The World Is Our Market LATIN AMERICA (32) Aruba Argentina Bahamas Barbados Belize Benin Bolivia Brazil Chile Colombia Costa Rica Cuba Dominica Domini

Transcription

1 Company No. : X Incorporated in Malaysia under the Companies Act, 1965 A W A R D E D I S O The World s Largest Rubber Glove Manufacturer A n n u a l R e p o r t For Financial Ye a r E n d e d 31 August 2007 The World is Our Market A W A R D E D MALAYSIA

2 The World Is Our Market LATIN AMERICA (32) Aruba Argentina Bahamas Barbados Belize Benin Bolivia Brazil Chile Colombia Costa Rica Cuba Dominica Dominican Republic Ecuador El Salvador French Guiana Grenada Guatemala Guyana Haiti Honduras Jamaica Mexico Nicaragua Panama Paraguay Peru Suriname Trinidad & Tobago Uruguay Venezuela NORTH AMERICA (3) Canada Puerto Rico USA Top Glove Exports to 180 Countries Worldwide Top Glove Corporation Berhad I Annual Report 2007

3 EUROPE (47) Albania Andorra Armenia Austria Azerbaijan Belarus Belgium Bosnia Herzegovina Bulgaria Canary Islands Croatia Cyprus Czech Republic Denmark Estonia Finland France Georgia Germany Greece Hungary Iceland Ireland Italy Kosovo Latvia Lithuania Luxembourg Macedonia, FYR Malta Moldova Montenegro Netherlands Northern Ireland Norway Poland Portugal Romania Russia Slovakia Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom ASIA (29) Afghanistan Bangladesh Bhutan Brunei Cambodia China Hong Kong India Indonesia Japan Kazakhstan Korea Laos Macau Malaysia Mongolia Myanmar Nepal New Caledonia Pakistan Philippines Singapore Sri Lanka Taiwan Thailand Tajikistan Turkmenistan Uzbekistan Vietnam AFRICA (44) Algeria Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Central African Republic Chad Congo Eritrea Ethiopia Gabon Gambia Ghana Gibraltar Guinea Ivory Coast Kenya Lesotho Liberia Libya Madagascar Malawi Mauritius Morocco Mozambique Namibia Niger Nigeria Rwanda MIDDLE EAST (15) Bahrain Egypt Iran Iraq Israel Jordan Kuwait Senegal Sierra Leone Somalia South Africa Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe Lebanon Oman Palestine Qatar Saudi Arabia Syria UAE Yemen OCEANIA (10) Australia Christmas Island Fiji Guam Micronesia, Federated New Zealand Papua New Guinea Samoa Solomon Islands Vanuatu Top Glove Corporation Berhad I Annual Report 2007

4 Vision and Mission VISION We strive to be the world s leading manufacturer with excellent quality glove products and services that enrich and protect human lives. MISSION To be a world class glove manufacturer providing top quality products with excellent services through continuous improvement and innovation. Our business rules for the Company are:- i) Do not lose your shareholders money; ii) Do not lose your health; iii) Do not lose your temper; and iv) Do not lose your customers. Tan Sri Dr. Lim, Wee-Chai Chairman CORPORATE RATE VALUES Global customer satisfaction Do it right first time and every time Integrity and total commitment Excellence e in quality and competitiveness Environmental ntal friendly and social responsibilities QUALITY POLICY Quality and productivity are our business Continuous improvement and innovation are our duties Towards zero defect is our target 2 Top Glove Corporation Berhad I Annual Report 2007

5 Contents MALAYSIA THAILAND CHINA Page 1 Export Markets 2 Vision and Mission 3 Contents 4 Corporate Structure 5 International Quality Awards & Certifications 6 Corporate Information 7 Board of Directors 8 Directors Profile 13 Senior Management Team 14 Six Year Group Financial Review 15 Performance Page 16 Chairman s Statement (English, Bahasa Malaysia & Mandarin) 28 Top Glove Corporate Song 29 Corporate Governance Statement 36 Statement on Internal Control 37 Audit Committee Report 41 Financial Statements for the Year Ended 31 August List of Properties 104 Analysis of Shareholdings 107 Notice of AGM 111 Form of Proxy Top Glove Corporation Berhad I Annual Report

6 Corporate Structure 100% Techniglove Asia Sdn Bhd : Malaysia 100% Hiclean International Pte Ltd : Singapore 35% Sonic Clean Pte Ltd : Singapore 100% Top Glove International Sdn Bhd : Malaysia 100% Top Glove Technology Sdn Bhd : Malaysia 60.06% Medi-Flex Limited : Singapore 100% Flexitech Sdn Bhd : Malaysia 100% Top Glove (Zhangjiagang) Co Ltd : China 100% TG Medical (Zhangjiagang) Incorporated : China 100% Great Glove (Xinghua) Co Ltd : China 100% Top Glove Technology (Thailand) Co Ltd : Thailand 100% Top Glove Medical (Thailand) Co Ltd : Thailand 100% B Tech Industry Co Ltd : Thailand 74% Great Glove (Thailand) Co Ltd : Thailand 100% TG MEDICAL SDN BHD 100% TOP GLOVE ENGINEERING SDN BHD 100% TOP GLOVE SDN BHD 100% GREAT GLOVE SDN BHD A W A R D E D I S O % TG MEDICAL (USA) INC. TOP GLOVE CORPORATION BERHAD 4 Top Glove Corporation Berhad I Annual Report 2007

7 International Quality Awards and Certifications SINCE Top Glove Corporation Berhad I Annual Report

8 Corporate Information BOARD OF DIRECTORS Tan Sri Dr. Lim, Wee-Chai Chairman Tan Sri Datuk (Dr.) Arshad Bin Ayub Independent Non-Executive Director Puan Sri Tong Siew Bee Executive Director Lee Kim Meow Executive Director Lim Hooi Sin Executive Director Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director Lau Boon Ann Non-Executive Director Quah Chin Chye Independent Non-Executive Director Lim Cheong Guan Executive Director REGISTERED OFFICE Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia Tel : Fax : / CORPORATE OFFICE Lot 4969, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 1905 Fax : / s : (i) top@topglove.com.my (ii) tgmed@po.jaring.my (iii) topg@po.jaring.my Website : COMPANY SECRETARY Chua Siew Chuan (MAICSA No: ) REGISTRAR Securities Services (Holdings) Sdn Bhd Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur, Malaysia Tel : Fax : / AUDITOR Ernst & Young Chartered Accountants, Lot 1, 6th Floor, Menara Pertam, Jalan BBP 2, Taman Batu Berendam Putra, Batu Berendam, Melaka, Malaysia STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad Stock Code : 7113 Stock Name : TOPGLOV American Depository Receipt (ADR), USA ADR Symbol : TGLVY PRINCIPAL BANKERS HSBC Bank Malaysia Berhad Standard Chartered Bank Malaysia Berhad OCBC Bank (M) Berhad Public Bank Berhad Hong Leong Bank Berhad United Overseas Bank (Malaysia) Berhad Malayan Banking Berhad EON Bank Berhad KBC Bank N. V. Thai Military Bank Public Company Limited China Construction Bank SOLICITORS Cheang & Ariff 39 Court, 39, Jalan Yap Kwan Seng, Kuala Lumpur, Malaysia Soo Thien Ming & Nashrah No , 1st Floor, Jalan Kapar, Klang, Selangor Darul Ehsan, Malaysia 6 Top Glove Corporation Berhad I Annual Report 2007

9 Board of Directors BOARD OF DIRECTORS 1. Tan Sri Dr. Lim, Wee-Chai Chairman 4. Lee Kim Meow Executive Director 7. Lau Boon Ann Non-Executive Director 2. Tan Sri Datuk (Dr.) Arshad Bin Ayub Independent Non-Executive Director 5. Lim Hooi Sin Executive Director 8. Quah Chin Chye Independent Non-Executive Director 3. Puan Sri Tong Siew Bee Executive Director 6. Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director 9. Lim Cheong Guan Executive Director Our Business Direction is: Consistently High Quality with Efficient Low Cost Top Glove Corporation Berhad I Annual Report

10 Directors Profile Tan Sri Dr. Lim, Wee-Chai Chairman Aged 49, a Malaysian citizen, was appointed as the Chairman of Top Glove Corporation Bhd on 4 September He is also the founder of the Top Glove Group of Companies. The Group was established in 1991 and was listed on the Bursa Malaysia Securities Berhad on 27 March He obtained a Bachelor of Science Degree with Honours in Physics in 1982 from University Malaya and a Master of Business Administration in 1985 from Sul Ross State University in Texas, USA. He also earned his Doctorate in Business Administration from the Irish International University, London in 2001 and later was awarded with the Fellow Membership of the Business Management Association, UK in September Tan Sri Dr. Lim brings a wealth of experience in the marketing of consumers products whilst he was the Sales Manager of a subsidiary company of OYL Industries Bhd. In 1991, he set up Top Glove Sdn Bhd, his own glove manufacturing and trading business with only three (3) production lines and has expanded this business to be the World s Largest Rubber Glove Manufacturer with 322 production lines in eighteen (18) factories based in Malaysia, Thailand and China (as at August 2007). He has more than 20 years of experience in the rubber and latex manufacturing business. He served as the President (1997 to 1999) of the Malaysian Rubber Glove Manufacturers Association (MARGMA). Prior to this, he was also the Vice-President, Treasurer and Honorary Secretary for the past seven (7) years in this association. In 1998 and 1999, he was the Director of the Association of Malaysia Medical Industries (AMMI). In 1998 and 1999, he was also the Board member of the Malaysia Rubber Board. In 4 December 2004, Tan Sri Dr. Lim, Wee-Chai was named and awarded the highly prestigious accolade, Master and Country Entrepreneur of Malaysia for the Year 2004, by Messrs Ernst and Young. This award was presented by the Prime Minister of Malaysia, Y.A.B. Dato Seri Abdullah Bin Hj. Ahmad Badawi. With this award, Tan Sri Dr. Lim represented Malaysia in Monte Carlo, Monaco for the World Entrepreneur of The Year contest on 28 May On 2 June 2007, he was awarded the Darjah Kebesaran Panglima Setia Mahkota (P.S.M.) award which carries the title Tan Sri from Duli Yang Maha Mulia Seri Paduka Baginda Yang di-pertuan Agong (The King of Malaysia). Tan Sri Dr. Lim s business rules for the Company are: i) Do not lose your shareholders money; ii) Do not lose your health; iii) Do not lose your temper; and iv) Do not lose your customers. Tan Sri Dr. Lim, Wee-Chai is the spouse of Puan Sri Tong Siew Bee and the brother of Mr. Lim Hooi Sin, both are the Directors and Substantial Shareholders of the Company. He is also the brother of Ms. Lim Quee Choo, a Substantial Shareholder of the Company. He does not have any directorship in other public companies and has no confl ict of interest with the Company. He has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. 8 Top Glove Corporation Berhad I Annual Report 2007

11 Directors Profile (cont d) Tan Sri Datuk (Dr.) Arshad Bin Ayub Independent Non-Executive Director Aged 79, a Malaysian citizen, was appointed as an Independent Non-Executive Director of Top Glove Corporation Bhd on 4 September He graduated with a Diploma in Agriculture from College of Agriculture, Serdang, Selangor in 1954 and later obtained a Bachelor of Science (Hons.) Economics and Statistics from University of Wales, Aberystwyth, United Kingdom in In 1964, he obtained a postgraduate Diploma in Business Administration from Management Development Institute (IMEDE), Lausanne, Switzerland. He has vast experience having served as a member of numerous bodies in the fi elds of industry and trade, education, economic planning, fi nance, regional development, agriculture and science. He was the fi rst Director of Mara Institute of Technology from 1965 to He held senior positions with various Ministries in the Malaysian Government, from 1951 to 1983, including his appointment as Deputy Governor of Bank Negara Malaysia from 1975 to 1977, and Deputy Director General of Economic Planning Unit, Prime Minister s Department. He currently serves as Chairman of Malaysia Rubber Export Promotion Council, President of Malaysia Rubber Products Manufacturers Association and a Member of Lembaga Getah Malaysia (LGM). He was Chairman of University of Malaya Board and a member of Harun s Salary Commission for Statutory Bodies and Local Government and Cooperative College Malaysia. On listed companies, he is currently the Chairman of Malayan Flour Mills Bhd, Asia Brands Corporation Berhad, Tomypak Holdings Bhd and LBI Capital Bhd. He is a Director of Kulim Malaysia Bhd, Sindora Bhd, KPJ Healthcare Bhd, Top Glove Corporation Bhd, and Greenyield Berhad. On unlisted companies, he is the Chairman of Pelaburan Johor Bhd, Bata Sdn. Bhd, PFM Capital Holdings Sdn Bhd, CSR Building Materials Sdn Bhd, Amanahraya-JFM Asset Management Sdn Bhd, Zalaraz Sdn Bhd and Land Rover (M) Sdn Bhd. Tan Sri Datuk (Dr.) Arshad Bin Ayub does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no confl ict of interest with the Company. He has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Puan Sri Tong Siew Bee Executive Director Aged 49, a Malaysian citizen, was appointed as an Executive Director of Top Glove Corporation Bhd on 4 September Prior to that, she was the director and the cofounder of Top Glove Sdn Bhd. She graduated with a Bachelor of Science Degree with Honours in Computer Science from University Sains Malaysia, Penang in 1983 and later obtained her Master of Business Administration from Sul Ross State University, Texas, USA in She is responsible for the Information Technology Department, Human Resource Department and the general administration for the Top Glove Group of Companies. Prior to this, she was working in the banking industry in the information technology fi eld for more than ten (10) years. She was formerly attached to United Overseas Bank Berhad and Utama Bank Berhad. Puan Sri Tong Siew Bee is the spouse of Tan Sri Dr. Lim, Wee-Chai and sister-in-law of Mr. Lim Hooi Sin, both are the Directors and Substantial Shareholders of the Company. She is also the sister-in-law of Ms. Lim Quee Choo, a Substantial Shareholder of the Company. She does not have any directorship in other public companies and has no confl ict of interest with the Company. She has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Top Glove Corporation Berhad I Annual Report

12 Directors Profile (cont d) Lee Kim Meow Executive Director Aged 48, a Malaysian citizen, was appointed as an Executive Director of Top Glove Corporation Bhd on 15 October He obtained his Bachelor of Commerce Degree from the University of New South Wales, Australia in 1982 majoring in Accounting, Finance and Information System. Upon his graduation, he worked for OCBC Finance Bhd, the fi nance subsidiary of OCBC Bank Bhd and subsequently with Asia Commercial Finance Bhd in In 1991, he obtained his Bachelor of Law Degree from the University of London (External Degree). He has more than twelve (12) years of experience in the marketing of fi nancial services and credit control operations in the fi nance industry during his employment with OCBC Finance Bhd and Asia Commercial Finance Bhd. He was the Branch Manager at Asia Commercial Finance (M) Bhd in early 1996 before he was promoted as the Personal Assistant to the Group Executive Director of the Lion Group, entrusted with the responsibility of overseeing the manufacturing, trading and fi nancial services under the Group s operation. He left in 1997 to join Top Glove as the General Manager in charge of the marketing and promotion of the Company s products to more than one hundred and eighty (180) countries worldwide. He is actively involved in the local Malaysian Rubber Glove Manufacturers Association (MARGMA) and the regional Asean Rubber Glove Manufacturers Association (ARGMA). He is also a Trustee Board Member of the Malaysian Rubber Export Promotion Council (MREPC). Lee Kim Meow does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no confl ict of interest with the Company. He does not have any directorships in other public companies and has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Lim Hooi Sin Executive Director 0 Top Glove Corporation Berhad I Annual Report 2007 Aged 45, a Malaysian citizen, was appointed as Executive Director of Top Glove Corporation Bhd on 4 September He obtained his Bachelor of Science Degree in Management Science from Oklahoma State University, USA in 1985, Master of Business Administration Degree from Arizona State University, USA in 1986 and Charter Financial Consultant Diploma from American College, PA, USA in He is a resident of the United States and has spent fourteen (14) years of his career with MetLife Financial Services (one of the largest insurance & financial services company in the US). Prior to this posting, he was a Management Trainee, Associate Branch Manager, Regional Marketing Specialist, Agency Director and Director of Asian Market. His experience includes product development, marketing, recruiting, training and supervision of a large highly productive sales force. He also served as Director of AAAA (Arizona Asian American Association) in 1996 to He is the founder of TG Medical USA, Inc. in 1994 with vast experiences in the United States glove market. He also sits on the Board of several private limited companies. Lim Hooi Sin is the brother of Tan Sri Dr. Lim, Wee-Chai and brother-in-law of Puan Sri Tong Siew Bee, both are the Directors and Substantial Shareholders of the Company. He is also the brother of Ms. Lim Quee Choo, a Substantial Shareholder of the Company. He does not have any directorship in other public companies and has no confl ict of interest with the Company. He has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any.

13 Directors Profile (cont d) Sekarajasekaran a/l Arasaratnam Independent Non-Executive Director Aged 79, a Malaysian citizen, was appointed as an Independent Non-Executive Director of Top Glove Corporation Bhd on 4 September He obtained a Diploma in Civil Engineering in 1951 from Technical College, Kuala Lumpur. In 1960, he passed the Membership Examination of the Institution of Civil Engineers (ICE), United Kingdom. Subsequently, he graduated with a Diploma in Public Health Engineering from the Imperial College of Science & Technology, United Kingdom in From 1951, he was with the Public Works Department as the Technical Assistant of Waterworks until 1959, thereafter as Assistant Resident Engineer, Executive Engineer and Waterworks Engineer from 1960 to He joined the Ministry of Health in 1968 as a Senior Public Health Engineer and was promoted to Chief Public Health Engineer in In 1980, he was the Director of Engineering Services, a position he held until Presently, he is the President of Erinco Sdn Bhd, a company active in various fi elds of environmental engineering. His wealth of knowledge gathered from over fi fty (50) years of working experience in environmental engineering, environmental related studies, design and implementation of environmental engineering projects in Malaysia and overseas, make him a much sought out Consultant. He is also a Fellow of the Institution of Engineers Malaysia, Member of the Institution of Civil Engineers, United Kingdom, Member of the Chartered Institution of Water and Environmental Management, United Kingdom, Member of the American Society of Civil Engineers and Member of the Association of Consulting Engineers Malaysia. Sekerajasekaran a/l Arasaratnam does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no confl ict of interest with the Company. He does not have any directorships in other public companies and has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Lau Boon Ann Non-Executive Director Aged 52, a Malaysian citizen, was appointed as a Non-Executive Director of Top Glove Corporation Bhd on 4 September He achieved his Diploma in Administrative Management, Organization and Methods, and Diploma in Marketing in United Kingdom in 1980 and later pursues his Post Graduate Diploma in Management studies. He obtained his Master in Business Analysis degree in 1981 from Lancaster University, United Kingdom. He started his career as a Corporate Planner in 1981 and he was also involved in Management Consultancy and Marketing Manager for various property companies. In August 1988, he was instrumented in the setting up of Top Glove s Factory 1, which was subsequently leased to Top Glove Sdn. Bhd. He returned to serve as an Assistant General Manager with Arab Malaysian Development Bhd. from 1990 to 1996 and is presently involved in the real estate and property development sector. Lau Boon Ann does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no confl ict of interest with the Company. He does not have any directorships in other public companies and has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Top Glove Corporation Berhad I Annual Report 2007

14 Directors Profile (cont d) Quah Chin Chye Independent Non-Executive Director Aged 53, is a Malaysian citizen, was appointed to the Board of Directors as an Independent Non-Executive Director of Top Glove Corporation Bhd on 28 December He was redesignated as Senior Independent Non-Executive Director on 3 November He is a fellow of the Chartered Institute of Management Accountants (CIMA), United Kingdom and also a member of the Malaysian Institute of Accountants. He is also a member of the Chartered Institute of Marketing, United Kingdom. Quah Chin Chye gained vast experience having worked more than ten (10) years with both American and British multi-national companies holding various senior management positions. He sits on the Board of several private limited companies. Prior to this, he was with another diversifi ed group listed on the Main Board of Bursa Malaysia Securities Berhad for approximately six (6) years. Currently, he does not have any directorships in other public companies. Quah Chin Chye does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no confl ict of interest with the Company. He has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. Lim Cheong Guan Executive Director Aged 42, is a Malaysian citizen, was appointed as an Executive Director of Top Glove Corporation Bhd on 31 August He joined the Company as Group Financial Controller in He is responsible for the accounting, treasury, corporate fi nance and investor relations of Top Glove Group of Companies. He graduated from University of Malaya with a Bachelor Degree in Accounting in He is a Chartered Accountant of the Malaysian Institute of Certified Public Accountants. He started his career as an Audit Assistant with Price Waterhouse (now known as PriceWaterhouseCoopers) in He was involved in auditing and business advisory of companies from various industries. He left Price Waterhouse in 1993 and joined Ciba Geigy (M) Sdn Bhd, a Swiss multinational company as an Accountant. Subsequently, he joined Timbermaster Industries Bhd as the Group Accountant. He was responsible for the corporate finance, accounting and secretarial functions of the company and its subsidiaries. In 1999, he joined Tanah Emas Corporation as the Financial Controller. He was principally involved in the listing of Tanah Emas Group of Companies through the reverse take over of Isuta Holdings Bhd. Lim Cheong Guan does not have any family relationship with any Director and/or Substantial Shareholder of the Company and has no conflict of interest with the Company. He does not have any directorships in other public companies and has not been convicted of any offences within the past ten (10) years other than traffi c offences, if any. 2 Top Glove Corporation Berhad I Annual Report 2007

15 Senior Management Team Tan Sri Dr. Lim, Wee-Chai 2. Puan Sri Tong Siew Bee 3. David Lim 4. KM Lee 5. Lim Cheong Guan 6. Wu Kin Yeap 7. Chookiad Usaha 8. Hue Kon Fah 9. Jeremy Liew 10. Jeff Lee 11. Noraziah Mahmud 12. Philip Thomas 13. Lim Wee Meng 14. Ken Soo 15. Danny Ong 16. Nagappen s/o Kumarasamy 17. Puon Tuck Seng 18. Audie Seow 19. Manmeet Singh 20. Lew Sin Chiang Top Glove Corporation Berhad I Annual Report

16 Six Year Group Financial Review The Group continued to achieve another year of remarkable net profit growth of 32% to RM103.8 million, from RM78.4 million in Group (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) (RM 000) Turnover 180, , , , ,611 1,228,778 Earning Before Interest, Depreciation & Taxation 27,058 39,455 60,638 89, , ,651 Profi t Before Taxation 20,186 29,264 45,190 65,745 91, ,644 Taxation 4,170 5,457 5,848 12,262 12,712 15,757 Profi t Attributable to Equity Holders 16,102 23,349 38,932 53,447 78, ,795 Net Assets 107, , , , , ,138 Earnings Per Share (RM) Gross Dividend Rate (%) Number of Shares in Issue 65,000 92,197 93, , , ,476 Par Value of Ordinary Share (RM) Net Assets Per Share (RM) Share Price (RM) Market Capitalisation (at 31 August) 143, , , ,104 1,663,265 2,088,308 (i) During the FY 2006, the Group change its accounting policy in compliance with MASB 25. The comparative amount from FY 2001 to FY 2005 have been restated. (ii) Subdivision of shares from one ordinary share of RM1.00 to two ordinary shares of RM0.50 each which was completed in February (iii) Issuance of bonus shares of 30% in FY2002, 40% in FY2003 and 40% in FY Top Glove Corporation Berhad I Annual Report 2007

17 Performance Top Glove Corporation Berhad I Annual Report

18 Chairman s Statement Tan Sri Dr. Lim, Wee-Chai Chairman of Top Glove Corporation Berhad Our business philosophies for the Company are:- 1 We work for our CUSTOMERS; 2 We take care of the interest of our SHAREHOLDERS; 3 We ensure that our EMPLOYEES continue to contribute positively to the Company and we take good care of the well-being of our employees; and 4 We work closely with our BANKERS, SUPPLIERS, BUSINESS ASSOCIATES and FRIENDS. 6 Top Glove Corporation Berhad I Annual Report 2007

19 Chairman s Statement (cont d) Top Glove s remarkable strong growth and stellar performance are due to its excellent teamwork, prudence, staying focused in our business and forging ahead towards the right business direction. I am pleased to present the Chairman s review for the Group for the fi nancial year marks the sixth year that Top Glove has been listed on the Main Board of Bursa Malaysia Securities Berhad and indeed, we are proud to share with you our commendable results, with special thanks to our 800-strong customers operating in more than 180 countries, our valued shareholders, our staffs, our worldwide business associates, suppliers, bankers and friends. Top Glove s remarkable strong growth and stellar performance are due to its excellent teamwork, prudence, staying focused in our business and forging ahead towards the right business direction. As at 31 August 2007, Top Glove has 18 factories supported by 322 highly effi cient and advance production lines churning out about 28 billion pieces of premium quality gloves per annum. These fi gures are not exhaustive as we foresee continuous strong growth in demand in the global glove business. To cater for the strong demand for our gloves, we are very much driven by expansion in production capacity and tight operational controls resulting in consistent high quality gloves. The year under review proved to be yet another year fi lled with challenges, including the drastic increase in the cost of raw materials such as the price of raw latex, fuel cost, the strengthening of the Malaysian Ringgit, Thai Baht and China Renminbi against the US Dollar. However, with sound business strategies and concerted efforts from all, we managed to weather the diffi cult times and performed well given the circumstances. This is further complimented by effective cost-cutting measures and initiatives to increase customer satisfaction. In the pipeline is the high possibility of acquiring rubber plantations to have a better control over the highly volatile latex price. Sales Revenue RM1,229 million Earning Per Share 36.2 sen +24% +24% RM993 million sen Net Profit RM103.8 million Net Assets RM637 million +32% +124% RM78.4 million RM284 million Top Glove Corporation Berhad I Annual Report

