BASWELL-AnnualReport2010 (1.2MB)

Annual Report 2010
Rise above adversity
CONTENTS
NOTICE OF ANNUAL GENERAL MEETING CORPORATE STRUCTURE CORPORATE INFORMATION DIRECTORS PROFILE CHAIRMANS STATEMENT STATEMENT ON CORPORATE GOVERNANCE AUDIT COMMITTEE REPORT STATEMENT ON INTERNAL CONTROL DIRECTORS RESPONSIBILITY STATEMENT OTHER COMPLIANCE INFORMATION FINANCIAL STATEMENTS LIST OF LANDED PROPERTIES ANALYSIS OF SHAREHOLDINGS FORM OF PROXY
23 4 5 69 10 11 14 15 18 19 20 21 22 23 59 60 61 62 Enclosed
Annual Report 2010
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting (AGM) of the Company will be held at Wisma Baswood, Lot 6516, Batu 5-3/4, Jalan Kapar, 42100 Klang, Selangor Darul Ehsan on Wednesday, 30 March 2011 at 9:00 a.m. for the following purposes: AGENDA 1. To receive the Audited Financial Statements for the financial year ended 30 September 2010 together with the Reports of the Directors and the Auditors thereon. To approve the payment of Directors Fees for the financial year ended 30 September 2010. To re-elect the following Directors who are retiring pursuant to Article 119 of the Companys Articles of Association and being eligible, have offered themselves for re-election: (a) Dr. Lai Chee Chuen; and (b) Mr. Chong Yong Kai. 4. To consider and if thought fit, to pass the following ordinary resolution in accordance with Section 129(6) of the Companies Act, 1965: That pursuant to Section 129(6) of the Companies Act, 1965, Mr. Lim Boon Chiang be and is hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting. 5. To re-appoint Messrs. Thiang & Co. as Auditors of the Company until the conclusion of the next Annual General Meeting of the Company and to authorise the Directors to fix their remuneration. As Special Business To consider and if thought fit, with or without any modification, to pass the following resolution as an Ordinary Resolution: ORDINARY RESOLUTION - Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965 THAT pursuant to Section 132D of the Companies Act, 1965 and the 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 fit, PROVIDED THAT the aggregate number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company for the time being; AND THAT 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. 7 . To transact any other business of which due notice shall have been given. (Resolution 2) (Resolution 3) (Resolution 1)
2. 3.
(Resolution 4)
(Resolution 5)
6.
(Resolution 6)
By Order of the Board CHUA SIEW CHUAN (MAICSA 0777689) ELAINE WONG WEI SYN (MAICSA 7048544) Company Secretaries 8 March 2011
BASWELL RESOURCES BERHAD (540508-D)
NOTICE OF ANNUAL GENERAL MEETING (CONTD)
Explanatory Note to Special Business: Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act 1965 at the Tenth AGM of the Company (hereinafter referred to as the General Mandate). The Company had been granted a General Mandate by its shareholders at the Ninth AGM of the Company held on 30 March 2010 (hereinafter referred to as the Previous Mandate). The Previous Mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom. The purpose to seek the General Mandate is to enable the Directors of the Company to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time and cost-consuming to organise a general meeting. This authority unless revoked or varied by the Company in general meeting, will expire at the next AGM. The proceeds raised from the General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding current and/or future investment project(s), working capital and/or acquisition(s). Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 24 March 2011 (General Meeting Record of Depositors) shall be eligible to attend the Meeting. 2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him. 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 Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. 3. A member shall not be entitled to appoint more than two (2) proxies to attend and vote provided that where a member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depository) Act 1991, he may appoint at least one (1) proxy in respect of each securities account he holds with ordinary shares of the Company standing to the credit of the said securities account. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised. 5. The instrument appointing a proxy or a power of attorney must be deposited at Securities Services (Holdings) Sdn. Bhd. of Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting.
Annual Report 2010
CORPORATE STRUCTURE
WOODMASTER FURNITURE CONSOLIDATION SDN. BHD. (619555-T)
100%
BASWOOD INDUSTRIES SDN. BHD. (124125-H)
100%
AIMWOOD FURNITURE INDUSTRIES SDN. BHD. (In Liquidation) (175568-D)
100%
100%
DESWELL PACKAGING (M) SDN. BHD. (221089-D)
CORPORATE INFORMATION
BOARD OF DIRECTORS Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab Rahman
REMUNERATION COMMITTEE
Independent Non-Executive Director
Lim Boon Chiang, Chairman
(Appointed w.e.f. 24 February 2010 and Re-designated w.e.f. 30 March 2010) Independent Non-Executive Chairman
Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab Rahman, Member
(Appointed w.e.f. 27 October 2010) Independent Non-Executive Chairman
Dr. Lai Chee Chuen Khoo Yew Kheng Khoo Yew Nean
Executive Director
(Re-designated w.e.f. 27 October 2010) Managing Director/Chief Executive Officer (Re-designated w.e.f. 27 October 2010) Executive Director
Chong Yong Kai, Member
(Appointed w.e.f. 27 October 2010) Independent Non-Executive Director
Khoo Yew Nean, Member
(Ceased w.e.f. 27 October 2010) Executive Director
Lim Boon Chiang Chong Yong Kai
Dr. Lai Chee Chuen, Member
Independent Non-Executive Director Independent Non-Executive Director
(Ceased w.e.f. 27 October 2010) Independent Non-Executive Director
Dato Wong Kam Hoong, Member
Dato Wong Kam Hoong Dr. Oh Han Cheng
(Ceased w.e.f. 27 October 2010) Non-Independent Non-Executive Director
Non-Independent Non-Executive Director (Retired on 30 March 2010) Non-Independent Executive Chairman
COMPANY SECRETARIES Chua Siew Chuan (MAICSA 0777689)

(Appointed w.e.f. 30 March 2010) (Resigned w.e.f. 30 March 2010)
Elaine Wong Wei Syn (MAICSA 7048544)
Tan Beng Kheng
(Resigned w.e.f. 2 August 2010) Independent Non-Executive Director
Tan Ai Ning (MAICSA 7015852) REGISTERED AND PRINCIPAL OFFICE Wisma Baswood Lot 6516, Batu 5-3/4, Jalan Kapar, 42100 Klang, Selangor Darul Ehsan, Malaysia. Tel.: 603-3291 2001 Fax.: 603-3291 2070 SHARE REGISTRAR Securities Services (Holdings) Sdn Bhd (36869-T) Level 7 , Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur. Tel.: 603-2084 9000 Fax.: 603-2094 9940 AUDITORS Messrs. Thiang & Co (AF: 0415) 10, Lebuh Gopeng 41400 Klang Selangor Darul Ehsan PRINCIPAL BANKERS Citibank Berhad Malayan Banking Berhad CIMB Bank Berhad HSBC Bank (Malaysia) Berhad STOCK EXCHANGE LISTING Listed on Main Market of Bursa Malaysia Securities Berhad Sector: Consumer Stock Short Name: Baswell Stock Code: 7156
CHIEF EXECUTIVE OFFICER

