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FIBON

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FIBON BERHAD

ANNUAL REPORT

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CONTENTS

Corporate Information

Profile of Directors

Group Structure

Financial Highlights

Audit Committee Report

Chairman‟s Statement

Statement on Corporate Governance

Statement on Internal Control

Statement on Directors‟ Responsibilities

Additional Compliance Information

Financial Statements

Analysis of Shareholdings

Notice of Annual General Meeting

Enclosed : Proxy Form

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18

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71

ADVANCE COMPOSITES…

Corporate Information

2

BOARD OF DIRECTORS

Pang Chee Khiong

Executive Chairman

Pang Fok Seng

Managing Director

Lim Wai Kiew

Executive Director

Pang Nyuk Yin

Executive Director

Datuk Mohamad Saleh Bin Mohd Ghazali

Independent Non-Executive Director

Dr. Chen Chaw Min


Chong Peng Khang


COMPANY SECRETARY

Noriah Binti Md Yusof (LS No. 0009298)

AUDITORS AND REPORTING

ACCOUNTANTS

Crowe Horwath (AF 1018)

52, Jalan Kota Laksamana 2/15,

Taman Kota Laksamana,

Seksyen 2, 75200 Melaka.

Tel: (607) 282 5995

Fax: (607) 283 6449

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd

(378993-D)

Level 6, Symphony House,

Block D13, Pusat Dagangan Dana 1,

Jalan PJU 1A/46,

47301 Petaling Jaya, Selangor.

Tel: (603) 7841 8000

Fax: (603) 7841 8008

REGISTERED OFFICE

31-04, Level 31, Menara Landmark

Mail Box 172, No. 12, Jln Ngee Heng,

80000 Johor Bahru, Johor Darul Takzim.

Tel: (607) 278 1338

Fax: (607) 223 9330

HEAD OFFICE

12A, Jalan 20, Taman Sri Kluang,

86000 Kluang, Johor Darul Takzim

Tel: (607) 773 6918

Fax: (607) 774 2025

Website: www.fibon.com.my

E-mail: [email protected]

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia

Securities Berhad

Stock Name: Fibon

Stock Code: 0149

http://www.fibon.com.my/

ANNUAL REPORT 2010

Profile of Directors

3

Pang Chee Khiong

Executive Chairman, Non-Independent

Mr Pang Chee Khiong, a Malaysian aged 46 is a

Non-Independent Executive Chairman since 25

March 2008. He has attended all four Board

meetings held during the financial year under

review. He has more than 22 years of

experience in the industries such as plumbing,

timber logging, construction and housing

development. He is the brother to Pang Fok

Seng and Pang Nyuk Yin. He maintains a clean

record with regard to convictions for offences

and he has no conflict of interest with the group.

Pang Fok Seng

Managing Director, Non-Independent

Mr Pang Fok Seng, a Malaysian aged 44 is a

Non-Independent Managing Director since 25

March 2008. He has attended three out of four

Board meetings held during the financial year

under review. He has more than 16 years of

experience in the advanced polymer matrix fibre

composite industry. He is the brother to Pang

Chee Khiong and Pang Nyuk Yin. He is the

husband to Lim Wai Kiew. He maintains a clean


and he has no conflict of interest with the group.

Pang Nyuk Yin

Executive Director, Non-Independent

Ms Pang Nyuk Yin, a Malaysian aged 50 is a

Non-Independent Executive Director since 9

April 2008. She has attended all four Board

meetings held during the financial year under

review. She was in charge of production

processes, sales, purchases and general

administration from 1990 to 2003 in a private

company. She is sister to Pang Fok Seng and

Pang Chee Khiong. She maintains a clean


and she has no conflict of interest with the

group.

Lim Wai Kiew

Executive Director, Non-Independent

Ms Lim Wai Kiew, a Malaysian aged 44, is a

Non-Independent Executive Director since 9

April 2008. She has attended two out of four

Board meetings held during the financial year

under review. She was a quantity surveyor in

Singapore from 1990 to 1991. She was in

charge of office management and administration

in a private company from 1992 to 2003. She is

wife to Pang Fok Seng She maintains a clean


and she has no conflict of interest with the

group.