20 Chairman s Statement (cont d) Adopting good Customer Relationship Management ( CRM ) practices, our Marketing department has been successful in working closely with all our global customers to share part of the rising costs through the acceptance of higher glove prices. Likewise, when there is a drop in price of raw materials, we will share the benefi ts with our customer by offering them more competitive prices. This way, it will always be a win-win situation for both parties. We will always have our customers interest in mind. We have also set ambitious targets for the company to achieve and also to ensure that we maintain the confi dence that our shareholders have given to the Board of Directors to grow the company from strength to strength, year after year. Business challenges are inevitable in today s ever highly competitive and challenging global business arena. However, I am happy to say that our highly professional and dedicated management team has continuously put in relentless efforts in ensuring the smooth running of our daily operations, continue to improve and working towards zero mistakes by innovating and also undertaking extensive and effective measures to overcome challenges and obstacles. By having effective organizational team activities under various departments in Top Glove, we are able to build and strengthen our positions in the different markets.we believe that not only has this strengthened our positions but it has also allow us to take full advantage of any favorable market situations. Optimization of such areas allows us to have enough resources to overcome any adverse external challenges. Our daily practice of maintaining a good working environment for the employees has also played an important role and helped to better position ourselves for the future growth of the company. Continuous Research & Development ( R&D ) efforts have enabled Top Glove to be competitive by coming up with innovative productions methods and cost effective measures to produce consistently high quality gloves for our customers. OVERVIEW OF OPERATIONS Our continuous focus on robust growth has positioned us to be The World s Largest Glove Manufacturer. Today, we are supported by 16 glove factories that are strategically located in Malaysia, Thailand and China with an immense strong production capacity of about 28 billion pieces of gloves per year (and increasing), from our 322 advance and highly effi cient production lines. Besides that, we have 2 other latex concentrate plants that have the production capabilities to churn out 90,000 tones of wet latex per annum, which is expected to contribute to about 80 percent of our latex concentrate for in house consumption. We will continue to excel with our carefully planned strategies and continuous innovation in our quest to improve on our quality, manufacturing process, product range and standards. With the completion of our acquisition of Medi-Flex Limited ( Medi-Flex ) in March 2007, we are putting in relentless efforts to turn Medi-Flex around within the shortest possible time. To date, Medi-Flex has managed to improve drastically after adopting Top Glove s operational procedures and business practices.task forces have been set up at all levels and departments to ensure that we are able to deliver and refocus the strength and forte of Medi-Flex in the clean room and other specialty glove areas. Besides that, this venture has fi tted in very well to further enhance Top Glove s image as a One Stop Comprehensive Glove Sourcing Centre for our targeted as well as existing customers. I am happy to share with you that through technology and automated precision, we are able to produce consistent quality gloves at very effi cient cost. Our latest plants are supported by effi cient production lines which are built to operate at higher speeds to churn out quality gloves. With good cost controls, I am confi dent that the Group will be able to capture more market share in the coming years. The company is very confident on continuous growth through on going efforts such as aggressive marketing and improvement in cost and quality control measures. 8 Top Glove Corporation Berhad I Annual Report 2007

21 Chairman s Statement (cont d) The general success of the company is outlined by the simple business rules that are strategically implemented to achieve a better understanding of the market. These business rules are implemented at all levels and factories: 1. Do not lose your shareholders money; 2. Do not lose your health; 3. Do not lose your temper; and 4. Do not lose your customers. COOPERATION & TEAM WORK At Top Glove, we have always stressed on the importance of teamwork within the organization as this will enable us to spearhead our objectives and overcome obstacles along the way. Strategic planning and distribution of responsibilities to all team members will ensure that work load is distributed evenly. By having these structured programmes, it will enable all team members to achieve their respective targets. With a strong work force of 8,300 from factory workers right up to the management staff in various departments, it is important to stress on teamwork if we are to meet the demands of our more than 800 customers worldwide. Each and every individual in the company plays an important role in meeting the targets and directions set. This strong will and determination are pre-requisites to bring the Group to a higher level of success. I strongly believe that the good co-operation and teamwork among our staff at all levels, together with good knowledge and experience as well as their own individual specialty will further encourage the distribution of good knowledge at all levels. This learning cycle will increase the effi ciency of our operations and improve productivity at a minimal cost via the adoption of new technology in our operational areas. I believe that improvement in these areas will be benefi cial for both the short and long term goals of the Company. FINANCIAL PERFORMANCE The Top Glove Group continued to achieve another year of remarkable revenue growth of 24% to RM1,228.9 million for the fi nancial year ended 31 August 2007 against RM992.6 million recorded in the previous fi nancial year. The growth was mainly attributed to the continued increase in customer base globally, higher volume of sales contributed by the increased capacity, as well as, to our continued ability to pass on the increase in operating cost. Against this backdrop, the Group continued to turn in record profi ts for year Pre-tax profi t registered of RM118.6 million represented an increase of 29% over the previous record pre-tax profi t of RM91.8 million achieved in 2006, whilst net profit grew by 32% year-on-year to RM103.8 million from RM78.4 million achieved in Earnings per share rose to sen from sen in Total assets of the Top Glove Group increased from RM762.1 million as at August 2006 to RM1,053.3 million in August 2007, an increase of 38%, a refl ection of the Group increase in asset base. In line with the strong fi nancial performance for the year, net assets also rose by 124% to RM637.2 million from RM284.1 million. DIVIDENDS In line with the favorable results, the Board of Directors is pleased to recommend a final dividend of 6% (tax exempt) amounting approximately RM9.0 million and a 6% (with tax 26%) amounting to approximately RM6.7 million for the fi nancial year ended 31 August The proposed fi nal dividend is subject to the shareholders approval in the forthcoming Ninth Annual General Meeting. The company had on 4 July 2007 declared an interim dividend of 8.0% (tax exempt) amounting to RM12 million in conjunction with the third quarter ended 31 May 2007 financial results announcement. Payment of the interim dividend was made on 13 September Top Glove Corporation Berhad I Annual Report

22 Chairman s Statement (cont d) Therefore, on a full year basis, subject to the shareholders approval for the proposed fi nal dividend, together with the interim dividend already declared and paid, will represent a total dividend of 20% for the fi nancial year ended 31 August 2007 as compared to a total dividend of 18% for the fi nancial year ended 31 August This would translate to a 2% increase in gross dividend payment. The total dividend proposed/paid represents a distribution to shareholders of 27% of the Group s net profi ts for this fi nancial year. FUTURE PROSPECT Top Glove has been in the expansion mode since our listing in year 2001 and this is attributed to the increase in demand of the world rubber gloves usage which currently stands at 123 billion pieces per annum and is still growing at an increasing rate of between 10 to 12 percent per year. In the pipe lines, we have projects that will enable us to increase our market share to the targeted 25% by December To meet our target, we will concentrate heavily on human resources training and improving our gloving process. The Group has emphasized on improving our standards especially in Good Manufacturing Practice ( GMP ) as well as extensive Research & Developments projects both internally and externally. All these measures are carried out carefully to anticipate the continuous strong growth and demand for our new products in the global market. In view of the increasing stringent health standards and awareness throughout the world, Top Glove is playing its role by producing premium quality gloves to help protect and enrich human lives. Collaboration with external parties, particularly government agencies to improve the production and manufacturing process has been given priority to ensure that we meet the targeted cost effectiveness. Latest addition to the array of products is by introducing polyethylene aprons and gloves, which are widely used in the non medical fi elds. Promotional efforts have been carried out by participating in both medical and non medical tradeshows to capture both segments of the glove markets. Participation and new targets have been identifi ed to enable our marketing team to open up this niche markets which have tremendous potentials to increase gloves usage. Moving forward, we are also aggressively extending our network to Eastern Europe. Having joined European Union ( EU ), the health standard in Eastern Europe has also improved and complied with the high European health standards. Countries from Latin America are also continuously in the frontline to use more gloves as the need has arisen with the effect greater health awareness and the emergence of new diseases. IN APPRECIATION I would like to take this opportunity to express my sincere appreciation and gratitude to all our existing shareholders for giving us the opportunity to work together and maintaining the trust, support and confi dence in building a good relationship with various parties. To our business associates, customers, suppliers, bankers, business analyst and fund managers, we would like to thank you for your contributions and initiatives taken to enable us to make the year 2007 a successful year for all of us. I would also like to thank the management and staff of Top Glove Group of Companies who have played an important role in contributing to the continuous growth of the company. Last but not least, I would like to express my gratitude to all who has supported Top Glove in all our business endeavors and we are confi dent, we will be able to continue to grow and expand, hence maintaining and strengthening our position as The World s Largest Rubber Glove Manufacturer. Tan Sri Dr. Lim, Wee-Chai Chairman Top Glove Corporation Berhad 12 November Top Glove Corporation Berhad I Annual Report 2007

23 Kenyataan Pengerusi (Chairman s Statement - Bahasa Malaysia Version) Pertumbuhan yang kukuh dan prestasi cemerlang Top Glove adalah lahir dari hasil semangat berpasukan yang jitu, pendekatan perniagaan yang bijaksana dan tumpuan berterusan kepada perniagaan kami agar ia bergerak maju ke arah yang betul. Saya dengan sukacitanya membentangkan kepada anda Kenyataan Pengerusi Kumpulan bagi tahun kewangan Tahun 2007 merupakan tahun keenam Top Glove disenaraikan di Papan Utama Bursa Malaysia Securities Berhad dan kami berasa sungguh bangga untuk berkongsi dengan anda keputusan yang cemerlang. Kami ingin mengucapkan terima kasih khas kepada 800 pelanggan yang beroperasi di lebih 180 buah negara, kepada para pemegang saham kami yang tidak ternilai, kepada kakitangan kami, kepada rakan perniagaan, pembekal, ahli bank dan kawan kami di seluruh dunia. Pertumbuhan yang kukuh dan prestasi cemerlang Top Glove adalah lahir dari hasil semangat berpasukan yang jitu, pendekatan perniagaan yang bijaksana dan tumpuan berterusan kepada perniagaan kami agar ia bergerak maju ke arah yang betul. Sehingga 31 Ogos 2007, Top Glove mempunyai 18 buah kilang yang disokong oleh 322 mesin pengeluaran yang cekap dan canggih dalam mengeluarkan lebih kurang 28 bilion helai sarung tangan berkualiti setiap tahun. Angkaangka ini masih meningkat oleh kerana kami menjangkakan pertumbuhan yang memberangsangkan dalam permintaan perniagaan sarung tangan getah dalam pasaran dunia. Untuk memenuhi permintaan kukuh bagi sarung tangan kami, peningkatan aktif dalam kapasiti pengeluaran dan melaksanakan kawalan operasi yang ketat dalam mengeluarkan sarung tangan yang berkualiti tinggi secara konsisten telah dijalankan. Tahun 2007 ini merupakan satu lagi tahun yang penuh dengan cabaran apabila ianya melibatkan peningkatan harga kos bahan mentah seperti harga lateks mentah, bahan api, dan peningkatan nilai Ringgit Malaysia, Baht Thailand, dan Renminbi China berbanding dengan nilai Dolar Amerika Syarikat. Namun demikian, dengan adanya strategi perniagaan yang sempurna serta usaha bersatu daripada semua pihak, kami telah berjaya mengatasi segala cabaran dan mencapai prestasi cemerlang dalam keadaan tersebut. Di samping itu, langkah-langkah dan daya usaha bagi mengurangkan kos yang berkesan telah diambil untuk mempertingkatkan tahap kepuasan pelanggan. Dalam usaha meningkatkan kawalan terhadap harga lateks yang sentiasa turun naik, berkemungkinan besar Kumpulan akan mengambil alih dan melibatkan diri dalam sektor perladangan khususnya ladang getah. Selaras dengan keperihatinan terhadap kepentingan para pelanggan, kami telah melaksanakan amalan Pengurusan Hubung-Baik Pelanggan (Customer Relationship Management). Oleh itu, bahagian Pemasaran telah berjaya bekerjasama rapat dengan semua pelanggan di seluruh dunia untuk berkongsi kos pembuatan yang kian meningkat. Kami berjaya menyakinkan mereka dalam menerima harga sarung tangan yang lebih tinggi. Namun demikian, apabila harga bahan mentah menurun, kami akan berkongsi faedah ini dengan mereka melalui penawaran harga yang lebih saingan agar kedua-dua pihak dapat mencapai manfaat dan keadaan yang saling menguntungkan. Malah, kami juga telah menetapkan sasaran untuk dicapai oleh syarikat dan memastikan kami dapat mengekalkan keyakinan para pemegang saham yang diamanahkan kepada Lembaga Pengarah untuk memperkembangkan syarikat dan mencapai kejayaan dari tahun ke tahun. Dalam arena perniagaan sedunia yang penuh saingan hari ini, cabaran perniagaan memang tidak dapat dielakkan. Namun demikian, saya dengan gembiranya ingin menyatakan di sini bahawa pasukan pengurusan kami yang profesional dan penuh dedikasi sentiasa berusaha untuk memastikan operasi harian berjalan dengan lancar, peningkatan mutu kerja dan berusaha ke arah keadaan silap sifar dengan pengambilan langkah-langkah yang membawa pembaharuan secara menyeluruh serta berkesan demi mengatasi berbagai cabaran dan halangan. Top Glove Corporation Berhad I Annual Report

24 Kenyataan Pengerusi (samb.) (Chairman s Statement - Bahasa Malaysia Version) Dengan keberkesanan aktiviti berpasukan di pelbagai jabatan di Top Glove, kami dapat membina dan memperkukuhkan kedudukan di pasaran yang berbeza. Kami percaya bahawa langkah ini bukan sahaja telah memperkuatkan lagi kedudukan, tetapi juga membolehkan kami mengambil kesempatan sepenuhnya terhadap mana-mana keadaan pasaran yang menguntungkan. Dengan mengoptimumkan bidang-bidang tersebut kami dapat memperolehi sumber yang mencukupi untuk mengatasi pelbagai cabaran luar. Di samping itu, kami telah mengekalkan suasana kerja yang baik bagi para pekerja yang juga turut membantu dalam penyediaan untuk mencapai kadar pertumbuhan pada masa depan. Usaha Penyelidikan dan Pembangunan yang berterusan ini telah mengekalkan kedudukan kami yang penuh saingan menerusi kaedah pengeluaran inovatif dan langkah keberkesanan kos untuk pengeluaran sarung tangan yang berkualiti bagi memenuhi permintaan pelanggan-pelanggan kami. TINJAUAN MENYELURUH OPERASI Tumpuan berterusan untuk mencapai pertumbuhan yang kukuh telah membolehkan kami mencapai kedudukan sebagai Pengeluar Sarung Tangan Getah Terbesar di Dunia. Kini kami memiliki 16 buah kilang sarung tangan yang terletak di lokasilokasi strategik di Malaysia, Thailand dan China dengan kapasiti pengeluaran lebih kurang 28 bilion helai sarung tangan setiap tahun (dan terus meningkat) melalui 322 mesin pengeluaran yang canggih dan amat berkesan. Selain itu, kami mempunyai 2 lagi loji lateks pekat yang mempunyai kapasiti pengeluaran untuk mengeluarkan 90,000 tan metrik lateks basah setahun dan ini dijangka menyumbang kepada kira-kira 80 peratus lateks pekat bagi keperluan dan penggunaan dalaman Kumpulan. Kami akan terus berusaha mencapai prestasi cemerlang dengan perancangan strategi yang teliti dan inovasi berterusan dalam usaha mempertingkatkan kualiti, proses pengeluaran, rangkaian serta piawaian barangan. Dengan selesainya pengambilalihan Medi-Flex Limited ( Medi-Flex ) pada Mac 2007, kami sedang giat berusaha untuk memulihkan kedudukan Medi-Flex dalam tempoh yang sesingkat mungkin. Setakat ini, Medi-Flex telah berjaya memperbaiki kedudukannya dengan ketara setelah menggunakan tatacara operasi dan amalan perniagaan Top Glove. Pasukan petugas telah ditubuhkan di semua peringkat dan jabatan untuk memastikan syarikat dapat mencapai matlamat yang ditetapkan. Malah kami telah memberi tumpuan semula kepada kekuatan dan kelebihan Medi-Flex dalam teknologi pengeluaran sarung tangan bilik bersih (clean room gloves) dan kepakaran lain. Selain dari itu, kami menganggap bahawa pengambilalihan syarikat ini sesuai dengan struktur kumpulan demi meningkatkan imej Top Glove sebagai Satu Pusat Sumber Sarung Tangan Komprehensif bagi pelanggan pelanggan yang sedia ada dan juga pelanggan pelanggan baru pada masa yang akan datang. Saya dengan sukacitanya ingin berkongsi dengan anda bahawa melalui teknologi dan keperisian automatik, kami dapat menghasilkan sarung tangan berkualiti dengan kos yang lebih berkesan. Kilang-kilang kami kini dilengkapi dengan mesin pengeluaran yang berdaya saing, cekap dan direka untuk beroperasi dengan lebih laju dan mantap dalam penghasilan sarung tangan yang berkualiti. Saya percaya dengan kawalan yang sempurna, Kumpulan akan dapat menguasai bahagian pasaran yang lebih luas pada masa yang akan datang. Sehubungan dengan ini syarikat penuh yakin dengan pertumbuhan yang berterusan menerusi usaha berpanjangan seperti aktiviti pemasaran yang agresif dan langkah kawalan kos dan kualiti yang lebih ketat dan bermutu. Kejayaan menyeluruh syarikat adalah berdasarkan beberapa prinsip perniagaan mudah yang telah dilaksanakan secara strategik untuk mencapai tahap kefahaman yang lebih baik tentang pasaran. Prinsip perniagaan yang dilaksanakan di semua peringkat dan kilang adalah seperti berikut: 1. Tidak mendatangkan kerugian kepada para pemegang saham; 2. Lebih menitikberatkan kesihatan badan anda; 3. Tidak mudah hilang sabar; dan 4. Tidak kehilangan pelanggan. 22 Top Glove Corporation Berhad I Annual Report 2007

25 Kenyataan Pengerusi (samb.) (Chairman s Statement - Bahasa Malaysia Version) KERJASAMA DAN SEMANGAT BERPASUKAN Di Top Glove, kami sentiasa menekankan peri pentingnya semangat berpasukan di dalam organisasi kerana ini akan membolehkan pencapaian matlamat dan mengatasi segala halangan yang dihadapi. Perancangan strategik dan pengagihan tanggungjawab kepada seluruh anggota pasukan akan memastikan beban kerja dipikul secara rata. Program berstruktur tersebut akan memastikan keseluruhan anggota pasukan dapat mencapai matlamat masing-masing. Dengan jumlah pekerja sebanyak 8,300 orang yang terdiri dari pekerja kilang sehingga kakitangan pengurusan dalam berbagai jabatan, adalah penting bagi kami menegaskan semangat berpasukan dalam memenuhi permintaan lebih 800 pelanggan di seluruh dunia. Setiap individu di dalam syarikat memainkan peranan penting dalam memenuhi sasaran dan arah yang telah ditetapkan. Hasrat dan keazaman yang kuat ini adalah prasyarat untuk membawa Kumpulan ke tahap kejayaan yang lebih tinggi. Saya percaya bahawa kerjasama dan semangat berpasukan di antara kakitangan kami di semua peringkat, bersama-sama dengan pengetahuan dan pengalaman yang meluas, serta kepakaran setiap individu akan menggalakan kakitangan berkongsi pengetahuan di semua peringkat. Proses pembelajaran ini akan meningkatkan kecekapan operasi kami dan memperbaiki produktiviti dengan kos yang minimum menerusi penggunaan teknologi baru di dalam bidang operasi. Saya percaya bahawa pembaikan dalam bidang-bidang tersebut akan memanfaatkan matlamat jangka pendek dan jangka panjang Syarikat. PENCAPAIAN KEWANGAN Kumpulan Top Glove terus mencapai satu lagi tahun pertumbuhan hasil yang luar biasa sebanyak 24% kepada RM1,228.9 juta bagi tahun kewangan berakhir 31 Ogos 2007 berbanding dengan RM992.6 juta yang dicatatkan pada tahun kewangan lalu. Sebahagian besar pertumbuhan tersebut disebabkan pertambahan jumlah pelanggan yang berterusan di seluruh dunia serta jumlah jualan yang lebih tinggi hasil daripada peningkatan kapasiti pengeluaran serta keupayaan kami untuk memindah kenaikan kos operasi. Dalam keadaan tersebut, Kumpulan terus mencapai rekod baru dalam keuntungan bagi tahun Keuntungan sebelum cukai berjumlah RM118.6 juta atau peningkatan sebanyak 29% berbanding dengan keuntungan sebelum cukai pada tahun lepas yang berjumlah RM91.8 juta yang tercapai pada tahun 2006, manakala keuntungan bersih bertambah sebanyak 32% dari tahun ke tahun kepada RM103.8 juta dari RM78.4 juta yang tercapai pada tahun Perolehan sesaham meningkat kepada sen dari sen pada tahun Jumlah aset Kumpulan Top Glove meningkat dari RM762.1 juta pada Ogos 2006 kepada RM1,053.3 juta pada Ogos 2007, dengan kenaikan 38% yang mencerminkan peningkatan asas aset Kumpulan. Serentak dengan pencapaian kewangan yang kukuh pada tahun ini, jumlah aset bersih turut meningkat sebanyak 124% kepada RM637.2 juta dari RM284.1 juta. DIVIDEN Memandangkan keputusan yang menggalakkan, Lembaga Pengarah dengan sukacitanya mencadangkan pembayaran dividen akhir sebanyak 6% (tanpa cukai) berjumlah lebih kurang RM9.0 juta dan 6% (dengan cukai 28%) berjumlah lebih kurang RM6.7 juta bagi tahun kewangan berakhir 31 Ogos Cadangan dividen akhir tertakluk kepada kelulusan pemegang saham di Mesyuarat Agung Tahunan Kesembilan yang akan datang. Pada 4 Julai 2007, syarikat telah mengumumkan dividen interim sebanyak 8.0% (tanpa cukai) berjumlah RM12 juta sempena dengan pengumuman keputusan kewangan suku ketiga yang berakhir 31 Mei Dividen interim tersebut telah dibayar pada 13 September Oleh itu, bagi tahun kewangan yang sepenuhnya, dan tertakluk kepada kelulusan pemegang saham untuk dividen akhir yang dicadangkan, maka bersama-sama dividen interim yang telah diumumkan dan dibayar, jumlah dividen bagi tahun kewangan berakhir 31 Ogos 2007 ialah 20% berbanding dengan jumlah dividen sebanyak 18% bagi tahun kewangan berakhir 31 Ogos Ini merupakan peningkatan sebanyak 2% dalam pembayaran dividen kasar. Jumlah dividen yang dicadangkan/dibayar merupakan pengagihan kepada pemegang saham sebanyak 27% daripada keuntungan bersih Kumpulan bagi tahun kewangan ini. Top Glove Corporation Berhad I Annual Report

26 Kenyataan Pengerusi (samb.) (Chairman s Statement - Bahasa Malaysia Version) PROSPEK MASA DEPAN Top Glove telah melaksanakan pelbagai rancangan perkembangan sejak disenaraikan pada tahun 2001 untuk memenuhi peningkatan permintaan penggunaan sarung tangan getah di seluruh dunia yang sehingga kini berjumlah 123 bilion setahun. Jumlah ini masih terus meningkat dengan kadar pertumbuhan di antara 10 hingga 12 peratus setiap tahun. Kami telah merancang projek-projek yang akan membolehkan peningkatan bahagian pasaran kepada sasaran yang dirancang iaitu, sebanyak 25% menjelang Disember Untuk mencapai sasaran tersebut, kami akan menumpukan perhatian kepada latihan sumber manusia dan mempertingkatkan proses pembuatan sarung tangan. Kumpulan telah menekankan untuk meningkatkan piawaian kami, khasnya dalam Amalan Baik Pengilang (Good Manufacturing Practice) serta projek Penyelidikan dan Pembangunan yang menyeluruh secara dalaman dan luaran. Segala langkah tersebut telah dilaksanakan secara teliti untuk menjangkakan pertumbuhan dan permintaan yang kukuh dan berterusan bagi produk baru kami di dalam pasaran dunia. Memandangkan tahap piawaian kesihatan yang semakin ketat serta kesedaran yang kian meningkat di seluruh dunia, Top Glove memainkan peranannya sebagai pengeluar sarung tangan berkualiti tinggi untuk membantu melindungi dan mempertingkatkan lagi jangka hayat manusia. Tumpuan kami adalah untuk bekerjasama dengan pihak-pihak luar, khususnya agensi-agensi kerajaan demi memperbaiki proses pengeluaran dan pembuatan agar kami dapat memenuhi keberkesanan kos yang disasarkan. Di antara produk terbaru kami ialah apron dan sarung tangan polietilena (polyethylene) yang digunakan secara meluas dalam bidang-bidang bukan perubatan. Usaha promosi gigih telah dijalankan dengan menyertai pameran perdagangan perubatan dan bukan perubatan untuk menembusi kedua-dua segmen pasaran sarung tangan ini. Penyertaan pameran dan sasaran baru telah dikenal pasti untuk membolehkan pasukan pemasaran kami membuka pasaran khusus yang mempunyai potensi besar demi menambah penggunaan sarung tangan. Meninjau ke arah masa depan, kami juga sedang memperkembangkan rangkaian kami secara agresif ke Eropah Timur. Setelah menganggotai Kesatuan Eropah, piawaian kesihatan di Eropah Timur turut dipertingkatkan demi mematuhi piawaian kesihatan Eropah yang tinggi. Negara-negara dari Latin Amerika juga terus menambah penggunaan sarung tangan oleh kerana keperluan yang meningkat dari tahap kesedaran kesihatan yang lebih tinggi dan kemunculan penyakit baru. PENGHARGAAN Saya ingin mengambil kesempatan ini untuk menyampaikan penghargaan dan ucapan terima kasih yang ikhlas dan tidak terhingga kepada seluruh pemegang saham kerana memberi peluang kepada kami untuk bekerjasama, serta mengekalkan kepercayaan, sokongan dan keyakinan dalam menjalin hubungan baik dengan pelbagai pihak. Kepada rakan perniagaan, pelanggan, pembekal, ahli bank, pakar analisis perniagaan dan pengurus dana, kami ingin mengucapkan terima kasih atas sumbangan dan inisiatif anda yang telah membolehkan kami menjadikan tahun 2007 sebagai satu lagi tahun yang berjaya bagi kami semua. Saya juga ingin mengucapkan terima kasih kepada pihak pengurusan dan kakitangan Kumpulan Top Glove yang telah memainkan peranan penting dalam menyumbang kepada perkembangan syarikat yang berterusan. Akhir sekali, saya ingin mengucapkan terima kasih kepada semua pihak yang telah menyokong Top Glove dalam segala usaha perniagaan dan kami amat yakin untuk terus berkembang pesat demi mengekalkan kedudukan sebagai Pengeluar Sarung Tangan Getah Terbesar Di Dunia. Tan Sri Dr. Lim, Wee-Chai Pengerusi Top Glove Corporation Berhad 12 November Top Glove Corporation Berhad I Annual Report 2007