(Re-designated w.e.f. 27 October 2010)
Dr. Lai Chee Chuen
AUDIT COMMITTEE
(Re-designated w.e.f. 27 October 2010) Independent Non-Executive Director
Chong Yong Kai, Chairman
Lim Boon Chiang, Member
Dato Wong Kam Hoong, Member
Non-Independent Non-Executive Director
Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab Rahman, Member
Dr. Lai Chee Chuen, Chairman
(Ceased w.e.f. 27 October 2010) Managing Director/Chief Executive Officer
NOMINATION COMMITTEE Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman, Chairman
Lim Boon Chiang, Member Chong Yong Kai, Member
(Re-designated w.e.f. 27 October 2010) Independent Non-Executive Director Independent Non-Executive Director
Dr. Lai Chee Chuen, Member
(Ceased w.e.f. 27 October 2010) Independent Non-Executive Director
Annual Report 2010
DIRECTORS PROFILE
TAN SRI DATO BENTARA ISTANA NIK HASHIM BIN NIK AB. RAHMAN Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman (Independent Non-Executive Chairman), a Malaysian, aged 68, was appointed to the Board of Directors of Baswell on 24 February 2010. Pursuant to Dr. Oh Han Chengs retirement at Ninth Annual General Meeting of the Company held on 30 March 2010, he was re-designated as the Independent Non-Executive Chairman w.e.f. 30 March 2010. Tan Sri Dato Bentara Istana Nik Hashim graduated from Sultan Ismail College in Kota Bharu, Kelantan in 1962 and started his career in 1963 as a Clerical Officer with the Land Office & General Hospital Kota Bharu, Kelantan. The following year, he was appointed as a police inspector until 1968, when he left on a scholarship to read law. He was admitted as a Barrister-at-Law of the Inner Temple, London in 1970 and upon his return, joined the Judicial and Legal Service (JLS). Tan Sri Dato Bentara Istana Nik Hashim has held various posts in the JLS since 1970: a magistrate in Klang and Kuala Terengganu; President of the Sessions Court in Temerloh and Muar; Deputy Director of the Legal Aid Bureau; Senior Federal Counsel of the Ministry of Housing and Local Government; Judge Advocate, Ministry of Defence; Deputy Public Prosecutor, Sarawak; State Legal Advisor, Terengganu; Senior Federal Counsel (Special Unit) in the Attorney Generals Chambers; Deputy Parliamentary Draftsman; Public Trustee and Official Administrator; the first and founding Director General of the Judicial and Legal Training Institute (ILKAP) and Chairman of the Advisory Board in the Prime Ministers Department, Taiping Perak before he was retired on national interest to be appointed to the Malaysian Judiciary. On 1 October 1995, Tan Sri Dato Bentara Istana Nik Hashim was appointed as a Judicial Commissioner of the High Court Malaya and was posted to Kota Bharu and later to Kuala Lumpur. Two years later, he was confirmed as a Judge of the High Court. On 1 August 2003 he was promoted to the Court of Appeal and subsequently on 17 June 2005, he was made a Judge of the Federal Court until he retired on 1 July 2009 on reaching the age of 66 years and 6 months. Tan Sri Dato Bentara Istana Nik Hashim was a member of the Royal Police Force Commission from 12 March 2004 until 11 March 2008. He has been a member of the Syariah Appeal Court, Kelantan since April 1998 and an Adjunct Professor in the Faculty of Law and International Relations of the University of Darul Iman Malaysia from 1 February 2009 until 31 January 2010. Tan Sri Dato Bentara Istana Nik Hashim currently sits on the Board of Inch Kenneth Kajang Rubber Public Limited Company and Olympia Industries Berhad as Independent Non-Executive Director, respectively. In addition, he is a Director of Jetoil Berhad. Tan Sri Dato Bentara Istana Nik Hashim has also been appointed as a Non-Executive Director/Chairman of Tropicana Golf & Country Resort Bhd, a non-listed subsidiary of Dijaya Corporation Bhd. On 27 October 2010, Tan Sri Dato Bentara Istana Nik Hashim was appointed as a member of the Audit Committee, the Chairman of the Nomination Committee, as well as a member of the Remuneration Committee. Tan Sri Dato Bentara Istana Nik Hashim does not have any family relationship with any other director and/or major shareholder of the Company.
DIRECTORS PROFILE (contd)
DR. LAI CHEE CHUEN Dr. Lai Chee Chuen (Managing Director/Chief Executive Officer), a Malaysian, aged 46, was appointed to the Board of Baswell on 30 August 2002. He obtained his professional qualifications from Chartered Institute of Management Accountants (CIMA) in 1986 and Chartered Association of Certified Accountants (CACA) in 1987 . Subsequently, he obtained his Master of Business Administration and Doctor of Philosophy in Finance from City University Business School, London, United Kingdom (UK) in 1992 and 1997 respectively. He has been an Associate of CIMA since 1991 and a Fellow of CACA since 1996. He has also been a member of the Chartered Institute of Marketing since 2000. He worked in UK for 11 years between 1985 and 1996. He gained substantial experience in financial services working as a Senior Financial Accountant with Barclays Mercantile Group. Whilst in the academia, he lectured in Finance and Accounting at London Business School and the City Banking College, London, UK. Upon his return to Malaysia 1996, he joined Price Waterhouse (now known as PricewaterhouseCoopers) as Managing Consultant and was subsequently promoted to Executive Director in 1999 in the Corporate Finance and Investment Banking Division. He left in August 2000, to assume his position as Chief Executive Officer of Seloga Holdings Berhad. Subsequently, he resigned on 31 July 2002 as Chief Executive Officer but remained as Corporate Adviser of Seloga Holdings Berhad until 31 December 2003. On 26 August 2003, he was appointed as Independent Non-Executive Director of SRII Berhad. Dr. Lai resigned from the Board of SRII Berhad on 31 December 2009. He sits on Board of Key West Global Telecommunications Berhad as Independent Non-Executive Director. Dr. Lai was appointed as Senior Independent Non-Executive Director of the Company on 12 November 2003. On 27 October 2010, Dr. Lai was re-designated as Managing Director/Chief Executive Officer of the Company. In view of his re-designation, Dr. Lai ceased as Chairman of the Audit Committee, as well as member of the Nomination Committee and the Remuneration Committee, respectively, on 27 October 2010. Dr. Lai does not have any family relationship with any other director and/or major shareholder of the Company. KHOO YEW KHENG Khoo Yew Kheng (Executive Director), a Malaysian, aged 51, was appointed to the Board of Baswell on 30 August 2002. She began her career in an accounting and taxation firm before venturing into furniture trading. After five (5) years in furniture trading, she co-founded Baswood Industries Sdn Bhd in 1984. Since then, she has acquired various management skills from finance to operations management. She also played a pivotal role in product development, and driving innovations in the design and manufacturing of the Groups product. Madam Khoo is not a director of any other public companies. On 27 October 2010, Madam Khoo was re-designated as Executive Director of the Company. She is Mr. Khoo Yew Neans sister. Other than that, she does not have any family relationship with any other director and/or major shareholder of the Company. KHOO YEW NEAN Khoo Yew Nean (Executive Director), a Malaysian, aged 46, was appointed to the Board of Baswell on 30 August 2002. He began his career as a Marketing Executive with a furniture trading company. He was promoted to Marketing Manager in 1987 . He left in 1991 to set up Deswell Packaging (M) Sdn Bhd (DPSB) and has assumed his present position of Managing Director of DPSB since then. He is responsible for the overall day-to-day management of DPSB. Mr. Khoo is not a director of any other public companies. On 27 October 2010, he ceased as a member of the Remuneration Committee. He is the brother of Madam Khoo Yew Kheng. Other than that, he does not have any family relationship with any other director and/or major shareholder of the Company.
Annual Report 2010
LIM BOON CHIANG Lim Boon Chiang (Independent Non-Executive Director), a Malaysian, aged 71, was appointed to the Board of Baswell on 30 August 2002. He graduated from National Taiwan University, Taiwan with a degree in Electrical Engineering in 1967 . Upon his return in 1969, he joined Folin Brothers Sdn Bhd as Boiler Engineer. In 1973, he joined Texas Instrument Singapore as a Sales Manager and was responsible for setting up the sales department. Subsequently, in 1980, he was assigned to Texas Instrument South Korea as a Marketing Director. During his ten (10) years tenure in South Korea, he had successfully built-up a sales and marketing team and formed a strong business base for Texas Instrument South Korea. In 1990, he was reassigned to Texas Instrument Malaysia as a Marketing Director to oversee the sales and marketing division of Texas Instrument Malaysia. He retired from Texas Instrument Malaysia in 1998. Subsequent to his retirement, he joined Taliworks Corporation Berhad Group (TCB) in 1999 to take charge of Carpet International Malaysia Manufacturing Sdn Bhd, a subsidiary company of TCB, as the Chief Operating Officer. In September 2002, he was subsequently reassigned to Sungai Harmoni Sdn Bhd, a subsidiary company of TCB as Business Adviser. Mr. Lim is not a director of any other public companies. On 27 October 2010, Mr. Lim has been re-designated as a member of the Nomination Committee. He is also a member of the Audit Committee as well as the Chairman of the Remuneration Committee. Mr. Lim does not have any family relationship with any other director and/or major shareholder of the Company. DATO WONG KAM HOONG Dato Wong Kam Hoong (Non-Independent Non-Executive Director), a Malaysian, aged 63, was appointed to the Board of Directors of Baswell on 15 January 2010. He is a Chartered Accountant by profession and is the currently a Fellow of Chartered Certified Accountants (UK) (F .C.C.A). He was a partner of Wong Liu & Partners, an accounting firm based in Perai, Penang until 1999. Dato Wong stood for and won the parliamentary seat of Bayan Baru, Penang since 1995. He was appointed as the Parliament Secretary, Ministry of Domestic Trade and Consumer Affairs in year 2000 and became the Deputy Minister of Culture, Arts and Heritage in 2004. Dato Wong has announced his retirement in year 2008 and had not stood for re-election in the same year. He was appointed as the Chairman of National Film Development Corporation of Malaysia (FINAS) in year 2009. Dato Wong is not a director of any other public companies. Dato Wong is a member of the Audit Committee. On 27 October 2010, he ceased as a member of the Remuneration Committee. Dato Wong is the father-in-law of Mr. Ng Min Lin, a major shareholder of the Company. Other than that, he does not have any family relationship with any other director and/or major shareholder of the Company.
CHONG YONG KAI Chong Yong Kai (Independent Non-Executive Director), a Malaysian, aged 64, was appointed to the Board of Baswell Resources Berhad on 23 January 2009 and a member of the following professional bodies, namely the Chartered Institute of Banker (UK), the British of Institute of Management (UK)-MIMgt, the Institute of Credit Management (UK)-MICM, American Institute of Management (US)-AIMA and Institute of Marketing-MIMM. He started his banking career in 1964 with a Foreign Bank (United Commercial Bank-India which later became United Asian Bank Berhad and now CIMB Bank Berhad) and held various positions namely Officer-in-charge of Credit Divisions, Internal Audit and Relief Manager. He left the bank in 1979 to joint Hong Leong Finance Berhad as a Credit Executive. In 1980 he joint Finplan Leasing Sdn Bhd as a Senior Manager which oversee the whole operation. In 1988 he joint Mechmar Capital Sdn Bhd (formerly known as Titan Leasing Sdn Bhd) a wholly owned subsidiary of Mechmar Corporation Berhad as a General Manager. He left in 1994 to be on its own as a Business, Financial and Corporate Affairs Advisor & Consultant for various group of businesses and industries namely Hospitality, Entertainment, Budget, Restaurant and Leisure Outfi ts. He is presently with a Group of companies involved in Housing Development, Building Construction and Interior Design as a Group Advisor for Finance and Corporate Affairs. He has four decades of career and experience ranging from Finance, Corporate Affairs, Reorganising and Restructuring of companies, Mergers and Acquisition and Fundings. He is not a director of any other public companies. Mr. Chong is a member of the Nomination Committee. On 27 October 2010, he was re-designated as the Chairman of the Audit Committee and appointed as a member of the Remuneration Committee. Mr. Chong does not have any family relationship with any other director and/or major shareholder of the Company. The number of Board Meetings attended by directors during the financial year are disclosed in the Statement on Corporate Governance on page 12 of this Annual Report. Save as disclosed above, none of the Directors, have any conflict of interests with the Company; and a. have been convicted of any offences within the past 10 years other than traffic offences. b.
Annual Report 2010
CHAIRMANS STATEMENT
On behalf of the Board of Directors (the Board) of Baswell Resources Berhad, I am pleased to present the Annual Report and the Audited Financial Statements of the Group and the Company for the financial year ended 30 September 2010.
OPERATIONAL AND FINANCIAL REVIEW The financial year ended 30 September, 2010 has been impacted by the ongoing recession in the Groups primary markets in Europe and U.S. The severe reduction in orders coupled with wafer thin margin had resulted in higher losses to the Group. During the year, the Group signed a MOU with Metroplex Resources Ltd (HK) to bring in potential new orders. However, the expected orders from the MOU failed to materialize and the Group decided to terminate the MOU on 9 August 2009. The costs of maintaining and gearing up the operations for the MOU had severely drained the Groups financial resources. Consequently the Board decided to cease all furniture making operations on 9 August, 2010 in order to stem any further losses. The group achieved a lower turnover of RM11,608,995 resulting in a loss before tax of RM27 ,484,646 as compared to previous year. MARKET OUTLOOK The outlook for the Groups remaining business in packaging remains challenging. Without the core and complementary furniture making business, the turnaround in the packaging operations will increasingly look remote. CORPORATE SOCIAL RESPONSIBILITY Due to the lacklustre financial performance of the Group, the Group has not undertaken any corporate social responsibility activities for the financial year ended 30 September, 2010. WORDS OF THANKS AND APPRECIATION On behalf of the Board, I wish to extend our sincere thanks and appreciation to the management and staff for their loyalty and commitment despite the hardship facing the Group. To all former employees, the Board would like to express their heartfelt appreciation. I wish to thank my fellow Board members for their invaluable professional advices, guidance and contribution in making this Board effective and efficient.
Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman Chairman of the Board 8 March 2011
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STATEMENT ON CORPORATE GOVERNANCE
The Board is fully committed to ensure that the highest standards of corporate governance are observed throughout the Group so that the affairs of the Group are conducted in a transparent and objective manner with full accountability and integrity to safeguard shareholders investment and ultimately enhancing their value. The Company is led and managed by an experienced Board comprising members with a wide range of business, financial, and public services background. The Board has overall responsibility for the strategic direction of the Group and oversees the Groups businesses to ensure that they are properly managed. The Board commits to observe and practise towards ensuring full application of the principles of corporate governance as set out in Part 1 of the Malaysian Code on Corporate Governance (the Code) and had, to their best ability, complied with the best practices as set out in Part 2 of the Code. DIRECTORS 1. Board Composition The Board consists of seven (7) members; comprising three (3) Executive Directors, three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. More than one third (1/3) of the Board comprises Independent Non-Executive Directors. The Board is of the opinion that the composition of the Board fairly reflects a balance of executive and non-executive directors to ensure that the interest of not only the Group, but also the stakeholders and the public in general are represented in all business strategies formulation and adoption. Indeed, the Board is made-up of directors who possess the relevant experiences, knowledge and skills. Proactive discussions were held during the Board meetings and various meetings of Board Committees in the strategic decision-making process. The Board currently has no Senior Independent Non-Executive Director. The profiles of each Director is presented on pages 6 to 9 of this Annual Report.
2. Duties and Responsibilities of the Board The Board takes full responsibility for the performance of the Group. The Boards duties and responsibilities include determining the Groups overall strategic plans, performing periodic review of business and financial performance, engaging in succession planning and adopting practical risk management and internal controls for the Group. The Managing Director/Chief Executive Officer, assisted by the Directors has overall responsibility in working towards achieving strategic goals and objective for the Group together with the implementation of Groups policies, corporate strategies and decisions. This is to facilitate the Non-Executive Directors to discharge their duties and responsibilities effectively and to avoid any conflict of interest situations. The Board comprises highly reputable and professional persons of calibre, credibility and has the necessary skills and experience to exercise independent judgement. With their combined experience and knowledge they provide sound advice and impartial judgement for the benefits of the Company, its shareholders and stakeholders.
3. Appointment to the Board In order to comply with good practice for the appointment of new directors through a formal and transparent procedure, the Board has set up a Nomination Committee which comprise exclusively of Independent Non-Executive Directors, to evaluate and recommend candidates for directorships to the Board.
4. Re-election/Re-appointment of Directors In accordance with the Companys Articles of Association, one third (1/3) of the directors shall retire by rotation at each Annual General Meeting provided always that all directors shall retire from office at least once in three (3) years. The directors retiring from office shall be eligible for re-election by the shareholders. The directors to retire shall be the directors who have been longest in office since their last election or appointment when he has previously vacated office. The re-election/re-appointment of Director(s) at the Annual General Meeting of the Company is subject to the prior consent being obtained from the Director(s) to continue to hold office.
Annual Report 2010
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STATEMENT ON CORPORATE GOVERNANCE (contd)
DIRECTORS (contd) 4. Re-election/Re-appointment of Directors (contd) Pursuant to Section 129(6 ) of the Companies Act,1965, Mr. Lim Boon Chiang retires at the conclusion of the forthcoming Tenth Annual General Meeting, and being eligible, Mr. Lim is seeking for re-appointment to the Board of Directors.
5. Board Meetings and Supply of Information to the Board The Board meets at least four (4) times and, as and when required, during the financial year to, amongst others, review and approve the quarterly financial statements and the annual audited financial statements. The agenda for the Board Meetings, together with appropriate reports and information on the Companys business operations, and proposal papers for the Boards consideration are circulated to all the directors prior to the meetings in sufficient time so that all directors are given time to prepare, obtain additional information or clarification prior to the meeting to ensure a smooth proceeding of each meeting. The proceedings and resolutions reached at each Board Meeting are documented in the minutes and signed by Chairman of the next Board Meeting. Besides Board Meetings, the Board exercises control on matters that require Boards approval through circulation of Directors Resolutions. All directors have access to all information within the Company as well as the advices and services of the company secretary whether as a full Board or in their individual capacity to assist them in their decision making. Where necessary, the directors may engage independent professionals at the Companys expense on specialized issues to enable the directors to discharge their duties with adequate knowledge on the matters being deliberated. The Board held ten (10) meetings during the financial year ended 30 September 2010 and the attendance at the meetings were as follows: Name Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman Dr. Lai Chee Chuen Khoo Yew Kheng Khoo Yew Nean Lim Boon Chiang Chong Yong Kai Dato Wong Kam Hoong Tan Beng Kheng (Resigned w.e.f. 2 August 2010) 6. Training of Directors All the Directors the Company have attended and successfully completed the Mandatory Accreditation Programme (MAP). During the year, Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman had attended the following trainings:Trainings attended Governance, Risk Management and Compliance: What Audit Committees and Chief Audit Executives Should Know Making Corporate Boards More Effective Analysing and Interpreting Financial Statements Save for the Tan Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman, all other Directors of the Company have confirmed that they have not attended any trainings for the financial year ended 30 September 2010 as the Company was unable to allocate any funding for such purposes. Nonetheless, the Board will continue to evaluate and determine the training needs of the directors from time to time to enhance their knowledge to enable them to discharge their responsibility more effectively. The Board of Directors are kept abreast with general economic, industry and technical developments by senior managements briefing to the Board from time to time. Designation Independent Non-Executive Chairman Managing Director/Chief Executive Officer Executive Director Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Attendance 7/8 9/10 10/10 10/10 8/10 10/10 9/9 5/6
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Board Committees The Board has established the following committees: i. Audit Committee The terms of reference, composition and summary of activities of the Audit Committee during the financial year are set out under the Audit Committee Report on pages 15 to 18 of this Annual Report. The Remuneration Committee comprises the following members: Name Designation Lim Boon Chiang (Chairman) Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman (Member) (Appointed w.e.f. 27 October 2010) Chong Yong Kai (Member) (Appointed w.e.f. 27 October 2010) Dr. Lai Chee Chuen (Member) (Ceased w.e.f. 27 October 2010) Mr. Khoo Yew Nean (Member) (Ceased w.e.f. 27 October 2010) Dato Wong Kam Hoong (Member) (Ceased w.e.f. 27 October 2010) Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Chief Executive Officer
ii. Remuneration Committee
The Remuneration Committee is responsible for assessing the remuneration packages of the Executive Directors. The respective Executive Directors would abstain from participating in decisions regarding their remuneration package. Subject to shareholders approval in general meeting, the Board as a whole determines the level of remuneration of the non-executive directors of the Company. The remuneration of the non-executive directors will be reviewed in order to take into recognition of their principal duties and responsibilities under the Code.
Directors Remuneration The Directors remuneration aggregated and categorized into appropriate components, the number of Directors whose remuneration falls into the successive bands of RM50,000.00, as below, Particulars Fee Salaries and other emoluments Employees provident fund Benefit in kinds Total Range of remuneration RM50,000 and below RM50,001 - RM100,000 RM100,001 - RM150,000 RM150,001 - 200,000 RM200,001 - 250,000 Total iii. Nomination Committee The Nomination Committee comprises the following members: Name Designation Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman (Chairman) (Appointed w.e.f. 27 October 2010) Lim Boon Chiang (Member) (Re-designated w.e.f. 27 October 2010) Chong Yong Kai (Member) Dr. Lai Chee Chuen (Member) (Ceased w.e.f. 27 October 2010) Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Chief Executive Officer Executives Directors (RM) 600,000 114,000 21,050 735,050 Executives Directors 2 1 3 Non-Executive Directors (RM) 137 ,828 218,314 356,142 NonExecutive Directors 4 2 6 Total (RM) 137 ,828 818,314 114,000 21,050 1,091,192 Total 4 2 2 1 9
The main responsibilities of this Committee are to propose and recommend new candidates to the Board on an on-going basis, if necessary and to annually review the mix of skills and experience and other qualities, including core competencies which the directors should possess in order to ensure that the effectiveness and efficiency of the Nomination Committee is always maintained in discharging its duties and responsibilities.
Annual Report 2010
13
Accountability and Audit a. Financial Reporting The Board aims to present a balanced, clear and understandable assessment of the Groups financial positions and prospects in the annual financial statements and quarterly announcements to the shareholders, investors and regulatory authorities. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out in page 27 of the Annual Report.
b. Internal Control The Board recognizes that it has overall responsibility for maintaining a sound system of internal control for the Group in order to safeguard shareholders interest of the Groups assets. The system of internal control not only covers financial controls but also operational and compliance controls as well as risk management. Information on the Groups internal control is presented in the Statement of Internal Control on pages 19 to 20 of this Annual Report. c. Relationship with Auditors The external auditors have continued to report to shareholders of the Company on their findings which are included as part of the Companys financial reports with respect to each financial years audit on the statutory financial statements. The roles of the Audit Committee, the internal and external auditors of the Company are described in the Audit Committee Report as set out on pages 15 to 18 of this Annual Report. The Board and the Audit Committee have always maintained a professional and transparent relationship with the Companys auditors.
Shareholders i. Relationship with Shareholders The Board recognises the need for transparency and accountability to the Companys shareholders as well as regular communication with its shareholders, stakeholders and investors on the performance and major developments in the Company. The Company ensures that timely releases of the quarterly financial results, press releases and corporate announcements are made to its shareholders and investors, which are clear, unambiguous, succinct, accurate and contains sufficient and relevant information to enable shareholders and investors to make informed investments decision.
ii. Annual General Meeting (AGM) The AGM is the principal forum for dialogue with shareholders. At the Companys AGM, shareholders participation is always encouraged and welcomed. It is a useful opportunity for the directors to communicate face to face with shareholders and to present the Companys business operations, performance and future plans. The directors are prepared to answer queries and to receive feedback from the shareholders. The external auditors are also present to provide their professional and independent clarification on issues of concern raised by the shareholders, if any. Notice of the AGM and Annual Report are sent out with sufficient notice before the date of the meeting. The Statement Accompanying the Notice of the AGM and explanatory notes on the proposed resolution under Special Business are provided to help the shareholders to decide on their vote on the resolution. Where Extraordinary General Meetings are held to obtain shareholders approval on certain business or corporate proposals, comprehensive circulars to shareholders would be sent within prescribed deadlines in accordance with regulatory and statutory provisions.
Best Practice of the Code The Board is committed to achieve high standards of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. The Board considers that the Group has complied throughout the current financial year under review with the Best Practices as set out in the Code unless stated otherwise. This Statement on Corporate Governance has been duly approved at the Board of Directors Meeting held on 25 February 2011.
14
AUDIT COMMITTEE REPORT
TERMS OF REFERENCE The terms of reference of the Audit Committee are as follows: Objectives The principal objectives of the Audit Committee is to assist the Board of Directors (Board) in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Company and each of its subsidiaries. In addition, the Audit Committee shall: evaluate the quality of the audits performed by the internal and external auditors; provide assurance that the financial information presented by management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of a proper code of conduct; and determine the quality, adequacy and effectiveness of the Groups control environment.
Composition and Meetings In view of the re-designation of Dr. Lai Chee Chuen as the Managing Director/Chief Executive Officer on 27 October 2010, the Audit Committee has undergone a restructuring on the same day and the members of the Audit Committee, attendance at each Audit Committee Meeting during the financial year ended 30 September 2010 are as follows: Name Chong Yong Kai (Re-designated w.e.f. 27 October 2010) Lim Boon Chiang Dato Wong Kam Hoong Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman (Appointed w.e.f. 27 October 2010) Dr. Lai CHee Chuen (Ceased w.e.f. 27 October 2010) Designation Chairman Member Member Member Directorship Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director Independent Non-Executive Director Attendance 7/7 7/7 5/5 N/A
Chairman
5/7
Note: There were seven (7) Audit Committee Meetings held during the financial year ended 30 September 2010. 1. Composition of members The Board shall appoint the Audit Committee members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the Audit Committee members shall be independent directors. In this respect, the Board adopts the definition of independent director as defined under the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities). All members of the Audit Committee shall be financially literate and at least one (1) member of the Audit Committee must be: (a) member of the Malaysian Institute of Accountant (MIA); or (b) if he is not a member of MIA, he must have at least three (3) years of working experience and: i. he must have passed the examinations specified 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 specified in Part II of the First Schedule of the Accountants Act 1967; or (c) fulfils such other requirements as prescribed or approved by Bursa Securities. No alternate director of the Board shall be appointed as a member of the Audit Committee. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
Annual Report 2010
15
AUDIT COMMITTEE REPORT (contd)
TERMS OF REFERENCE (contd) 1. Composition of members (contd) Retirement and resignation If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member resulting in noncompliance to the composition criteria as stated in paragraph 1 above, the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.
2. Chairman The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an independent director. In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst themselves elect a Chairman who must be independent director to chair the meeting.
3. Secretary The Company Secretary shall be the Secretary of the Audit Committee and as a reporting procedure, the Minutes shall be circulated to all members of the Board.
4. Meetings The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairmans discretion. Upon the request of the external auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditor believes should be brought to the attention of the directors or shareholders. Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement. The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Finance Director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company. The head of finance, the head of internal audit and a representative of the external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the external auditors. Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.
5. Minutes Minutes of each meeting shall be kept at the registered office and distributed to each member of the Audit Committee and also to the other members of the Board. The Audit Committee Chairman shall report on each meeting to the Board. The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.
6. Quorum The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent directors.
16
TERMS OF REFERENCE (contd) 7. Objectives The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. In addition, the Audit Committee shall: (a) (b) (c) (d) evaluate the quality of the audits performed by the internal and external auditors; provide assurance that the financial information presented by management is relevant, reliable and timely; oversee compliance with laws and regulations and observance of a proper code of conduct; and determine the quality, adequacy and effectiveness of the Groups control environment.
8. Authority The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company, (a) have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. 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 independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary. (d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any). (e) where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to Bursa Securities. 9. Duties and Responsibilities The duties and responsibilities of the Audit Committee are as follows: (a) To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal; (b) To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure coordination where more than one audit firm is involved; (c) To review with the external auditor his evaluation of the system of internal controls and his audit report; (d) To review the quarterly and year-end financial statements of the Board, focusing particularly on: any change in accounting policies and practices; significant adjustments arising from the audit; the going concern assumption; and compliance with accounting standards and other legal requirements.
(e) To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management, where necessary); (f) To review the external auditors management letter and managements response; (g) To do the following, in relation to the internal audit function: review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function; review any appraisal or assessment of the performance of members of the internal audit function; approve any appointment or termination of senior staff members of the internal audit function; and take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
Annual Report 2010
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TERMS OF REFERENCE (contd) 9. Duties and Responsibilities (contd) (h) To consider any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; (i) To report its findings on the financial and management performance, and other material matters to the Board; (j) To consider the major findings of internal investigations and managements response; (k) To verify the allocation of employees share option scheme (ESOS) in compliance with the criteria as stipulated in the by-laws of ESOS of the Company, if any; (l) To determine the remit of the internal audit function; (m) To consider other topics as defined by the Board; and (n) To consider and examine such other matters as the Audit Committee considers appropriate. Summary of Activities The main activities of the Audit Committee in discharging its functions and duties during the financial year under review were as follows: Reviewed with the external auditors the result of the audit and the audit reports. Reviewed the quarterly unaudited financial results of the Group and ensure compliance with approved accounting standards, other legal and regulatory requirements, before recommending them for Boards approval. Reviewed the audited financial statements of the Group and the Company prior to submission to the Board for their consideration and approval. Reviewed the performance of the internal audit function. Summary of Internal Audit Function During the financial year ended 30 September 2010, the Group has appointed an in-house internal auditor to carry out routine audit and review of all operating units within the Group. The total cost incurred for the internal audit function in respect of financial year ended 30 September 2010 amounted to RM6,000.00. The internal audits shall be performed based on risk based approach by focusing on: Review and identify potential high-risk areas for compliance with internal control policies and procedures, legal and regulatory bodies; and Evaluate the adequacy and effectiveness of the internal control systems
The internal audit reports were forwarded to the management for attention and necessary action and presented to the Audit Committee for deliberation and approval. During the financial year under review, a review on the system of internal controls as follows of the Groups operations were completed: Quality Assurance and Maintenance Department Purchasing Department function of Furniture Division and Packaging Division Marketing Department function of Furniture Division and Packaging Division
18
STATEMENT ON INTERNAL CONTROL
Pursuant to Paragraph 15.26 of the Listing Requirements of the Bursa Malaysia Securities Berhad for the Main Market and the Malaysian Code on Corporate Governance (the Code), the Board of Directors (Board) is pleased to provide the following statement, which outlines the nature and scope of the Groups system of internal controls for the financial year ended 30 September 2010. Directors Responsibilities The Board affirms its overall responsibility to maintain a sound system of internal controls and risk management practices for the Group which includes the establishment of an appropriate control environment and framework as well as periodical reviews of its effectiveness, adequacy and integrity so as to safeguard shareholders interest and investment and the Groups assets. The Board recognises that a sound system of internal controls, which include inter alia, financial, operational, information technology and organisational controls is an important part of managing risks in an effort to achieve overall corporate objectives. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve the Groups business objectives. In pursuing these objectives, system of internal controls can only provide reasonable and not absolute assurance against material misstatement, loss and fraud. Internal Control and Control Environment The Group has incorporated the following key elements into its system of internal controls: The Managing Director/Chief Executive Officer played a major role as the link between the Board and management in implementing the Boards expectation of effective system of internal controls in managing the Groups business. The Managing Director/Chief Executive Officer and respective management team attended to various management and operations meetings, and reviewed financial and operational reports, in order to monitor the performance and profitability of the Groups business. The Managing Director/Chief Executive Officer and the management visit the operating units regularly and all matters arose are promptly and effectively dealt with. The Audit Committee holds regular meetings in order to deliberate on findings and recommendations for improvement on the state of affairs and system of internal controls in the presence of management. The matters discussed in the Audit Committees meeting will be reported to the Board. The Group has formulated various departmental operational manuals to assist them in designing, operating, monitoring and managing the control processes. With the operational manuals, the key commercial and financial risks are being identified so as to ensure that reasonable assurance on the effectiveness and efficiency of the system of internal controls will mitigate various risks faced by the Group to an appropriate level and acceptable to the Board. The Group has performed on-going review and timely updating of departmental operational manuals from time to time. The Group has arranged regular interactive meetings between the senior management personnel in order to rectify any weaknesses highlighted in respective area. In doing so, the senior management personnel determine proactive actions to create awareness on the importance of staffs and line managements involvement in the system of internal controls by allowing various management personnel to have access to important information for better decision making. The Group has established the Safety and Health measures in safeguarding the Groups assets as well as shareholders and stakeholders interest. The Group has adequate system of internal controls covering management, financial, operational and compliance controls. In addition, the operational manuals for Furniture Division and Packaging Division will also help facilitate the dayto-day running of the Groups businesses within clearly defined key functions of each department in the most efficient and effective manner. The development of the system of internal controls entails identifying, evaluating and managing the risks faced by the Group. The Board maintains an ongoing commitment to strengthen the Groups internal control environment and processes.
Annual Report 2010
19
STATEMENT ON INTERNAL CONTROL (contd)
Conclusion Generally, it can be concluded that the Group has implemented a good system of internal controls with respect to the various operating activities at all levels. Since the cessation of the furniture-making operations in August 2010, the maintenance of the Groups internal Control System was limited to the remaining packing business. This Statement on Internal Audit Control has been duly approved at the Board of Directors Meeting held on 25 February 2011.
20
DIRECTORS RESPONSIBILITY STATEMENT IN RELATION TO THE FINANCIAL STATEMENTS