Independent Non-Executive

Datuk Mohamad Saleh Bin Mohd Ghazali, a

Malaysian aged 66 is an Independent Non-

Executive Director and Chairman of Audit and

Remuneration Committee and member of the

Nomination Committee. He is appointed as

Director on 20 October 2008 and has attended

all four Board meetings held during the financial

year under review. He graduated from the

University of Hawaii, United States with a

Bachelor of Business Administration and went

on to obtain his Masters of Business

Administration from Ohio University in Athens,

United States in 1972.

Datuk Mohamad Saleh began his career by

serving the Fishery Development Authority of

Malaysia as an economist in 1972 and went on

to lecture in Universiti Institut Teknologi Mara in

1973. Prior to retiring in November 1999 he was

the Executive Director/ Chief Executive Officer of

Bank Perusahaan Kecil & Sederhana Malaysia

Berhad (formerly known as Bank Industri

Malaysia Berhad) for eighteen years. His other

working experiences encompasses being a

marketing executive in Tourist Development

Corporation of Malaysia, an assistant director in

the Urban Development Authority, Malaysia and

an assistant general manager in the Armed


Profile of Directors cont‟d

4


Independent Non-Executive (Cont’d)

Forces Provident Fund in its investment

department.

He has no conflict of interest with the Group and

has no family relationship with any director

and/or major shareholder of the Group. He

maintains a clean record with regard to

convictions for offences.

Dr. Chen Chaw Min


Dr. Chen Chaw Min, a Malaysian aged 49, is an

Independent Non-Executive Director and

Chairman of Nomination Committee and

member of the Audit Committee. He is

appointed as Director on 20 October 2008 and

has attended all four Board meetings held

during the financial year under review. He

graduated from the University of Technology,

Malaysia with a Bachelor I

n Surveying (Hons) in 1985. He obtained his

Masters in Business Administration (Finance)

from University of Illinois at Urbana-Champaign,

United States in 1997. He subsequently went on

to obtain his PhD in Finance from University of

Putra, Malaysia in 2005.

Dr. Chen began his career in the Malaysian Civil

Service in 1988 and has held many posts in the

government such as assistant secretary and

principal assistant secretary in the Budget

Division, Investment Division and Finance

Division of the Ministry of Finance. He is

currently the Senior Principal Assistant

Secretary in the Finance Division of Ministry of

Finance. Dr. Chen currently sits on the board of

Kumpulan Modal Perdana, a public venture

capital company which is wholly owned by the

Minister of Finance Incorporated. He has no

conflict of interest with the Group and has no

family relationship with any director and/or major

shareholder of the Group. He maintains a clean

record with regard to convictions for offences.

Chong Peng Khang


Mr Chong Peng Khang, a Malaysian aged 30, is

an Independent Non-Executive Director and

member of the Audit and Remuneration

Committee for the Group. He is appointed as

Director on 20 October 2008 and has attended

all four Board meetings held during the financial

year under review. He holds a first class

honours Bachelor of Accounting degree from

Multimedia University, Malaysia. He is a

Chartered Accountant by profession as well as a

member of the Association of Chartered

Certified Accountants (ACCA, United Kingdom)

and also member of the Malaysian Institute of

Accountants (MIA).

He began his career as an auditor with Deloitte

Kassim Chan and subsequently Ernst & Young,

involving in audit and business advisory of

companies from various industries. His

experience covers audit and assurance

engagements, corporate reporting and

compliance, taxation and wide-ranging overseas

exposures. He has previously headed the

accounting and finance division of a public listed

company listed on the Main Board of Bursa

Malaysia Securities Berhad and responsible for

the corporate finance, accounting, tax and cash

flow functions of the company and its

subsidiaries. He is currently an Audit Manager

of a chartered accounting firm. He is also an

independent non-executive director of another

company listed on the Main Market of Bursa

Malaysia Securities Berhad. He has no conflict

of interest with the Group and has no family

relationship with any director and/or major

shareholder of the Group. He maintains a clean

record with regard to convictions for offences.