27 董事主席致词 (Chairman s Statement - Mandarin Version) 顶级集团的卓越成长及骄人的业绩都归功于它出色的团队精神 慎重 对业务的全心专注以及迈向正确的业务方针 我很荣幸的在此向大家报告 2007 年度财务报告 2007 年适逢顶级集团在马来西亚证券有限公司主板上市的第六个周年, 我们很荣幸的和大家分享我们骄人的业绩 在此, 要特别的感谢我们在 180 个国家的 800 名客户 股东 全体员工 全球的商业伙伴 供应商 金融界以及朋友们 顶级集团的卓越成长及骄人的业绩都归功于它出色的团队精神 慎重 对业务的全心专注以及迈向正确的业务方针 截至 2007 年 8 月 31 日, 顶级集团拥有 18 间工厂, 322 条高效率和先进的流水线, 每年生产约 280 亿只优质手套 这些数字还不完整, 因为我们可以预测全球手套行业持续强劲的需求增长 为了满足市场对我们手套的强大需求, 我们将扩大生产产量并且严格地控制营运流程, 以生产出高品质的手套 回顾今年的财务年, 证实了又是一个充满挑战的年份, 其中包括原材料成本的大幅度增长, 如乳胶价格 燃油成本 马币 泰铢和人民币对美元汇率增值等 然而, 通过合理的生意策略和全体成员的共同努力, 我们得以安然渡过困难时期, 并在当前的情况下取得了不错的成绩 这要进一步有效的节支降本措施和主动增加客户满意度的行动 公司打算购买橡胶种植园的可能性很高, 从而能够更好的控制大浮动的乳胶价格 通过采用良好的客户关系管理策略 ( CRM ), 我们市场部门已经成功地和全球客户建立起密切的合作, 使客户接受较高的手套价格, 进而分担部份增加的成本 同样地, 当原料价格回跌时, 我们也将为客户提供更具竞争性的价格, 与他们共享利益, 从而为双方建立双赢的局面 我们将永远照及顾客的利益 确保我们不负股东对董事部所寄予的厚望, 我们为公司定下了远大的目标, 以期在来年日益壮大 在今天竞争剧烈和充满挑战的全球商场上, 商业挑战在所难免 然而, 我很高兴地对各位说, 集团高度专业而富有奉献精神的管理团队, 时时刻刻不遗余力地通过新和采取广泛 有效的措施等, 确保集团日常运作顺畅, 不断改进及朝向零失误方面努力, 以克服业务上的挑战和障碍 通过在顶级不同部门中建立有效的组织团队活动, 我们可以建立和巩固我们在不同市场的地位 我们相信这不仅加强了我们的地位, 也让我们能够充份地把握市场任何有利的形势和机会 将这些方面的优化可以让我们掌握充份的资源以克服任何不利的外来挑战 与此同时, 我们在日常业务中为员工维持一个良好的工作环境也扮演着重要角色, 及帮助我们在公司未来的发展中给予我们自己更好的定位 不断的研发 ( R&D ), 于新的生产方式和成本效益措施并且生产高品质和稳定的手套给我们的客户, 这使顶级保持有利的竞争力 业务概述由于集团向来关注于建立稳健的成长, 这使我们成为全球最大的手套制造商 如今, 我们在马来西亚 泰国和中国等策略地点设立了 16 间手套制造厂, 并拥有 322 条先进并高效率的流水线, 年产量高达 280 亿只手套, 而且年产量还会继续增加 此外, 我们也设立了 2 间浓缩乳胶厂, 年产量为 90,000 吨湿乳胶, 预料此产量可以供应集团本身 80% 的消耗量 我们将会继续的迈向集团所精心策划的策略并且不断地追求新以提高手套质量 制造流程 产品种类和标准 Top Glove Corporation Berhad I Annual Report

28 董事主席致词 ( 继续 ) (Chairman s Statement - Mandarin Version) 随著集团在 2007 年 3 月完成收购 Medi-Flex 有限公司 ( Medi-Flex ) 后, 集团也投入极大的努力以期在最短的时间内将 Medi-Flex 亏转为盈 到目前为止, 自从 Medi-Flex 采用了顶级的运作程序和业务规范之后, 业务已大幅度的提高 公司也在各层次及部门设立了工作小组以确保落实公司所设立的目标并且重新将专注力放在 Medi-Flex 所推出的防静电手套和其他专用手套领域 此外, 这项收购也非常符合集团业务结构, 并且进一步地加强顶级为未来和现有客户所设立的 一站式手套搜寻中心 的形象 我很高兴与大家分享, 通过先进技术和精密的自动工程, 我们可以以极为有效的成本生产出品质一致的手套 此外, 我们最新设立的工厂设有高效率的流水线并能以最快的速度生产出优质手套 我深信, 在完善成本的控制下, 集团能在未来建立起更大的市场占有率 通过各方面地努力, 如积极的市场发展和加强成本和质量控制等措施, 集团很有信心公司能持续的增长 公司整体的成功是建立在我们各层次及工厂以策略性实行以下的商业哲学以便达到更好地市场了解 这些商业哲学如下 : 1. 不要损失股东们的钱 ; 2. 不要失去你的健康 ; 3. 不可以失去你的耐性 ; 以及 4. 不要失去你的客户 合作与团队精神顶级向来强调组织内团队精神的重要性, 因为有了团队精神我们才能实现我们的目标和克服业务上的各种障碍 通过策略性的规划和把工作分配给所有团队成员, 可确保工作量分配均匀 在落实了这些结构性计划后, 团队的成员将可以实现他们各自的目标 集团员工阵容共达 8,300 人, 包括从工厂工人到各部门的管理层人员 因此, 要应付全球逾 800 个客户的需求, 团队精神更是不可或缺的 在公司里, 每一位员工都扮演举足轻重的角色以达到公司所设立的目标和方针 这股坚强的决心和意志是集团在业务上更上一层楼的先决条件 我深信, 各级员工之间良好的合作及团队精神, 加上深厚的工作知识和经验, 以及个人的专长, 鼓励员工们彼此分享知识 这个学习过程将提高集团运作的效率, 以及通过在运作方面采纳新技术并改善低成本的高生产力 我相信这方面的改进将有助于落实集团所设立的短期和长期目标 财务成绩顶级集团在截至 2007 年 8 月 31 日的财务年度再次在收益上下可观的成绩, 收益增长了 24% 至 RM12 亿 2890 万令吉, 而上年度的收益为 RM9 亿 9260 万令吉 收益增加主要是全球的顾客群持续增加 集团生产力提高使销售额上升, 以及集团持续有能力地应付营运成本的提高 在此情景下, 集团继续在 2007 年取得记录的盈利 税前盈利达 RM1 亿 1186 万令吉, 比 2006 年的税前盈利 RM9180 万令吉增加了 29%, 而按年计算, 净利则增长 32%, 从 2006 年的 RM7840 万令吉增至 RM1 亿 380 万令吉 每股收益从 2006 年的 仙增至 仙 顶级集团的总资产从 2006 年 8 月的 RM7 亿 6210 万令吉, 增至 2007 年 8 月的 RM10 亿 5330 万令吉, 增长了 38%, 这反映了集团的资产基础不断地扩大 配合在本年度的强劲财务表现, 集团净资产提高了 124%, 从 RM6 亿 3720 万令吉增至 RM2 亿 8410 万令吉 26 Top Glove Corporation Berhad I Annual Report 2007

29 股息 董事主席致词 ( 继续 ) (Chairman s Statement - Mandarin Version) 鉴于集团可观业绩, 董事部欣然建议认为截至 2007 年 8 月 31 日的财务年派发终期 6% 的股息 ( 免税 ), 共计大约 RM900 万令吉以及 6%( 须扣税 26%) 股息, 共计大约 RM670 万令吉 建议上诉终期股息有待股东在即将召开的第 9 届常年大会上通过 公司曾于 2007 年 7 月 4 日配合公布截止 2007 年 5 月 31 日第 3 季度的财务成绩, 而宣布派发中期股息 8.0%( 免税 ), 共计 RM1200 万令吉 上述中期股息于 2007 年 9 月 13 日支付 因此, 以全年计算, 以及有待通过股东同意的终期股息, 连同宣布已支付的中期股息, 公司在截至 2007 年 8 月 31 日所派发的股息共达 20%, 而截至 2006 年 8 月 31 日财务年的总股息为 18% 这相等于毛股息增加了 2% 这建议中 / 已支付给股东的股息占了集团 2007 年财务年度净盈利的 27% 展望顶级自 2001 年上市以来, 一直进行扩充计划以应付全球与日俱增的乳胶手套使用量, 目前全球每年使用量为 1230 亿只乳胶手套, 而且每年增长了 10 至 12% 之间 预测, 我们所展开的扩充计划将使我们在 2007 年 12 月之前把我们的市场额增至我们所设下的目标 25% 为了达到这个目标, 我们将集中大量的人力资源的培训和提升手套制造过程 在这一方面, 集团不断强调改进生产标准, 尤其是采用良好生产规范 ( GMP ) 以及进行内部和外部的广泛研发计划 这些措施都在经过深思远虑后落实, 以应付全球市场对集团新产品持续的强劲成长和需求 鉴于全球的卫生标准日益严格以及人们对卫生意识逐渐提高, 顶级通过生产优质手套以协助保护及丰富人类生命 集团把优先权与外界合作, 尤其是政府机构合作以提高生产和制造流程, 以确保集团达到成本效益的目标 集团最新推出的多种新产品包括非医疗界所广泛使用的聚乙烯围裙和手套 为了展开宣传活动和把握医疗和非医疗的手套市场, 集团参加了医疗和非医疗的展览会 此外, 集团认同参与展商和新目标有助于集团市场团队开旷这具有巨大潜力市场以增加手套使用量 展望未来, 我们也积极扩大东欧的销售网络 自从东欧加入欧洲联盟后, 东欧的卫生标准为了符合欧盟国际标准也做出相应的提升 在拉丁美洲, 由于卫生意识提高以及新疾病的出现, 手套的需求量也相应的增加 致谢我要借此机会向全体股东同仁给与我们一起合作的机会, 以及维持对我们的信任 支持 信心 和各界建立良好关系致于衷心地感谢 我也要感谢我们的生意伙伴 顾客 供应商 金融界 企业分析员和基金经理等给予我们的贡献和协助, 使 2007 年成为成功的一年 我也要谢谢顶级集团管理层和所有的员工, 对公司持续在成长上所扮演的重要角色 最后, 我还要感谢所有在我们在业务上支持我们的各界人士 ; 我们深信我们将能够继续成长和扩大, 进而维持而巩固我们为 全球最大乳胶手套制造商 丹斯里林伟才博士董事主席顶级手套有限公司 2007 年 11 月 12 日 Top Glove Corporation Berhad I Annual Report

30 Top Glove Corporate Song A W A R D E D I S O ENGLISH All over the world, We are known, For our superior quality gloves, Through the years we have grown, We have shown, Our gloves stand out superior in the world, Top Glove is the best, Better than the rest, Quality, Reliability and Consistency, Remain our policy, At Top Glove s Group of Companies. BAHASA MALAYSIA Dari mulanya, hingga terkini, Top Glove nama diberi, Pengeluar sarung tangan yang berkualiti, Yakinlah hasil pengeluaran kami, Yang bermutu dan berkualiti tinggi, Sentiasa menuju kejayaan, Untuk mencapai keunggulan. MANDARIN THAI Tour loak yom rub - wah rao nan kheu, Phoo num darn tungmue - teee - prom - lae - khun na parb dee, Rao sang sarn - rao terb toh - rao man khong, Pur kao pai - soo sakon - doay mue rao, Top Glove dee kwa krai, Rao tum ngarn doay jai, Khun na parb dee - lae bor ri karn tee dee, Pur kwarm wai wang jai, rao yin dee rub chai, Top Glove nan ngai - khun na parb tong tee nee 28 Top Glove Corporation Berhad I Annual Report 2007

31 Corporate Governance Statement Top Glove Corporation Bhd ( Top Glove or the Company ) recognizes that its existence in the business community relies on the support, trust and confi dence of our shareholders, business associates, customers, suppliers, financiers and various other group of stakeholders with whom it interacts and/or conducts business with. The Board of Directors of Top Glove is committed to formulate policies and direct the Company to achieve its objectives by enhancing Shareholders value with corporate accountability and openness, taking into account the interests of other Stakeholders. The Board of Directors acknowledges the importance of the role of good corporate governance in assisting the Company to achieve its corporate mission and in enhancing its Shareholders value. Thus, the Board of Directors is committed to ensure that the corporate governance adopted by the Company is in line with the principles set out in Part 1 of the Malaysian Code on Corporate Governance ( the Code ) to the Company s particular circumstances. The Board further acknowledges the recommended best practices as set out in Part 2 of the Code and continues to evaluate the status of the practices and the adopted alternatives. BOARD OF DIRECTORS Top Glove is led by an experienced Board comprising members who are specialized in the glove manufacturing and various business sectors supported by a wide range of other professionals in the legal and accounting sectors. This wide spectrum of skills and experience provide the strength that is needed to lead the Company to meet its objectives and enable the Company to rest in the fi rm control of an accountable and competent Board of Directors. The Board currently comprises nine (9) members, made up of fi ve (5) executive Directors including the Chairman/Managing Director, three (3) independent non-executive Directors and one (1) non-executive Director. The composition refl ects a balance of executive Directors and non-executive Directors (including independent non-executive Directors) such that no individual or small group of individuals can dominate the Board s decision making. A brief description of the background of each Director is presented on pages 8 to 12 of this Annual Report. The Board has identifi ed Mr. Quah Chin Chye as the Senior Independent Non-Executive Director to whom concerns may be conveyed where it could be inappropriate for the concerns to be dealt with by the Chairman/Managing Director. The Board meets quarterly to review its quarterly performances and discuss new policies and strategies. Additional meetings will be called as and when necessary. During the fi nancial year ended 31 August 2007, four (4) Board Meetings were held and the attendance of the Board members is as follows: Name of Directors No. of Meetings Attended Tan Sri Dr. Lim, Wee-Chai 4/4 Tan Sri Datuk (Dr.) Arshad Bin Ayub 4/4 Puan Sri Tong Siew Bee 4/4 Lee Kim Meow (revoked as Alternate Director to Lim Hooi Sin on 8 June 2007 and remain as Director) 4/4 Lim Hooi Sin 4/4 Sekarajasekaran a/l Arasaratnam 4/4 Lau Boon Ann 4/4 Quah Chin Chye 4/4 Lim Cheong Guan 4/4 All of the above meetings were held in the Company s Conference Room at Lot 4969, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor Darul Ehsan, Malaysia. Top Glove Corporation Berhad I Annual Report

32 Corporate Governance Statement (cont d) All the Board members have attended the Mandatory Accreditation Programme and are mindful that they shall receive appropriate training which may be required from time to time to keep abreast with current developments of the industry as well as new statutory and regulatory requirements. During the fi nancial year, the Directors have attended relevant training programmes in areas of leadership, corporate governance, fi nance and competitive strategies to enhance their ability in discharging their duties and responsibilities more effectively. It is the Company s intention that each new Director is given a comprehensive briefi ng on the Company s history, operations, fi nancial control system and plant visit to enable them to have fi rst hand understanding of the Company s operation. This orientation programme had been implemented since 31 December Clear demarcation of duties, responsibilities and authority are being practiced by the Board. The position of Chairman/Managing Director is held by Tan Sri Dr. Lim, Wee-Chai. The Chairman/Managing Director is primarily responsible for the orderly conduct of the Board Meetings and workings of the Board. The Chairman/Managing Director, assisted by the executive Directors is subject to the control of the Board and is responsible for the implementation of Board policies, making operational decisions and monitoring the day-to-day running of the business. He also defi nes the limits of the management s responsibilities. The executive Directors are responsible for the day-to-day operations of the Group whereby operational issues and problems are discussed, major transactions and matters relating to the Group are reviewed and also to formulate operational strategies. The non-executive Directors are to deliberate and discuss policies and strategies formulated and proposed by the management with the view of the long-term interests of all stakeholders. They contributed to the formulation of policies, and decision-making using their expertise and experience. They also provide guidance and promote professionalism to the management. The presence of the independent non-executive Directors are essential as they provide the unbiased and independent view, advice and judegment as well as to safeguard the interest of other parties like minority Shareholders and the community. In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to retirement at the fi rst Annual General Meeting ( AGM ) of the Company subsequent to their appointment. One third (1/3) of all the other Directors shall retire by rotation at each AGM provided always that all Directors shall retire from offi ce at least once in three (3) years. The Directors retiring from offi ce shall be eligible for re-election by the Shareholders. Directors standing for re-election at the AGM of the Company to be held are Mr. Lau Boon Ann, Mr. Quah Chin Chye, Tan Sri Datuk (Dr.) Arshad Bin Ayub and Mr. Sekarajasekaran a/l Arasaratnam. The Board has delegated certain responsibilities to several Board Committees, which operates within clearly defi ned terms of reference. The Chairman of the various Committees will report to the Board the outcome of the Committee meetings and such reports are incorporated in the minutes of the Board meetings. The various Committees are as below: AUDIT COMMITTEE This Committee was established on 5 September The terms of reference of the Audit Committee was reviewed by the Board and all the members of the Committee were re-nominated and re-appointed on 4 September The terms of offi ce of the Committee is two (2) years and may be re-nominated and re-appointed by the Board. Its role and function is to assist the Board in overseeing the Group s activities within its clearly defi ned terms of reference. Best Practices BB Part 2 and Part 4 of the Code and Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad ( LR of Bursa Securities ) spell out the duties of an Audit Committee. The scope of duties of Top Glove s Audit Committee includes primarily the duties detailed therein. Pursuant to Paragraph of the LR of Bursa Securities, the Audit Committee Report for the current fi nancial year can be found on pages 37 to 40 of this Annual Report which also contain other information as required under the Code. The Board shall review the term of offi ce and performance of the Audit Committee and each of its members at least once every two (2) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference. 30 Top Glove Corporation Berhad I Annual Report 2007

33 Corporate Governance Statement (cont d) The Board has full access to both internal and external auditors and receives reports on all audits performed via this Committee. NOMINATION COMMITTEE This Committee was established on 7 November The terms of reference of the Nomination Committee was reviewed by the Board and all the members of the Committee were re-nominated and re-appointed on 4 September The terms of offi ce of this Committee is two (2) years and may be re-nominated and re-appointed by the Board. Its role is to assist the Board of Directors in their responsibilities in nominating new nominees to the Board of Directors. The Nomination Committee shall also assess the performance of the Directors of the Company on an on-going basis. The members of the Nomination Committee are as follows: (a) Tan Sri Datuk (Dr.) Arshad Bin Ayub (Independent Non-Executive Director) - Chairman (b) Lau Boon Ann (Non-Executive Director) (c) Sekarajasekaran a/l Arasaratnam (Independent Non-Executive Director) (d) Quah Chin Chye (Independent Non-Executive Director) The duties and responsibilities of the Nomination Committee are as follows: To recommend to the Board of Directors, candidates for all directorships to be fi lled by the Shareholders or the Board of Directors; To consider, in making its recommendations, candidates for directorships proposed by the Managing Director and, within the bounds of practicability, by any other senior executive or any Director or Shareholder; To recommend to the Board of Directors the nominees to fi ll the seats on Board Committees; To assess the effectiveness of the Board of Directors as a whole and each individual Directors/Committees of the Board; To act in line with the directions of the Board of Directors; and To consider and examine such other matters as the Nomination Committee considers appropriate. REMUNERATION COMMITTEE This Committee was established on 7 November The terms of reference of the Remuneration Committee was reviewed by the Board and all the members of the Remuneration Committee were re-nominated and re-appointed on 4 September The terms of offi ce of this Committee is two (2) years and may be re-nominated and re-appointed by the Board. Its role is to assist the Board of Directors in their responsibilities in assessing the remuneration packages of the executive Directors. The members of the Remuneration Committee are as follows: (a) Tan Sri Dr. Lim, Wee-Chai (Chairman/Managing Director) - Chairman (b) Sekarajasekaran a/l Arasaratnam (Independent Non-Executive Director) (c) Lau Boon Ann (Non-Executive Director) The duties and responsibilities of the Remuneration Committee are as follows: To review and assess the remuneration packages of the executive Directors in all forms, with or without other independent professional advice or other outside advice; To ensure the levels of remuneration be suffi ciently attractive and be able to retain Directors needed to run the Company successfully; To structure the component parts of remuneration so as to link rewards to corporate and individual performance and to assess the needs of the Company for talent at Board level at a particular time; To recommend to the Board of Directors the remuneration packages of the executive Directors; To act in line with the directions of the Board of Directors; and To consider and examine such other matters as the Remuneration Committee considers appropriate. Top Glove Corporation Berhad I Annual Report

34 Corporate Governance Statement (cont d) DIRECTORS REMUNERATION 1) Aggregate remuneration of Directors categorized into appropriate components are as follows: Salaries Fees Bonus Benefit-in-kind Total RM 000 RM 000 RM 000 RM 000 RM 000 Executive Directors 2, ,930 Non-Executive Directors ) Directors remuneration are broadly categorized into the following bands: Number of Directors Range of Remuneration Executive Non-Executive Below RM50,000-4 RM150,001 to RM200, RM200,001 to RM250, RM250,001 to RM300, RM300,001 to RM350, RM550,001 to RM600, RM1,650,001 to RM1,700, Details of individual Directors Remuneration are not disclosed in this report as the Board has consider that the above Directors Remuneration disclosures by band and analysis between executive and non-executive Directors satisfi es the accountability and transparency aspects of the Code. ESOS OPTION COMMITTEE The Company, with approval of the Shareholders during its Extraordinary General Meeting ( EGM ) held on 9 January 2003, has implemented the ESOS ( Employees Share Option Scheme ) offi cially on 29 April An ESOS Option Committee was appointed by the Board on 11 April 2003 to oversee the administration as well as to ensure proper implementation of the ESOS according to the Bye-laws of the scheme. Currently the ESOS Option Committee comprises the following members: Tan Sri Dr. Lim, Wee-Chai - Chairman Lee Kim Meow - member Lim Cheong Guan - member Wu Kin Yeap - member (appointed on 7 September 2007) Hue Kon Fah - member (appointed on 7 September 2007) Ngian Yoke Fung - member (appointed on 7 September 2007) Chee Ban Tuck - member (resigned on 7 September 2007) 32 Top Glove Corporation Berhad I Annual Report 2007

35 Corporate Governance Statement (cont d) SUPPLY OF INFORMATION TO THE BOARD All Directors are provided with an agenda of the meeting and board papers which contain Company s fi nancial performance, business outlook, various Committees reports and disclosures by Directors of their interest in shares and their interest in contracts, properties and offi ces pursuant to Section 135 and Section 131 of the Companies Act, 1965 respectively prior to the Board meeting. The board papers are issued in advance to facilitate informed decision-making. The Chairman/Managing Director will lead the presentation of board papers and provide comprehensive explanations of pertinent issues. Any proposals and recommendations by the management will be deliberated and discussed by the Board before a decision is made. Minutes are prepared on all Board proceedings and will be signed by the Chairman of the meeting in accordance with the provision of Section 156 of the Companies Act, The Board is kept updated on the Company s fi nancial activities and operations on a regular basis. The Directors are also notifi ed of any corporate announcement released to Bursa Securities and the impending restriction on dealing with the securities of the Company prior to the announcement of the quarterly fi nancial results. All Directors have access to the advice and services of the Company Secretary and they have been issued with the Code of Ethics for Directors and Secretaries. The Company Secretary also acts as the Secretary for all the Board Committees. RELATIONSHIP WITH THE SHAREHOLDERS The Company views the timely and equal dissemination of information to Shareholders and Stakeholders as important. It strictly adheres to the disclosure requirements of Bursa Securities. The Company is cautious not to provide undisclosed material information about the Company to any Shareholder or Stakeholder group. In addition to the various announcements made during the year, the timely release of fi nancial results on a quarterly basis in line with the LR of Bursa Securities, the Company provides Shareholders with an overview of the Company s performance and progress. During the year, the executive Directors and senior management had regular dialogues and meetings with both local and overseas institutional investors, fund managers, analysts, research houses and members of the media to brief them and to keep them updated on the various announcements relating to the Company s fi nancial performance, major corporate proposals and pertinent issues within the disclosure requirements of Bursa Securities. The AGM is an important forum where communications with shareholders can be effectively conducted. Shareholders are notifi ed of the meeting together with a copy of the Company s Annual Report at least twenty-one (21) days before the meeting. At each AGM, shareholders are given ample time and opportunity to ask for more information, without limiting the type of questions asked, prior to seeking approval by show of hands from the members, corporate representatives and proxies on the Audited Financial Statements. During the meeting, the Chairman and the Board members are prepared to response to all queries and undertake to provide suffi cient clarifi cation on issues and concerns raised by the Shareholders. The external auditors are also present to provide their professional and independent clarifi cation on issues and concerns raised by the Shareholders. Status of all resolutions proposed at the AGM is submitted to Bursa Securities at the end of the meeting day. The Board has ensured that each item of special business included in the notice of the annual or extraordinary general meeting are accompanied by a full explanation of the effects of a proposed resolution. Institutional investors and analysts are welcomed and have equal opportunity to meet our management about performance, corporate governance and other matters related to Shareholders interest. The Company also maintains two websites at and from which Shareholders and Stakeholders can access for information. ACCOUNTABILITY AND AUDIT Financial Reporting Statement of Directors Responsibilities in respect of Audited Financial Statements pursuant to Paragraph 15.27(a) of the LR of Bursa Securities. Top Glove Corporation Berhad I Annual Report