This statement is prepared as required by the Listing Requirements of the Bursa Malaysia Securities Berhad for the Main Market. The Directors are required to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and the cash flows of the Group and the Company for that year then ended. The Directors consider that in preparing the financial statements, The Group and the Company have used appropriate accounting policies and are consistently applied; Reasonable and prudent judgements and estimates were made; and All applicable approved accounting standards in Malaysia have been followed.
The Directors are responsible for ensuring that the Group and the Company maintain accounting records that disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Directors have general responsibilities for taking such steps that appropriate systems are reasonably available to them to safeguard the assets of the Group and the Company, and to prevent and detect fraud and other irregularities and material misstatements. Such systems, by their nature, can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. This Directors Responsibility Statement has been duly approved at the Board of Directors Meeting held on 25 February 2011.
Annual Report 2010
21
OTHER COMPLIANCE INFORMATION
1. Utilisation of Proceeds Raised from Corporate Proposal There were no proceeds raised from any corporate proposal announced at the date of this report. 2. Share Buyback There were no share buyback of the Companys shares during the financial year. 3. Options or Convertible Securities There were no options or convertible securities exercised during the financial year as the Company has not issued any options or convertible securities. 4. Depository Receipt Programme The Company did not sponsor any Depository Receipt Programme during the financial year. 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. 6. Non-audit Fees Paid to External Auditors There were no non-audit fees paid to external auditors for the financial year ended 30 September 2010. 7. Profit Estimate, Forecast or Projection or Unaudited Results The Company did not make any release on the profit estimate or projection during the financial year. There are no profit forecast and unaudited results released which differ by ten percent (10%) or more from the audited results for the financial year ended 30 September 2010.
8. Profit Guarantee No profit guarantee was received by the Company during the financial year. 9. Material Contracts There were no material contracts entered into by the Company and its subsidiaries that involves directors and/or major shareholders interests since the end of the previous financial year, save as disclosed on page 57 in Note 23 to the financial statements. 10. Revaluation Policy Freehold land and buildings stated at valuation are revalued at regular intervals of at least once in every five years based on market value basis.
22
FINANCIAL STATEMENT
DIRECTORS REPORT STATEMENT BY DIRECTORS STATUTORY DECLARATION INDEPENDENT AUDITORS REPORT CONSOLIDATED BALANCE SHEET CONSOLIDATED INCOME STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY CONSOLIDATED CASH FLOW STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
24 26 27 27 28 30 31 32 33 34 35 36 59
Annual Report 2010
23
DIRECTORS REPORT
The Directors present their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 September 2010. PRINCIPAL ACTIVITIES The principal activities of the Company are that of an investment holding company and provision of management services to its subsidiaries. The principal activities of the subsidiary companies are stated in Note 3 to the financial statements. There were no significant changes in the nature of these activities during the financial year. CORPORATE STATUS The Company is listed on the Bursa Malaysia. The Company had on 9 August 2010, announced to Bursa Malaysia that it was designated a PN17 company pursuant to paragraphs 8.04(2) of the Listing Requirements and Practice Note 17 (PN17) of the Main Market Listing Requirements (MMLR). The anticipated Sale Orders from the overseas buyers through a Memorandum of Understanding with Metroplex Resources Limited dated 20 January 2010 did not materialise, and owing to the escalating costs of preparing and increasing work force of our subsidiaries factories to meet the anticipated production, the Group expended all its funds and was unable to meet its debt liabilities when they fell due. Due mainly to this, the Group ceased its furniture-manufacturing operations with effect from 9 August 2010. This rendered the Company to be classified as a PN17 company. FINANCIAL RESULTS GROUP RM (27 ,367 ,742) COMPANY RM (55,453,226)
Net loss for the year DIVIDEND
No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend any dividend in respect of the current financial year. ISSUE OF SHARES AND DEBENTURES There was no issue of shares and debentures during thefinancial year. OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the financial year. RESERVES AND PROVISIONS All material transfer to or from reserves or provisions during the financial year have been disclosed in the financial statements. BAD AND DOUBTFUL DEBTS Before the income statements and balance sheets were made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all known bad debts have been written off and that adequate allowance had been made for doubtful debts. At the date of this report, the Directors are not aware of any circumstance which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.
24
DIRECTORS REPORT (contd)
CURRENT ASSETS Before the income statements and balance sheets were made out, the Directors took reasonable steps to ensure that any current asset, other than debts, which were unlikely to be realised in the ordinary course of business their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstance which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the Directors are not aware of any circumstance which has arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES Except for the liabilities arising from the financial obligations to its subsidiaries described in Note 9 and Note 10 to the financial statements, at the date of this report, there does not exist: i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year. All liabilities, present and contingent, have become enforceable on 9 August 2010, when the Company was classified as a PN17 company. CHANGE OF CIRCUMSTANCES At the date of this report, the Directors are not aware of any circumstance not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature. EVENTS SUBSEQUENT TO BALANCE SHEET DATE There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made. DIRECTORS OF THE COMPANY The Directors in office since the date of the last report are: Dr. Oh Han Cheng Khoo Yew Kheng (F) Khoo Yew Nean Dr. Lai Chee Chuen Lim Boon Chiang Chong Yong Kai Dato Wong Kam Hoong Tan Beng Kheng Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman - Retired at AGM held on 30 March 2010.
- Appointed on 15 January 2010 - Appointed on 15 January 2010. Resigned on 2 August 2010. - Appointed on 24 February 2010
Under Section 129 of the Companies Act 1965, Lim Boon Chiang who has attained the age of seventy years subsequent to the financial year end shall retire at the forthcoming annual general meeting.
Annual Report 2010
25
DIRECTORS REPORT (contd)
DIRECTORS INTERESTS According to the register of Directors shareholdings, the interests of Directors in office at the end of the financial year in the ordinary shares of the Company and its related corporations are as follows: Number of Ordinary shares of RM1.00 each As at 1-10-2009 Shareholdings in the names of Directors Shares in the Company Khoo Yew Kheng Khoo Yew Nean Bought Sold As at 30-9-2010
6,433,146 806,130
(5,400,000)
1,033,146 806,130
By virtue of their interest in the shares of the Company, all the Directors are deemed to have beneficial interest in the shares of the subsidiary companies to the extent the Company has an interest.
DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than a benefit disclosed as Directors remuneration as stated in Note 20 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. AUDITORS The auditors, Messrs. Thiang & Co., have indicated their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors,
............................... DR. LAI CHEE CHUEN DIRECTOR
............................... KHOO YEW KHENG DIRECTOR Klang. Date:
26
STATEMENT BY DIRECTORS
Pursuant to Section 169(15) of the Companies Act, 1965
We, DR. LAI CHEE CHUEN and KHOO YEW KHENG, being two of the Directors of BASWELL RESOURCES BERHAD, do hereby state on behalf of the Directors that, in the opinion of the Directors, the accompanying financial statements, together with the notes thereto, are drawn up in accordance with applicable Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965, so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 September 2010 and of the results of theirs operations and of the cash flows of the Group and of the Company for the year ended on that date. Signed on behalf of the Board in accordance with a resolution of the Directors,
............................... DR. LAI CHEE CHUEN DIRECTOR Klang. Date:
............................... KHOO YEW KHENG DIRECTOR
STATUTORY DECLARATION
Pursuant to Section 169(16) of the Companies Act, 1965
I, DR. LAI CHEE CHUEN, being the Director primarily responsible for the accounting records and financial management of BASWELL RESOURCES BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements, together with the noted thereto, are correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed DR. LAI CHEE CHUEN I.C. No. 640831-08-6331 at Klang in the state of Selangor Darul Ehsan on this day of
............................... Before me,
Annual Report 2010
27
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF

BASWELL RESOURCES BERHAD
Report on the Financial Statements We have audited the financial statements of Baswell Resources Berhad, which comprise the balance sheets as at 30 September 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 31 to 59. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with the Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence and explanations about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the Companys preparation and fair presentation of the financial statements in order to design our audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We found that there were insufficient audit evidence and explanations for some of the financial matters, described more appropriately in the Notes to the Financial Statements and the Basis for Disclaimer of Opinion paragraph (below), which provide the basis for our disclaimer of audit opinion. Basis for Disclaimer of Opinion 1. On 9 August 2010, pursuant to its announcement to Bursa Malaysia, the Company and its subsidiaries (Group) were classified as a PN17 company, due mainly to the Groups inability to meet its debt liabilities when they fell due, and that it has ceased its furniture-manufacturing operations since that date. 2. We draw attention the following matters in the subsidiaries: a) Baswood Industries Sdn Bhd (Baswood): i) On 13 December 2010, Baswood entered into a Sale and Purchase Agreement to dispose its freehold industrial land and buildings for a total consideration of RM19,000,000. The disposal has not been completed as at the date of the report.
ii) Baswood had provided an impairment loss of RM3,238,065 (2009: Nil) on Property, Plant and Equipment, based on the Baswoods Board of Directors assumption that the net realisable value of the Baswoods freehold industrial land and buildings is RM19,000,000. The impairment loss on the Freehold Land and Factory Buildings of RM2,732,041 was written off against the Revaluation Reserves and the balance, RM506,024 was charged to the income statement for financial year. iii) The Board of Directors of Baswood was uncertain on the extent of the recoverability of the Trade Receivables. Accordingly, the Board of Directors made a general allowance of 80% on the trade receivables for bad and doubtful debts amounting to RM536,798 (2009: RM159,000). The auditors were unable to ascertain the appropriateness of the basis, the quantum and adequacy of this allowance. b) Deswell Packaging Sdn Bhd (Deswell): i) The Board of Directors of Deswell was uncertain on the extent of the recoverability of the Trade Receivables. Accordingly, the Board of Directors of Deswell made a specific and general allowances on the trade receivables for bad and doubtful debts amounting to RM1,795,870 (2009: RM770,533) and RM2,098,000 (2009: RM98,000) respectively. The auditors are unable to ascertain the appropriateness for the basis, the quantum and adequacy of the allowances for bad and doubtful debts amounting to RM1,795,870 and RM2,098,000.
28

BASWELL RESOURCES BERHAD (contd)
Basis for Disclaimer of Opinion (contd) ii) There was a Writ of Summons dated 26 July 2010 petitioned by a Trade Creditor to recover its debts of RM1,834,708 plus interest 8% per annum from Deswell. The Directors of Deswell informed the auditors that Deswell has made arrangement with the Creditor to pay them by instalments. iii) Factory Rental of RM539,869 has been long outstanding. Deswell does not have the ability to pay the rental. c) Aimwood Furniture Industries Sdn Bhd (Aimwood): i) Due to Aimwoods inability to pay its debt liabilities when fell due, Aimwood was put under a Creditors Winding Up Order by the Court under Section 218 of the Companies Act 1965, on the 23 November 2010, on which date the Liquidator, Dato Robert Teo Keng Tuan of Messrs. RSM NWT Advisory Services Sdn. Bhd was appointed.
ii) Aimwood made a gross loss in its trading activity. The auditors were unable to satisfy themselves as to the cause(s) of this matter. The Directors of Aimwood have explained that Aimwood anticipated sale orders from overseas buyers and began to incur expenditure in preparing the factories and increasing the labour force to meet these demands. However, the sales did not materialise, and due to those escalated costs, Aimwood suffered gross loss in its trading accounts. iii) There was no physical stock-take at financial year-end due mainly to the non-accessibility of the management staff into Aimwoods premises during the period when Aimwood was put under a Provisional Liquidator in a Court Winding Up Petitions. The Directors of Aimwood are of the opinion that the value of the stock as at financial year ended 30 September 2010 was RM 1,742,835. There was no alternative means for the auditors to verify the quantity, obsolescence, costing of the Inventories at the financial year-end.
iv) Aimwood had provided an impairment loss of RM2,197 ,970 (2009: Nil) on Property, Plant and Equipment, based on the Aimwoods Board of Directors assumption that the net realisable value is 50% of the net book value at the financial year end for all categories of property, plant and equipment. v) Aimwood had written off RM4,394,657 (2009: nil) from the inventories. The Board of Directors of Aimwood was of the opinion that the finished goods and work-in-progress may be realised at 50% of the raw material price, and accordingly, valued them as such in the financial statements. vi) The Board of Directors of Aimwood was uncertain on the extent of the recoverability of the Trade Receivables since Aimwood ceased its manufacturing and trading activities on 9 August 2010. Accordingly, the Board of Directors of Aimwood made a general and specific allowance for bad and doubtful debts of 80% of the Trade Receivables, amounting to RM2,670,748 (2009: RM281,708). vii) Aimwood had defaulted in its hire-purchase instalment payments during the financial year. The hire purchase agreements include terms, which allow the lender institutions to proceed with legal proceedings against Aimwood and its corporate guarantor (the Company), for recovery of the principal amounts outstanding together with interest and penalty charges. viii) During the year, the Aimwood had defaulted in its repayments to its banks borrowings. The banking agreements include terms which allow the lender banks to proceed with legal proceedings against the Aimwood, its holding company (Baswood) and corporate guarantor (the Company) for recovery of the principal amounts outstanding together with interest and penalty charges. 3. The audited financial statements of the subsidiaries were qualified by the auditors due to the following matters: a) The subsidiaries are insolvent and unable to pay their debt liabilities when they fell due. b) The preparation of their financial statements on the going concern basis was no longer applicable. c) The appropriateness of the basis, quantum and adequacy of the following: i) Allowance for write down of inventories;
ii) Allowance for bad and doubtful debts of the trade receivables; iii) Impairment loss on property, plant and equipment.
Annual Report 2010
29

BASWELL RESOURCES BERHAD (contd)
Basis for Disclaimer of Opinion (contd) 4. In view of the matters set out in the preceding paragraphs, the Group and the Company are insolvent and unable to continue as a going concern. Therefore the usage of the going concern assumption for the preparation of the financial statements is no longer applicable. 5. Accordingly, the financial statements of the Group and the Company include adjustments and provisions in respect of the recoverability and re-classification of assets and liabilities to reflect the status of the Group and the Company, which is insolvent. Disclaimer of Opinion In our opinion, due to the material matters stated in the Basis for Disclaimer of Opinion paragraph, we are unable to form an audit opinion on the financial statements of the Group and the Company. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act. b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. c) The financial statements of the subsidiaries contain qualifications under Section 174(3) of the Act. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
THIANG & CO. AF: 0415 Chartered Accountants Klang, Malaysia. Date:
THIANG KAI GOH 463/05/11(J/PH) Partner
30
CONSOLIDATED BALANCE SHEET

As at 30 September 2010
NOTE
GROUP 2010 RM
2009 RM
COMPANY 2010 RM
2009 RM
ASSETS Non current assets Property, plant and equipment Investment in subsidiary companies
2 3
22,598,545 22,598,545
31,417 ,352 31,417 ,352
8,900,000 8,900,000
42,387 ,635 42,387 ,635
Current assets Inventories Trade receivables Other receivables, deposits and prepayments Tax recoverable Amount due from subsidiary companies Cash and bank balances TOTAL ASSETS EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital Reserves Total equity Non-current liabilities Hire-purchase liabilities Bank borrowings (secured) Deferred taxation
4 5 6 7
1,865,025 2,969,869 450,298 4,835 481,766 5,771,793 28,370,338
9,906,411 11,650,529 948,774 2,817 66,410 22,574,941 53,992,293
27,944 3,838,641 256,138 4,122,723 13,022,723
14,335 11,626,567 492 11,641,394 54,029,029
48,000,000 (51,883,419) (3,883,419)
48,000,000 (22,054,052) 25,945,948
48,000,000 (51,278,799) (3,278,799)
48,000,000 4,174,427 52,174,427
9 10 11
355,159 6,862,318 116,904 7 ,334,381
Current liabilities Trade payables Other payables, accruals and other liabilities Amount due to Directors Amount due to shareholders Hire-purchase liabilities Bank borrowings (secured) Taxation Total liabilities TOTAL EQUITY AND LIABILITIES
12 13 14 15 9 10
8,015,930 9,526,088 1,557,916 2,160,000 367,165 10,599,881 26,777 32,253,757 32,253,757 28,370,338
9,096,966 2,440,670 2,126,271 251,676 6,776,924 19,457 20,711,964 28,046,345 53,992,293
12,556,829 1,557,916 2,160,000 26,777 16,301,522 16,301,522 13,022,723
587 ,518 1,247 ,627 19,457 1,854,602 1,854,602 54,029,029
The accompanying notes form an integral part of this balance sheet.

