

The Chief Executive Officer and the Chief Financial Officer have given assurance to your Board that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management framework adopted by the Group.

As required by paragraph 15.23 of the Bursa Securities Listing Requirements, the external auditors have reviewed this Statement on Risk Management & Internal Control. As set out in their terms of engagement, the procedures were performed in accordance with Audit and Assurance Practice Guide 3 (AAPG 3) issued by Malaysian Institute of Accountants. Based on their procedures performed, the external auditor has reported to your Board that nothing has come to their attention that causes them to believe that this Statement is not prepared in all material respects, in accordance with the disclosures required by paragraph 41 & 42 of the Guidelines, nor is this statement factually inaccurate.

This statement is made in accordance with the resolution of the Board of Directors dated 5 April 2018.

3. BOARD’S STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

4. ASSURANCE FROM MANAGEMENT

5. REVIEW OF STATEMENT BY EXTERNAL AUDITOR

STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued) Page 47


ADDITIONAL COMPLIANCEINFORMATION

UTILIZATION OF PROCEEDSThere was no fund raising exercise implemented during the financial year.

NON–AUDIT FEE During the financial year ended 31 December 2017, RM39,500 was paid to the external auditor, BDO, for non-audit services.

MATERIAL CONTRACTSThere were no material contract entered into by the Company and/or its subsidiaries during the financial year ended 31 December 2017, which involves the interest of Directors and/or major shareholders.

RECURRENT RELATED PARTY TRANSACTIONSThe aggregate value of the recurrent related party transactions conducted by the Company and/or its subsidiary companies with related parties during the financial year were as follows:-

Amount oftransactions(RM)

805,52247,400

545,609220,717

152,812

1,044,420106,60636,000

307,658

10,500

105,0004,500

17,500

97,200

Nature ofrelationship

Note 1Note 2Note 3Note 4

Note 5

Note 6Note 7Note 8

Note 9

Note 10Note 11

Nature of transactions

Sales and purchase of jewellery Rental of premises Rental of premisesRental of premises

Rental of premises

Rental of premisesPurchase of manufacturing toolsRental of premisesPurchase of gold

Rental of premises

Rental of premisesAdvertising expensesRental of premisesRental of premises

Companies within the Group

YXGYXG, GPM, OMDTS, TGJHTS

TS YXG, GPM, TGJM, OMD,TS, TGJHGPM TGJHTGJH

DB

GHDBTGJH

TGJH

Transacting parties

Ong Tiong Yee & Sons Sdn. Bhd.Unique Avenue Sdn. Bhd. Best Arcade Sdn. Bhd.Teck Fong Property Sdn. Bhd.

Teck Fong Property (Subang) Sdn. Bhd.Oasis Properties Sdn. Bhd.

Gexcel Asia Sdn. Bhd.Pajak Gadai JP Sdn. Bhd.

Permata Sagu Sdn. Bhd.

AU Properties Sdn. Bhd.

M Design Solutions Sdn. Bhd.Datuk Ng Yih PyngDatin Choong Chow Mooi

Abbreviation:-Yi Xing Goldsmith Sdn. Bhd. (“YXG”)Gemas Precious Metals Industries Sdn. Bhd. (“GPM”)Tomei Gold & Jewellery Manufacturing Sdn. Bhd. (“TGJM”)

O M Design Sdn. Bhd. (“OMD”)Tomei Signature Sdn. Bhd. (“TS”)Tomei Gold & Jewellery Holdings (M) Sdn. Bhd. (“TGJH”)

De Beers Diamond Jewellers Sdn. Bhd. (“DB”)Goldheart Collections Sdn. Bhd. (“GH”)

Page 48


Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng and Ng Yih Chen are directors and major shareholders of the Company. Ng Sheau Chyn, Ng Sheau Yuen and Datin Choong Chow Mooi are directors and shareholders of the Company. Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are the children of Tan Sri Datuk Dr Ng Teck Fong. Datin Choong Chow Mooi is the spouse to Datuk Ng Yih Pyng.

NOTE 1Ong Kee Liang, a director and shareholder of Ong Tiong Yee & Sons Sdn. Bhd., is the spouse of Ng Sheau Chyn, who is a director and shareholder of the Company.

NOTE 2Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are directors and shareholders of Unique Avenue Sdn. Bhd..

NOTE 3Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are directors and shareholders of Best Arcade Sdn. Bhd..

NOTE 4Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are directors of Teck Fong Property Sdn. Bhd.. Best Arcade Sdn. Bhd. is the sole shareholder of Teck Fong Property Sdn. Bhd..

NOTE 5Tan Sri Datuk Dr Ng Teck Fong and Ng Yih Chen are directors of Teck Fong Property (Subang) Sdn. Bhd.. Teck Fong Property Sdn. Bhd. is the sole shareholder of Teck Fong Property (Subang) Sdn. Bhd..

NOTE 6Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are directors and shareholders of Oasis Properties Sdn. Bhd..

NOTE 7Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng and Ng Sheau Chyn are directors of Gexcel Asia Sdn. Bhd.. Ng Teck Fong Holdings Sdn. Bhd. is the sole shareholder of Gexcel Asia Sdn. Bhd.. Tan Sri Datuk Dr Ng Teck Fong, Datuk Ng Yih Pyng, Ng Yih Chen, Ng Sheau Chyn and Ng Sheau Yuen are the directors and shareholders of Ng Teck Fong Holdings Sdn Bhd..

NOTE 8Tan Sri Datuk Dr Ng Teck Fong and Datuk Ng Yih Pyng are directors and major shareholders of Pajak Gadai JP Sdn. Bhd..

NOTE 9Ng Yin Chen and Ng Sheau Yuen are directors and major shareholders of Permata Sagu Sdn. Bhd..

NOTE 10Datuk Ng Yih Pyng and Datin Choong Chow Mooi are directors and major shareholders of AU Properties Sdn. Bhd..

NOTE 11Ng Sheau Yuen is the director and major shareholder of M Design Solutions Sdn. Bhd..

ADDITIONAL COMPLIANCE INFORMATION (continued) Page 49


DIRECTORS’RESPONSIBILITY

STATEMENT IN RELATION TO THE AUDITED

FINANCIAL STATEMENTS

In preparing the financial statements, your Board has used appropriate and relevant accounting policies that are consistently used and supported by reasonable as well as prudent judgements and estimates, and that all applicable approved MFRSs and IFRSs have been complied with.

Your Board is responsible for ensuring that the Group and the Company keep proper accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with MFRSs, IFRSs and the provision of the Companies Act 2016 in Malaysia.

Your Board also has a general responsibility for taking such steps as are reasonably opened to them to safeguard the assets of the Group and to detect and prevent fraud and other irregularities.

The Statement by Directors pursuant to Section 251(3) of the Companies Act 2016 in Malaysia is set out on page 56 of the Annual Report.

Your Board is responsible for ensuring that the financial statements for the financial year which have been drawn up in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017 and of their financial performance and cash flows of the Group and of the Company for the financial year then ended.

Page 50


Documents

Tomei Annual Report 2017 Cover - 50 - Malaysiastock.biz outstanding jewellers across the Asian countries. Tomei was founded in 1968 as a jewellery designer and manufacturer. It then