36 Corporate Governance Statement (cont d) The Directors are responsible to ensure that fi nancial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the fi nancial statements, the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates and prepared on a going concern basis. The Directors also strive to ensure that fi nancial reporting present a balanced and understandable assessment of the Company s position and prospects. Quarterly fi nancial statements are reviewed by the Audit Committee and approved by the Board of Directors prior to release to Bursa Securities within the stipulated time frame. Internal Control The Board acknowledges its responsibility for maintaining a sound system of internal controls, which provides reasonable assessment of effective and effi cient operations, internal fi nancial controls, and compliance with laws and regulations as well as with internal procedures and guidelines. The internal control system also aims at identifying and managing any risks that the Company may encounter in pursuit of its business objectives. A Statement on Internal Control of the Company is set out on page 36 of this Annual Report. Relationship with the Auditors The external auditors, Messrs. Ernst & Young and Messrs. William C.H. Tan & Associates have continued to report to members of the Company on their fi ndings which are included as part of the Company s statutory fi nancial statements. The Company has thus established a transparent arrangement with the auditors to meet auditors professional requirements. From time to time, the auditors highlight to the Audit Committee and the Board of Directors on matters that require Audit Committee s and Board s attention through the issuance of management letters. OTHER COMPLIANCE INFORMATION 1. Utilisation Of Proceeds The status of the utilisation of proceeds from the private placement of up to 27,217,902 ordinary shares of RM0.50 each at RM8.80 per Placement Share up to RM240 million as at 31 August 2007 is as follows: Description Approved Utilisation Actual Utilised RM 000 RM 000 Capital Expenditure Repayment of working capital Working Capital Defray Expenses Total Recurrent Related Party Transactions During the fi nancial year, there were no recurrent related party transactions of a revenue or trading nature involving the Directors and/or substantial shareholders of the Company. 3. Share Buy-back There were no share buy-back exercise undertaken by the Company during the fi nancial year under review. 4. American Depository Receipt ( ADR ) Or Global Depository Receipt ( GDR ) Programmes A Sponsored Level-1 ADR Programme for shares of the Company was registered with the Securities and Exchange Commission of the United States of America on 27 December Top Glove Corporation Berhad I Annual Report 2007

37 Corporate Governance Statement (cont d) Under the ADR Programme, a maximum of 5% of the total issued and paid-up capital of the Company will be traded in the ADRs in the United States of America, in the ratio of four (4) shares to one (1) ADR. The Depository Bank for the ADR Programme is The Bank of New York and the sole custodian of the Company s shares for the ADR Programme is Malayan Banking Berhad, Kuala Lumpur. As at 16 October 2007, the total number of ADRs sold under the ADR Programme amounted to 80,640 shares. During the fi nancial year, the Company did not sponsor any GDR Programme. 5. Imposition Of Sanctions And/Or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the fi nancial year. 6. Non-Audit Fees During the fi nancial year, the amount of non-audit fees paid to the external auditors amounted to RM236, Variation In Results There was no material variance between the results of the fi nancial year and the unaudited results previously announced. The Company did not make any release on the profi t estimate, forecast or projections for the fi nancial year. 8. Profit Guarantees During the fi nancial year, there were no profi t guarantees given by the Company. 9. Material Contracts During the fi nancial year, there were no material contracts entered into by the Company and its subsidiaries involving Directors and/or substantial shareholders interests. 10. Contracts Relating To Loans There were no material contracts relating to loans entered into by the Company involving Directors and/or substantial shareholders. 11. Options, Warrants or Convertible Securities During the current fi nancial year ended 31 August 2007, a total of 108,190,531 new ordinary shares were issued and allotted pursuant to the exercise of the ESOS, Bonus Issue and Private Placement. The details of the issued and paid-up share capital of the Company as at 31 August 2007 are as follows: No. of Shares RM As at 1 September ,285,300 96,142, Ordinary shares of RM0.50 each issued pursuant to the ESOS 3,207,200 1,603, Bonus Issue 77,765,429 38,882, Private Placement 27,217,902 13,608, As at 31 August ,475, ,237, Other than the above, there were no issuance of warrants or convertible securities during the fi nancial year. 12. Revaluation of Landed Properties The Company does not have a revaluation policy on landed properties. Top Glove Corporation Berhad I Annual Report

38 Statement on Internal Control The Board acknowledges its responsibility in establishing an effi cient and effective system of internal control covering not only fi nancial controls but also controls relating to operational compliance and risk management to safeguard shareholders investment and the Group s assets. There is an on-going review process by the Board to ensure the adequacy and integrity of the system. Such a system is designed to identify and to manage the Group s risk within the acceptable risk profi le, rather than eliminate the risk of failure. Accordingly, the system can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. The Group s internal control mechanism is embedded in the various work processes and procedures at appropriate levels in the Group. The Chairman/Managing Director and Senior Management team, comprising experienced personnel with vast specialised industry experience, are assigned the responsibility of managing the Group. They are accountable for the conduct and performance of their operations within their respective businesses. The Chairman/Managing Director and Senior Management monitor the dayto-day affairs of the Group through review of performance and operations reports, as well as attending management meetings. Any signifi cant issues are immediately brought to the attention of the Chairman/Managing Director, who in turn, will bring these matters before the Board. The Audit Committee is also responsible for reviewing and monitoring the effectiveness of the Group s system of internal control. In this respect, the Internal Audit Department of the Company, which was set up in the fi nancial year ended 31 August 2003, conducts regular review on the Group s various operations and reports directly to the Audit Committee. The external auditors provide assurance in the form of their annual statutory audit of the fi nancial statements. Further areas for improvement identifi ed during the course of the statutory audit by the external auditors are brought to the attention of the Audit Committee through management letters, or discussed at Audit Committee meetings. The key processes that the Group has established in reviewing the adequacy and integrity of the Group s system of internal control include the following: 1) Company s Policies and Procedures, which set out guidelines and the expected standards for the Group s operations. The policies and procedures are under regular review and update so as to maintain its effectiveness at all time. 2) Periodical and/or annual budgeting and target setting and review system for every operation of the Group. Analysis, data comparison and reporting of variances against targets are presented in the Group s various management meetings, which provide the framework for monitoring and controlling mechanism. 3) Requirement for the submission of regular and timely fi nancial and comprehensive management reports to the management. 4) Clearly defi ned organisation structure of the various departments with clearly defi ned delegation of responsibilities and accountability. It sets out the decision that needs to be taken and the appropriate approving authority at various levels of the management including matters that requires Board s approval. 5) Setting up monetary limits to the various level of delegated authority in order to minimize the risks of unauthorised transactions. 6) Regular internal audit visits by the Company s Internal Audit Department to assess and provide independent reports and assurance on the state of the internal control system of the Group s various operations. 7) Continuous training and development programmes covering all level of the Group s employees to ensure and to maintain the competency and effi ciency of the employees. 8) Compliance review functions to ensure adherence to rules and regulations laid down by the various regulators and authorities. 9) The management had continue to enhance the control and monitor the worker s permit renewal via the human resources management computer system and work closely with Foreign Workers Medical Examination Monitoring Agency on the medical check up of our foreign workers. The Company s business direction is consistently high quality and effi ciently low cost and hence, the Board will remains committed towards operating a sound system of internal control and therefore recognises that the system must continuously evolve to support the business and size of operations of the Group. There were no material internal control failures, which resulted in material losses or contingencies during the fi nancial year. The Management will, when necessary, put in place appropriate action to further enhance the Group s system of internal control. This statement does not include the state of internal control in associate company, which has not been dealt with as part of the Group. This statement is made in accordance with a resolution of the Board of Directors dated 19 October Top Glove Corporation Berhad I Annual Report 2007

39 Audit Committee Report The Audit Committee of Top Glove Corporation Bhd is pleased to present the Audit Committee Report for the fi nancial year ended 31 August MEMBERSHIP AND ATTENDANCE The Audit Committee members and details of attendance of each member at the Audit Committee meetings held during the fi nancial year ended 31 August 2007 are as follows: Number of Audit Committee Meetings Composition of Audit Committee Held Attended Tan Sri Datuk (Dr.) Arshad Bin Ayub 4 4 Chairman/Independent Non-Executive Director Tan Sri Dr. Lim, Wee-Chai* 4 4 Member/Chairman/Managing Director Sekarajasekaran a/l Arasaratnam 4 4 Member/Independent Non-Executive Director Quah Chin Chye 4 4 Member/Independent Non-Executive Director Note: * In compliance with the revised Code of Corporate Governance which took effect on 1 October 2007, Tan Sri Dr. Lim, Wee-Chai resigned on 17 October COMPOSITION AND TERMS OF REFERENCE 2.1 Composition of members The Board shall elect the Audit Committee members from amongst themselves, comprising no fewer than three (3) Directors, where the majority shall be Independent Directors. The term of offi ce of the Audit Committee is two (2) years and may be renominated and appointed by the Board of Directors. In this respect, the Board adopts the defi nition of Independent Director as defi ned under the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ). At least one (1) member of the Audit Committee must be: a) a member of the Malaysian Institute of Accountant ( MIA ); or b) if he is not a member of MIA, he must have at least 3 years of working experience; and i) he must have passed the examinations specifi ed in Part I of the First Schedule of the Accountants Act 1967; or ii) he must be a member of one of the associations of the accountants specifi ed in Part II of the First Schedule of the Accountants Act 1967; or c) fulfi lls such other requirements as prescribed by Bursa Securities. No alternate Director of the Board shall be appointed as a member of the Audit Committee. Retirement and resignation If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of the new members as may be required to fi ll the vacancy. Top Glove Corporation Berhad I Annual Report

40 Audit Committee Report (cont d) 2.2 Chairman The Chairman of the Audit Committee, elected from amongst the Audit Committee members, shall be an Independent Director. The Chairman of the Committee shall be approved by the Board of Directors. 2.3 Secretary The Secretary of the Audit Committee shall be the Company Secretary. The Secretary shall be responsible for drawing up the agenda with concurrence of the Chairman and circulating it, supported by explanatory documentation to members of the Audit Committee prior to each meeting. The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, circulating them to members of the Audit Committee and to the other members of the Board of Directors and for following up outstanding matters. 2.4 Meetings The Audit Committee meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate. In addition, the Chairman may call for additional meetings at any time at the Chairman s discretion. In the absence of the Chairman, the other Independent Director shall be the Chairman for that meeting. The members of the Audit Committee, Financial Controller, Finance Manager, Head of Operations and the Internal Audit will normally be in attendance at the meetings. Representatives of the external auditors are to be in attendance at meeting where matters relating to the audit of the statutory accounts and/or external auditors are to be discussed. Directors who are non members of the Audit Committee, offi cers and employees of the Company and/or Group may be invited to attend, except for those portions of the meetings where their presence is considered inappropriate, as determined by the Audit Committee. However, at least once a year the Audit Committee shall meet with the external auditors. Minutes of each meeting shall be kept and distributed to each member of the Audit Committee and also to the other members of the Board of Directors. The Audit Committee Chairman shall report on each meeting to the Board of Directors. 2.5 Quorum The quorum for the Audit Committee meeting shall be the majority of members present whom must be Independent Directors. 2.6 Reporting The Audit Committee shall report to the Board of Directors, either formally in writing, or verbally, as it considers appropriate on the matters within its terms of reference at least once a year, but more frequently if it so wishes. The Audit Committee shall report to the Board of Directors on any specifi c matters referred to it by the Board for investigation and report. 2.7 Objectives The principal objectives of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. 38 Top Glove Corporation Berhad I Annual Report 2007

41 Audit Committee Report (cont d) In addition, the Audit Committee shall: a) evaluate the quality of the audits performed by the internal and external auditors; b) provide assurance that the fi nancial information presented by management is relevant, reliable and timely; c) oversee compliance with laws and regulations and observance of a proper code of conduct; and d) determine the quality, adequacy and effectiveness of the Group s control environment. 2.8 Authority The Audit Committee shall, in accordance with a procedure to be determined by the Board of Directors and at the expense of the Company: a) authorise to investigate any activity within its terms of reference. All employees shall be directed to co-operate as requested by members of the Audit Committee; b) have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group; c) obtain, at the expense of the Company, other independent professional advice or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary; d) be able to convene meetings with the external auditors, without the attendance of the executive members of the Audit Committee, whenever deemed necessary; and e) be able to make relevant reports when necessary to the relevant authorities if a breach of the LR of Bursa Securities occurred. 2.9 Duties and responsibilities The duties and responsibilities of the Audit Committee are as follows: a) To review the maintenance and control of an effective accounting system; b) To review the Group s public accountability and compliance with the law; c) To ensure adequacy of internal and external audit procedures; d) To evaluate the quality of external auditors and make recommendations concerning their appointment and remuneration and to consider the nomination of a person or persons as external auditors; e) To provide liaison between the external auditors, the management and the Board of Directors and also to review the assistance given by the management to the external auditors; f) To review the fi ndings of the internal and external auditors; g) To review the quarterly results and fi nancial statements and annual report prior to submission to the Board of Directors; h) To monitor any related party transactions that may arise within the Group and to report, if any, transactions between the Group and any related party outside the Group, which are not based on arms-length terms and on terms which are disadvantageous to the Group; i) To report its fi ndings on the fi nancial and management performance, and other material matters to the Board of Directors; j) To verify the allocation of Employees Share Option Scheme ( ESOS ) in compliance with the criteria as stipulated in the Bye-Laws of ESOS of the Company, if any; k) To act in line with the directions of the Board of Directors; and l) To consider and examine such other matters as the Audit Committee considers appropriate. Top Glove Corporation Berhad I Annual Report

42 Audit Committee Report (cont d) 3. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE The Audit Committee has discharged its duties as set out in its Terms of Reference. The major areas reviewed and deliberated by the Audit Committee are as follows: a) Reviewed the Quarterly Reports and the Annual Report to ensure adherence to legal and regulatory reporting requirements and appropriate resolution of all accounting matters requiring signifi cant judgment; b) Reviewed and deliberated the signifi cant risk areas, internal control and fi nancial matters brought to the attention of the external auditors in the course of their work; c) Reviewed the related party transactions that are required to be transacted at an arm s length basis and are not detrimental to the interest of minority shareholders; d) Deliberated the emerging fi nancial reporting issues pursuant to the introduction of new accounting standards and additional statutory/regulatory disclosure requirements; e) Deliberated the best Board practices for meeting market expectations and protecting shareholders interests that were highlighted by the external auditors; f) Reviewed the measures being taken to fortify the existing risk assessment and management processes; and g) Verifi ed the allocation of option shares pursuant to the ESOS to eligible employees had been made in accordance with the criteria of allocation of option shares as set out in the Bye-Laws of the ESOS. 4. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT DEPARTMENT The Company has an Internal Audit Department whose principal objective is to undertake regular reviews of the systems of controls, procedures and operations so as to provide reasonable assurance that the internal control system is sound, adequate and satisfactory. The Internal Audit Department reports direct to the Audit Committee. Its role is to provide the Committee with independent and objective reports on the state of internal controls of the operating units within the Group and the extent of compliance by such units with the Group s established policies and procedures and the regulatory requirements of the relevant authorities. The Audit Committee reviews and approves the internal audit plan of the Group submitted by the Internal Audit Manager. During the fi nancial year ended 31 August 2007, the areas audited included audits of the various departments covering all the factories and subsidiaries within the Group. Internal audit reports were issued to the Audit Committee regularly and tabled in the Audit Committee meetings. The reports are also issued to the respective operations management, incorporating audit recommendations and management responses with regards to any audit fi ndings on the weaknesses in the systems and controls of the operations. The Internal Audit Department also follows up with management on the implementation of the agreed audit recommendations. 40 Top Glove Corporation Berhad I Annual Report 2007

43 Financial Statements for the Year Ended 31 August 2007 Page Directors Report 42 Statement by Directors 47 Statutory Declaration 47 Report of the Auditors 48 Income Statements 49 Balance Sheets 50 Statements of Changes in Equity 52 Cash Flow Statements 54 Notes to the Financial Statements 56 Top Glove Corporation Berhad I Annual Report

44 Directors Report The directors have pleasure in presenting their report together with the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 31 August PRINCIPAL ACTIVITIES The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiaries are described in Note 12 to the fi nancial statements. There have been no signifi cant changes in the nature of the principal activities during the fi nancial year. RESULTS Group RM 000 Company RM 000 Profi t for the year 102,887 11,948 Attributable to: Equity holders of the Company 103,795 11,948 Minority interests (908) - 102,887 11,948 There were no material transfers to or from reserves or provisions during the fi nancial year other than as disclosed in the fi nancial statements. In the opinion of the directors, the results of the operations of the Group and of the Company during the fi nancial year were not substantially affected by any item, transaction or event of a material and unusual nature other than as dislosed in Note 2.3 to the fi nancial statements. DIVIDENDS The amount of dividends paid by the Company since 31 August 2006 were as follows: RM 000 In respect of the fi nancial year ended 31 August 2006: Interim tax exempt dividend of 7%, paid on 15 September ,727 Final tax exempt dividend of 6%, paid on 15 March ,982 Final dividend of 5% less 27% taxation, paid on 15 March ,464 21,173 In respect of the fi nancial year ended 31 August 2007: Interim tax exempt dividend of 8%, paid on 13 September ,013 At the forthcoming Annual General Meeting, a fi nal tax exempt dividend of 6% on 300,479,831 ordinary shares amounting to RM9,014,395 (3 sen per share) and a fi nal dividend of 6% less 26% taxation amounting to RM6,670,652 (2.22 sen per share) in respect of the fi nancial year ended 31 August 2007 will be proposed for shareholders approval. The fi nancial statements for the current fi nancial year do not refl ect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the fi nancial year ending 31 August Top Glove Corporation Berhad I Annual Report 2007

45 Directors Report (cont d) DIRECTORS The names of the directors of the Company in offi ce since the date of the last report and at the date of this report are: Tan Sri Dr. Lim, Wee-Chai Tan Sri Datuk (Dr.) Arshad bin Ayub Puan Sri Tong Siew Bee Lim Hooi Sin Sekarajasekaran a/l Arasaratnam Lau Boon Ann Quah Chin Chye Lee Kim Meow Lim Cheong Guan DIRECTORS BENEFITS Neither at the end of the fi nancial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefi ts by means of acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employee Share Options Scheme ( ESOS ). Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t (other than benefi ts included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 7 to the fi nancial statements or the fi xed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a fi rm of which he is a member, or with a company in which he has a substantial fi nancial interest. DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors in offi ce at the end of the fi nancial year in shares in the Company during the fi nancial year were as follows: Number of Ordinary Shares of RM0.50 Each Balance 1 September prior to 2006 Bought Sold bonus issue* Tan Sri Dr. Lim, Wee-Chai - direct 59,296, ,000-59,916,358 - indirect 27,966, ,000 (1,899,400) 26,435,302 Tan Sri Datuk (Dr.) Arshad bin Ayub 1,200, ,200,000 Puan Sri Tong Siew Bee - direct 3,284, ,000 (272,000) 3,284,196 - indirect 83,978, ,000 (1,627,400) 83,067,464 Lim Hooi Sin - direct 4,979, ,979,130 - indirect 82,283, ,000 (1,899,400) 81,372,530 Sekarajasekaran a/l Arasaratnam 7,567,978 10,000-7,577,978 Lau Boon Ann 196, ,400 Lee Kim Meow 557,012 - (42,000) 515,012 Top Glove Corporation Berhad I Annual Report

46 Directors Report (cont d) DIRECTORS INTERESTS (cont d) Number of Ordinary Shares of RM0.50 Each Balance after 31 August bonus issue* Bought Sold 2007 Tan Sri Dr. Lim, Wee-Chai - direct 83,882,900 2,580,000-86,462,900 - indirect 37,009, ,400 (6,380,000) 30,763,821 Tan Sri Datuk (Dr.) Arshad bin Ayub 1,680,000 - (50,000) 1,630,000 Puan Sri Tong Siew Bee - direct 4,597, ,597,874 - indirect 116,294,447 2,714,400 (6,380,000) 112,628,847 Lim Hooi Sin - direct 6,970, ,400-7,105,181 - indirect 113,921,540 2,580,000 (6,380,000) 110,121,540 Sekarajasekaran a/l Arasaratnam 10,609,169 1,400,000 (2,910,000) 9,099,169 Lau Boon Ann 274, ,960 Lee Kim Meow 721, ,000 (20,000) 813,016 Number of Options over Ordinary Shares of RM0.50 Each Balance 1 September prior to 2006 Granted Exercised bonus issue* Tan Sri Dr. Lim, Wee-Chai 252,000 - (252,000) - Puan Sri Tong Siew Bee 384,000 - (272,000) 112,000 Lim Hooi Sin 96, ,000 Lee Kim Meow 304, ,000 Lim Cheong Guan 40, ,000 Number of Options over Ordinary Shares of RM0.50 Each Balance after 31 August bonus issue* Granted Exercised 2007 Tan Sri Dr. Lim, Wee-Chai - 806, ,400 Puan Sri Tong Siew Bee 156, , ,800 Lim Hooi Sin 134, ,200 (134,400) 403,200 Lee Kim Meow 425,600 - (112,000) 313,600 Lim Cheong Guan 56, ,000 * Bonus issue on the basis of two new ordinary shares for every fi ve existing ordinary shares. Tan Sri Dr. Lim, Wee-Chai, Puan Sri Tong Siew Bee and Lim Hooi Sin by virtue of their interest in shares of the Company are also deemed interested in shares of all the subsidiaries to the extent the Company has an interest. The other director in offi ce at the end of the fi nancial year had no interest in shares in the Company or its related corporations or in share options in the Company during the fi nancial year. 44 Top Glove Corporation Berhad I Annual Report 2007

47 Directors Report (cont d) ISSUE OF SHARES During the fi nancial year, the Company increased its issued and paid-up share capital from RM96,142,650 to RM150,237,915 by way of: (a) (b) (c) the issuance of 27,217,902 ordinary shares of RM0.50 each through a private placement at an issue price of RM8.80 per ordinary share for cash, for additional capital expenditure, repayment of borrowings and working capital purposes; the issuance of 77,765,429 ordinary shares of RM0.50 each through a bonus issue on the basis of 2 new ordinary shares of RM0.50 each for 5 existing ordinary shares of RM0.50 each held in the Company, by way of capitalisation of RM32,800,000 from the share premium account and RM6,082,715 from retained earnings; and the issuance of 3,207,200 ordinary shares of RM0.50 each pursuant to the ESOS at an option price of between RM0.62 and RM10.49 per ordinary share. Subsequent to the end of the fi nancial year up to the date of this report, the Company increased its issued and paid-up share capital from RM150,237,915 to RM150,255,765 by way of the issuance of 35,700 ordinary shares of RM0.50 each pursuant to the ESOS at an option price of between RM0.62 and RM10.49 per ordinary share. The new ordinary shares issued during the fi nancial year ranked pari passu in all respects with the existing ordinary shares of the Company. EMPLOYEE SHARE OPTIONS SCHEME The Company s ESOS is governed by the by-laws which was approved by the shareholders at the Extraordinary General Meeting held on 9 January 2003 and became effective on 29 April The main features and other terms of the ESOS are disclosed in Note 25 to the fi nancial statements. The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of employees who have been granted options to subscribe for less than 100,000 ordinary shares. The list of employees granted options to subscribe for 100,000 or more ordinary shares during the fi nancial year is disclosed in the section on Directors Interests in this report. OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfi ed themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumtances which would render: (i) (ii) the amount written off for bad debts or the amount of the provision for doubtful debts in the fi nancial statements of the Group and of the Company inadequate to any substantial extent; and the values attributed to the current assets in the fi nancial statements of the Group and of the Company misleading. Top Glove Corporation Berhad I Annual Report

48 Directors Report (cont d) OTHER STATUTORY INFORMATION (cont d) (c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. (d) (e) At the date of this report, the directors are not aware of any circumtances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group or of the Company which has arisen since the end of the fi nancial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the fi nancial year. (f) In the opinion of the directors: (i) (ii) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the fi nancial year which will or may affect the ability of the Group or of the Company to meet its obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the fi nancial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the fi nancial year in which this report is made. SIGNIFICANT EVENT The signifi cant event is disclosed in Note 12 to the fi nancial statements. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in offi ce. Signed on behalf of the Board in accordance with a resolution of the directors dated 12 November TAN SRI DR. LIM, WEE-CHAI QUAH CHIN CHYE 46 Top Glove Corporation Berhad I Annual Report 2007

49 Statement by Directors pursuant to Section 169 (15) of the Companies Act, 1965 We, TAN SRI DR. LIM, WEE-CHAI and QUAH CHIN CHYE, being two of the directors of TOP GLOVE CORPORATION BHD., do hereby state that, in the opinion of the directors, the accompanying fi nancial statements set out on pages 49 to 99 are drawn up in accordance with the provisions of Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as at 31 August 2007 and of the results and the cash fl ows of the Group and of the Company for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors dated 12 November TAN SRI DR. LIM, WEE-CHAI QUAH CHIN CHYE Statutory Declaration pursuant to Section 169 (16) of the Companies Act, 1965 I, TAN SRI DR. LIM, WEE-CHAI, the director primarily responsible for the financial management of TOP GLOVE CORPORATION BHD., do solemnly and sincerely declare that the accompanying fi nancial statements set out on pages 49 to 99 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act Subscribed and solemnly declared by the ) abovenamed TAN SRI DR. LIM, WEE-CHAI at ) Klang in the State of Selangor ) on 12 November 2007 ) TAN SRI DR. LIM, WEE-CHAI Before me, LEE PEI NAM Commissioner for Oaths Top Glove Corporation Berhad I Annual Report

50 Report of The Auditors to the Members of Top Glove Corporation Bhd. (Incorporated in Malaysia) We have audited the fi nancial statements set out on pages 49 to 99. These fi nancial statements are the responsibility of the Company s directors. It is our responsibility to form an independent opinion, based on our audit, on the fi nancial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the directors, as well as evaluating the overall presentation of the fi nancial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the fi nancial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to give a true and fair view of: (i) (ii) the fi nancial position of the Group and of the Company as at 31 August 2007 and of the results and the cash fl ows of the Group and of the Company for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the fi nancial statements; and (b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We have considered the fi nancial statements and the auditors reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 12 to the fi nancial statements, being fi nancial statements that have been included in the consolidated fi nancial statements. We are satisfi ed that the fi nancial statements of the subsidiaries that have been consolidated with the fi nancial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated fi nancial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors reports on the fi nancial statements of the subsidiaries were not subject to any qualifi cation material to the consolidated fi nancial statements and, in respect of subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174 (3) of the Act. ERNST & YOUNG AF: 0039 Chartered Accountants ABRAHAM VERGHESE A/L T.V.ABRAHAM No. 1664/10/08(J) Partner Melaka, Malaysia Date: 12 November Top Glove Corporation Berhad I Annual Report 2007

51 Income Statements for the year ended 31 August 2007 Group Company Note RM 000 RM 000 RM 000 RM 000 Revenue 3 1,228, ,611 13,290 45,780 Cost of sales (1,014,377) (822,959) - - Gross profit 214, ,652 13,290 45,780 Other operating income 8,879 3,165 1, Distribution and selling costs (43,771) (34,799) - - Administrative and general expenses (47,221) (35,918) (2,628) (685) Operating profit 132, ,100 12,010 45,202 Finance costs 4 (13,525) (10,327) (62) - Share of loss of associate (119) Profit before tax 5 118,644 91,773 11,948 45,202 Income tax expense 8 (15,757) (12,712) - (3,221) Profit for the year 102,887 79,061 11,948 41,981 Attributable to: Equity holders of the Company 103,795 78,392 11,948 41,981 Minority interests (908) Earnings per share attributable to equity holders of the Company (sen): Basic Diluted ,887 79,061 11,948 41,981 The accompanying notes form an integral part of the fi nancial statements. Top Glove Corporation Berhad I Annual Report