Annual Report 2010
31
CONSOLIDATED INCOME STATEMENT

For the year ended 30 September 2010
NOTE
GROUP 2010 RM 11,608,995 (17,068,624) (5,459,629) 261,115 (1,015,151) (13,156,261)
2009 RM 20,505,399 (33,513,438) (13,008,039) 410,668 (1,538,763) (3,401,869) (17 ,538,003) (1,146,013) (18,684,016) 61,999 (18,622,017) (38.80)
COMPANY 2010 RM 804,000 804,000 (1,559,824) (54,612,351) (55,368,175) (85,051) (55,453,226) (55,453,226)
2009 RM 804,000 804,000 (1,143,165) (339,165) (40) (339,205) 1,903 (337 ,302)
Revenue Cost of sales Gross loss Other operating income Distribution costs Administration expenses Other operating expenses Loss from operations Finance costs Loss before taxation Income tax credit Net loss for the year EARNING PER SHARE (SEN)
16 17
18
(7,098,651) (26,468,577)
19 20 21
(1,016,069) (27,484,646) 116,904 (27,367,742)
22
(57.02)
The accompanying notes form an integral part of this statement.
32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Non-Distributable Share capital RM 2009 As at 1 October 2008 Net loss for the year As at 30 September 2009 2010 As at 1 October 2009 Impairment loss on Property, Plant and Equipment Net loss for the year As at 30 September 2010 48,000,000 48,000,000 4,388,784 4,388,784 627,243 (627,243) 48,000,000 48,000,000 4,388,784 4,388,784 627 ,243 627 ,243 Share premium RM Revaluation reserve RM
Distributable Accumulated losses RM Total Equity RM
(8,448,062) (18,622,017) (27 ,070,079)
44,567 ,965 (18,622,017) 25,945,948
(27,070,079) (1,834,382) (27,367,742) (56,272,203)
25,945,948 (2,461,625) (27,367,742) (3,883,419)

Annual Report 2010
33
STATEMENT OF CHANGES IN EQUITY

As at 30 September 2010
Non distributable
Share capital RM 2009 As at 1 October 2008 Net loss for the year As at 30 September 2009 2010 As at 1 October 2009 Net loss for the year As at 30 September 2010 48,000,000 48,000,000 48,000,000 48,000,000
Share premium RM
Distributable Retained profits/ (Accumulated losses) RM
Total equity RM
4,388,784 4,388,784
122,945 (337 ,302) (214,357)
52,511,729 (337 ,302) 52,174,427
4,388,784 4,388,784
(214,357) (55,453,226) (55,667,583)
52,174,427 (55,453,226) (3,278,799)
The accompanying notes form an integral part of the financial statements.
34
CONSOLIDATED CASH FLOW STATEMENT

NOTE CASH FLOW FROM OPERATING ACTIVITIES Loss before taxation Adjustments for: Depreciation Interest expenses Bad debts written off Allowance for doubtful debts - general Allowance for doubtful debts - specific Inventories written down Impairment loss on Property, plant and equipment Deposits written off Gain on disposal of property, plant and equipment Property, plant and equipment written-off Operating loss before working capital changes Decrease in inventories Decrease in trade receivables Decrease in other receivables, deposits and prepayments (Decrease)/Increase in trade payables Increase/(Decrease) in other payables, accruals and other liabilities Increase/(Decrease) in bills payable (secured) Cash generated from/(used in) operations Tax paid Interest paid Net generated from/(cash used) in operating activities CASH FLOW FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash generated from investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from term loan Repayment of term loans Payment of hire-purchase liabilities Advances from Directors Advances from Shareholders Net cash generated from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR CASH AND CASH EQUIVALENTS COMPRISE: Cash and banks balances Bank overdrafts (secured)
2010 RM (27,484,646)
2009 RM (18,684,016) 3,780,052 1,016,580 95,914 (52,997) 634 (13,843,833) 8,229,447 4,037 ,488 1,151,971 1,187 ,081 (847 ,064) (5,164,309) (5,249,219) (17 ,222) (671,819) (5,938,260)
3,452,800 839,921 2,403,170 1,100,766 4,925,838 4,394,658 2,703,994 381,648 (261,115) (7,542,966) 3,646,728 250,886 116,828 (1,081,036) 7,085,418 231,499 2,707,357 5,302 (839,921) 1,872,738
(4,790) 466,293 461,503
(5,143) 53,000 47 ,857
(239,670) (568,355) 2,160,000 1,351,975 3,686,216 (5,228,842) (1,542,626)
2,745,605 (104,800) (379,423) 1,358,982 3,620,364 (2,270,039) (2,958,803) (5,228,842)
481,766 (2,024,392) (1,542,626)
66,410 (5,295,252) (5,228,842)

Annual Report 2010
35
NOTES TO THE FINANCIAL STATEMENTS

30 September 2010
1.1 GENERAL INFORMATION These financial statements of the Group and the Company have been approved by the Board of Directors for issuance on 17 January 2011. The Company is a public limited liability company incorporated and domiciled in Malaysia, and is listed on the Main Market of the Bursa Malaysia. a) Principal Activities The principal activities of the Company are that of an investment holding company and provision of management services to its subsidiaries. The principal activities of the Subsidiaries were: Manufacture and export of wooden furniture and furniture parts; Provision of preservative treatment and kiln drying of wood and timber; Manufacturer and dealer in papers, paper carton boxes and boards, and other related products; and Dealer and exporter of wooden furniture and furniture parts.
The Group ceased its furniture-manufacturing operations on 9 August 2010. b) Business Address and Registered Office The Companys business address and registered office is situated at Wisma Baswood, Lot 6516, Batu 5 , Jalan Kapar, 42100 Klang, Selangor Darul Ehsan, Malaysia.
c) Employees The number of employees, excluding directors, in the Group and in the Company as at the end of the financial year were 62 (2009: 430) and 2 (2009: Nil) respectively.
1.2 CORPORATE STATUS The Company is listed on the Bursa Malaysia. On 9 August 2010, the Company made the announcement to Bursa Malaysia pursuant to paragraphs 8.04(2) of the Listing Requirements and Practice Note 17 (PN17) of the Main Market Listing Requirements (MMLR), for the following main reasons: i) That the Memorandum of Understanding between the Company and Metroplex Resources Ltd dated 20 January 2010 has been mutually terminated by the parties on 9 August 2010.
ii) That two (2) of its wholly-owned furniture-manufacturing subsidiaries i.e. Baswood Industries Sdn Bhd and Aimwood Furniture Industries Sdn Bhd are in default in payment pursuant to Practice Note 1 (PN1) of the MMLR. Further notes explained that Both Baswood Industries Sdn Bhd and Aimwood Furniture Industries Sdn Bhd have not been able to make the payments to the financial institutions due to lack of funds.
iii) That with effect from 9 August 2010, the Group has ceased all its furniture-manufacturing operations, triggering the Prescribed Criteria under paragraph 2.1(g) of PN17 , which renders Company to be classified as a PN17 company. 1.3 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and the Company have been prepared in accordance with applicable approved Finance Reporting Standards of the Malaysian Accounting Standards Board (MASB) in Malaysia and the provisions of the Companies Act, 1965 in Malaysia. The measurement bases used in preparing the financial statements include historical cost, realisable amount, revalued amount and fair value, as indicated in the respective accounting policies.
36
NOTES TO THE FINANCIAL STATEMENTS (contd)

30 September 2010
1.3 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS (contd) Estimates are used in preparation of the financial statements. The amounts in the financial statements are stated in Ringgit Malaysia (RM). Due to the current Corporate Status described in Note 1.2 above, the Group and the Company are insolvent and unable to continue as going concerns. Therefore the usage of the going concern assumption for the preparation of the financial statements is no longer applicable. Accordingly, the financial statements of the Group and the Company include adjustments and provisions in respect of the recoverability and re-classification of assets and liabilities to reflect the status of the Group and the Company, which is insolvent.
1.4 FUNDAMENTAL ACCOUNTING CONCEPT The Group and the Company incurred a net loss of RM27 ,367 ,742 and RM55,453,226 for the year ended 30 September 2010 respectively and as of that date, the current liabilities exceeded its current assets by RM26,481,964 and RM12,178,799 respectively. The financial statements are prepared on the basis that the Company is no longer a going concern.
1.5 Financial Risk Management Objectives and Policies Though the Group practised good financial risk management, but due mainly to the Global Financial Crisis and the resultant poor export orders, the Group had to cease its furniture-manufacturing business operation during the year, in order to cut further expenses. While in operation, the Group had managed its credit, foreign currency, interest rate, liquidity and cash flow risks arising in the normal course of the Groups business activities, diligently and had not engaged in speculative transactions.
1.6 SIGNIFICANT ACCOUNTING POLICIES a) Group Accounting and Basis of Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to the end of the financial year. The financial statements of all the subsidiaries are all drawn up to the same financial year ending on 30 September with the Company. All the financial statements have been prepared in accordance with the Groups accounting policies. Subsidiaries are consolidated using the acquisition method from the date on which control is transferred to the Group and no longer consolidated from the date that control ceases. The results of the subsidiaries acquired during the year are included in the consolidated income statements from the date of their acquisition. At the date of acquisition, the fair values of the subsidiaries net assets are determined and theses values are reflected in the consolidated financial statements. The difference between the purchase prices over the fair values of the net assets of the subsidiaries at the date of acquisition is reflected as goodwill or reserve on consolidation. Goodwill or reserve on consolidation is not amortised. Goodwill is reviewed at each balance sheet date and will be written down for impairment when it is considered necessary. All inter-company transactions, balances and unrealised profits and losses on transactions between Group companies are eliminated on consolidation and the consolidated financial statements reflect external transactions only.
Annual Report 2010
37

30 September 2010
1.6 SIGNIFICANT ACCOUNTING POLICIES (contd) b) Impairment of Non Financial Assets The carrying amounts of the Groups and Companys non financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated and an impairment loss is recognised whenever the recoverable amount is less than the carrying amount of the asset. The recoverable is the higher of an assets net selling price and its value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash generating unit to which the asset belongs. The impairment loss is recognised in the income statement immediately except for the impairment on a revalued asset where the impairment loss is recognised directly against the revaluation surplus account to the extent of the surplus credited from the previous revaluation for the same asset with the excess of the impairment loss charged to the income statement. An impairment loss is only reversed to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in the income statement, unless it reverses an impairment loss on a revalued asset, in which case it is taken to equity. As at 30 September 2010, provision for impairment loss on Property, Plant and Equipment has been provided and disclosed in Note 2 and Note 18.
c) Functional Currency and Foreign Currencies The financial statements of the Group and the Company are presented in Ringgit Malaysia, the currency of the primary economic environment in which the Group and the Company operates (its functional currency). Transactions in foreign currencies are converted into Ringgit Malaysia at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated into Ringgit Malaysia at exchange rates approximating those ruling at the date. All exchange gains and losses are dealt with in the income statement. The principal closing exchange rate used is as follows: 2010 RM3.087 2009 RM3.457
United States Dollar d) Property, Plant and Equipment and Depreciation
Freehold land which has been revalued, are shown at fair value based on valuation by external independent valuer at an interval of approximately 5 years. The last valuation was made in 2006. Buildings, which have been revalued, are shown at fair value based on valuation by external independent valuer at an interval of approximately 5 years less accumulated depreciation, and accumulated impairment losses, if any. All other property, plant and equipment are stated at cost less accumulated depreciation, and accumulated impairment losses, if any. Surplus arising on revaluation net of tax are credited to revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to income statement.
38

30 September 2010
1.6 SIGNIFICANT ACCOUNTING POLICIES (contd) d) Property, Plant and Equipment and Depreciation (contd) Freehold land and capital work-in-progress are not depreciated. Depreciation on capital work-in-progress commences when it is ready for its intended use. Other property, plant and equipment are depreciated on the straight-line basis to write off the cost or the revalued amount of each asset over its estimated useful life. The principal annual rates used are: Buildings Renovation and electrical work Plant and machinery Tools and equipments 2.0-10.0% 10.0% 10.0-12.5% 12.5% Air conditioners Office equipments and computers Furniture and fittings Motor vehicles 10.0% 10.0% 10.0% 20.0%
At each balance sheet date, the property, plant and equipments residual values, useful lives and depreciation method are reviewed, and the effects of any changes are recognised prospectively. Plant and equipment acquired under hire-purchase arrangements are capitalised and depreciated over their estimated useful lives in a manner similar to owned plant and equipment. Gain or loss on disposal is determined by comparing net proceed with net carrying amount, and is included in income statement except for revalued asset whereby the revaluation reserve is transferred to retained profits.
e) Inventories Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for damaged, obsolete and slow moving items. Cost is determined principally on a weighted average method. The cost for finished goods and work-in-progress includes raw materials, direct labour, other direct costs and appropriate proportion of production overheads derived based on normal operating capacity. Net realisable value is the estimated selling price in the normal course of business, less the costs of completion and selling expenses. Financial Instruments Financial instruments are classified as assets, liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividend, gain and loss relating to financial instrument classified as asset and liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group and the Company 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. Financial instruments are recognised in the balance sheet when the Group and the Company have become a party to the contractual provisions of the instruments. i) Financial Assets The Groups principal financial assets are trade and other receivables and cash and bank balances. The companys principal financial assets are investment in the Subsidiaries and inter-companies indebtedness.
f)
Annual Report 2010
39

30 September 2010
1.6 SIGNIFICANT ACCOUNTING POLICIES (contd) f) Financial Instruments (contd) i) Financial Assets (contd) Receivables Receivables are carried at anticipated realisable value. Estimated allowance is made for doubtful receivables based on a review of outstanding amounts at the year end. Bad receivables are written off to the income statement when identified. Subsidiaries Subsidiaries are those corporations in which the Company has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. Investment in subsidiaries is stated at cost less impairment, if any. Where there is an indication of impairment, the carrying amount is assessed and written down to its recoverable amount. Impairment loss is recognised in the income statement in the year in which the impairment is identified.
ii) Financial Liabilities The Group and the Companys principal financial liabilities are trade and other payables, and interest bearing borrowings in which they are stated at their nominal values. Payables Payables are stated at cost, which is the fair value of the consideration to be paid in the future for goods and services rendered. Interest-bearing borrowings Borrowings are recognised in the balance sheet when the Group and the Company has become a party to the contractual provisions of the instruments. Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs.
iii) Equity Instruments The Group and the Companys principal equity instrument are ordinary shares which are recorded at the proceeds received net of direct issue costs. Ordinary shares Ordinary shares are classified as equity. Dividend on ordinary share is recognised in equity in the period in which it approved.
40

30 September 2010
1.6 SIGNIFICANT ACCOUNTING POLICIES (contd) g) Provision for liabilities Provision for liabilities are recognised when the Group and the Company has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. Provision for liabilities are reviewed at each balance sheet date and adjusted to reflect the current best estimate.
h) Hire-Purchase Payables i) j) Hire-purchase payables comprise outstanding obligations under the hire purchase agreements net of future finance charges. The finance charges of the hire-purchase are charged to the income statement over the period of the hire-purchase agreement using the sum of digit method. Property, plant and equipment acquired under hire-purchase arrangement are depreciated over their estimated useful lives in a manner similar to owned plant and equipment. Revenue Recognition Revenue from sales of goods is measured at the fair value of the consideration receivable and is recognised when the significant risks and rewards of the ownership have been transferred to the customer. Interest income is recognised upon receipt basis. Management fee is recognised on accrual basis. Dividend income is recognised when the right to receive payment is established. Employee benefits i) Short-term employee benefits Wages, salaries, bonuses and social security contribution are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. 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, and short term non accumulating compensated absences such as sick leave are recognised when the absence occur.
Annual Report 2010
41

30 September 2010
1.6 SIGNIFICANT ACCOUNTING POLICIES (contd) j) Employee benefits (contd) ii) Defined contribution plans The Group and Company makes statutory contributions to an approved provident fund and contributions are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group and the Company has no further payment obligations. As required by law, companies in Malaysia make contributions to the state pension scheme the Employees Provident fund (EPF).
k) Income Taxes Tax on the result for the year comprises current and deferred tax. Current tax expense is the expected tax payable on the taxable income for the year calculated at the tax rate 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 the assets and liabilities and their carrying amounts in the balance sheet measured at the tax rates that are expected to apply in the year when the assets are realised or the liabilities are settled, based on the tax rates that have been enacted or substantially enacted at the balance sheet date. In principal, 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 tax credits to the extent that is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. Deferred tax is recognised in the income statement, except when it arises from transaction which is recognised directly in equity, in which case the deferred tax is also accounted directly in equity. Cash Flow Statement The Group and Company adopts the indirect method in the preparation of the cash flow statement. Cash and cash equivalents comprise of cash at banks and in hand and overdraft. Cash equivalents are short term, highly liquid investments with maturities of three months or less from the dates of acquisition and which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.
l)
m) Segmental Information Segmental information is presented by business segments as the Groups risks and rates of return are affected predominantly by differences in the products it produces. The business segments are based on the Groups management and internal reporting structure. Inter-segment revenue is determined based on negotiated terms. Inter-segment transfers are eliminated on consolidation. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that is expected to be used for more than one period. The Groups business segment operates principally in Malaysia and accordingly, no geographical segmental information is presented.
42