ANNUAL REPORT 2010

Group Structure

5

100% 100% 100%

FIBON BERHAD, incorporated on 25 March 2008, Malaysia

HEXA ANALISA SDN BHD, acquired on 20 October 2008, Malaysia

FIBON UK LIMITED, acquired on 16 April 2009, United Kingdom

FIBON AUSTRALIA PTY LTD, incorporated on 14 July 2009, Australia

FIBON BERHAD

HEXA

ANALISA

SDN BHD

FIBON

UK

LIMITED

FIBON

AUSTRALIA

PTY LTD


Financial Highlights

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Financial year ended 31 May

2006^ 2007^ 2008^ 2009 2010

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Revenue 4,038 7,910 14,305 16,474 12,891

Profit before taxation (“PBT”) 1,952 4,232 8,007 8,693 5,010

Profit after taxation (“PAT”) 1,846 4,210 7,847 8,304 4,014

EARNINGS PER SHARE (“EPS”)

Gross EPS (sen)* 7.23 15.67 13.30 17.86 5.11

Net EPS (sen)* 6.84 15.59 13.04 17.06 4.10

^ Assuming that the Group was in existence since 1 June 2005.

* FYE 2006-2007: Computed based on the PBT and PAT for the relevant financial years under review

and divided by the issued and paid up share capital of 27,000,000 Shares immediately prior to the

Public Issue by Fibon Berhad.

* FYE 2008-2009: Computed based on the PBT and PAT for FYE 2009 and divided by the weighted

average number of shares in issue of 60,187,000 and 48,666,000 during the respective financial

year.

* FYE 2010: Computed based on the PBT and PAT for FYE 2010 and divided by the issued and paid

up share capital of 98,000,000 Shares for the financial year.

REVENUE AND PROFIT FROM ORDINARY ACTIVITY AFTER TAXATION (RM’000)

(RM’000)

ANNUAL REPORT 2010

Financial Highlights cont‟d

7

NET EPS (SEN)

YEAR

(sen)


Audit Committee Report for the financial year ended 31 May 2010

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THE AUDIT COMMITTEE

The present Audit Committee consists entirely

of Non-Executive Directors. The Company has

complied with the Listing Requirements of Bursa

Malaysia Securities Berhad, which require all of

Audit Committee members to be non-executive,

with a majority of them being independent

directors. In addition, one of the members of the

Audit Committee is also a member of the

Malaysian Institute of Accountants (“MIA”) and

the Chairman of the Audit Committee is an

Independent Director.

COMPOSITION AND MEETINGS

The Audit Committee was established on 20

October 2008. The composition of the Audit

Committee and their attendance at the 4

meetings held during the year are as follows:

Name of Director Designation Attendance

Datuk Mohamad

Saleh Bin Mohd

Ghazali

Independent

Non-

Executive

Director

Chairman 4/4

Dr. Chen Chaw

Min

Independent

Non-

Executive

Director

Member 4/4

Chong Peng

Khang

Independent

Non-

Executive

Director;

Member of

the MIA

Member 4/4

TERMS OF REFERENCE

Objectives

The principle objective of the Audit Committee is

to assist the Board of Directors in discharging its

statutory duties and responsibilities relating to

accounting and reporting practices of the Group.

In addition, the Committee shall:

1. Ensure the timely and accurate

preparation and publication of financial

statements of our Group;

2. Review the adequacy of provisions against

contingencies and bad and/or doubtful

debts;

3. Review internal control process and

procedures, scope, internal audit findings

and recommend actions to the Board;

4. Recommend and appoint external auditors

and deal with any issues arising from their

audit findings;

5. Review related party transactions that may

arise within our Group;

6. Approve fees relating to external auditors;

and

7. Address any accountability issues that

may arise from time to time within our

Group.

ANNUAL REPORT 2010

Audit Committee Report for the financial year ended 31 May 2010 cont‟d

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TERMS OF REFERENCE (Cont’d)

Composition

1. The Audit Committee shall be appointed

by the Board of Directors from amongst

their members and comprising not less

than three (3) members, of whom the

majority shall be the Independent Non-

Executive directors.