52 Balance Sheets as at 31 August 2007 Group Company Note RM 000 RM 000 RM 000 RM 000 ASSETS Non-current assets Property, plant and equipment , , Investments in subsidiaries ,348 29,348 Investments in associate 13 8, Other investment Due from a subsidiary , ,961 Goodwill 15 21,078 21, , , , ,412 Current assets Inventories , , Trade receivables , , Other receivables 18 10,441 9,042 79,271 70,820 Tax recoverable Cash and bank balances ,584 59,211 49, , , ,668 71,686 TOTAL ASSETS 1,053, , , ,098 EQUITY AND LIABILTIES Equity attributable to equity holders of the Company Share capital ,238 96, ,238 96,143 Reserves 465, , ,087 49,142 Shareholders equity 615, , , ,285 Minority interests 21,447 2, Total equity 637, , , ,285 Non-current liabilities Borrowings , ,439 70,000 70,000 Deferred taxation 26 30,809 29, Non-current liabilities 159, ,977 70,000 70, Top Glove Corporation Berhad I Annual Report 2007

53 Balance Sheets as at 31 August 2007 (cont d) Group Company Note RM 000 RM 000 RM 000 RM 000 Current liabilities Borrowings 20 63, ,229-24,880 Trade payables , , Other payables 23 76,764 68,650 1,441 1,189 Tax payable Dividends payable 12,013 6,744 12,013 6, , ,030 13,454 32,813 Total liabilities 416, ,007 83, ,813 TOTAL EQUITY AND LIABILITIES 1,053, , , ,098 The accompanying notes form an integral part of the fi nancial statements. Top Glove Corporation Berhad I Annual Report

54 Statements of Changes in Equity for the year ended 31 August 2007 < Attributable to Equity Holders of the Company > < Non distributable > Distributable Foreign Share Share Share exchange Legal option Retained Minority Total capital premium reserve reserve reserve earnings Total interests Equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 GROUP At 1 September ,319 9, , ,460 1, ,692 Profi t for the year ,392 78, ,061 Dividends (Note 10) (15,182) (15,182) - (15,182) Issuance of ordinary shares pursuant to ESOS 1,824 13, ,829-14,829 Share issue expenses - (15) (15) - (15) Foreign currency translation - - 1, , ,724 Transfer to legal reserve (895) At 31 August ,143 22,054 2,040 1, , ,106 2, ,109 Profi t for the year , ,795 (908) 102,887 Dividends (Note 10) (26,459) (26,459) - (26,459) Issuance of ordinary shares: Private placement 13, , , ,518 Pursuant to ESOS 1,603 17, ,927-18,927 Issuance of bonus shares 38,883 (32,800) (6,083) Share issue expenses - (3,676) (3,676) - (3,676) Share options granted under ESOS Foreign currency translation (50) 648 Transfer from legal reserve (306) Acquisition of subsidiary ,402 20,402 At 31 August , ,811 2,738 1, , ,691 21, , Top Glove Corporation Berhad I Annual Report 2007

55 Statements of Changes in Equity for the year ended 31 August 2007 (cont d) < Non distributable > Distributable Share Share Share option Retained capital premium reserve earnings Total RM 000 RM 000 RM 000 RM 000 RM 000 COMPANY At 1 September ,319 9, ,672 Profi t for the year ,981 41,981 Dividends (Note 10) (15,182) (15,182) Issuance of ordinary shares pursuant to ESOS 1,824 13, ,829 Share issue expenses - (15) - - (15) At 31 August ,143 22,054-27, ,285 Profi t for the year ,948 11,948 Dividends (Note 10) (26,459) (26,459) Issuance of ordinary shares: Private placement 13, , ,518 Pursuant to ESOS 1,603 17, ,927 Issuance of bonus shares 38,883 (32,800) - (6,083) - Share issue expenses - (3,676) - - (3,676) Share options granted under ESOS At 31 August , , , ,325 The accompanying notes form an integral part of the fi nancial statements. Top Glove Corporation Berhad I Annual Report

56 Cash Flow Statements for the year ended 31 August 2007 Group Company RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM OPERATING ACTIVITIES Profi t before tax 118,644 91,773 11,948 45,202 Adjustments for: Bad debts written off Depreciation 43,482 28, Loss/(gain) on disposal of property, plant and equipment 44 (11) - - Property, plant and equipment written off 1, Provision for doubtful debts Reversal of provision for doubtful debts (143) Share options granted under ESOS Unrealised foreign exchange gains (1,959) (1,426) - - Share of loss of associate Negative goodwill written off (2,862) Interest expense 13,525 10, Interest income (2,552) (772) (1,348) (107) Operating profi t before working capital changes 170, ,296 11,444 45,095 Increase in receivables (10,690) (31,370) (33,266) (26,118) Increase in inventories (11,029) (29,074) - - (Decrease)/increase in payables (16,218) 45, Cash generated from/(used in) operations 132, ,754 (21,570) 19,827 Interest paid (13,948) (10,818) (62) - Tax paid (13,822) (6,217) - (3,304) Net cash generated from/(used in) operating activities 105,135 96,719 (21,632) 16,523 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (105,006) (137,662) - - Acquisition of subsidiaries (Note 12) (16,143) (24,846) - - Interest received 2, , Purchase of other investment - (217) - (103) Proceeds from disposal of other investment Proceeds from disposal of property, plant and equipment Net cash (used in)/generated from investing activities (118,079) (161,626) 1, Top Glove Corporation Berhad I Annual Report 2007

57 Cash Flow Statements for the year ended 31 August 2007 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM FINANCING ACTIVITIES Advances to subsidiaries - - (139,987) (111,360) Proceeds from issuance of shares 258,445 14, ,445 14,829 Share issue expenses (3,676) (15) (3,676) (15) Payment of dividends (21,190) (14,093) (21,190) (14,093) Repayment of hire purchase payables (1,281) (1,781) - - Drawdown of term loans - 29, Repayment of term loans (46,313) (20,186) - - (Repayment)/drawdown of commercial papers (24,880) 24,880 (24,880) 24,880 Drawdown of medium term notes - 70,000-70,000 Decrease in short term borrowings (42,619) (4,199) - - Net cash generated from/(used in) fi nancing activities 118,486 98,852 68,712 (15,759) NET INCREASE IN CASH AND CASH EQUIVALENTS 105,542 33,945 48, EFFECTS OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 58,757 24, CASH AND CASH EQUIVALENTS AT END OF YEAR (NOTE 19) 164,397 58,757 49, The accompanying notes form an integral part of the fi nancial statements. Top Glove Corporation Berhad I Annual Report

58 Notes to the Financial Statements 31 August CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The principal place of business of the Company is located at Lot 4969, Jalan Teratai, Batu 6, off Jalan Meru, Klang, Selangor. The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiaries are described in Note 12. There were no signifi cant changes in the nature of the principal activities during the fi nancial year. The fi nancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 12 November SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia. At the beginning of the current fi nancial year, the Group and the Company had adopted new and revised Financial Reporting Standards ( FRSs ) which are mandatory for the fi nancial periods beginning on or after 1 January 2006 as described fully in Note 2.3. The fi nancial statements of the Group and of the Company have also been prepared on a historical basis. The fi nancial statements are presented in Ringgit Malaysia (RM) and all values are rounded to nearest thousand (RM 000) except when otherwise indicated. 2.2 Summary of Significant Accounting Policies (a) Subsidiaries and Basis of Consolidation (i) Subsidiaries Subsidiaries are entities over which the Group has the ability to control the fi nancial and operating policies so as to obtain benefi ts from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. In the Company s separate fi nancial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profi t or loss. (ii) Basis of Consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The fi nancial statements of the subsidiaries are prepared for the same reporting date as the Company. All the subsidiaries are consolidated using the merger method of accounting except for the subsidiaries of Top Glove Sdn. Bhd., which are accounted for under the acquisition method. 56 Top Glove Corporation Berhad I Annual Report 2007

59 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (a) Subsidiaries and Basis of Consolidation (cont d) (ii) Basis of Consolidation (cont d) Acquisition of subsidiaries that meets the conditions of a merger are accounted for using the merger method. Under the merger method of accounting, the results of subsidiaries are presented as if the merger had been effected throughout the current and previous years. In the consolidated financial statements, the cost of the merger is cancelled with the nominal values of the shares received. Any resulting debit difference is adjusted against the consolidated capital and revenue reserves. Subsidiaries accounted for using the purchase method are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated fi nancial statements for like transactions and events in similar circumstances. Acquisitions of subsidiaries that do not meet the conditions of a merger are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. Any excess of the cost of the acquisition over the Group s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profi t or loss. Minority interests represent the portion of profi t or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities share of the fair value of the subsidiaries identifi able assets and liabilities at the acquisition date and the minorities share of changes in the subsidiaries equity since then. (b) Associates Associates are entities in which the Group has signifi cant infl uence and that is neither a subsidiary nor an interest in a joint venture. Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the investee but not in control or joint control over those policies. Investments in associates are accounted for in the consolidated fi nancial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group s share of net assets of the associate. The Group s share of the net profi t or loss of the associate is recognised in the consolidated profi t or loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group s net investment in the associate. The associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group ceases to have signifi cant infl uence over the associate. Top Glove Corporation Berhad I Annual Report

60 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (b) Associates (cont d) Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group s share of the net fair value of the associate s identifi able assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group s share of the associate s profi t or loss in the period in which the investment is acquired. When the Group s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group s net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The most recent available audited fi nancial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited fi nancial statements available and management fi nancial statements to the end of the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances. In the Company s separate fi nancial statements, investments in associates are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profi t or loss. (c) Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. (d) Property, Plant and Equipment and Depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the fi nancial period in which they are incurred. Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses. Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are also not depreciated as these assets are not available for use. Leasehold land is depreciated over the period of the respective leases which range from 50 to 99 years. Depreciation of other property, plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimate useful life at the following annual rates: 58 Top Glove Corporation Berhad I Annual Report 2007

61 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (d) Property, Plant and Equipment and Depreciation (cont d) Buildings 2% - 5% Plant and equipment 10% Other assets 10% - 20% The residual values, useful life and depreciation method are reviewed at each fi nancial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profi t or loss. (e) Impairment of Non-financial Assets The carrying amounts of assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated to determine the amount of impairment loss. For goodwill that have an indefi nite useful life the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identifi ed. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash fl ows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s CGUs, or groups of CGUs, that are expected to benefi t from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. An asset s recoverable amount is the higher of an asset s or CGU s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated fi rst to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. An impairment loss is recognised in profi t or loss in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profi t or loss. Top Glove Corporation Berhad I Annual Report

62 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (f) Inventories Inventories are stated at lower of cost and net realisable value. Cost is determined using the fi rst-in, fi rst-out method. The cost of raw materials comprises costs of purchase. The costs of fi nished goods and work-in-progress comprise costs of raw materials, direct labour, other direct costs and appropriate proportions of manufacturing overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and costs necessary to make the sale. (g) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and gains and losses relating to a fi nancial instrument classifi ed as a liability, are reported as expense or income. Distributions to holders of fi nancial instruments classifi ed as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. (i) Cash and Cash Equivalents For the purposes of the cash fl ow statements, cash and cash equivalents include cash on hand and at bank, deposits at call and short term highly liquid investments which have an insignifi cant risk of changes in value, net of outstanding bank overdrafts. (ii) Other Non-Current Investments Non-current investments other than investments in subsidiaries and associates are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the profi t or loss. (iii) Marketable Securities Marketable securities are carried at the lower of cost and market value, determined on aggregate basis. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are recognised in profi t or loss. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is recognised in profi t or loss. (iv) Trade Receivables Trade receivables are carried at anticipated realisable values. Bad debts are written off when identifi ed. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. (v) Trade Payables Trade payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. 60 Top Glove Corporation Berhad I Annual Report 2007

63 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (g) Financial Instruments (cont d) (vi) Interest Bearing Loans and Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. (vii) Equity Instruments Ordinary shares are classifi ed as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction are accounted for as a deduction from equity. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. No gain or loss is recognised in profit or loss on the sale, re-issuance or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity. (viii) Derivative Financial Instruments Derivative fi nancial statements are not recognised in the fi nancial statements. (h) Leases Assets acquired by way of hire purchase are stated at an amount equal to the lower of their fair values and the present value of the minimum hire purchase payments at the inception of the hire purchase, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum hire purchase payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company s incremental borrowing rate is used. Hire purchase payments are apportioned between the fi nance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total hire purchase commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant hire purchase so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. The depreciation policy for assets purchased under hire purchase is consistent with that for depreciable property, plant and equipment as described in Note 2(d). (i) Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outfl ow of resources embodying ecomonic benefi ts will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that refl ects, where appropriate, the risks specifi c to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as fi nance costs. Top Glove Corporation Berhad I Annual Report

64 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (j) Income Tax Income tax on the profi t or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profi t nor taxable profi t. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profi t or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer s interest in the net fair value of the acquiree s identifi able assets, liabilities and contingent liabilities over the cost of the combination. (k) Employee Benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into seperate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold suffi cient assets to pay all employee benefi ts relating to employee services in the current and preceding fi nancial years. Such contributions are recognised as an expense in the profi t or loss as incurred. As required by law, companies in Malaysia make contributions to the Employees Provident Fund ( EPF ). Some of the Group s foreign subsidiaries make contributions to their respective countries statutory pension schemes. (iii) Equity compensation benefits The Company s ESOS allows the Group s employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest.the fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date. 62 Top Glove Corporation Berhad I Annual Report 2007

65 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (k) Employee Benefits (cont d) (iii) Equity compensation benefits (cont d) At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates, if any, in the profi t or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amounts is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings. The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised. (l) Revenue Recognition Revenue is recognised when it is probable that the economic benefi ts associated with the transaction will fl ow to the Group and the revenue can be reliably measured. (i) Sale of goods Revenue is recognised net of sales taxes, discounts and returns upon the transfer of signifi cant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are signifi cant uncertainties regarding recovery of the consideration due, associated costs and the possible return of goods. (ii) Management fees Management fees are recognised when services are rendered. (iii) Interest income Interest is recognised on an accrual basis using the effective interest method. (iv) Dividend income Dividend income is recognised when the Group s right to receive payment is established. (m) Foreign Currencies (i) Functional and presentation currency The individual fi nancial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated fi nancial statements are presented in Ringgit Malaysia (RM), which is also the Company s functional currency. (ii) Foreign currency transactions In preparing the fi nancial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Nonmonetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated. Top Glove Corporation Berhad I Annual Report

66 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 Summary of Significant Accounting Policies (cont d) (m) Foreign Currencies (cont d) (ii) Foreign currency transactions (cont d) Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profi t or loss for the period except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profi t or loss. Exchange differences arising on monetary items that form part of the Group s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profi t or loss for the period. Exchange differences arising on monetary items that form part of the Company s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company s fi nancial statements or the individual fi nancial statements of the foreign operation, as appropriate. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profi t or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. (iii) Foreign operations The results and fi nancial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated fi nancial statements are translated into RM as follows: - Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet date; - Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and - All resulting exchange differences are taken to the foreign currency translation reserve within equity. Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition. (n) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specifi c borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profi t or loss in the period in which they are incurred. 64 Top Glove Corporation Berhad I Annual Report 2007

67 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs The MASB has issued a number of new and revised FRS and Interpretations that are effective for fi nancial periods beginning on or after 1 January Except for the changes in accounting policies and their effects as discussed below, the new and revised FRS and Interpretations above do not have any other signifi cant impact on the fi nancial statements of the Group and the Company: (a) FRS 2: Share-based Payment Prior to 1 September 2006, no compensation expense was recognised in profi t or loss for share options granted. The Group and the Company recognised an increase in share capital and share premium when options were exercised. Upon the adoption of FRS 2, the total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period. The effects on the balance sheets as at 31 August 2007 and income statements for the year ended 31 August 2007 are set out in Note 2.3(d)(i) and Note 2.3 (d)(ii) respectively. (b) FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible Assets The new FRS 3 has resulted in consequential amendments to two other accounting standards, FRS 136 and FRS 138. In accordance with the transitional provisions, FRS 3 has been applied for business combinations for which the agreement date is on or after 1 September Excess of Group s interest in the net fair value of acquiree s identifiable assets, liabilities and contingent liabilities over cost (previously known as negative goodwill). Prior to 1 September 2006, negative goodwill was stated at cost, except to the extent it relates to identifi ed expected future losses as at the date of acquisition. Under FRS 3, any excess of the Group s interest in the net fair value of acquiree s identifi able assets, liabilities and contingent liabilities over cost of acquisitions, after reassessment, is now recognised immediately in profi t or loss. Because the revised accounting policy has been applied prospectively, the change has had no impact on amounts reported for 2006 or prior periods. The effects on the consolidated balance sheet as at 31 August 2007 and consolidated income statement for the year ended 31 August 2007 are set out in Note 2.3(d)(i) and Note 2.3(d)(ii) respectively. This change has no impact on the Company s fi nancial statements. (c) FRS 101: Presentation of Financial Statements Prior to 1 September 2006, minority interests at the balance sheet date were presented in the consolidated balance sheet separately from liabilities and equity. Upon the adoption of the revised FRS 101, minority interests are now presented within total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profi t or loss for the year. A similar requirement is also applicable to the statement of changes in equity. The revised FRS 101 also requires disclosure, on the face of the statement of changes in equity, total recognised income and expenses for the year, showing separately the amounts attributable to equity holders of the Company and to minority interests. Prior to 1 September 2006, the Group s share of taxation of associates accounted for using the equity method was included as part of the Group s income tax expense in the consolidated income statement. Upon the adoption of the revised FRS 101, the share of taxation of associates accounted for using the equity method are now included in the respective shares of profi t or loss reported in the consolidated income statement before arriving at the Group s profi t or loss before tax. Top Glove Corporation Berhad I Annual Report

68 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont d) (c) FRS 101: Presentation of Financial Statements (cont d) These changes in presentation have been applied retrospectively and as disclosed in Note 2.3(e), certain comparatives have been restated. The effects on the consolidated balance sheet as at 31 August 2007 are set out in Note 2.3(e). There were no effects on the consolidated income statement for the year ended 31 August 2007 and the Company s fi nancial statements. (d) Summary of effects of adopting new and revised FRSs on the current year s financial statements The following table provides estimates of the extent to which each of the line items in the balance sheets and income statement for the year ended 31 August 2007 is higher or lower than it would have been had the previous policies been applied in the current year. (i) Effects on balance sheets as at 31 August 2007 < Increase/(Decrease) > FRS 2 FRS 3 Note 2.3(a) Note 2.3(b) Total Description of change RM 000 RM 000 RM 000 Group Negative goodwill - 2,862 2,862 Retained earnings 545 (2,862) (2,317) Share option reserve (545) - (545) Company Trade and other receivables (782) - (782) Retained earnings (237) - (237) Share option reserve (545) - (545) (ii) Effects on income statement for the year ended 31 August 2007 < Increase/(Decrease) > FRS 2 FRS 3 Note 2.3(a) Note 2.3(b) Total Description of change RM 000 RM 000 RM 000 Group Administrative and general expenses (782) - (782) Other income - (2,862) (2,862) Operating profi t 782 (2,862) (2,080) Profi t before tax 782 (2,862) (2,080) Profi t for the year 782 (2,862) (2,080) 66 Top Glove Corporation Berhad I Annual Report 2007

69 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) Notes to the Financial Statements 31 August 2007 (cont d) 2.3 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (cont d) (e) Restatement of Comparatives The following comparative amounts have been restated as a result of adopting the new and revised FRSs: At 31 August 2006 Previously Increase/ Restated Stated (Decrease) FRS 101 Note 2.3 (c) Description of change RM 000 RM 000 RM 000 Group Total equity 282,106 2, , Standards and Interpretations Issued but Not Yet Effective At the date of authorisation of these fi nancial statements, the following FRS, amendments to FRS and Interpretations were issued but not yet effective and have not been applied by the Group and the Company: FRS, Amendments to FRS and Interpretations Effective for financial periods beginning on or after (i) FRS 117: Leases 1 October 2006 (ii) FRS 124: Related Party Disclosures 1 October 2006 (iii) FRS 139: Financial Instruments: Recognition and Measurement Deferred (iv) FRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2007 (v) Amendment to FRS : Employee Benefi ts (vi) - Actuarial Gains and Losses, Group Plans and Disclosures 1 January 2007 Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation 1 July 2007 (vii) FRS 107: Cash Flow Statements 1 July 2007 (viii) FRS 111: Construction Contracts 1 July 2007 (ix) FRS 112: Income Taxes 1 July 2007 (x) FRS 118: Revenue 1 July 2007 (xi) FRS 120: Accounting for Government Grants and Disclosure of Government Assistance 1 July 2007 (xii) FRS 134: Interim Financial Reporting 1 July 2007 (xiii) FRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 July 2007 (xiv) IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities 1 July 2007 (xv) IC Interpretation 2: Members Shares in Co-operative Entities and Similar Instruments 1 July 2007 (xvi) IC Interpretation 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds 1 July 2007 (xvii) IC Interpretation 6: Liabilities arising from Participating in a Specifi c Market - Waste Electrical and Electronic Equipment 1 July 2007 (xviii) IC Interpretation 7: Applying the Restatement Approach under FRS Financial Reporting in Hyperinfl ationary Economies 1 July 2007 (xix) IC Interpretation 8: Scope of FRS 2 1 July 2007 Top Glove Corporation Berhad I Annual Report

70 Notes to the Financial Statements 31 August 2007 (cont d) 2. SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.4 Standards and Interpretations Issued but Not Yet Effective (cont d) The Group is exempted from disclosing the possible impact, if any, to the fi nancial statements upon the initial application of FRS 117, FRS 124 and FRS 139. Except for FRS 112, FRS 117, FRS 124 and FRS 139, the above FRS, amendments to FRS and Interpretations are expected to have no signifi cant impact on the fi nancial statements of the Group upon their initial application. Upon initial application of FRS 112, unused reinvestment allowance will be allowed to be recognised as deferred tax asset to the extent that it is probable that future taxable profi t will be available against which the unused reinvestment allowance can be utilised. The effects on the balance sheet as at 31 August 2007 will be as follows: Effects on balance sheet as at 31 August 2007 Description of Change Increase/(Decrease) FRS 112 RM 000 Group Deferred tax liabilities (1,453) Retained earnings 1, Significant Accounting Estimates and Judgements Key Sources of Estimation Uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below. (i) Depreciation of plant and machinery The cost of plant and machinery for the manufacture of gloves is depreciated on a straight-line basis over the assets useful lives. Management estimates the useful lives of these plant and machinery to be 10 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. (ii) Impairment of goodwill The Group determines whether goodwill are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units ( CGU ) to which goodwill are allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash fl ows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash fl ows. The carrying amounts of goodwill as at 31 August 2007 was RM21,078,000 (2006: RM21,078,000). Further details are disclosed in Note Top Glove Corporation Berhad I Annual Report 2007

71 3. REVENUE Notes to the Financial Statements 31 August 2007 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Sales of goods 1,228, , Management fees from subsidiaries - - 1, Dividend income from subsidiaries ,000 45,500 1,228, ,611 13,290 45, FINANCE COSTS Group Company RM 000 RM 000 RM 000 RM 000 Interest expense 13,948 10, Less: interest expense capitalised in capital work-in-progress (Note 11 (c)) (423) (491) ,525 10, PROFIT BEFORE TAX The following amounts have been included in arriving at profi t before tax: Group Company RM 000 RM 000 RM 000 RM 000 Auditors remuneration: -Statutory audit Overprovision in prior year (1) Bad debts written off Provision for doubtful debts Reversal of provision for doubtful debts (143) Depreciation 43,482 28, Non-executive directors remuneration (Note 7) Net foreign exchange losses 7,745 2, Employee benefi ts expense (Note 6) 94,676 86,543 1, Rental expenses 1,725 1, Property, plant and equipment written off 1, Loss/(gain) on disposal of property, plant and equipment 44 (11) - - Negative goodwill written off (2,862) Interest income (2,552) (772) (1,348) (107) Rental income (417) (333) - - Top Glove Corporation Berhad I Annual Report

72 Notes to the Financial Statements 31 August 2007 (cont d) 6. EMPLOYEE BENEFITS EXPENSE Group Company RM 000 RM 000 RM 000 RM 000 Wages and salaries 86,965 80,193 1,317 - Social security costs Pension costs - defi ned contribution plan 2,630 2, Share options granted under ESOS Other staff related expenses 3,349 3,253 - Directors fees ,676 86,543 1, Included in employee benefi ts expense of the Group and of the Company are executive directors remuneration amounting to RM3,687,000 (2006: RM2,476,000) and RM823,000 (2006: RM146,000) respectively as further disclosed in Note DIRECTORS REMUNERATION Group Company RM 000 RM 000 RM 000 RM 000 Directors of the Company Executive: Salaries and other emoluments 2,394 2, Pension costs - defi ned contribution plan Share Options granted under ESOS Fees Benefi ts-in-kind ,282 2, Non-executive: Fees Other directors Executive: Salaries and other emoluments Pension costs - defi ned contribution plan Benefi ts-in-kind Non-executive: Fees Analysis excluding benefi ts-in-kind: Total executive directors remuneration (Note 6) 3,687 2, Total non-executive directors remuneration (Note 5) Total directors remuneration 3,899 2, Top Glove Corporation Berhad I Annual Report 2007