30 September 2010
1.7 CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs In the current financial year, the Company adopted the following new and revised FRSs, Amendment to FRSs and Interpretations issued by the Malaysian Accounting Standards Board (MASB): Standards and interpretations issued but not yet effective At the date of authorisation of issue of the financial statements, the following FRSs and Issues Committee Interpretations (IC Interpretation) are issued but not yet effective until future periods: Effective for financial periods beginning on or after 1 January 2010 FRS 4 FRS 7 FRS 8 FRS 101 FRS 123 FRS 139 Amendments to FRS 1 Amendments to FRS 2 Amendments to FRS 7 Amendments to FRS 101 Amendments to FRS 127 Amendments to FRS 132 Amendments to FRS 139 IC Interpretation 9 IC Interpretation 10 IC Interpretation 11 IC Interpretation 13 IC Interpretation 14 Insurance Contracts Financial Instruments: Disclosure Operating Segments Presentation of Financial Statements (revised) Borrowing Costs (revised) Financial Instruments: Recognition and Measurement First-time Adoption of Financial Reporting Standard Share-based Payment: Vesting Conditions and Cancellations Financial Instruments: Disclosure Presentation of Financial Statements - Puttable Financial Instruments and Obligations Arising on liquidation Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate FRS 132 - Financial Instruments: Presentation Financial Instruments: Recognition and Measurement Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment FRS 2 - Group and Treasury Share Transactions Customer Loyalty Programmes FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Effective for financial periods beginning on or after 1 March 2010 Amendments to FRS 132 Amendments to FRS 132 Classification of Rights Issue
Effective for financial periods beginning on or after 1 July 2010 FRS 1 FRS 3 FRS 127 Amendments to FRS2 Amendments to FRS5 Amendments to FRS 138 IC Interpretation 12 IC Interpretation 16 IC Interpretation 17 Amendments to IC Interpretation 9 First-time Adoption of Financial Reporting Standards (revised) Business Combinations (revised) Consolidated and Separate Financial Statements (revised) Share-based Payment Non-current Assets held for Sale and Discontinued Operations Intangible Assets Service Concession Agreements Hedges of a Net Investment in a Foreign Operation Distribution of Non-cash Assets to Owners Reassessment of Embedded Derivatives
Effective for financial periods beginning on or after 1 January 2011 Amendments to FRS 1 Amendments to FRS 2 Amendments to FRS 7 IC Interpretation 4 IC Interpretation 18 First-time Adoption of Financial Reporting Standards Group Cash-settled Share-based Payment Transactions Financial Instruments: Disclosures Improving Disclosures about Financial Instruments Determining whether an Arrangement contains a Lease Transfers of Assets from Customers
Effective for financial periods beginning on or after 1 January 2012 IC Interpretation 15 Agreements for the Construction of Real Estate
Annual Report 2010
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30 September 2010
1.7 CHANGES IN ACCOUNTING POLICIES AND EFFECTS ARISING FROM ADOPTION OF NEW AND REVISED FRSs (contd) Except for FRS 8 which is effective for annual financial statements for periods beginning on or after 1 July 2010, these new/revised FRSs, Amendments to FRSs and IC Interpretations are effective for annual periods beginning on or after 1 January 2010. The Directors anticipate that the adoption of these new/revised FRSs, Amendments to FRSs and IC Interpretations will have no material impact on the financial statements of the Company in the period of initial application except for the following: FRS 7: Financial Instruments: Disclosures FRS 7 and the consequential amendment to FRS 101 Presentation of Financial Statements require disclosure of information about the significance of the financial instruments for the Companys financial position and performance, the nature and extent of risks arising from financial instruments, and the objectives, policies and processes for managing capital. FRS 139: Financial Instruments: Recognition and Measurement This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. By virtue of the exemption provided in paragraph 44AB of FRS 7 and paragraph 103AB of FRS 139, the impact of applying FRS 7 and FRS 139 on the Companys financial statements upon initial application of these standards as required by paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors is not disclosed. 1.8 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY a) Critical Judgements in Applying the Group and the Companys Accounting Policies In the process of applying the Group and the Companys accounting policies, which are described in Note 1.6 above, the directors are of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements.
b) Key Sources of Estimation Uncertainty The Directors believe that there are no key assumptions made concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year except as discussed below: i) Allowance For Obsolete Inventories The Group makes allowance for obsolete inventories based on an assessment of the recoverability of the inventories through sales and recycling for alternative uses. Allowance is applied to inventories where events or changes in circumstances indicate that the costs may not be recoverable. The identification of obsolete inventories requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the inventories and obsolete inventories expenses in the period in which such estimate has been changed. As at 30 September 2010, allowance for obsolete inventories has been disclosed in Note 4.
ii) Allowance For Doubtful Receivables The Group and the Company makes allowance for doubtful receivables based on an assessment of the recoverability of the trade and other receivables. Allowance is applied to these receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of doubtful receivables requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade receivables and doubtful receivables expenses in the period in which such estimate has been changed. As at 30 September 2010, allowance for doubtful receivables for trade receivables has been disclosed in Note 5.
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30 September 2010
2. PROPERTY, PLANT AND EQUIPMENT Additions/ Current Charge/ Impairment RM
Opening balance RM GROUP 2010 Cost/Valuation Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
Disposal/ written off RM
Closing balance RM
8,560,000 13,002,452 453,674 1,137 ,548 516,076 33,655,460 2,877 ,679 236,310 1,634,843 221,123 3,127 ,809 65,422,974
4,790 4,790
(938,775) (225,900) (1,164,675)
8,560,000 13,002,452 453,674 1,137 ,548 516,076 32,716,685 2,877 ,679 236,310 1,639,633 221,123 2,901,909 64,263,089
Accumulated Depreciation Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
780,148 115,973 68,253 329,465 25,855,957 2,420,373 191,053 1,110,555 178,095 2,955,750 34,005,622
1,950,892 175,100 1,069,294 109,167 4,501,199 362,030 44,958 385,954 42,095 248,146 *8,888,835
(762,666) (467 ,247) (1,229,913)
2,731,040 291,073 1,137 ,547 438,632 29,594,490 2,782,403 236,011 1,496,509 220,190 2,736,649 41,664,544
Net Carrying Value Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
8,560,000 12,222,304 337 ,701 1,069,295 186,611 7 ,799,503 457 ,306 45,257 524,288 43,028 172,059 31,417 ,352
8,560,000 10,271,412 162,601 1 77 ,444 3,122,195 95,276 299 143,124 933 165,260 22,598,545
* This comprises of depreciation of RM3,452,800 and impairment loss of RM5,436,035.
Annual Report 2010
45

30 September 2010
2. PROPERTY, PLANT AND EQUIPMENT (contd) Additions/ Current charge RM 425 4,718 5,143
GROUP 2009 Cost/Valuation Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
Opening balance RM 8,560,000 13,002,452 453,674 1,137 ,548 516,076 37 ,036,141 2,877 ,254 236,310 1,632,005 221,123 3,374,460 69,047 ,043
Disposal/ written off RM (3,380,681) (1,880) (246,651) (3,629,212)
Closing balance RM 8,560,000 13,002,452 453,674 1,137 ,548 516,076 33,655,460 2,877 ,679 236,310 1,634,843 221,123 3,127 ,809 65,422,974
Accumulated Depreciation Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
520,099 106,900 45,502 293,563 26,481,407 2,213,145 171,084 970,209 158,718 2,893,518 33,854,145
260,049 9,073 22,751 35,902 2,755,209 207 ,228 19,969 141,614 19,377 308,880 3,780,052
(3,380,659) (1,268) (246,648) (3,628,575)
780,148 115,973 68,253 329,465 25,855,957 2,420,373 191,053 1,110,555 178,095 2,955,750 34,005,622
Net Carrying Value Freehold land, at valuation Factory buildings, at valuation Factory and office buildings Warehouse, at valuation Renovation and electrical works Plant and machinery Tools and equipments Air conditioners Office equipments and computers Furniture and fittings Motor vehicles
8,560,000 12,482,353 346,774 1,092,046 222,513 10,554,734 664,109 65,226 661,796 62,405 480,942 35,192,898
8,560,000 12,222,304 337 ,701 1,069,295 186,611 7 ,799,503 457 ,306 45,257 524,288 43,028 172,059 31,417 ,352
46

30 September 2010
2. PROPERTY, PLANT AND EQUIPMENT (contd) The freehold land and factory buildings are registered under the ownership of a subsidiary. They were revalued based on current market value basis by an independent professional valuer on 30 September 2006. Had these properties been included in the financial statements at cost less accumulated depreciation, their net book values would have been follows: GROUP 2010 RM Freehold land Factory buildings Warehouse 2,567,649 10,200,087 1,043,888 13,811,624 2009 RM 2,567 ,649 10,462,097 1,067 ,303 14,097 ,049
The property, plant and equipment acquired by the Group during the financial year was RM4,790 (2009: RM5,143) were financed as follows: GROUP 2010 RM Cash 4,790 2009 RM 5,143
Net carrying value of property, plant and equipment pledged as securities for borrowings (Note 10) are as follows: GROUP 2010 RM Freehold land Factory and office buildings Warehouse Plant and Machinery 8,560,000 10,440,000 1 283,172 19,283,173 2009 RM 8,560,000 12,402,110 1,069,295 1,755,894 23,787 ,299
Included in the property, plant and equipment are assets acquired under hire-purchase arrangements (new and existing) with net book values as follows: GROUP 2010 RM Motor vehicles Plant and machinery 160,416 283,172 2009 RM 291,844 816,454
The subsidiary, Baswood Industries Sdn Bhd, had provided an impairment loss of RM3,238,065 (2009: Nil) on Property, Plant and Equipment, based on the Board of Directors assumption that the net realisable value of the subsidiarys freehold industrial land and buildings is RM19,000,000. The impairment loss on the Freehold Land and Factory Buildings of RM2,732,041 was written off against the Revaluation Reserves and the balance of RM506,024 was charged to the income statement for financial year. Another subsidiary, Aimwood Furniture Industries Sdn Bhd, had provided an impairment loss of RM2,197 ,970 (2009: Nil) on Property, Plant and Equipment, based on the Board of Directors assumption that the net realisable value is 50% of the net book value at the financial year end for all categories of property, plant and equipment
Annual Report 2010
47

30 September 2010
3. INVESTMENT IN SUBSIDIARY COMPANIES COMPANY 2010 2009 RM RM Investment in unquoted shares, at cost Less: Impairment loss 42,387,635 (33,487,635) 8,900,000 42,387 ,635 42,387 ,635
The Board of Directors provided impairment loss on the Companys Investment in Subsidiaries Companies for all its loss making subsidiaries except for Baswood Industries Sdn Bhd (Baswood). The Board of Directors is of the opinion that the amount of RM8,900,000 which represents the net tangible assets of Baswood as at 30 September 2010 is recoverable. The subsidiaries, which were all incorporated and domiciled in Malaysia are: Name of Company Proportion of ownership interest Principal Activities 2010 2009 100% 100% Manufacture and export of wooden furniture and furniture parts, and the provision of preservative treatment and kiln drying of wood and timber. Trading in wooden furniture and furniture parts. Manufacturer and dealer in papers, paper carton boxes and boards, and other related products. Dealer and exporter of wooden furniture and furniture parts.
Aimwood Furniture Industries Sdn Bhd # * (Under Creditors Winding Up) Baswood Industries Sdn Bhd * Deswell Packaging (M) Sdn Bhd * Woodmaster Furniture Consolidation Sdn Bhd # *
100% 100% 100%
100% 100% 100%
Held through Baswood Industries Sdn. Bhd. The financial statements of the subsidiaries were audited by the Auditors of the Company. Their financial statements were qualified for insolvency and other matters. Please refer to Auditors Report page 28 to 30.
See Note 25 for Subsequent Events. 4. INVENTORIES GROUP 2010 RM At cost: Finished goods At net realisable value: Raw materials Work-in-progress Allowance for inventories written down: As at 1 October Current year allowance As at 30 September Net inventories 2009 RM
3,215,819
1,453,143
2,352,775 1,162,264 (471,175) (4,394,658) (4,865,833) 1,865,025
3,618,293 5,306,150 (471,175) (471,175) 9,906,411
The Group had written off RM4,394,658 (2009: Nil) from the inventories. The Board of Directors was of the opinion that the finished goods and work-in-progress can be realised at raw material price less 50%, and accordingly valued them as such in the financial statements.
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30 September 2010
5. TRADE RECEIVABLES GROUP 2010 RM Trade receivables 10,250,284 2009 RM 12,979,769
Allowance for doubtful receivables: - Specific: As at 1 October Transferred to bad debts written off Current year allowance As at 30 September - General: As at 1 October Current year allowance As at 30 September Net trade receivables The credit terms of trade receivables range from 30 to 90 days (2009: 30 to 90 days) The credit risk exposure of the Group is as disclosed in Note 1.5. The currency exposure of trade receivables of the Group is as follows:
(985,335) 75,429 (1,100,766) (2,010,672) (343,905) (4,925,838) (5,269,743) 2,969,869
(967 ,326) (18,009) (985,335) (266,000) (77 ,905) (343,905) 11,650,529
2010 RM Receivable in United States Dollar Ringgit Malaysia 4,185,637 6,064,647 10,250,284
2009 RM 4,350,817 8,628,952 12,979,769
The Board of Directors was uncertain on the extent of the recoverability of the Trade Receivables since the Group ceased its manufacturing and trading activities on 9 August 2010. Accordingly, the Board of Directors made a specific allowance and general allowance for bad and doubtful debts of amounting to RM1,100,766 (2009: RM18,009) and RM4,925,838 (2009:RM77 ,905) respectively. 6. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS GROUP 2010 RM Other receivables Deposits Prepayments 210,107 120,616 119,575 450,298 2009 RM 169,794 96,350 682,630 948,774 COMPANY 2010 2009 RM RM 3,258 1,000 23,686 27,944 10,770 1,000 2,565 14,335
Other receivables credit term are assessed and approved on a case by case basis.
Annual Report 2010
49