2. At least one of the members of the Audit

Committee must be a member of the

Malaysian Institute if Accountants, or if he

is not a member of the Malaysian Institute

of Accountants, he must have at least

three (3) years of working experience or

either must have passed the examinations

specified in Part I of the schedule of

Accountants Act 1967, or must be a

member of one of the associations of

accountants specified in Part II of the 1st

Schedule of the Accountant Act, 1967.

3. The members of the Audit Committee shall

elect a chairman amongst themselves who

shall be an Independent Non-Executive

director. No alternate director shall be

appointed as a member of the Audit

Committee.

4. If a result that the number of members is

reduced below three (3), the Board of

Directors shall, within three (3) months of

the events, appoints such number of new

members as may be required to make the

minimum number of three (3) members.

Authority

1. The Audit Committee is authorized by the

Board of Directors shall have the authority

to investigate any matter within its items of

reference and shall have unlimited access

to both the internal and external auditors,

as well as the employees of the Group. All

employees are directed to co-operate with

any request made by the Committee.

2. The Committee shall have unlimited

access to all information and documents

relevant to its activities, to the internal and

external auditors, and to senior

management of the Group.

3. The Committee shall have the authority to

obtain independent legal or other

professional advices as it considers

necessary.

4. The Committee shall be able to convene

meetings with the external auditors,

excluding the attendance of the executive

members of the Committee, whenever

deemed necessary.

5. The Audit Committee shall have the power

to establish Sub-Audit Committee(s) to

carry out certain investigation on behalf of

the Committee in such manner, as the

Committee deem fit and necessary.

Meetings

The Committee is at liberty to determine the

frequency of the meetings as least four times

annually. The quorum shall consist of two (2)

members, where the majority of members

present must be independent directors.

Attendance of the Meetings

1. The external auditors may be invited to

attend to meetings. The Committee may

invite any person to be in attendance to

assist in its deliberations. The other

directors and employees attend any

particular audit committee meeting only at

the audit committee‟s invitation, specific to

the relevant meeting.

2. The Company Secretary shall be the

Secretary of the Committee and shall be

responsible for drawing up the agenda

with concurrence of the chairperson and

circulating it, supporting by explanatory

documentation to committee members

prior to each meeting.



10

TERMS OF REFERENCE (Cont’d)

Duties

The duties of the Audit Committee include the

followings:

1. To consider the appointment or re-

appointment of external auditors, the audit

fee and matter relating to the resignation

or dismissal of auditors, if any;

2. To review with the external auditors the

audit plan, their evaluation of the system

of internal accounting controls, their letter

to management and the management‟s

response;

3. To review the quarterly and annual

financial statements before submission to

the Board of Directors for approval,

focusing particularly on:

Changes in accounting policies and

practices;

Significant and unusual events;

Significant adjustments resulting from

the audit;

The going concern assumption; and

Compliance with accounting standard

and other legal requirements

4. To discuss problems and reservations

arising from the interim and final audits,

and any matter the auditors may wish to

discuss (in the absence of management

where necessary);

5. To do followings where an internal audit

function exists;

Review the adequacy of the scope,

function and resources of the internal

audit function and that it has the

necessary to carry out its work;

Review the internal audit programme

and results of the internal audit

process and where necessary ensure

that appropriate action is 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;

Review the resignation of internal

audit staff members and provide the

staff member the opportunity to

submit his reasons for resigning; and

To consider major findings of internal

investigations and management‟s

response.

6. To consider any related party transaction

and conflict of interest situation that may

arise within the Company or the Group

including any transaction, procedure or

course of conduct that raises questions of

management integrity; and

7. To consider other topics as defined by the

Board.

Reporting

The Audit Committee is authorized to regulate

its own procedures and in particular the calling

of meetings, the notice to be given of such

meetings, the voting and proceeding thereat, the

keeping of minutes and the custody, production

and inspection of such meetings.

The minutes of meetings shall be circulated by

the Secretary of the Committee to the

Committee members and all the other Board

members.