73 8. INCOME TAX EXPENSE Notes to the Financial Statements 31 August 2007 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Tax expense for the year: Malaysian income tax 9,532 5,392-3,304 Foreign tax Under/(over) provided in prior years 4,204 (184) - (83) 14,486 5,579-3,221 Deferred tax (Note 26): Relating to origination and reversal of temporary differences (471) 7, Under/(over) provided in prior years 1,742 (757) - - 1,271 7, ,757 12,712-3,221 Domestic current income tax is calculated at the Malaysian statutory tax rate of 27% (2006: 28%) of the estimated assessable profi t for the year. The domestic statutory tax rate will be reduced to 26% from the current year s rate of 27%, effective year of assessment The computation of deferred tax as at 31 August 2007 has refl ected these changes. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. A reconciliation of income tax expense applicable to profi t before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows: Group RM 000 RM 000 Profi t before tax 118,644 91,773 Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 32,034 25,696 Different tax rates in other countries Effect of changes in tax rates on opening balance of deferred tax 1,068 - Deferred tax recognised at different tax rates (4,247) - Effect of income subject to tax rate of 20% 30 (41) Effects of tax incentives claimed by foreign subsidiaries (1,383) (4,542) Effect of income not subject to tax (1,612) (30) Expenses not deductible for tax purposes 1,710 1,462 Expenses entitled for double deduction for tax purposes (291) (56) Utilisation of current year s reinvestment allowances (22,272) (8,935) Deferred tax assets not recognised in respect of current year s tax losses and unabsorbed reinvestment allowances 4,438 1 Under/(over) provision of deferred tax in prior years 1,742 (757) Under/(over) provision of income tax expense in prior years 4,204 (184) Income tax expense for the year 15,757 12,712 Top Glove Corporation Berhad I Annual Report

74 Notes to the Financial Statements 31 August 2007 (cont d) 8. INCOME TAX EXPENSE (cont d) Company RM 000 RM 000 Profi t before tax 11,948 45,202 Taxation at Malaysian statutory tax rate of 27% (2006: 28%) 3,226 12,657 Effect of income not subject to tax (3,459) (9,466) Expenses not deductible for tax purposes Overprovision of tax expense in prior year - (83) Income tax expense for the year - 3, EARNINGS PER SHARE (a) Basic Basic earnings per share amounts are calculated by dividing profi t for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the fi nancial year. Group Profi t attributable to ordinary equity holders of the Company (RM 000) 103,795 78,392 Weighted average number of ordinary shares in issue ( 000) 287, ,373 Basic earnings per share (sen) (b) Diluted For the purpose of calculating diluted earnings per share, the profi t for the year attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares in issue during the fi nancial year have been adjusted for the dilutive effects of share options granted to employees. Group Profi t attributable to ordinary equity holders of the Company (RM 000) 103,795 78,392 Weighted average number of ordinary shares in issue ( 000) 287, ,373 Effect of dilution: share options ( 000) 636 1,290 Adjusted weighted average number of ordinary shares in issue and issuable ( 000) 287, ,663 Diluted earnings per share (sen) The comparative basic and diluted earnings per share have been restated to take into account the effect of bonus issue as disclosed in Note Top Glove Corporation Berhad I Annual Report 2007

75 10. DIVIDENDS Notes to the Financial Statements 31 August 2007 (cont d) Dividends Dividends in respect of Year Recognised in Year Group and Company RM 000 RM 000 RM 000 RM 000 RM 000 Recognised during the year: Final tax exempt dividend of 6% paid on 14 March ,713-5,713 Final dividend of 4% less 28% taxation, paid on 14 March ,742-2,742 Interim tax exempt dividend of 7%, paid on 15 September , ,727 Final tax exempt dividend of 6% paid on 15 March ,982-8,982 - Final dividend of 5% less 27% taxation, paid on 15 March ,464-5,464 - Interim tax exempt dividend of 8%, paid on 13 September , ,013 - Proposed for approval: at AGM (not recognised as at 31 August): Final tax exempt dividend of 6% 9, Final dividend of 6%, less 26% taxation 6, ,698 21,173 8,455 26,459 15,182 At the forthcoming Annual General Meeting, a final tax exempt dividend of 6% on 300,479,831 ordinary shares amounting to RM9,014,395 (3 sen per share) and a fi nal dividend of 6% less 26% taxation amounting to RM6,670,652 (2.22 sen per share) in respect of the fi nancial year ended 31 August 2007 will be proposed for shareholders approval. The fi nancial statements for the current fi nancial year do not refl ect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the fi nancial year ending 31 August Top Glove Corporation Berhad I Annual Report

76 Notes to the Financial Statements 31 August 2007 (cont d) 11. PROPERTY, PLANT AND EQUIPMENT * Land Plant Capital and and ** Other work-in- Group buildings equipment assets progress Total RM 000 RM 000 RM 000 RM 000 RM 000 AT 31 AUGUST 2007 Cost At 1 September , ,781 25,932 35, ,562 Additions 10,023 32,976 5,341 57, ,529 Disposals - (160) (446) - (606) Written off (95) (304) (1,281) - (1,680) Reclassifi cation 25,926 29,483 (1,274) (54,135) - Acquisition of subsidiary 9,749 85,203 2, ,812 Exchange differences (60) 2,546 (34) (49) 2,403 At 31 August , ,525 31,007 39, ,020 Accumulated depreciation At 1 September ,080 74,567 8,524-91,171 Depreciation charge for the year 3,343 36,177 3,962-43,482 Disposals - (63) (192) - (255) Written off - (52) (139) - (191) Reclassifi cation (508) - - Acquisition of subsidiary ,064 1,216-22,669 Exchange differences (162) At 31 August , ,362 12, ,397 Net carrying amount At 31 August , ,163 18,306 39, ,623 AT 31 AUGUST 2006 Cost At 1 September , ,794 18,432 38, ,707 Additions 24,511 68,851 5,647 39, ,560 Disposals - (295) (106) - (401) Written off (76) (120) - - (196) Reclassifi cation 5,324 39,352 (459) (44,217) - Acquisition of subsidiary 3,832 8,951 2, ,082 Exchange differences 521 1, ,920 3,810 At 31 August , ,781 25,932 35, , Top Glove Corporation Berhad I Annual Report 2007

77 11. PROPERTY, PLANT AND EQUIPMENT (cont d) Notes to the Financial Statements 31 August 2007 (cont d) * Land Plant Capital and and ** Other work-in- Group buildings equipment assets progress Total RM 000 RM 000 RM 000 RM 000 RM 000 Accumulated depreciation At 1 September ,337 48,103 5,971-59,411 Depreciation charge for the year 1,998 23,795 2,417-28,210 Disposals - (43) (42) - (85) Written off - (1) - - (1) Reclassifi cation (493) - - Acquisition of subsidiary 489 2, ,224 Exchange differences At 31 August ,080 74,567 8,524-91,171 Net carrying amount At 31 August , ,214 17,408 35, ,391 * Land and buildings Long term Freehold land leasehold land Buildings Total RM 000 RM 000 RM 000 RM 000 AT 31 AUGUST 2007 Cost At 1 September ,166 5,563 93, ,872 Additions 3,116 1,253 5,654 10,023 Written off - - (95) (95) Reclassifi cation 1,022-24,904 25,926 Acquisition of subsidiary - 3,900 5,849 9,749 Exchange differences 54 (59) (55) (60) At 31 August ,358 10, , ,415 Accumulated depreciation At 1 September ,732 8,080 Depreciation charge for the year ,089 3,343 Reclassifi cation Acquisition of subsidiary Exchange differences At 31 August ,712 12,334 Net carrying amount At 31 August ,358 10, , ,081 Top Glove Corporation Berhad I Annual Report

78 Notes to the Financial Statements 31 August 2007 (cont d) 11. PROPERTY, PLANT AND EQUIPMENT (cont d) * Land and buildings (cont d) Long term Freehold land leasehold land Buildings Total RM 000 RM 000 RM 000 RM 000 AT 31 AUGUST 2006 Cost At 1 September ,722 3,748 71, ,760 Additions 10,171 1,881 12,459 24,511 Written off - - (76) (76) Reclassifi cation - - 5,324 5,324 Acquisition of subsidiary 483-3,349 3,832 Exchange differences (210) (66) At 31 August ,166 5,563 93, ,872 Accumulated depreciation At 1 September ,015 5,337 Depreciation charge for the year ,912 1,998 Acquisition of subsidiary Exchange differences - (60) At 31 August ,732 8,080 Net carrying amount At 31 August ,166 5,215 85, ,792 ** Other assets comprise motor vehicles, renovation, offi ce furniture and equipment (a) Property, plant and equipment of the Group with the following net carrying amounts are pledged to banks for banking facilities granted to the Group as referred to in Note RM 000 RM 000 Land and buildings 65,309 59,764 Plant and equipment 146, ,266 Other assets 7,692 8, , , Top Glove Corporation Berhad I Annual Report 2007

79 Notes to the Financial Statements 31 August 2007 (cont d) 11. PROPERTY, PLANT AND EQUIPMENT (cont d) (b) During the fi nancial year, the Group acquired property, plant and equipment at aggregate costs of RM105,529,000 (2006: RM138,560,000) of which RM100,000 (2006: RM407,000) were acquired by means of hire purchase arrangements. Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows: RM 000 RM 000 Plant and equipment 4,691 - Motor vehicles 1,264 1,252 5,955 1,252 (c) Interest expense capitalised during the financial year under capital work-in-progress of the Group amounted to RM423,000 (2006: RM491,000), as disclosed in Note INVESTMENTS IN SUBSIDIARIES Company RM 000 RM 000 Unquoted shares, at cost: - in Malaysia 25,620 25,620 - outside Malaysia 3,728 3,728 29,348 29,348 Details of the subsidiaries are as follows: Proportion of Country of ownership Name of company incorporation interest (%) Principal activities Top Glove Sdn. Bhd. ( TGSB )* Malaysia Manufacture and trading of gloves TG Medical Sdn. Bhd.# Malaysia Manufacture and trading of gloves Great Glove Sdn. Bhd.# Malaysia Dormant Top Glove Engineering Sdn. Bhd.# Malaysia Property investment and trading of machinery TG Medical (U.S.A.) Inc # United States Trading of gloves of America Top Glove Corporation Berhad I Annual Report

80 Notes to the Financial Statements 31 August 2007 (cont d) 12. INVESTMENTS IN SUBSIDIARIES (cont d) Proportion of Country of ownership Name of company incorporation interest (%) Principal activities Subsidiaries of TGSB: Great Glove (Thailand) Co. Ltd.# Thailand Manufacture of gloves Top Glove Medical Thailand Manufacture of gloves (Thailand) Co. Ltd.# Top Glove Technology Thailand Producing and selling latex concentrate (Thailand) Co. Ltd.# B Tech Industry Co. Ltd.# Thailand Producing and selling latex concentrate Top Glove (Zhangjiagang) The People s Manufacture of gloves Co. Ltd.# Republic of China Great Glove (Xinghua) The People s Manufacture of gloves Co. Ltd.# Republic of China TG Medical (Zhangjiagang) The People s Trading of gloves Co. Ltd.# Republic of China Top Glove International Sdn. Bhd.# Malaysia Dormant Top Glove Technology Sdn. Bhd.# Malaysia Dormant Medi-Flex Limited ( Medi-Flex )** Singapore 60 - Investment holding Subsidiaries of Medi-Flex: Flexitech Sdn. Bhd. ( Flexitech )* Malaysia 60 - Manufacturing of gloves Hiclean International Pte. Ltd.** Singapore 60 - Trading of gloves Subsidiary of Flexitech: Techniglove Asia Sdn. Bhd.* Malaysia 60 - Trading of gloves * Audited by Ernst & Young, Malaysia ** Audited by member fi rms of Ernst & Young Global in the respective countries # Audited by fi rms other than Ernst & Young Acquisition of Subsidiary On 15 March 2007, the Company through its wholly owned subsidiary, Top Glove Sdn. Bhd. ( TGSB ) subcribed 300,305,829 ordinary shares representing 60.06% of the equity interest in Medi-Flex Limited ( Medi-Flex ), a company incorporated in Singapore and listed on the Singapore Exchange Trading Limited Dealing and Automated System for a cash consideration of RM27.8 million, resulting in the Company to become the ultimate holding company of Medi-Flex. The acquired subsidiary has contributed the following results to the Group: 2007 RM 000 Revenue 22,176 Loss for the year 3,589 If the acquisition had occurred on 1 September 2006, the Group s revenue and profi t for the year would have been approximately RM1,251.6 million and RM87.5 milliion respectively. 78 Top Glove Corporation Berhad I Annual Report 2007

81 Notes to the Financial Statements 31 August 2007 (cont d) 12. INVESTMENTS IN SUBSIDIARIES (cont d) Acquisition of Subsidiary (cont d) The assets and liabilities arising from the acquisition are as follows: Fair value* Acquiree s recognised carrying on acquisition amount RM 000 RM 000 Property, plant and equipment (Note 11) 75,143 75,143 Investments in associate 8,677 8,677 Inventories 7,995 7,995 Trade and other receivables 9,394 9,394 Cash and bank balances 11,674 11, , ,883 Trade and other payables (28,017) (28,017) Borrowings (33,785) (33,785) Fair value of net assets 51,081 Less: Minority interests (20,402) Group s share of net assets 30,679 Negative goodwill (2,862) Total cost of acquisition 27,817 (61,802) (61,802) The cash outfl ow on acquisition is as follows: 2007 RM 000 Purchase consideration satisfi ed by cash 27,604 Cost attributable to the acquisition, paid in cash 213 Total cash outfl ow of the Company 27,817 Cash and cash equivalents of subsidiary acquired (11,674) Net cash outfl ow of the Group (16,143) There were no acquisition subsequent to 31 August * The initial accounting for the above business acquisition has been accounted for using provisional values as the fair values to be assigned to the acquiree s identifi able assets or liabilities can be determined only provisionally, due to certain components of the assets and liabilities acquired require further considerations before the amounts can be fi nally determined. Top Glove Corporation Berhad I Annual Report

82 Notes to the Financial Statements 31 August 2007 (cont d) 13. INVESTMENTS IN ASSOCIATE Group RM 000 RM 000 Unquoted shares at cost 8,677 - Share of post-acquisition reserves 60-8,737 - Details of the associate are as follows: Proportion of Country of ownership Name of company incorporation interest (%) Principal activities Held through subsidiary: Sonic Clean Pte. Ltd. Singapore 21 - Provide all kinds of aqueous cleaning services, consumable cleaning and sub-assembly work in clean room environment, and investment holding The summarised fi nancial information of the associate are as follows: 2007 RM 000 Assets and liabilities Current assets 12,599 Non-current assets 11,245 Total assets 23,844 Current liabilities (6,880) Non-current liabilities (233) Total liabilities (7,113) Results Revenue 22,600 Profi t for the period 1, Top Glove Corporation Berhad I Annual Report 2007

83 14. DUE FROM A SUBSIDIARY Notes to the Financial Statements 31 August 2007 (cont d) Company RM 000 RM 000 Interest bearing at 5.10% to 5.50% per annum 70,000 70,000 Non interest bearing 241,763 76, , ,961 The amounts due from a subsidiary are unsecured and are not receivable within the next twelve months. 15. GOODWILL Group RM 000 RM 000 At 1 September 21,078 5,324 Acquisition of subsidiary - 15,754 At 31 August 21,078 21,078 Impairment tests for goodwill Goodwill has been allocated to the Group s CGUs identifi ed according to the subsidiaries, as follows: RM 000 RM 000 Top Glove (Zhangjiagang) Co. Ltd. 2,378 2,378 Top Glove Medical (Thailand) Co. Ltd. 2,946 2,946 B Tech Industry Co. Ltd. 15,754 15,754 21,078 21,078 Key assumptions used in value-in-use calculations The recoverable amount of a CGU is determined based on value-in-use calculations using cash fl ow projections based on fi nancial budgets approved by management covering a fi ve to seven years period. The key assumptions used for value-in-use calculations are: Gross Margin Discount Rate Top Glove (Zhangjiagang) Co. Ltd. 15% 5% Top Glove Medical (Thailand) Co. Ltd. 10% 5% B Tech Industry Co. Ltd. 7% 5% Top Glove Corporation Berhad I Annual Report

84 Notes to the Financial Statements 31 August 2007 (cont d) 15. GOODWILL (cont d) Key assumptions used in value-in-use calculations (cont d) The following describes each key assumptions on which management has based its cash fl ow projections to undertake impairment testing of goodwill: (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for expected effi ciency improvements. (ii) Discount rate The discount rates used are pre-tax and refl ect specifi c risks relating to the relevant segments. The Group believes that any reasonably possible change in the above key assumptions applied are not likely to materially cause recoverable amount to be lower than its carrying amount. 16. INVENTORIES Group RM 000 RM 000 At cost: Raw materials 27,672 22,414 Consumables and hardware 8,037 6,608 Work-in-progress 14,857 8,379 Finished goods 67,071 56, ,637 93,874 At net realisable value: Finished goods 3,619 8, , , TRADE RECEIVABLES Group RM 000 RM 000 Trade receivables 169, ,768 Less: Provision for doubtful debts (910) (7) 168, ,761 The Group s normal trade credit term ranges from 30 to 90 days. Other credit terms are assessed and approved on a case-by-case basis. 82 The Group has no signifi cant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. Top Glove Corporation Berhad I Annual Report 2007

85 18. OTHER RECEIVABLES Notes to the Financial Statements 31 August 2007 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Due from subsidiaries - interest bearing at 3.44% to 4.02% per annum ,815 - non interest bearing ,264 46,003 Other receivables, deposits and prepayments 10,441 9, ,441 9,042 79,271 70,820 The amounts due from subsidiaries are unsecured and are repayable on demand. The Group has no signifi cant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. 19. CASH AND CASH EQUIVALENTS Group Company RM 000 RM 000 RM 000 RM 000 Cash on hand and in banks 58,586 52,720 12, Fixed deposits with a licensed bank 48,956 6, Money market funds 58,042-36,373 - Cash and bank balances 165,584 59,211 49, Less: Bank overdrafts (Note 20) (1,187) (454) - - Cash and cash equivalents 164,397 58,757 49, Fixed deposits amounting to RM451,000 (2006: RM440,000) are registered in the name of certain directors, who are holding them in trust for the Group. Deposits with a licensed bank of the Group amounting to RM451,000 (2006: RM1,027,000) are pledged to banks as securities. Cash in bank of the Company amounting to RM755,000 (2006: RM755,000) are pledged to bank for Murabahah/Ijarah commercial papers and medium term notes facilities granted to the Company as referred to in Note 28. The weighted average effective interest rates of deposits at the balance sheet date were as follows: Group % % Licensed banks Money market funds Top Glove Corporation Berhad I Annual Report

86 Notes to the Financial Statements 31 August 2007 (cont d) 19. CASH AND CASH EQUIVALENTS (cont d) The average maturities of deposits as at the end of the fi nancial year were as follows: Group Days Days Licensed banks There is no maturity period for money market funds as these money are callable on demand. 20. BORROWINGS Group Company RM 000 RM 000 RM 000 RM 000 Short Term Borrowings Secured: Bank overdrafts (Note 19) 1, Bankers acceptances 4,211 23, Commercial papers - 24,880-24,880 Export credit refi nancing - 20, Revolving credits 33,245 20, Trust receipts - 12, Term loans 23,382 23, Hire purchase payables (Note 21) 1, , ,229-24,880 Long Term Borrowings Secured: Medium term notes 70,000 70,000 70,000 70,000 Term loans 57,328 76, Hire purchase payables (Note 21) 1, , ,439 70,000 70,000 Total Borrowings Bank overdrafts (Note 19) 1, Bankers acceptances 4,211 23, Commercial papers - 24,880-24,880 Export credit refi nancing - 20, Medium term notes 70,000 70,000 70,000 70,000 Revolving credits 33,245 20, Trust receipts - 12, Term loans 80,710 99, Hire purchase payables (Note 21) 2, , ,668 70,000 94, Top Glove Corporation Berhad I Annual Report 2007

87 20. BORROWINGS (cont d) Notes to the Financial Statements 31 August 2007 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Maturity of borrowings (excluding hire purchase) Within one year 62, ,951-24,880 More than 1 year and less than 2 years 41,667 24,544 15,000 - More than 2 years and less than 5 years 82, ,034 55,000 70,000 5 years or more 2,762 8, , ,170 70,000 94,880 The weighted average effective interest rates at the balance sheet date for borrowings, excluding hire purchase payables were as follows: Group Company % % % % Bank overdrafts Bankers acceptances Commercial papers Export credit refi nancing Medium term notes Revolving credits Trust receipts Term loans The above bank borrowings of the Group are secured by way of fi xed and fl oating charges over certain property, plant and equipment and deposits with a licensed bank of the Group as disclosed in Note 11(a) and Note 19 respectively. 21. HIRE PURCHASE PAYABLES Group RM 000 RM 000 Minimum hire purchase payments: Not later than 1 year 1, Later than 1 year and not later than 2 years 1, Later than 2 years and not later than 5 years , Less: Future fi nance charges (169) (54) Present value of hire purchase payables 2, Top Glove Corporation Berhad I Annual Report

88 Notes to the Financial Statements 31 August 2007 (cont d) 21. HIRE PURCHASE PAYABLES (cont d) Group RM 000 RM 000 Present value of hire purchase payables: Not later than 1 year 1, Later than 1 year and not later than 2 years 1, Later than 2 years and not later than 5 years , Analysed as: Due within 12 months (Note 20) 1, Due after 12 months (Note 20) 1, , The hire purchase bore interest at the balance sheet date of between 2.70% to 3.50% (2006: 2.70% to 3.30%) per annum. 22. TRADE PAYABLES The normal trade credit term granted to the Group ranges from 30 to 90 days. 23. OTHER PAYABLES Group Company RM 000 RM 000 RM 000 RM 000 Amounts payable for acquisition of a subsidiary - 9, Sundry payables and accruals 76,764 58,778 1,441 1,189 76,764 68,650 1,441 1, SHARE CAPITAL Group and Company Number of Ordinary Shares Amount RM 000 RM 000 Authorised 400, , , ,000 Issued and fully paid: Ordinary shares of RM0.50 each At 1 September 192, ,639 96,143 94,319 Bonus issue 77,765-38,883 - Private placement 27,218-13,609 - Exercise of ESOS 3,207 3,647 1,603 1,824 At 31 August 300, , ,238 96, Top Glove Corporation Berhad I Annual Report 2007

89 Notes to the Financial Statements 31 August 2007 (cont d) 24. SHARE CAPITAL (cont d) Subsequent to the end of the financial year, the Company increased its issued and paid-up share capital from RM150,237,915 to RM150,255,765 by way of the issuance of 35,700 ordinary shares of RM0.50 each pursuant to the ESOS at an option price of between RM0.62 and RM10.49 per ordinary share. The new ordinary shares ranked pari passu in all respects with the existing ordinary shares of the Company. 25. EMPLOYEE BENEFITS Employee Share Options Scheme The Company s ESOS is governed by the by-laws which was approved by the shareholders at the Extraordinary General Meeting held on 9 January 2003 and became effective on 29 April The main features of the ESOS are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) The ESOS shall be in force for a period of fi ve years from the date of the receipt of the last of the requisite approvals. Eligible persons are employees of the Group (including executive directors) who have been confirmed in the employment of the Group and have served for at least one year before the date of the offer. The eligibility for participation in the ESOS shall be at the discretion of the Options Committee appointed by the Board of Directors. The total number of shares to be issued under the ESOS shall not exceed in aggregate 10% of the issued share capital of the Company at any point of time during the tenure of the ESOS. The option price for each share shall be the 5-days weighted average market price of the underlying shares at the time the ESOS Options are granted, with a discount of not more than ten percent (10%) if deemed appropriate, or the par value of the ordinary shares of the Company of RM0.50, whichever is the higher. No option shall be granted for less than 100 shares to any eligible employee. An option granted under the ESOS shall be capable of being exercised by the grantee by notice in writing to the Company commencing from the date of the offer but before the expiry of fi ve years from the date of the receipt of the last of the requisite approvals. All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respect with the existing ordinary shares of the Company other than as may be specifi ed in a resolution approving the distribution of dividends prior to their exercise dates. The persons to whom the options have been granted have no right to participate by virtue of the options in any share issue of any other company. The options shall not carry any right to vote at a general meeting of the Company. Subsequent to the fi nancial year end, the Company proposed to establish a new ESOS for the eligible persons. The maximum number of new ordinary shares of RM0.50 each to be granted under the proposed new ESOS shall not exceed 15% of the total issued and paid-up share capital of the Company at any point in time during the duration of the proposed new ESOS. The proposed new ESOS will be implemented after the expiring of the existing ESOS on 29 April Top Glove Corporation Berhad I Annual Report

90 Notes to the Financial Statements 31 August 2007 (cont d) 25. EMPLOYEE BENEFITS (cont d) Employee Share Options Scheme (cont d) The terms of share options outstanding as at end of the fi nancial year are as follows: 2007 Number of share options over the ordinary shares of RM0.50 each Balance prior to At adjustment Grant Expiry Exercise beginning for bonus Date Date Price of year Granted Exercised Lapsed issue* RM (2.0) (285.4) (8.0) (4.0) (1.0) (4.6) (7.6) (3.0) (0.4) (4.0) (8.0) (26.0) (431.7) (11.3) (4.0) (17.0) (12.0) (27.0) (13.0) (69.0) (10.0) (2.4) (11.3) (33.7) (41.4) (2.4) , (809.4) (156.5) 1, (71.0) (80.2) (59.2) (7.0) (59.1) (7.0) (41.3) , (2,128.3) (202.6) 2, Top Glove Corporation Berhad I Annual Report 2007

91 25. EMPLOYEE BENEFITS (cont d) Employee Share Options Scheme (cont d) 2007 (cont d) Notes to the Financial Statements 31 August 2007 (cont d) Number of share options over the ordinary shares of RM0.50 each Balance after adjustment Grant Expiry Exercise for bonus At end Date Date Price issue* Granted Exercised Lapsed of year RM (8.4) (136.0) (6.8) (42.3) (2.4) (9.8) (11.2) (46.7) (94.3) (24.4) (2.8) (7.6) (9.8) (5.6) (3.8) (11.8) (4.0) (36.4) , (516.9) - 1, (4.8) (20.2) (13.2) (25.1) (37.0) , , , ,363.6 (1,078.9) (2.4) 3,880.5 * Bonus issue on the basis of two new ordinary shares for every fi ve existing ordinary shares. Top Glove Corporation Berhad I Annual Report

92 Notes to the Financial Statements 31 August 2007 (cont d) 25. EMPLOYEE BENEFITS (cont d) Employee Share Options Scheme (cont d) 2006 Number of share options over the ordinary shares of RM0.50 each At Grant Expiry Exercise beginning At end Date Date Price of year Granted Exercised Lapsed of year RM (15.0) (3.0) (26.0) (12.0) , (967.6) (20.0) (4.0) (15.0) (10.0) (23.0) (92.2) (0.4) (4.0) (91.0) (8.0) (14.4) (37.8) (18.0) (155.0) (97.0) , (1,323.8) (11.0) (62.4) (67.5) (45.9) (78.2) (112.8) (57.2) (101.2) (60.5) (63.4) (0.2) (51.5) (7.0) ,281.5 (54.7) (3.5) 2, (7.0) , ,681.2 (3,646.7) (74.5) 4, Top Glove Corporation Berhad I Annual Report 2007