30 September 2010
7. AMOUNT DUE FROM SUBSIDIARY COMPANIES This comprises advances which are interest free, unsecured and have no fixed terms of repayment. 8. SHARE CAPITAL GROUP and COMPANY GROUP and COMPANY Ordinary share of RM1.00 each Ordinary share of RM1.00 each 2010 2009 2010 2009 Unit Unit RM RM Authorised Issued and paid-up 100,000,000 48,000,000 100,000,000 48,000,000 100,000,000 48,000,000 100,000,000 48,000,000
9. HIRE-PURCHASE LIABILITIES GROUP 2010 RM Minimum hire-purchase payables: Current Non-current - not later than one year - later than one year and not later than five years 381,497 381,497 (14,332) 367,165 291,031 388,712 679,743 (72,908) 606,835 2009 RM
Future finance charges on hire-purchase Present value of hire-purchase payables Tenure of repayments: Current - not later than one year Non-current - 1ater than one year and not later than five years
367,165 367,165
251,676 355,159 606,835 % perannum 1.506.00%
Interest rates during the financial year: Hire-purchases
% perannum 1.506.00%
A subsidiary, Aimwood Furniture Industries Sdn Bhd (Under Creditors Winding Up) had defaulted in its hire-purchase instalment payments during the financial year. The hire purchase agreements include terms, which allow the lender institutions to proceed with legal proceedings against the subsidiary and its corporate guarantor (the Company), for recovery of the principal amounts outstanding together with interest and penalty charges. Due to this, the Company has recognised the liability of RM3,654,349 (2009: Nil) owing by Aimwood Furniture Industries Sdn. Bhd. to the lender institutions, as a provision for liability in its financial statement. Refer Note 18. The Group is insolvent and accordingly, the total hire-purchase payments payable has been classified as current liabilities of the Group.
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30 September 2010
10. BANK BORROWINGS (SECURED) GROUP 2010 RM Overdrafts Trade bills Term loans 2,024,392 1,400,223 7,175,266 10,599,881 Tenure of repayments: Current - not later than one year Non-current Non-current - later than one year and not later than five years - later than five years 2009 RM 5,295,252 1,170,675 7 ,173,315 13,639,242
10,599,881 10,599,881
6,776,924 6,319,440 542,878 6,862,318 13,639,242
Interest rate during the financial year: Overdrafts Trade bills Term loans The bank borrowings are secured by the following: i) ii) iii) iv) v) vi) a corporate guarantee by the Company; endorsement by Credit Guarantee Corporation Malaysia Berhad; legal charge over a freehold industrial landed property belonging to a subsidiary; sub-ordination of Directors advances to a subsidiary to the bank; legal charge over certain plant and machinery of a subsidiary being part-financed by the bank; and existing debenture over all the present and future assets of a subsidiary. % per annum 5.50 - 7.50 5.15 - 6.95 7.00 - 7.25 % per annum 5.50 - 7 .50 5.15 - 6.95 7 .00 - 7 .25
During the year, two of the subsidiaries, Aimwood Furniture Industries Sdn Bhd (Under Creditors Winding Up) and Baswood Industries Sdn Bhd had defaulted in its repayments to its banks borrowings. The banking agreements include terms which allow the lender banks to proceed with legal proceedings against the subsidiaries and corporate guarantor (the Company) for recovery of the principal amounts outstanding together with interest and penalty charges. Due to this, the Company has recognised the liability of RM2,298,390 (2009: Nil) owing by Aimwood Furniture Industries Sdn. Bhd. (Under Creditors Winding Up) to the banks, as a provision for liability in its financial statement. Refer Note 18. The Group is insolvent and accordingly, the total bank borrowings have been classified as current liabilities of the Company.
Annual Report 2010
51

30 September 2010
11. DEFERRED TAXATION GROUP 2010 RM Opening balance Recognised in income statement (Note 21) Closing balance 116,904 (116,904) 2009 RM 183,000 (66,096) 116,904
The deferred tax liabilities as at 30 September 2010 have been computed at the statutory tax rate applicable to the Group and Company at 25% effective from the year of assessment 2010. Presented after appropriate offsetting as follows: GROUP 2010 RM Deferred tax liabilities Deferred tax assets 116,904 (116,904) 2009 RM 3,153,073 (3,036,169) 116,904
The components and movements of the deferred tax liabilities and assets during the financial year prior to offsetting are as follows: GROUP 2010 RM Deferred tax liabilities: Capital allowances and depreciation charges: Opening balance Recognised in the income statement Closing balance Revaluation reserve: Opening balance Recognised in the equity statement Closing balance Total deferred tax liabilities Deferred tax assets: Unabsorbed tax losses and capital allowances: Opening balance Recognised in the income statement Closing balance Others: Opening balance Recognised in the income statement Closing balance Total deferred tax assets 2009 RM
2,333,979 2,333,979
3,046,000 (712,021) 2,333,979
819,094 819,094 3,153,073
819,094 819,094 3,153,073
(2,726,073) (116,904) (2,842,977)
(3,438,094) 712,021 (2,726,073)
(310,096) (310,096) (3,153,073)
(244,000) (66,096) (310,096) (3,036,169)
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30 September 2010
11. DEFERRED TAXATION (contd) The estimated deferred tax liabilities/(assets) arising from temporary differences not provided/recognised in the financial statements is as follows: GROUP 2010 RM Unabsorbed tax losses and capital allowances Others (8,667,810) 325,011 (8,342,799) 2009 RM (4,275,250) (821,750) (5,097 ,000)
12. TRADE PAYABLES The Groups normal credit terms of trade payables range from 7 to 90 days (2009: 7 to 90 days). The Group has no foreign currency trade payables. There were creditors liabilities fallen due which the Group was unable to pay. 13. OTHER PAYABLES, ACCRUALS AND OTHER LIABILITIES GROUP 2010 RM Other payables Accruals 4,738,794 4,787,294 9,526,088 2009 RM 910,191 1,530,479 2,440,670 COMPANY 2010 2009 RM RM 9,675,982 2,880,847 12,556,829 33,387 554,131 587 ,518
Other Payables and Accruals arose mainly from on-going costs. Also included in Other Payables are advances of RM3,313,967 (2009: RM679,173) from a former director who retired during the financial year. These amounts are unsecured and interest free. 14. AMOUNT DUE TO DIRECTORS This comprises of advances which are interest free, unsecured and have no fixed terms of repayment. 15. AMOUNT DUE TO A SHAREHOLDER This comprises of advances which are interest free, unsecured and have no fixed terms of repayment. 16. REVENUE This represents invoiced sale values less discount, if any, of: sales of wooden furniture and furniture parts; preservative treatment and kiln drying of wood and timber services rendered; sales of papers, paper carton boxes and boards, and other related products; management fees; and interest income.
Annual Report 2010
53

30 September 2010
17. COST OF SALES This represents cost of sales of: wooden furniture and furniture parts; preservative treatment and kiln drying of wood and timber services rendered; and sales of papers, paper carton boxes and boards, and other related products.
18. OTHER OPERATING EXPENSES GROUP 2010 RM (a) (b) (c) (d) Impairment loss on property, plant and equipment Allowance for inventories written down Impairment loss on investment in subsidiaries Allowance for bad and doubtful debts on amount due from subsidiaries (e) Provision for liability arising from a subsidiary 2,703,994 4,394,658 7,098,652 Group (a) Impairment loss on property, plant and equipment A subsidiary, Baswood Industries Sdn Bhd had provided an impairment loss of RM3,238,065 (2009: Nil) on Property, Plant and Equipment, based on the Board of Directors assumption that the net realisable value of the Companys freehold industrial land and buildings is RM19,000,000. The impairment loss in relation to the Freehold Land and Factory Buildings, RM2,732,041 was written off against the Revaluation Reserves and the balance, RM506,024 was charged to the income statement for financial year Another subsidiary, Aimwood Furniture Industries Sdn Bhd also provided an impairment loss of RM2,197 ,970 (2009: Nil) on Property, Plant and Equipment, based on the Board of Directors assumption that the net realisable value is 50% of the net book value at the financial year end for all categories of property, plant and equipment. 2009 RM COMPANY 2010 2009 RM RM 33,487,635 15,171,977 5,952,739 54,612,351
(b) Allowance for inventories written down The Group had written off RM4,394,658 (2009: Nil) from the inventories. The Board of Directors was of the opinion that the finished goods and work-in-progress can be realised at raw material price less 50%, and accordingly valued them as such in the financial statements.
Company (c) Impairment loss on investment in subsidiary The impairment loss was in relation to the Companys investment in its subsidiaries.
(d) Allowance for bad and doubtful debts on amount due from subsidiaries The allowance for bad and doubtful debts of RM15,171,977 (2009: Nil) is in relation to the amounts due from the subsidiaries except for Baswood Industries Sdn Bhd, based on the Board of Directors assumption that the amounts due are no longer recoverable.
(e) Provision for liability arising from a subsidiary The Company is a guarantor for the hire-purchasing arrangements and bank borrowings of its subsidiary, Aimwood Furniture Industries Sdn Bhd (Under Creditors Winding Up) and due to the subsidiary inability to repay its borrowings, the Company has recognised the liability of RM5,952,739 owing by its subsidiary to the financial institutions, as a provision for liability in its financial statements.
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30 September 2010
19. FINANCE COSTS GROUP 2010 RM Interest on overdrafts Interest on term loans Interest on hire-purchases Interest on bills of exchange Interest on bankers acceptance Other loan interest Other bank charges 431,757 376,229 40,333 19,050 49,541 85,000 14,159 1,016,069 2009 RM 332,778 439,481 73,952 23,980 142,780 133,042 1,146,013 COMPANY 2010 2009 RM RM 85,000 51 85,051 40 40
20. LOSS BEFORE TAXATION GROUP 2010 RM (a) This is arrived at: After charging: Directors remuneration (Note 20(b)) Auditors remuneration Staff costs: - salaries, wages, bonuses and allowances - EPF & Socso contributions - other staff related costs Allowance for doubtful receivables: - specific - general Bad debts written off Factory rental Impairment loss in investment Amount due from subsidiaries written off Inventories written down Loss on foreign exchanges - unrealised Property, plant and equipment written off Impairment loss on property, plant and equipment Provision for liability arising from a subsidiary Depreciation And crediting: Allowances for doubtful receivables written back Gain on foreign exchanges - realised Gain on disposal of plant and equipment (b) Details of Directors Remuneration: Executive Directors: Salary and other emoluments EPF and Socso contributions 2009 RM COMPANY 2010 2009 RM RM
1,026,634 48,000 2,252,102 248,746 59,969 1,100,766 4,925,838 2,403,170 231,400 4,394,658 66,546 2,703,994 3,452,800
1,000,170 34,450 3,816,994 275,507 50,376 213,765 159,000 276,170 1,720 634 3,780,052
1,024,634 12,500 203,828 24,462 5,586 9,781,665 33,487,635 15,171,977 5,952,739
998,170 10,000 1,610
261,115
276,851 5,933 52,997
600,000 114,620 714,620 139,828 172,186 312,014 1,026,634
768,000 145,920 913,920 66,000 20,250 86,250 1,000,170
600,000 114,620 714,620 137,828 172,186 310,014 1,024,634
768,000 145,920 913,920 64,000 20,250 84,250 998,170
Non-Executive Directors: Fees Other emoluments Total
Annual Report 2010
55

30 September 2010
20. LOSS BEFORE TAXATION (contd) The estimated monetary value of benefit-in-kinds received by the Directors during the financial year was RM21,050 (2009: RM75,900) for the Group. The Directors of the Company and their respective remuneration for the financial year are as follows: GROUP 2010 2009 Number of Directors Range of Remuneration Executive Directors: RM150,001 - RM200,000 RM200,001 - RM250,000 RM250,001 - RM300,000 RM300,001 - RM350,000 RM350,001 - RM400,000 Non-Executive Directors: RM50,000 and below RM50,001 - RM100,000
2 1 4 2 9
1 1 1 3 6
21. INCOME TAX CREDIT GROUP 2010 RM Income Tax Current year (Under)/Over provision in prior years Deferred Tax Transferred from deferred tax (Note 11) Tax credit for the year 116,904 116,904 2009 RM (4,097) (4,097) 66,096 61,999 COMPANY 2010 2009 RM RM 1,903 1,903 1,903
A reconciliation of income tax expense applicable to loss before taxation at the statutory income tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows: GROUP 2010 RM Loss before taxation Tax calculated at 25% (2009: 25%) Expenses not deductible for tax purpose Deductible temporary difference Expenses qualified for double deduction Deferred tax movements Deferred tax assets not recognised Over provision in prior years Tax credit/(expense) for the year (27,484,646) 6,596,315 (3,779,710) (83,199) 116,904 (2,733,406) 116,904 2009 RM (18,684,016) 4,671,004 (1,076,832) 48,725 (3,576,801) (4,097) 61,999 COMPANY 2010 2009 RM RM (55,453,226) 13,863,307 (13,667,089) (196,218) (339,205) 84,801 (18,470) (66,331) 1,903 1,903
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30 September 2010
21. INCOME TAX CREDIT (cotd) Prior to the year of assessment 2009, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007 , companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (single tier system). However, there is 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. The change in tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007 . As at 30 September 2010, the Company does not have any reserves for distribution of profits. Subject to the agreement by the Inland Revenue Board: i) the Group has unabsorbed capital allowance and reinvestment allowances of approximately RM6,564,000 (2009: RM5,354,000) and RM2,866,000 (2009: RM2,895,000) respectively, available for off set against future taxable income.
ii) the Group and Company have unabsorbed tax losses of approximately RM31,228,000 (2009: RM23,802,000) and RM853,000 (2009: RM265,000) respectively, available for off set against future taxable income. 22. EARNING PER SHARE The basic earnings per share of the Group is calculated based on the net loss attributable to equity holders of the Company divided by the weighted average number of shares in issue during the financial year. GROUP 2010 RM Net loss for the year attributable to equity holders of the Company Opening number of shares Effect of shares arising from new issue Weighted average number of ordinary shares Basic earning per share, Sen 23. SIGNIFICANT RELATED PARTY TRANSACTIONS The Company has a controlling related party relationship with its subsidiaries as disclosed in Note 3 to the financial statements. GROUP 2010 RM Significant transaction with subsidiaries: Management fee charged on subsidiaries Significant transaction with directors: Rental payable to Directors 90,000 2009 RM 99,400 COMPANY 2010 2009 RM RM 804,000 804,000 (27 ,367 ,742) 48,000,000 48,000,000 (57 .02) 2009 RM (18,622,017) 48,000,000 48,000,000 (38.80)
The management fee is charged by the Company on its subsidiaries except for Baswood Industries Sdn. Bhd. and Woodmaster Furniture Consolidation Sdn. Bhd. The rental was payable by a subsidiary to two Directors of the Company, namely Dr Oh Han Cheng and Khoo Yew Kheng. This is a Re-current Related Party Transaction. The Directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.
Annual Report 2010
57