ANNUAL REPORT 2010


11

ACTIVITIES OF THE AUDIT COMMITTEE

There were four (4) Audit Committee Meetings

held during the financial year under review.

The main activities undertaken by the Audit

Committee during the financial year included the

following:

Reviewed and commented on the

quarterly financial result before

recommending the same for Board‟s

approval.

Reviewed the audit report and

observations made by external auditors on

the audited financial statements that

require appropriate management action

and the management‟s response thereon

and reporting them to the Board.

Reviewed the external auditors‟ scope of

work and audit plan.

Reviewed the internal audit reports, which

highlighted the audit issues and

management„s response.

INTERNAL AUDIT FUNCTION

The Board engaged an external professional

firm to carry out internal audit function for the

Group. The internal auditors report directly to

the Audit Committee.

The primary role of the internal auditors is to

inter-alia, assist the Audit Committee on an

ongoing basis to:

Review the risk management framework;

Evaluate the state of compliance with the

Bursa Securities Listing Requirements,

Malaysian Code on Corporate

Governance (“the Code”) and other

statutory requirements; and

Provide such other function as requested

by the Audit Committee

The total costs incurred for the internal audit

function of the Group for the financial year was

RM35,829.


Chairman‟s Statement

12

ON behalf of the Board of Directors of FIBON

Berhad, I am pleased to present the Annual

Report and Audited Financial Statements of the

Group and of the Company for the financial year

ended 31 May 2010.

FINANCIAL PERFORMANCE

For the financial year under review, the Group

registered a revenue of approximately RM 12.9

million, a decreased of 21.8% compared to the

preceding year. Profit after tax decrease from

RM 8.3 million to RM 4.0 million. The decrease

is mainly due to decrease in sales and expiry of

pioneer status. The Group continues maintain a

set of healthy and financially sound balance

sheet with cash and cash equivalents of

approximately RM 15.4 million. The lower

revenue achieved in the year is mainly due to

impact of the financial crisis in year 2009.

INDUSTRY OUTLOOK AND PROSPECTS

There were signs of stabilisation towards the

end of first quarter year 2010 as global

economics condition started to improve. The

recovery in the global economy will provide a

further impetus for growth in 2010. However,

economic condition in year 2010 will remain

challenging in view of sovereign debt crisis in

Europe.

Nevertheless, the Group has taken steps to

mitigate the impact of these issues including

focusing on sale expansion of its existing

products and continue to invest in research and

development.

DIVIDENDS

The Board is pleased to recommend a proposed

single tier final dividend of 0.82 sen per ordinary

share for FYE 31 May 2010. The proposed

dividend is subject to Shareholders‟ approval at

the forthcoming Annual General Meeting.

The total dividends payable for the FYE 31 May

2010 would be approximately amounting to

RM 804,000, being a dividend payout ratio of

approximately 20.1% of PAT of RM 4.0 million.

APPRECIATION

On behalf of the Board of Directors, I would like

to express our sincere appreciation to the

management and the staff of the Group for their

continued efforts, commitment and contribution

in instituting the strict strategic and operational

measures needed to stand resilient during these

challenging times. I would like to take this

opportunity to thank all our valued customers,

suppliers, business associates, investors, the

regulatory authorities, bankers for their

continuous support and confidence in the Group

especially during the listing exercise of the

Group.

Finally, I wish to thank my fellow Directors for

their invaluable guidance, advice and support.

Pang Chee Khiong

Chairman

ANNUAL REPORT 2010

Statement on Corporate Governance for the financial year ended 31 May 2010

13

INTRODUCTION

The Board of Directors (“the Board”) of Fibon

Berhad (“the Company”) is committed to

exercise good corporate governance by

supporting and applying the prescriptions of the

principles and best practices set out in Parts 1

and 2 respectively of the Malaysian Code on

Corporate Governance (“the code”).

The Board is pleased to provide the following

statement on how the Group has applied the

principles and best practices set out in Part 1

and 2 of the Code. Unless otherwise stated, the

Board has throughout the financial year ended

31 May 2010 complied with the best practices

indicated in the Code.