93 Notes to the Financial Statements 31 August 2007 (cont d) 25. EMPLOYEE BENEFITS (cont d) Employee Share Options Scheme (cont d) Details of share options exercised during the fi nancial year and the fair value, at exercise date, of ordinary shares issued are as follows: Fair Value Number Exercise of Ordinary of Share Considerations Exercise Date Price Shares Options Received RM RM 000 RM Before bonus issue September February , ,844 October February November February After bonus issue September August , ,709 October August November August , ,927 Less: Par value of ordinary shares (1,603) Share premium 17, September August , ,346 October August November August December August January August February August March August April August June August July August , ,829 Less: Par value of ordinary shares (1,824) Share premium 13,005 Top Glove Corporation Berhad I Annual Report

94 Notes to the Financial Statements 31 August 2007 (cont d) 25. EMPLOYEE BENEFITS (cont d) Fair value of share options granted during the year The fair value of share options granted during the year was estimated by using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The fair value of share options measured at grant date and the assumptions are as follows: Fair value of share options at the following grant dates (RM) 5 September October November June Weighted average share price (RM) 8.29 Weighted average exercise price (RM) 8.18 Expected volatility (%) Expected life (years) Risk free rate (%) 3.70 Expected dividend yield (%) The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility refl ects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option were incorporated into the measurement of fair value. 26. DEFERRED TAXATION Group RM 000 RM 000 At 1 September 29,538 22,405 Recognised in the income statement (Note 8) 1,271 7,133 At 31 August 30,809 29,538 The deferred taxation provided in the fi nancial statements represents the temporary differences arising between the amounts attributed to property, plant and equipment for tax purposes and their carrying amount in the financial statements. The Group has unused tax losses of approximately RM13,498,000 (2006 : RM Nil) which can be used to offset against future taxable income, such amount has not been recognised as deferred tax assets in arriving at the above deferred tax liabilities as it has arisen in a subsidiary that has recent history of losses. 92 Top Glove Corporation Berhad I Annual Report 2007

95 Notes to the Financial Statements 31 August 2007 (cont d) 27. RETAINED EARNINGS Presently, Malaysian companies adopt the full imputation system. In the Budget 2008, the Government announced the proposal to introduce the single tier tax system for companies effective from the year of assessment Under the proposed single tier system, the Company shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends paid, credited or distributed by the Company will be exempted from tax in the hands of the shareholders. However, there will be a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. This proposed change in the tax law also provides for the 108 balance to be locked in as at 31 December During the transitional period, the Company can utilise the balance in the 108 account as at 31 August 2007 to distribute cash dividend payments to ordinary shareholdings as defi ned under the Finance Bill, As at 31 August 2007, the Company has suffi cient balance in the 108 account and the balance in the tax-exempt income account to pay franked dividends out of its entire retained earnings. 28. ISLAMIC COMMERCIAL PAPERS/MEDIUM TERM NOTES The Company entered into Murabahah/Ijarah commercial papers and medium term notes facilities which comprised the following: (a) RM100 million Murabahah/Ijarah Commercial Papers ( CP ) The CP facility has an availability period of 7 years from the date of the fi rst issue under the CP programme. CP are issued at discount to face value and have maturity periods of 1 (one), 2 (two), 3 (three), 6 (six), 9 (nine) or 12 (twelve) months. The profi t rates are determined on the formula specifi ed in the rules of fully automated system for tendering of private debt securities ( FAST ) issued by Bank Negara Malaysia ( BNM ). (b) RM100 million Murabahah/Ijarah Medium Term Notes ( MTN ) The MTN facility has an availability period of 15 years from the date of the fi rst issue under the MTN programme. MTN are issued at par or at discount to face value and have a maturity period of more than 1 year to not more than 15 years. The profi t rates are determined on the formula specifi ed in FAST rules issued by BNM. The CP and MTN are secured by an assignment of the Finance Service Reserve Account as disclosed in Note COMMITMENTS Group RM 000 RM 000 Capital expenditure: Approved and contracted for 5,925 28,342 Top Glove Corporation Berhad I Annual Report

96 Notes to the Financial Statements 31 August 2007 (cont d) 30. SIGNIFICANT RELATED PARTY TRANSACTIONS Company RM 000 RM 000 Gross dividends from subsidiaries 12,000 45,500 Management fees from subsidiaries 1, The directors are of the opinion that the transactions above have been entered into in the normal course of business and have been established on negotiated and mutually agreed terms. 31. CONTINGENT LIABILITIES Company RM 000 RM 000 Corporate guarantee issued to fi nancial institutions for credit facilities granted to subsidiaries (unsecured) 129, ,668 Save as disclosed below, the Group is not engaged in any litigation, either as plaintiff or defendant, which may have a material effect on the fi nancial position of the Group. (i) On 8 November 2000, Top Glove Sdn. Bhd. ( TGSB ), a subsidiary of the Company was served a writ of summons by Supermax Glove Manufacturing Sdn. Bhd. ( SGM ) claiming damages for alleged passing off by TGSB of certain coloured boxes bearing the device of a glove containing gloves manufactured by TGSB under the brand name Safemax as boxes containing gloves manufactured by SGM under the brand name Supermax. TGSB s appointed solicitors, have opined that SGM s case against the TGSB is weak and unlikely to succeed. TGSB, in relation to the suit above, has filed its defence and has also filed a counterclaim in the same suit against SGM seeking general damages for the abuse of process and/or unlawful interference with trade or business and/or the commission of deliberate and positive acts designed to injure the Company. The learned Judge was not in favour of fi xing trial dates until all pre-trial directions have been complied with including, inter alia, the fi ling of the relevant bundles of documents. The pre-trial case management was fi xed for 6 July 2004 for parties to fi le all relevant documents for purposes of trial. This date has been extended several times to 14 September 2007 for mention for pre-trial case management and pending a decision on an application for Further and Better Particulars on this suit by TGSB as set out below. 94 Top Glove Corporation Berhad I Annual Report 2007

97 Notes to the Financial Statements 31 August 2007 (cont d) 31. CONTINGENT LIABILITIES (cont d) The court had also fi xed 16 May 2005 for hearing of an application by TGSB for Further and Better Particulars on the above suit. This date was extended to 2 August 2005 and subsequently heard on 13 September 2005 and the said application was fi xed for decision on 11 October The matter however was not listed before the court on 11 October 2005 as the fi le could not be located. The fi le was subsequently located and on 22 February 2006 the court fi xed 31 March 2006 for a decision which was given on 3 April On that date, the court allowed TGSB s application for Further and Better Particulars on the above suit and SGM was given one month to comply with the said order dated 3 April 2006 which was fi xed to be heard on 6 September 2006 and extended to 13 March On 20 July 2007, the court allowed SGM s appeal and fi xed a fi nal case management on 14 September Pursuant to the said case management on 14 September 2007, the court has fi xed the matter for trial on 24 & 25 June (ii) TGSB had commenced legal proceedings against SGM, pursuant to a writ fi led at the Shah Alam High Court on 10 November TGSB among others is claiming for general, aggravated and exemplary damages for maliciously distributing and publishing defamatory words contained in documents relating to Summon No fi led by SGM at the Shah Alam High Court. TGSB among others avers that SGM had, with mala fi de, distributed the said documents with intent to lower TGSB s reputation. SGM had also published defamatory words in its quaterly reports announced by its holding company, Supermax Corporation Berhad to Bursa Malaysia Securities Berhad ( Bursa Securities ) in the years 2000 and The commencement of these legal proceedings was announced to Bursa Securities on 20 December SGM has fi led a statement of defence on the above suit on 17 January 2005 and the TGSB has fi led the reply to defence on 14 February The court had fi xed 6 July 2005 for hearing of an application by TGSB to amend the Statement of Claim to include the Company as an additional plaintiff and Supermax Corporation Berhad as an additional defendant. The matter was heard on 28 September 2005 and a decision was to be given on 14 October 2005 but this was deferred to 18 November 2005 where the court allowed TGSB s application to amend the Statement of Claim and instructed SGM to fi le its amended Statement of Defence. SGM had fi led an application to strike out certain paragraphs of TGSB s Statement of Claim. This matter was also heard on 28 September 2005 and a decision was to be given on 14 October 2005 but this was also deferred to 18 November 2005 when the court dismissed SGM s application to strike out with costs to be paid by SGM. SGM fi led a notice of appeal against both decisions given by the Senior Assistant Registrar on 18 November 2005 above. Appeals against both these decisions were allowed and they were to be heard on 12 and 29 June 2006 and subsequently adjourned to 5 February SGM had also on 14 December 2005 fi led an application to stay the above proceedings until the disposal of SGM s appeal. This application was allowed on 7 March (iii) The Company has been named as one of 39 respondents in United States International Trade Commission ( ITC ) investigation, which Tillotson Corporation instituted on 30 May 2007, for alleged patent infringement of nitrile gloves. The outcome of the abovementioned investigation is not presently determinable. The ITC, however, cannot award monetary damages and the Company s appointed solicitors, have opined that the Company has meritorious defenses. Top Glove Corporation Berhad I Annual Report

98 Notes to the Financial Statements 31 August 2007 (cont d) 32. SEGMENTAL INFORMATION (a) Primary reporting segment - Geographical segments The Group operates in four principal geographical areas of the world and is primarily involved in the gloves manufacturing industry. The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on negotiated and mutually agreed terms. The People s Republic of Malaysia Thailand China Others Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM AUGUST 2007 Revenue External sales 941, ,653 42,673 63,291-1,228,778 Inter-segment sales 43,747 81,670 49,535 - (174,952) - Total revenue 984, ,323 92,208 63,291 (174,952) 1,228,778 Results Operating profi t/(loss) 132,239 6,279 (8,456) 2, ,288 Finance costs (13,525) Share of loss of associate (119) Profi t before tax 118,644 Income tax expense (15,757) Profi t for the year 102,887 Assets Segment assets 731, ,072 85,250 43,877 1,023,813 Investments in associate 8,737 Goodwill 21,078 1,053,628 Liabilities Segment liabilities 290,038 78,115 41,487 6, ,490 Other information Capital expenditure 52,969 34,426 18, ,529 Depreciation 31,133 8,651 3, , Top Glove Corporation Berhad I Annual Report 2007

99 Notes to the Financial Statements 31 August 2007 (cont d) 32. SEGMENTAL INFORMATION (cont d) (a) Primary reporting segment - Geographical segments (cont d) The People s Republic of Malaysia Thailand China Others Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM AUGUST 2006 Revenue External sales 766, ,125 38,148 55, ,611 Inter-segment sales 48,000 22,773 53,715 - (124,488) - Total revenue 814, ,898 91,863 55,358 (124,488) 992,611 Results Operating profi t 83,922 8,734 9,452 1,596 (1,604) 102,100 Finance costs (10,327) Profi t before tax 91,773 Income tax expense (12,712) Profi t for the year 79,061 Assets Segment assets 514, ,222 66,125 29, ,038 Goodwill 21, ,116 Liabilities Segment liabilities 366,921 66,614 37,056 7, ,007 Other information Capital expenditure 103,029 14,719 20, ,560 Depreciation 21,304 4,890 1, ,210 (b) Secondary reporting segment - Business segments As the Group is principally involved in gloves manufacturing industry, segment reporting by business segment is not prepared. 33. FINANCIAL INSTRUMENTS (a) Financial Risk Management Objectives and Policies The Group s fi nancial risk management policy seeks to ensure that adequate fi nancial resources are available for the development of the Group s businesses whilst managing its interest rate, foreign exchange, credit and liquidity risks. Top Glove Corporation Berhad I Annual Report

100 Notes to the Financial Statements 31 August 2007 (cont d) 33. FINANCIAL INSTRUMENTS (cont d) (b) Interest Rate Risk Cash fl ow interest rate risk is the risk that the future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a fi nancial instrument will fl uctuate due to changes in market interest rates. The Group s primary interest rate risk relates to interestbearing debt. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fi xed deposits and money market funds. The Group manages its interest rate exposure by maintaining a prudent mix of fi xed and fl oating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes. The information on maturity dates and effective interest rates of fi nancial assets and liabilities are disclosed in their respective notes. (c) Foreign Exchange Risk The Group is exposed to various currencies especially in United States Dollars, Thailand Baht, Chinese Renminbi and Singapore Dollars. Foreign currency denominated assets and liabilities together with expected cash fl ows from highly probable purchases and sales give rise to foreign exchange exposures. Foreign exchange exposures in transactional currencies other than functional curencies of the operating entities are kept to an acceptable level. Material foreign currency transaction exposures are hedged, mainly with derivative fi nancial instruments such as forward foreign exchange contracts. The net unhedged fi nancial assets and fi nancial liabilities of the Group companies that are not denominated in their functional currencies are as follows: Net Financial Assets/(Liabilities) Held in Non-Functional Currency Functional Currency of Ringgit United States Group Companies Malaysia Dollars Euro Total RM 000 RM 000 RM 000 RM 000 At 31 August 2007 Ringgit Malaysia - 42,035-42,035 Thailand Baht 4,337 21,400 (1,309) 24,428 Chinese Renminbi - (12,931) - (12,931) Singapore Dollars ,358 50,504 (1,309) 53,553 At 31 August 2006 Ringgit Malaysia - (719) - (719) Thailand Baht (290) 17,270-16,980 Chinese Renminbi - (2,939) - (2,939) (290) 13,612-13, Top Glove Corporation Berhad I Annual Report 2007

101 Notes to the Financial Statements 31 August 2007 (cont d) 33. FINANCIAL INSTRUMENTS (cont d) (c) Foreign Exchange Risk (cont d) As at balance sheet date, the Group had entered into United States Dollars forward foreign exchange contracts with notional amount of RM181,432,500 (2006 : RM192,142,000) to hedge anticipated sales. The net unrecognised gains/(losses) as at balance sheet date on forward contracts used to hedge anticipated sales which are expected to occur during the next twelve months and are deferred until the related sales occur, at which time they will be included in the measurement of the sales is as follows: Group RM 000 RM 000 Net unrealised gains/(losses) 4,235 (284) (d) Credit Risk Credit risks or the risk of customers defaulting are minimised and monitored via strictly limiting the Group s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via Group management reporting procedures. The Group does not have any signifi cant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any fi nancial assets. (e) Liquidity The Group manages its debt maturity profi le, operating cash fl ows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains suffi cient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from fi nancial institutions and prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness. (f) Fair Values The carrying amounts of fi nancial assets and liabilities of the Group and of the Company at the balance sheet date approximated their fair values except for the followings: Company Carrying Fair Amount Value Note RM 000 RM 000 Financial Assets At 31 August 2007 Due from a subsidiary ,763 * Due from subsidiaries 18 79,264 * At 31 August 2006 Due from a subsidiary ,961 * Due from subsidiaries 18 70,818 * * It is not practicable to estimate the fair value of the amount due from subsidiaries due principally to a lack of fi xed repayment terms entered into by the parties involved and without incurring excessive costs. Top Glove Corporation Berhad I Annual Report

102 List of Properties The landed properties owned by Top Glove as at 31 August 2007 are set out below: Top Glove Sdn. Bhd. 18, Jalan Mempari 10, Taman Bayu, Batu 5½, Jalan Meru, Klang 36, Jalan Mempari 1, Taman Bayu, Batu 5½, Jalan Meru, Klang 11, Jalan Mempari 11, Taman Bayu, Batu 5½, Jalan Meru, Klang Lot 4968, Jalan Teratai, Batu 6, Off Jalan Meru, Klang 4, Jalan Seri Kenangan 8, Taman Meru 3, Meru, Klang 6, Jalan Seri Kenangan 8, Taman Meru 3, Meru, Klang 23, Jalan Seri Kenangan 8, Taman Meru 3, Meru, Klang 22, Jalan Mempari 1, Taman Bayu, Batu 5½, Jalan Meru, Klang Lot 5987, Jalan Teratai, Batu 5, Off Jalan Meru, Klang Lot 4969, Jalan Teratai, Batu 6, Off Jalan Meru, Klang Lot 18, 27, 38 & 57, Medan Tasek, Kawasan Perindustrian Tasek, Ipoh, Perak GM 581, Lot No , Mukim Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan Lot 4960, Jalan Teratai, Batu 6, Off Jalan Meru, Klang Particulars of Property HS (M) 15256, PT 8368, Mukim of Kapar, District of Selangor HS (M) 15297, PT 8411, Mukim of Kapar, District of Selangor HS (M) 15238, PT 8349, HS (M) 15238, PT 8445, Mukim of Kapar, District of Selangor EMR 6629, Lot 4968, Mukim of Kapar, District of Klang and State of Selangor HS (M) 10354, PT 15485, Mukim of Kapar, District of Selangor HS (M) 10355, PT 15486, Mukim of Kapar, District of Selangor HS (M) 10314, PT 15442, Mukim of Kapar, District of Selangor HS (M) 15304, PT 8419, Mukim of Kapar, District of Selangor EMR 8780, Lot No. 5987, Mukim of Kapar, District of Klang G.M. 2143, Lot No. 4969, Mukim of Kapar, District of Klang Lot 18, 27, 38 & 57, Medan Tasek, Kawasan Perindustrian Tasek, Ipoh, Perak GM 581, Lot No , Mukim Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan GM 2326, Lot No. 4960, Mukim of Kapar, District of Klang, State of Selangor Date of Acquisition (A)/ Revaluation (R) Age of Building (Years) Tenure Description/ Exisiting Use 23/10/97 (A) 10 Freehold Terrace house/ Accomodation for staff 13/2/98 (A) 9 Freehold Terrace house/ Accomodation for staff 15/9/97 (A) 10 Freehold Terrace house/ Accomodation for staff 13/10/93 (A) 13 Freehold Factory/ Glove Manufacturing 29/7/95 (A) 12 Freehold Terrace house/ Accomodation for staff 29/7/95 (A) 12 Freehold Terrace house/ Accomodation for staff 23/5/96 (A) 11 Freehold Terrace house/ Accomodation for staff 15/9/97 (A) 10 Freehold Terrace house/ Accomodation for staff 18/4/96 (A) 7 Freehold Factory/ Glove Manufacturing 11/10/00 (A) 5 Freehold Factory & Offi ce Building 22/11/99 (A) 19 Leasehold (expiring on: Lot Lot Lot Lot ) Factory/ Glove Manufacturing Land Area/ Build-Up Area 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 3 acres/ 66,980 square feet 1,640 square feet/1,400 square feet 1,640 square feet/1,400 square feet 1,608 square feet/1,350 square feet 1,300 square feet/1,100 square feet 2.8 acres/ 57,250 square feet 3 acres/ 41,274 square feet 31,192 square feet/ 197,675 square feet Audited Net Book Value as at (RM 000) , ,516 8,094 11,335 29/11/05 (A) N/A Freehold Vacant 3 acres 1,022 24/09/03 (A) 2 Freehold Factory/ Glove Manufacturing 3 acres/ 58,240 square feet 8, Top Glove Corporation Berhad I Annual Report 2007

103 List of Properties (cont d) Lot 4970, Jalan Teratai, Batu 6, Off Jalan Meru, Klang Lot 4967, Jalan Teratai, Batu 6, Off Jalan Meru, Klang Lot 5104, Jalan Teratai, Batu 5, Off Jalan Meru, Klang Lot 4975, Jalan Teratai, Batu 6 ½, Off Jalan Meru, Klang 21, Jalan Mempari 11, Taman Bayu, Batu 5 ½, Jalan Meru, Klang 37, Jalan Mempari 1, Taman Bayu, Batu 5 ½, Jalan Meru, Klang 6, Jalan Sg. Binjai, Klang 21, Jalan Sesenduk 20, Off Taman Meru Jaya, Klang 23, Jalan Sesenduk 20, Off Taman Meru Jaya, Klang 27, Lorong Tempinis 1, Pekan Meru, Klang 57, Jalan Sesenduk 5, Taman Meru Utama, Klang 51, Jalan Sesenduk 5, Taman Meru Utama, Klang 67, Jalan Sesenduk 6, Taman Meru Utama, Klang 65, Jalan Sesenduk 6, Taman Meru Utama, Klang Lot 4947, Jalan Teratai, Batu 5 ½, Off Jalan Meru, Klang Particulars of Property HS (M) , PT Nos , Mukim of Kapar, District of Klang, State of Selangor GM 5584, Lot No. 4967, Mukim of Kapar, District of Klang, State of Selangor GM 5064, Lot No. 5104, Mukim of Kapar, District of Klang, State of Selangor GM 626, Lot No. 4975, Mukim of Kapar, District of Klang, State of Selangor HS (M) 15324, PT 8441, HS (M) 15242, PT 8353, Mukim of Kapar, District of Klang HS (M) 18522, PT 24689, Mukim of Kapar, District of Klang HS (M) 26112, PT 39636, Mukim Kapar, District of Klang HS (M) 22145, No. PT 29907, Mukim Kapar, District of Klang HS (M) 22146, No. PT 29908, Mukim Kapar, District of Klang HS (M) 3773, PT 1286, Mukim of Kapar, District of Klang GM 7330, Lot No , Mukim Kapar, District of Klang GM 7327, Lot No , Mukim Kapar, District of Klang GM 7311, Lot No , Mukim Kapar, District of Klang GM 7310, Lot No , Mukim Kapar, District of Klang GM 5101, Lot No. 4947, Mukim of Kapar, District of Klang, State of Selangor Date of Acquisition (A)/ Revaluation (R) Age of Building (Years) Tenure Description/ Exisiting Use 20/11/03 (A) 4 Freehold Factory/ Glove Manufacturing 19/03/04 (A) 3 Freehold Factory/ Glove Manufacturing 29/03/04 (A) 1 Freehold Factory/ Glove Manufacturing Land Area/ Build-Up Area 3 acres/ 67,924 square feet 3 acres/ 58,240 square feet 3 acres/ 54,600 square feet Audited Net Book Value as at (RM 000) 6,947 7,649 7,296 05/05/04 (A) N/A Freehold Vacant 3 acres 1,080 12/05/05 (A) 2 Freehold Terrace house/ Accomodation for staff 12/05/05 (A) 2 Freehold Terrace house/ Accomodation for staff 21/03/05 (A) 2 Freehold Terrace house/ Accomodation for staff 13/05/05 (A) 2 Freehold Terrace house/ Accomodation for staff 13/05/05 (A) 2 Freehold Terrace house/ Accomodation for staff 25/05/05 (A) 2 Freehold Terrace house/ Accomodation for staff 19/07/05 (A) 2 Freehold Terrace house/ Accomodation for staff 19/07/05 (A) 2 Freehold Terrace house/ Accomodation for staff 19/07/05 (A) 2 Freehold Terrace house/ Accomodation for staff 19/07/05 (A) 2 Freehold Terrace house/ Accomodation for staff 23/11/04 (A) 2 Freehold Factory/ Glove Manufacturing 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 1,300 square feet/1,100 square feet 3 acres/ 58,240 square feet ,551 Top Glove Corporation Berhad I Annual Report

104 List of Properties (cont d) Particulars of Property Date of Acquisition (A)/ Revaluation (R) Age of Building (Years) Tenure Description/ Exisiting Use Land Area/ Build-Up Area Audited Net Book Value as at (RM 000) 1, 3, 5 & 7, Jalan Abadi 1A/KU8, 1-8, Jalan Abadi 1B/KU8, 1, 3, 5 & 7, Jalan Abadi 1C/KU8, HS (M) (PT No ) HS (M) (PT No ) HS (M) & (PT No & 40374) 29/04/06 (A) 1 Freehold Terrace house/ Accomodation for staff 70,995 square feet 6,549 62, 64, 66, 67, 69, 71, 73, 75 & 77, Jalan Abadi 4/KU8, HS (M) & (PT No & ) 49, 51, 53, 55, 57, 59, 62, 64, 66, 68, 70 & 72, Jalan Abadi 5/KU8 HS (M) & (PT No & ) 46, 48, 50, 52, 54 & 56, Jalan Abadi 6/KU8, Taman Daya Maju, Klang 41, Jalan Abadi 3, Taman Daya Meru, Klang Lot 4991, Jalan Bunga Raya, Batu 5 ½, Off Jalan Meru, Klang Lot 4908, Jalan Teratai, Batu 5 ½, Off Jalan Meru, Klang Lot 4988 & 4989, Mukim Kapar, Klang, Selangor Lot 4986, Batu 5, Jalan Sungai Binjai, Mukim Kapar, Klang Lot 4987, Batu 5, Jalan Teratai, Mukim Kapar, Klang Lot 4990, Jalan Bunga Raya, Batu 5 ½, Off Jalan Meru, Klang HS (M) (PT No ), Mukim Kapar, District of Klang, State of Selangor HS (M) 18218, PT 24467, Mukim Kapar, District of Klang GM 1617, Lot 4991, Mukim of Kapar, District of Klang EMR No. 6605, Lot No. 4908, Mukim of Kapar, District of Klang GM 1584, Lot 4988 & GM 703, Lot 4989, Mukim Kapar, District of Klang, State of Selangor GM 1102, Mukim Kapar, District of Klang, Selangor GM 2619, Mukim Kapar, District of Klang, State of Selangor GM 5116, Lot No. 4990, Mukim of Kapar, District of Klang, State of Selangor 02/12/05 (A) 1 Freehold Terrace house/ Accomodation for staff 1,098 square feet 19/10/04 (A) N/A Freehold Vacant 4.3 acres 3,390 08/07/97 (A) 3 Freehold Hostel/ Accomodation for workers 3 acres/ 54,140 square feet 10/10/05 (A) N/A Freehold Vacant 3 acres & 3.a 05 p 118 2,295 3,293 24/02/06 (A) N/A Freehold Vacant 3 acres 1,654 24/05/06 (A) N/A Freehold Under Construction 3 acres 1,627 05/03/07 (A) N/A Freehold Vacant 3 acres 2, Top Glove Corporation Berhad I Annual Report 2007