30 September 2010
24. SEGMENTAL INFORMATION Segment information is presented in respect of the Groups business segments. The Groups operations are organised into the following main business segments: Furniture - manufacturing of knockdown wooden furniture and furniture parts, and the provision of preservative treatment and kiln drying of wood and timber. Packing Others - manufacturer and dealer in papers, paper carton boxes and boards, and other related products. - comprise investment holding and provision of management services, neither which are of sufficient size to be reported separately.
The accounting policies of the segment are the same as those disclosed in Note 1.6. Furniture RM 2010 Revenue from external Inter-segment revenue Total net revenue Segment result Finance cost Interest income Loss before taxation Taxation Net loss for the year Segment assets Segment liabilities Capital expenditure Depreciation Net non-cash (income)/ expenses other than depreciation 24,250,150 40,831,309 2,862,497 10,406,137 4,269,668 8,604,867 4,790 590,303 5,503,936 13,562,243 16,575,238 (13,711,723) (33,757 ,657) 5,045,496 5,045,496 (27 ,243,382) 6,563,499 6,563,499 (6,284,531) 804,000 804,000 (55,374,234) 62,433,570 11,608,995 804,000 12,412,995 (26,468,577) (1,016,069) (27 ,484,646) 116,904 (27 ,367 ,742) 28,370,338 32,253,757 4,790 3,452,800 15,910,073 Packing RM Others RM Eliminations RM Consolidated RM
58

30 September 2010
24. SEGMENTAL INFORMATION (contd) The Groups operations are organised into the following main business segments: Furniture - manufacturing of knockdown wooden furniture and furniture parts, and the provision of preservative treatment and kiln drying of wood and timber. Packing Others - manufacturer and dealer in papers, paper carton boxes and boards, and other related products. - comprise investment holding and provision of management services, neither which are of sufficient size to be reported separately. Furniture RM 2009 Revenue from external Inter-segment revenue Total net revenue Segment result Finance cost Interest income Loss before taxation Taxation Net loss for the year Segment assets Segment liabilities Capital expenditure Depreciation Net non-cash (income)/ expenses other than depreciation 25. SUBSEQUENT EVENTS (a) On 23 November 2010, the Companys wholly owned subsidiary, Aimwood Furniture Industries Sdn Bhd was put under a Creditors Winding Up Order by the High Court of Kuala Lumpur, in respect of the High Court winding-up petition No. D-28NCC-654-2010 filed by the Creditor, Achieve Coatings and Services Sdn. Bhd. and Dato Robert Teo Keng Tuan of Messrs. RSM NWT Advisory Services Sdn. Bhd. was appointed as the Liquidator with effect from that date. (b) On 30 August 2010, the subsidiary of the Company, Baswood Industries Sdn Bhd was put under the Creditors Winding Up Order by the High Court of Kuala Lumpur, arising from the Petitions made by a Trade Creditor, whereby a Provisional Liquidator was appointed on that date. The subsidiary defended the case and on 30 November 2010, the Provisional liquidator was removed. On 6 January 2011, the petition for winding up by a creditor of the subsidiary was also withdrawn. (c) On 13 December 2010, the subsidiary of the Company, Baswood Industries Sdn Bhd entered into a Sale and Purchase Agreement to dispose of its freehold industrial land and buildings for a total consideration of RM19,000,000. The disposal has not been completed as at the date of this report. 43,891,826 9,343,408 3,148 3,185,208 95,914 10,082,823 2,485,354 1,995 594,844 14,827 1,835,145 11,676,969 61,011 11,737 ,980 (15,203,791) 8,828,430 8,828,430 (1,191,047) 804,000 804,000 (339,165) (865,011) (865,011) (804,000) 20,505,399 20,505,399 (17 ,538,003) (1,146,013) (18,684,016) 61,999 (18,622,017) 53,989,476 13,663,907 5,143 3,780,052 95,914 Packing RM Others RM Eliminations RM Consolidated RM
Annual Report 2010
59
LIST OF LANDED PROPERTIES
The details of the landed properties of the Group as at 30 September 2010 are set out below: Location Land/Built-up area Description/ Existing Use Industrial Land Factory Buildings Office Building Warehouse Building Age of Building (years) n/a 10 Tenure Date of Valuation (V)/ Acquisition (A) 30.09.2006 (V) 30.09.2006 (V) Net Book Value as at 30.09.10 RM 8,560,000 9,091,440
Lot 6516, Batu 5-3/4 Jalan Kapar 42100 Klang Selangor Darul Ehsan
10 acres 231,600 square feet 23,000 square feet 34,850 square feet
Freehold Freehold
7 4
Freehold Freehold
30.09.2006 (V) 30.09.2006 (V)
1,348,560 2
n/a - Not Applicable
60
ANALYSIS OF SHAREHOLDINGS
as at 25 February 2011
SHARE CAPITAL Authorised Share Capital Issued and Paid-up Share Capital Class of Share Voting Right : : : : RM100,000,000/RM48,000,000/Ordinary Shares of RM1.00 each One vote per ordinary share on a poll. One vote per shareholder on a show of hands.
SUBSTANTIAL SHAREHOLDERS (based on the Register of Substantial Shareholders) Direct Interest No. of Shares 7 ,153,100 6,290,600 Indirect Interest No. of Shares
Substantial Shareholders 1. Goh Mei Yuin 2. Ng Min Lin
% 14.90 13.11
DIRECTORS SHAREHOLDINGS (as shown in the Register of Directors Shareholdings) Direct Interest No. of Shares 1,033,146 806,130 Indirect Interest No. of Shares
No. Name 1. Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman 2. Khoo Yew Kheng 3. Khoo Yew Nean 4. Dr. Lai Chee Chuen 5. Lim Boon Chiang 6. Mr. Chong Yong Kai @ Chong Yong Kait 7 . Y. Bhg. Dato Wong Kam Hoong DISTRIBUTION OF SHAREHOLDINGS
% 2.15 1.68
Size of Shareholdings 1 99 100 1,000 1,001 10,000 10,001 100,000 100,001 2,399,9999* 2,400,000 and above** Total Remark:
No. of Shareholders 6 526 327 215 65 3 1,142
% of Shareholders 0.53 46.06 28.63 18.83 5.69 0.26 100.00
No. of Shares Held 182 354,206 1,914,524 7 ,732,039 28,603,949 9,395,100 48,000,000
% of Issued Share Capital 0.00 0.74 3.99 16.11 59.59 19.57 100.00
* - Less than 5% of Issued Shares ** - 5% and above of Issued Shares
Annual Report 2010
61
ANALYSIS OF SHAREHOLDINGS (contd)
THIRTY (30) LARGEST SECURITIES ACCOUNT HOLDERS No. Shareholders 1. AMSEC Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Ng Min Lin 2. Goh Mei Yuin 3. Goh Mei Yuin 4. Kenanga Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Goh Mei Yuin 5. Pan Choon Cheong @ Pun Choon Cheong 6. Arthur Yap Chee Keong 7 . JP Apex Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Chee Chik Eng 8. Yong Kok Chuan 9. Khoo Yew Kheng 10. Ng Min Lin 11. Khoo Yew Nean 12. AIBB Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Ng Aik Hooi 13 Affin Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Kok Kong Yoon 14. Goh Mei Yuin 15. Lim Poh Teot 16. Kenangan Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Elite Lion Sdn. Bhd. 17 . Ooi Liok Lai 18. AIBB Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Lim Hock Ho 19. TA Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Esabee Sdn. Bhd. 20. AllianceGroup Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Peter Ling Ee Kong 21. Lee Soo Seng 22. AllianceGroup Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Koh Kin Lip 23. Chan Chor Ngiak 24. Affin Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Tan Boon Hok 25. AIBB Nominees (Tempatan) Sdn. Bhd. - Pledged Securities Account for Cheong Yee Kiong 26 Elite Lion Sdn. Bhd. 27 Yeo Poh Lian 28 Yap Leong Seng 29 W. Ismail Bin W Nik 30 Kong Chee Fire Total Number of Shares 3,560,700 3,032,400 2,802,000 2,395,000 2,250,000 2,065,500 1,700,000 1,116,800 1,033,146 922,100 806,130 726,900 685,926 679,900 618,000 576,000 572,700 558,100 548,600 526,900 500,000 441,000 420,000 400,000 400,000 400,000 380,000 350,000 334,843 330,000 31,132,645 % 7 .42 6.32 5.84 4.99 4.69 4.30 3.54 2.33 2.15 1.92 1.68 1.51 1.43 1.42 1.29 1.20 1.19 1.16 1.14 1.10 1.04 0.92 0.88 0.83 0.83 0.83 0.79 0.73 0.70 0.69 64.86
62
FORM OF PROXY
Account No.
No. of Shares Held
I/We, ................................................................................................................... (NRIC No.....................) of (FULL NAME IN BLOCK CAPITALS) ....................................................................................................................................................................... being a member(s) (FULL ADDRESS) of BASWELL RESOURCES BERHAD, hereby appoint .................................(NRIC No.............................) (FULL NAME) of ............................................................................................................................................................................................... (FULL ADDRESS) or failing him/her, .........................................................................................................(NRIC No...................) (FULL NAME) of ............................................................................................................................................................................... (FULL ADDRESS) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Tenth Annual General Meeting of the Company to be held at Wisma Baswood, Lot 6516, Batu 5-3/4, Jalan Kapar, 42100 Klang, Selangor Darul Ehsan on Wednesday, 30 March 2011 at 9:00 a.m. or at any adjournment thereof. Please indicate an X in the space provided below on how you wish your votes to be casted. If no specific instruction as to voting is given, the Proxy will vote or abstain from voting at his/her discretion. AGENDA To receive the Audited Financial Statements for the financial year ended 30 September 2010 together with the Reports of the Directors and the Auditors thereon. To approve the payment of Directors Fees for the financial year ended 30 September 2010. To re-elect the following Directors who are retiring pursuant to Article 119 of the Companys Articles of Association and being eligible, have offered themselves for re-election:. (a) Dr. Lai Chee Chuen; and To re-elect the following Directors who are retiring pursuant to Article 119 of the Companys Articles of Association and being eligible, have offered themselves for re-election:. (b) Mr. Chong Yong Kai. To re-appoint Mr. Lim Boon Chiang who retires pursuant to Section 129(6) of the Companies Act, 1965. To re-appoint Messrs. Thiang & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. Special Business Ordinary Resolution - Authority to issue shares FOR AGAINST
Resolution 1 Resolution 2
Resolution 3
Resolution 4 Resolution 5 Resolution 6
Signed on this ................ day of ......................................... 2011 ....................................................................... Signature of Member(s)/Common Seal Notes: 1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 24 March 2011 (General Meeting Record of Depositors) shall be eligible to attend the Meeting. 2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him. 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 Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. 3. A member shall not be entitled to appoint more than two (2) proxies to attend and vote provided that where a member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depository) Act 1991, he may appoint at least one (1) proxy in respect of each securities account he holds with ordinary shares of the Company standing to the credit of the said securities account. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised. 5. The instrument appointing a proxy or a power of attorney must be deposited at Securities Services (Holdings) Sdn. Bhd. of Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting.
Please fold here
AFFIX STAMP HERE
TO: The Secretaries BASWELL RESOURCES BERHAD (540508-D) C/O SECURITIES SERVICES (HOLDINGS) SDN. BHD. LEVEL 7 , MENARA MILENIUM JALAN DAMANLELA PUSAT BANDAR DAMANSARA DAMANSARA HEIGHTS 50490 KUALA LUMPUR MALAYSIA
Please fold here
BASWELL RESOURCES BERHAD

WISMA BASWOOD LOT 6516, BATU 5-3/4, JALAN KAPAR 42100 KLANG SELANGOR DARUL EHSAN www.baswell.com.my
(540508-D)

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Annual Report 2010

Rise above adversity

Annual Report 2010

NOTICE OF ANNUAL GENERAL MEETING

BASWELL RESOURCES BERHAD (540508-D)

NOTICE OF ANNUAL GENERAL MEETING (CONTD)

Annual Report 2010

WOODMASTER FURNITURE CONSOLIDATION SDN. BHD. (619555-T)

BASWOOD INDUSTRIES SDN. BHD. (124125-H)

AIMWOOD FURNITURE INDUSTRIES SDN. BHD. (In Liquidation) (175568-D)

BASWELL RESOURCES BERHAD (540508-D)

Lim Boon Chiang, Chairman

Chong Yong Kai, Member

(Appointed w.e.f. 27 October 2010) Independent Non-Executive Director

Khoo Yew Nean, Member

(Ceased w.e.f. 27 October 2010) Executive Director

Lim Boon Chiang Chong Yong Kai

Dr. Lai Chee Chuen, Member

Independent Non-Executive Director Independent Non-Executive Director

(Ceased w.e.f. 27 October 2010) Independent Non-Executive Director

Dato Wong Kam Hoong, Member

Dato Wong Kam Hoong Dr. Oh Han Cheng

(Ceased w.e.f. 27 October 2010) Non-Independent Non-Executive Director

Non-Independent Non-Executive Director (Retired on 30 March 2010) Non-Independent Executive Chairman

COMPANY SECRETARIES Chua Siew Chuan (MAICSA 0777689)

Elaine Wong Wei Syn (MAICSA 7048544)

Tan Beng Kheng

(Resigned w.e.f. 2 August 2010) Independent Non-Executive Director

CHIEF EXECUTIVE OFFICER

Dr. Lai Chee Chuen

Chong Yong Kai, Chairman

Lim Boon Chiang, Member

Independent Non-Executive Director

Dato Wong Kam Hoong, Member

Non-Independent Non-Executive Director

Dr. Lai Chee Chuen, Chairman

(Ceased w.e.f. 27 October 2010) Managing Director/Chief Executive Officer

(Appointed w.e.f. 27 October 2010) Independent Non-Executive Chairman

Lim Boon Chiang, Member Chong Yong Kai, Member

Dr. Lai Chee Chuen, Member

(Ceased w.e.f. 27 October 2010) Independent Non-Executive Director

Annual Report 2010

BASWELL RESOURCES BERHAD (540508-D)

DIRECTORS PROFILE (contd)

Annual Report 2010

DIRECTORS PROFILE (contd)

BASWELL RESOURCES BERHAD (540508-D)

DIRECTORS PROFILE (contd)

Annual Report 2010

BASWELL RESOURCES BERHAD (540508-D)

STATEMENT ON CORPORATE GOVERNANCE

Annual Report 2010

STATEMENT ON CORPORATE GOVERNANCE (contd)

BASWELL RESOURCES BERHAD (540508-D)

STATEMENT ON CORPORATE GOVERNANCE (contd)

ii. Remuneration Committee

STATEMENT ON CORPORATE GOVERNANCE (contd)

BASWELL RESOURCES BERHAD (540508-D)

AUDIT COMMITTEE REPORT

Independent Non-Executive Director

Annual Report 2010

AUDIT COMMITTEE REPORT (contd)

BASWELL RESOURCES BERHAD (540508-D)