The Board acknowledges the importance of

achieving best practice in its standards of

business integrity and corporate accountability

and is committed to subscribe to the

recommendations of the Code.

The Board

The Group recognises the important role played

by the Board in the stewardship of the Group‟s

direction and operations, and ultimately, the

enhancement of long-term shareholders‟ value.

To fulfill this role, the Board is responsible for

the overall corporate governance of the Group,

including its strategic direction, establishing

goals for management and monitoring the

achievement of these goals.

Board Meeting

The Board ordinarily meets at least four (4)

times a year at quarterly intervals with additional

meeting convened when urgent and important

decisions need to be taken between the

scheduled meetings. During the financial year

ended 31 May 2010, the board met on four (4)

occasions, where it deliberated upon and

considered a variety of matters including the

Group‟s financial results, major investments and

strategic decisions and the business plan and

direction of the Group.

The present Board of Directors headed by the

chairman is comprised of:

4 Non-Independent Executive Directors

3 Independent Non-Executive Directors

The composition of the Board is in compliance

with the Bursa Securities Listing Requirements

and the Code. The Board composition has been

balanced to reflect the interests of the major

shareholders, management and minority

shareholders. Collectively, the Directors bring a

wide range of business and financial experience

relevant to the direction of the Group.

Details of Directors‟ attendance at Board

Meetings held in the financial year ended 31

May 2010 as follows:

Name of Directors No. of Meetings

Attended

Datuk Mohamad Saleh

Bin Mohd Ghazali 4/4

Dr Chen Chaw Min 4/4

Chong Peng Khang 4/4

Pang Chee Khiong 4/4

Pang Fok Seng 3/4

Pang Nyuk Yin 4/4

Lim Wai Kiew 2/4


Statement on Corporate Governance for the financial year ended 31 May 2010 cont‟d

14

Appointment of Directors

The Nomination Committee task is to assist the

Board to evaluate and recommend candidates

for appointments to the Board.

In accordance with the Company‟s Articles of

Association (“the Articles”), all Directors who are

appointed by the Board during a financial year,

will retire at the following Annual General

Meeting. The Articles also provide that at least

one-third (1/3) of the Directors for the time

being, or if their numbers is not in multiple of

three (3), then the number nearest to one-third

(1/3) shall retire from office provided always that

all Directors including the Managing

Director/Executive Director shall retire from

office at least once every three years but shall

be eligible for re-election.

At the forthcoming Annual General Meeting,

Pang Fok Seng and Lim Wai Kiew are due to

retire pursuant to Article 121 of the Company‟s

Articles of Association.

The Articles of Association further provide that a

managing director can be appointed for a fixed

term which shall not exceed five (5) years.

The Board, through the Nomination Committee,

appraises the composition of the Board and

believes that the current composition brings the

required mix of skills and core competencies for

the Board to discharge its duties effectively.

New appointees will be considered and

evaluated by the Nomination Committee. The

Nomination Committee will then recommend the

candidates to be approved and appointed by the

Board. The Company Secretary will ensure that

all appointments are properly made and that

legal and regulatory obligations are met.

Directors’ Remuneration

The Directors‟ remuneration is linked to

experience, scope of responsibility, seniority,

performance and industry information. Details of

Directors‟ remuneration for the year ended 31

May 2010 are as follows:

Description Fees Salaries and

Bonus Total

Executive

Directors

174,000 716,500 890,500

Non Executive

Directors

72,000 - 72,000

The number of Directors whose remuneration

falls within the following bands are:

Description Executive

Directors

Non

Executive

Less than RM50,000 - 3

RM50,000 – RM100,000 2 -

RM100,000 – RM150,000 - -

RM150,000 – RM200,000 - -

RM200,000 – RM300,000 1 -

RM300,000 – RM400,000 1 -

Directors’ Training

The Group acknowledges the importance of

continuous education and training to the Board

members.

During the financial year, Mr. Pang Chee

Khiong, Mr. Pang Fok Seng, Ms. Pang Nyuk Yin

and Ms. Lim Wai Kiew attended the forum on

“The Challenges of Implementing Financial

Reporting Standard 139” organised by the

Bursa Malaysia Securities Berhad.