105 List of Properties (cont d) TG Medical Sdn. Bhd. Lot 5091, Jalan Teratai, Batu 5, Off Jalan Meru, Klang 19, Jalan Mempari 11, Batu 5½, Jalan Meru, Klang Lot 5972 & 5974, Jalan Teratai, Batu 5, Jalan Meru, Klang Top Glove Engineering Sdn. Bhd. Lot 5987, Jalan Teratai, Batu 5, Off Jalan Meru, Klang, Selangor Darul Ehsan Top Glove Medical (Thailand) Co. Ltd. 188, Moo 5, Karnchanawanich Road Tambon Sumnukgarm Sadao, Songkhla 90320, Thailand Top Glove Technology (Thailand) Co. Ltd. 188, Moo 5, Tambol Pangla Amphur Sadao, Songkhla 90170, Thailand B Tech Industry Co. Ltd. 268 M.5, T.Kampangphet A.Rattaphum, Songkhla 90180, Thailand TG Medical (U.S.A.) Inc , North Aspan Avenue, Azusa, CA Top Glove (ZhangJiaGang) Co. Ltd. 53, Zhenbei Road, Xizhang Street, Fenghuang Town Zhangjiagang City, Jiangsu Province , China Great Glove (XingHua) Co. Ltd. South Weiwu Road, West of Xihuan Road, Xinghua Economic Developing District, Jiangsu Province, China Flexitech Sdn. Bhd. Lot 127, Jalan 6, Komplek Olak Lempit, Mukim Tanjung 12, Banting, Selangor D.E. Lot 128, Jalan 8, Komplek Olak Lempit, Mukim Tanjung 12, Banting, Selangor D.E. Particulars of Property EMR 6510, Lot No. 5091, Mukim of Kapar, Districtof Klang, State of Selangor HS (M) 15241, PT No. 8352, HS (M) 15325, PT No. 8442, Mukim of Kapar, District of Selangor EMR 8769, Lot 5972 & 5974, Mukim of Kapar, District of Klang, State of Selangor EMR 8780, Lot No. 5987, Mukim of Kapar, District of Klang, State of Selangor Nor Sor 3 Kor, No. 2655, Tambon Sumnukgarm Ampur Sadao, Songkhla, Thailand Nor Sor 3 Kor, No. 3275, 3277, 6010, Tambon Pangla Ampur Sadao, Songkhla, Thailand 1. Nor Sor 3 Kor No Nor Sor 4 Jor No Nor Sor 4 Jor No.5944 Ssessor s ID # No , Zhangjiagang City, Xizhang Town, West Road, Southern Side South Wei Wu Lu, Zhao Yang Zheng, Xinghua City HS (M) 5735, PT4065, Komplek Perabot Olak Lempit, Mukim Tanjung 12, Daerah Kuala Langat HS (M) 5719, PT4049, Komplek Perabot Olak Lempit, Mukim Tanjung 12, Daerah Kuala Langat Date of Acquisition (A)/ Revaluation (R) 8/5/98 (A) 25/10/95 (A) 1/7/99 (A) Age of Building (Years) Tenure Freehold Freehold Freehold Description/ Exisiting Use Factory/ Glove Manufacturing Terrace house/ Accomodation for staff Factory/ Glove Manufacturing 18/4/96 (A) 7 Freehold Factory /Glove Manufacturing 5/10/01 (A) 5 Freehold Factory & Offi ce Building 23/02/06 (A) 2 months Freehold Factory & Offi ce Building 01/08/06(A) 5 Freehold Factory & Offi ce Building 31/03/05 (A) 2 Freehold Warehouse & Offi ce Building 10/09/02 (A) 5 Leasehold (expiring on ) 13/10/05 (A) 22 months 15/09/05 (A) 02/08/05 (A) Leasehold (expiring on Oct 2056) Leasehold (expiring on 26th Sep 2087) Leasehold (expiring on 26th Sep 2087) Factory & Offi ce Building Factory & Offi ce Building, Industrial Usage Factory Factory Land Area/ Build-Up Area 3 acres/ 68,490 square feet 1,300 square feet/1,100 square feet Approx acres/47,200 square feet 2.8 acres/ 57,250 square feet Approx acres Approx 40.4 acres Approx 482,048 square feet Approx 47,896 sq ft/ 25,878 sq ft Approx 60,121.8 sq meter/ 21,703 square meter 112,234.8 square meter Approx 11, square meter Approx 11, square meter Audited Net Book Value as at (RM 000) 5,790 Top Glove Corporation Berhad I Annual Report ,867 2,107 8,821 12,237 5,285 8,828 11,812 9,951 3,981 3,426

106 Analysis of Shareholdings as at 16 October 2007 Authorised Share Capital Issued and Fully Paid-Up Capital Class of Shares Voting Rights : RM200,000,000 : RM150,239, : Ordinary Shares of RM0.50 each : One vote per ordinary share 1. DISTRIBUTION OF SHAREHOLDERS Size of Holdings No. of Holders % No. of Shares % , ,000 1, , ,001-10,000 1, ,942, , , ,842, ,001-14,961,260 (less than 5% of Issued Shares) ,076, ,961,261 (5% of Issued Shares) and above ,519, , ,225, LIST OF SUBSTANTIAL SHAREHOLDERS The Substantial Shareholders of Top Glove Corporation Berhad ( Top Glove ) based on the Register of Substantial Shareholders of the Company and their respective shareholdings are as follows: No. of Ordinary Shares Held No. Substantial Shareholders Direct % Indirect % 1. Tan Sri Dr. Lim, Wee-Chai 87,242, ,763,821* Puan Sri Tong Siew Bee 4,597, ,408,847** Lim Hooi Sin 7,105, ,901,540*** Lim Quee Choo 2,983, ,022,852**** Top Glove Holding Sdn. Bhd. 16,076, Matthews International Capital Management, LLC 18,102, Note: * Deemed interested through Puan Sri Tong Siew Bee, Mr. Lim Hooi Sin, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove ** Deemed interested through Tan Sri Dr. Lim, Wee-Chai, Mr. Lim Hooi Sin, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove *** Deemed interested through Tan Sri Dr. Lim, Wee-Chai, Puan Sri Tong Siew Bee, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove **** Deemed interested through Tan Sri Dr. Lim, Wee-Chai, Puan Sri Tong Siew Bee, Mr. Lim Hooi Sin and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove 104 Top Glove Corporation Berhad I Annual Report 2007

107 Analysis of Shareholdings as at 16 October 2007 (cont d) 3. DIRECTORS SHAREHOLDINGS The Directors Shareholdings of Top Glove based on the Record of Depositors are as follows: No. of Ordinary Shares Held No. Directors Direct % Indirect % 1. Tan Sri Dr. Lim, Wee-Chai 87,242, ,763,821* Puan Sri Tong Siew Bee 4,597, ,408,847** Lim Hooi Sin 7,105, ,901,540*** Sekarajasekaran a/l Arasaratnam 10,466, Lau Boon Ann 274, Tan Sri Datuk (Dr.) Arshad Bin Ayub 1,630, Lee Kim Meow 763, ,000**** Quah Chin Chye Lim Cheong Guan Note: * Deemed interested through Puan Sri Tong Siew Bee, Mr. Lim Hooi Sin, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove ** Deemed interested through Tan Sri Dr. Lim, Wee-Chai, Mr. Lim Hooi Sin, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove *** Deemed interested through Tan Sri Dr. Lim, Wee-Chai, Puan Sri Tong Siew Bee, Ms. Lim Quee Choo and Top Glove Holding Sdn. Bhd. s direct interest in Top Glove **** Deemed interested through Ms. Chung Lee Moy 4. LIST OF THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS No. Names Shareholdings % 1. Tan Sri Dr. Lim, Wee-Chai 60,992, Tan Sri Dr. Lim, Wee-Chai 24,917, HSBC Nominees (Asing) Sdn. Bhd. 15,609, BBH and Co. Boston for Matthews Pacifi c Tiger Fund 4. HSBC Nominees (Asing) Sdn. Bhd. 13,820, HSBC-FS for The Overlook Partners Fund LP 5. Portola Investment Holdings Corp. 13,591, Cartaban Nominees (Asing) Sdn. Bhd. 8,220, SSBT Fund HG22 for Smallcap World Fund, Inc. 7. Top Glove Holding Sdn. Bhd. 7,700, Employees Provident Fund Board 5,771, Mayban Nominees (Tempatan) Sdn. Bhd. 5,439, Mayban Trustees Berhad for Public Ittikal Fund 10. Cartaban Nominees (Asing) Sdn. Bhd. 5,160, SSBT Fund D26J for Emerging Markets Global Small Capitalization Fund 11. Mayban Nominees (Tempatan) Sdn. Bhd. 4,643, Mayban Trustees Berhad for Public Regular Savings Fund Top Glove Corporation Berhad I Annual Report

108 Analysis of Shareholdings as at 16 October 2007 (cont d) 4. LIST OF THIRTY LARGEST SECURITIES ACCOUNTS HOLDERS (cont d) No. Names Shareholdings % 12. Cartaban Nominees (Asing) Sdn. Bhd. 4,609, SSBT Fund ZM47 for Aim Developing Markets Fund 13. Lim Hooi Sin 4,532, HSBC Nominees (Asing) Sdn. Bhd. 3,955, TNTC for Saudi Arabian Monetary Agency 15. Top Glove Holding Sdn. Bhd. 3,941, Amanah Raya Nominees (Tempatan) Sdn. Bhd. 3,879, Skim Amanah Saham Bumiputera 17. Cartaban Nominees (Asing) Sdn. Bhd. 3,625, SSBT Fund HG19 for Global Small Capitalization 18. EB Nominees (Tempatan) Sendirian Berhad 3,420, Pledged Securities Account for Sekarajasekaran a/l Arasaratnam 19. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 3,251, Public Equity Fund 20. Citigroup Nominees (Tempatan) Sdn. Bhd. 3,000, Pledged Securities Account for Sekarajasekaran a/l Arasaratnam 21. Puan Sri Tong Siew Bee 2,923, Top Glove Holding Sdn. Bhd. 2,906, HSBC Nominees (Asing) Sdn. Bhd. 2,666, Exempt an for JPMorgan Chase Bank, National Association 24. HSBC Nominees (Asing) Sdn. Bhd. 2,663, Dresdner Bank Luxembourg SA for Dit-Bric Stars 25. Lim Hooi Sin 2,572, Amanah Raya Nominees (Tempatan) Sdn. Bhd. 2,399, Public Growth Fund 27. HSBC Nominees (Asing) Sdn. Bhd. 2,287, Exempt an for JPMorgan Chase Bank, National Association 28. Amanah Raya Nominees (Tempatan) Sdn. Bhd. 2,241, Public Islamic Equity Fund 29. HSBC Nominees (Asing) Sdn. Bhd. 2,219, KBC Bank NV Brussels for KBC Equity Fund 30. Cartaban Nominees (Asing) Sdn. Bhd. 2,007, UBOC Global Custody for MTap Asian Institution Partners LP Note: The analysis of shareholdings is based on the issued and paid-up capital of the Company after deducting 1,254,600 ordinary shares bought back by the Company and held as treasury shares as at 16 October Top Glove Corporation Berhad I Annual Report 2007

109 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Ninth Annual General Meeting of the Company will be held at Sime Darby Convention Centre, Banyan & Casuarina Function Rooms (Ground Floor) of 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Wednesday, 9 January 2008 at a.m. for the following purposes: AGENDA 1. To receive the Audited Financial Statements for the fi nancial year ended 31 August 2007 together with the Reports of the Directors and the Auditors thereon. 2. To approve the declaration of the Final Dividend of 6% less 26% Malaysian Income Tax and 6% Tax Exempt for the fi nancial year ended 31 August To approve the payment of Directors Fees for the fi nancial year ended 31 August (Resolution 1) (Resolution 2) 4. To re-elect the following Directors who retire pursuant to Article 94 of the Company s Articles of Association and being eligible, have offered themselves for re-election: (a) (b) Mr. Lau Boon Ann Mr. Quah Chin Chye (Resolution 3) (Resolution 4) 5. To pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965: That pursuant to Section 129(6) of the Companies Act, 1965, the following Directors who have attained the age of seventy (70) years, be and are hereby re-appointed as Directors of the Company and to hold offi ce until the conclusion of the next Annual General Meeting: (a) (b) Tan Sri Datuk (Dr.) Arshad Bin Ayub Mr. Sekarajasekaran a/l Arasaratnam (Resolution 5) (Resolution 6) 6. To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fi x their remuneration. (Resolution 7) 7. As Special Business To consider and, if thought fi t, with or without any modifi cation, to pass the following resolutions which will be proposed as Ordinary and Special Resolutions: Ordinary Resolution No. 1 - Authority To Issue Shares Pursuant To Section 132D Of The Companies Act, 1965 THAT subject to Section 132D of the Companies Act, 1965 and approvals of the relevant governmental/ regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fi t, provided that the aggregate number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company. (Resolution 8) Top Glove Corporation Berhad I Annual Report

110 Notice of Annual General Meeting (cont d) Ordinary Resolution No. 2 - Proposed Renewal of Authority For Share Buy-Back THAT subject to the Companies Act, 1965, the Company s Memorandum and Articles of Association, the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the approvals of all relevant governmental and/or regulatory authority (if any), the Company be and is hereby authorised to purchase such amount of ordinary shares of RM0.50 each in the Company ( Proposed Share Buy-Back ) as may be determined by the Board from time to time through Bursa Securities upon such terms and conditions as the Board may deem fi t and expedient in the interest of the Company provided that the aggregate number of shares purchased pursuant to this resolution shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company; AND THAT the maximum amount of funds to be utilised for the purpose of the Proposed Share Buy-Back shall not exceed the Company s aggregate retained profi ts and/or share premium account; AND THAT at the discretion of the Board, the shares of the Company to be purchased are proposed to be cancelled and/or retained as treasury shares and/or distributed as dividends and/or resold on Bursa Securities; AND THAT such authority shall commence immediately upon passing of this resolution until: (i) the conclusion of the next Annual General Meeting of the Company at which time the authority shall lapse unless by ordinary resolution passed at a general meeting, the authority is renewed either unconditionally or subject to conditions; (ii) the expiration of the period within which the next Annual General Meeting is required by law to be held; or (iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting, whichever is the earlier; AND THAT the Board be and is hereby authorised to take such steps to give full effect to the Proposed Share Buy-Back with full power to assent to any conditions, modifi cations, variations and/or amendments as may be imposed by the relevant authorities and/or to do all such acts and things as the Board may deem fi t and expedient in the best interest of the Company. (Resolution 9) Ordinary Resolution No. 3 - Proposed Issue of Options to Mr. Lee Kim Meow, Executive Director of the Company THAT the Directors be and are hereby authorised at any time and from time to time to offer and to grant to Mr. Lee Kim Meow, Executive Director of the Company, options to subscribe for such number of ordinary shares up to a maximum of 600,000 new ordinary shares of RM0.50 each in the Company to be allotted and issued subject always to such terms and conditions and/or adjustments which may be made in accordance with the provisions of the Bye-Laws governing and constituting the Company s Employees Share Option Scheme and to allot and issue ordinary shares in the Company pursuant to the exercise of such options notwithstanding that the issue thereof may take place after the next or any ensuing annual general meeting of the Company. (Resolution 10) 108 Top Glove Corporation Berhad I Annual Report 2007

111 Notice of Annual General Meeting (cont d) Ordinary Resolution No. 4 - Proposed Issue of Options to Mr. Lim Cheong Guan, Executive Director of the Company THAT the Directors be and are hereby authorised at any time and from time to time to offer and to grant to Mr. Lim Cheong Guan, Executive Director of the Company, options to subscribe for such number of ordinary shares up to a maximum of 200,000 new ordinary shares of RM0.50 each in the Company to be allotted and issued subject always to such terms and conditions and/or adjustments which may be made in accordance with the provisions of the Bye-Laws governing and constituting the Company s Employees Share Option Scheme and to allot and issue ordinary shares in the Company pursuant to the exercise of such options notwithstanding that the issue thereof may take place after the next or any ensuing annual general meeting of the Company. Special Resolution - Proposed Amendments to the Articles of Association of the Company THAT the alteration, modifi cations, deletions and/or additions to the Articles of Association of the Company as set out in Appendix I of Part B (ii) of the Circular to Shareholders be and are hereby approved; AND THAT the Directors of the Company be and are hereby authorised to assent to any condition, modifi cation, variation and/or amendment as may be required by Bursa Malaysia Securities Berhad; AND THAT the Directors and Secretary of the Company be and are hereby authorised to carry out all the necessary formalities in effecting the amendments as set out in Appendix I of Part B (ii) of the Circular to Shareholders. 8. To transact any other ordinary business for which due notice shall have been given. (Resolution 11) (Resolution 12) NOTICE OF DIVIDEND ENTITLEMENT NOTICE IS ALSO HEREBY GIVEN THAT the Final Dividend of 6% less 26% Malaysian Income Tax and 6% Tax Exempt in respect of the fi nancial year ended 31 August 2007 will be payable on 14 March 2008 to depositors who are registered in the Record of Depositors at the close of business on 15 February 2008, if approved by Members at the forthcoming Ninth Annual General Meeting on 9 January A Depositor shall qualify for entitlement only in respect of: (a) (b) Shares transferred into the Depositor s Securities Account before 4.00 p.m. on 15 February 2008 in respect of ordinary transfers; and Shares bought on Bursa Malaysia Securities Berhad ( Bursa Securities ) on a cum entitlement basis according to the Rules of Bursa Securities. By Order of the Board CHUA SIEW CHUAN (MAICSA ) Company Secretary Kuala Lumpur Dated: 27 November 2007 Top Glove Corporation Berhad I Annual Report

112 Notice of Annual General Meeting (cont d) Explanatory Note to Special Business: 1. Authority pursuant to Section 132D of the Companies Act, 1965 The proposed adoption of the Ordinary Resolution No. 1 is primarily to give fl exibility to the Board of Directors to issue and allot shares at any time in their absolute discretion without convening a general meeting. 2. Proposed Renewal of Authority for Share Buy-Back The proposed adoption of the Ordinary Resolution No. 2 is to renew the authority granted by the shareholders of the Company at the Extraordinary General Meeting held on 10 January The proposed renewal will allow the Board of Directors to exercise the power of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company any time within the time period stipulated in the Listing Requirements of Bursa Malaysia Securities Berhad. 3. Proposed Issue of Options to Mr. Lee Kim Meow, Executive Director of the Company The proposed adoption of the Ordinary Resolution No. 3 is to offer and to grant options to subscribe for ordinary shares to the Eligible Director. 4. Proposed Issue of Options to Mr. Lim Cheong Guan, Executive Director of the Company The proposed adoption of the Ordinary Resolution No. 4 is to offer and to grant options to subscribe for ordinary shares to the Eligible Director. 5. Proposed Amendments to the Articles of Association The proposed adoption of the Special Resolution is to enable the Company to streamline the existing Articles of Association with current developments under the Listing Requirements of Bursa Malaysia Securities Berhad and provide clarity in the Articles of Association. Notes: 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Sections 149(1) (a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company. 2. Where a holder appoints two or more proxies, the appointment shall be invalid unless he specifi es the proportion of his shareholdings to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an offi cer or attorney duly authorised. 4. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than 48 hours before the time for holding the Meeting or at any adjournment thereof. STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING The Directors who are standing for re-election at the Ninth Annual General Meeting of the Company are as follows: Name of Directors Shareholdings Details of Individual Director and of Directors other Disclosure Requirements Tan Sri Datuk (Dr.) Arshad Bin Ayub Refer to page 105 Refer to page 9 (Section 129(6) of the Companies Act, 1965) of the Annual Report. of the Annual Report. Mr. Sekarajasekaran a/l Arasaratnam Refer to page 105 Refer to page 11 (Section 129(6) of the Companies Act, 1965) of the Annual Report. of the Annual Report. Mr. Lau Boon Ann Refer to page 105 Refer to page 11 (Article 94 of the Company s Articles of Association) of the Annual Report. of the Annual Report. Mr. Quah Chin Chye Refer to page 105 Refer to page 12 (Article 94 of the Company s Articles of Association) of the Annual Report. of the Annual Report. 110 Top Glove Corporation Berhad I Annual Report 2007

113 Form of Proxy *I/We (full name in capital letters) (NRIC/Company No. ) of (full address) being a *Member/Members of TOP GLOVE CORPORATION BHD. ( the Company ), do hereby appoint (full name in capital letters) (NRIC No. ) of (full address) or failing *him/her, (full name in capital letters) (NRIC No. ) of (full address) or failing *him/her, *the CHAIRMAN OF THE MEETING, as *my/our proxy to attend and vote for *me/us, and on *my/our behalf at the Ninth Annual General Meeting of the Company to be held at Sime Darby Convention Centre, Banyan & Casuarina Function Rooms (Ground Floor) of 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Wednesday, 9 January 2008 at a.m. and at any adjournment thereof. Please indicate with an X in the spaces provided below how you wish your votes to be casted. If no specifi c direction as to voting is given, the Proxy will vote or abstain from voting at his/her discretion. Agenda Nos. Resolutions For Against 1 To receive the Audited Financial Statements for the fi nancial year ended 31 August 2007 together with the Reports of the Directors and the Auditors thereon. 2 To approve the declaration of the Final Dividend of 6% less 26% Malaysian Income Tax and 6% Tax Exempt for the fi nancial year ended 31 August (Resolution 1) 3 To approve the payment of Directors Fees for the financial year ended 31 August (Resolution 2) 4 (a) To re-elect the Director, Mr. Lau Boon Ann who retires pursuant to Article 94 of the Company s Articles of Association. (Resolution 3) 4 (b) To re-elect the Director, Mr. Quah Chin Chye who retires pursuant to Article 94 of the Company s Articles of Association. (Resolution 4) 5 (a) To re-elect the Director, Tan Sri Datuk (Dr.) Arshad Bin Ayub who retires pursuant to Section 129(6) of the Companies Act, (Resolution 5) 5 (b) To re-elect the Director, Mr. Sekarajasekaran a/l Arasaratnam who retires pursuant to Section 129(6) of the Companies Act, (Resolution 6) 6 To re-appoint Messrs. Ernst & Young as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fi x their remuneration. (Resolution 7) 7 As Special Business Ordinary Resolution No. 1 - Authority to issue shares pursuant to Section 132D of the Companies Act, (Resolution 8) Ordinary Resolution No. 2 - Proposed Renewal of Authority for Share Buy-Back. (Resolution 9) Ordinary Resolution No. 3 - Proposed Issue of Options to Mr. Lee Kim Meow, Executive Director of the Company. (Resolution 10) Ordinary Resolution No. 4 - Proposed Issue of Options to Mr. Lim Cheong Guan, Executive Director of the Company. (Resolution 11) Special Resolution - Proposed Amendments to the Articles of Association of the Company. (Resolution 12) * Strike out whichever not applicable. Signed on this day of 2007/2008 Number of Shares held CDS Account No. Signature of Member/Common Seal Notes: 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Sections 149(1) (a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company. 2. Where a holder appoints two or more proxies, the appointment shall be invalid unless he specifi es the proportion of his shareholdings to be represented by each proxy. 3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an offi cer or attorney duly authorised. 4. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than 48 hours before the time for holding the Meeting or at any adjournment thereof. Top Glove Corporation Berhad I Annual Report

114 Fold this flap for sealing Then fold here STAMP The Company Secretary Top Glove Corporation BERHAD ( X) Level 7, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara Damansara Heights Kuala Lumpur, Malaysia 1st fold here

115 F9 Corporate Office & Factory A W A R D E D I S O CORPORATE OFFICE (FACTORY 9) Address : Lot 4969, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 1905 Fax : / s : (i) top@topglove.com.my (ii) tgmed@po.jaring.my (iii) topg@po.jaring.my Website : U.S.A. Marketing Office Tg Medical (U.S.A.) Inc., 165, North Aspan Avenue, CA 91702, U.S.A. Tel : Fax : topglove@topgloveusa.com F2 FACTORY 2 Lot 4968, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 1905 Fax : / 8410 F12 FACTORY 12 Lot 4960, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : Fax : F3 FACTORY 3 Lot 5091, Jalan Teratai, Batu 5, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 7350 Fax : / 9160 F13 FACTORY 13 Lot 4947, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : Fax : F4 FACTORY 4 Lot 5987, Jalan Teratai, Batu 5, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 8996 Fax : F14 FACTORY 14 Lot 5104, Jalan Teratai, Batu 5, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 7350 Fax : / 9160 F5 FACTORY 5 Lot 18, 27, 38 & 57, Medan Tasek, Kawasan Perindustrian Tasek, Ipoh, Perak D.R., Malaysia Tel : / Fax : F15 FACTORY 15 South of Weiwu Road, West of Xihuan Road, Xinghua Economic Developing District Jiang Su Provience, China Tel : / Fax : F6 FACTORY 6 180/3, M. 7, Srisonthon Rd. A, Thalang, Phuket 83110, Thailand Tel : / Fax : F16L FACTORY 16L 188, Moo 5, Tambol Pangla Amphur Sadao, Songkhla Thailand Tel : Fax : F7 FACTORY 7 188, Moo 5, Karnchanawanich Rd. Tambon, Sumnukgram, Sadao, Songkhla, Thailand Tel : Fax : F17L FACTORY 17L 268, M.5 T. Kampangphet A. Rattaphum, Songkhla Thailand Tel : Fax : F8 F11 F10 FACTORY 8 53, Zhenbei Road, Xizhang Street, Fenghuang Town Zhangjiagang City, Jiangsu Province , China Tel : Fax : FACTORY 10 Lot 4970, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : / 1905 Fax : / 8410 FACTORY 11 Lot 4967, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : Fax : F18A FACTORY 18A Lot 5071, Batu 5 ½, Jalan Meru, Klang, Selangor D.E., Malaysia Tel : Fax : Top Glove Corporation Berhad ( X) I Annual Report 2007 F18B FACTORY 18B Lot 124 & 126, Jalan Lapan, Kompleks Olak Lempit, KM 13, Jalan Banting Dengkil, Banting, Selangor D.E., Malaysia Tel : Fax : F19 FACTORY 19 (by December 2007) Lot 4987, d/a Jalan Bunga Raya, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia Tel : Fax :

116 A W A R D E D I S O The World s Largest Rubber Glo ve Manufacturer The World Is Our Market A l w a y s S t a y i n g At The Top North America Europe Asia Middle East Latin America Africa A W A R D E D I S O Oceania 32 Billion Gloves per annum* 19 Factories 354 Production Lines* 9,000 Employees* *By 31 March 2008 TOP GLOVE CORPORATION BERHAD ( X) Lot 4969, Jalan Teratai, Batu 6, Off Jalan Meru, Klang, Selangor D.E., Malaysia. Tel : /1905 Fax : / top@topglove.com.my / topg@po.jaring.my Visit us at website :