Mr. Chong Peng Khang had attended the

following sessions:-

i) Upgrading of ISO 9001: 2008

ii) Integrating Financial Data and Reports

Presentation For Accountants

iii) ACCA Reception Addressing Challenging

Financial Reporting Areas

iv) Essential Tax Planning for Companies in

2010.

ANNUAL REPORT 2010

Statement on Corporate Governance for the financial year ended 31 May 2010 cont‟d

15

ACCOUNTABILTY AND AUDIT

Financial Reporting

The Board takes responsibility for ensuring that

the financial statements of the Group and of the

Company give a true and fair view of the state of

affairs of the Group and of the Company as

required under Section 169 (15) of the

Companies Act, 1965 efforts are made to

ensure that the financial statements comply with

the provisions of the Companies Act, 1965 and

the applicable approved accounting standards in

Malaysia. The Board also ensures the accurate

and timely release of the Group‟s quarterly and

annual financial results to Bursa Malaysia.

External Audit Function

The Company‟s independent external auditors

fill an essential role by enhancing the reliability

of the financial statements of the Group and of

the Company and giving assurance of that

reliability to users of these financial statements.

The external auditors, Messrs. Crowe Horwath

had reported to the members of the Company

on their findings which has been included as

part of the Group‟s and the Company‟s financial

reports with respect to the audit on the statutory

financial statements for the year ended 31 May

2010. In doing so, the Group and the Company

have established a transparent arrangement

with the auditors to meet their professional

requirements. From time to time, the auditors

highlight to the Audit Committee and the Board

on matters that require the Board‟s attention.

Internal Control

The Board is fully aware of its responsibility to

safeguard and enhance the value of

shareholders in the Group. Since the listing of

the Company, the Board has continuously

placed emphasis on the need for maintaining a

sound system of the internal control.

RELATIONS WITH SHAREHOLDERS

AND INVESTORS

Annual General Meeting

Annual General Meeting (“AGM”) is the principal

forum for dialogue with shareholders. At the

Company‟s AGM, shareholders have direct

access to the Board and are given opportunities

to ask questions. The shareholders are

encouraged to participate in the question and

answer session. The Chairman of the Board in

the AGM often presents to the shareholders, the

Company‟s operations in the financial year and

outlines future prospects of the Group. Further,

the Group‟s Company Secretary could provide

shareholders and investors with a channel of

communication on which they can provide

feedback to the Group. Queries regarding the

Group may be conveyed to the Company

Secretary at the Company‟s registered address.

Investor Relations

In line with the Main Market Listing

Requirements, shareholders, investors and

member of public can access the company‟s

announcements, quarterly financial results,

annual reports, circulars to shareholders etc via

the company‟s website.

Corporate Social Responsibilities

The Company recognises the importance of

Corporate Social Responsibilities and is

committed to conduct its business activities in a

socially, economically and environmentally

sustainable manner.

The Company has taken a proactive approach

wherever possible to provide monetary

contributions to non-profitable and charitable

organisations. In support of the local

universities, the Company accepts

undergraduates to perform their industrial

training.


Statement on Internal Control for the financial year ended 31 May 2010

16

INTRODUCTION

The Malaysia Code on Corporate Governance

requires listed companies to maintain a sound

system of internal control exists in order to

safeguard shareholders‟ investments and the

Group‟s assets.

Pursuant to Paragraph 15.26(b) of the Main

Market Listing Requirements of Bursa Malaysia

Securities Berhad and as guided by the Bursa

Malaysia‟s Statement on Internal Control:

Guidance for Directors of Public Listed

Companies („the Guidance"), the Board of

Directors ("the Board") of Fibon Berhad is

pleased to include a statement on the state of

the Group‟s internal control in this annual report.

BOARD RESPONSIBILITY

The Board acknowledges its overall

responsibility for the Group‟s system of internal

control, which includes the establishment of an

appropriate internal control environment and

framework, and the review of its adequacy and

integrity to ensure that the Group‟s assets and

shareholders‟ interests are safeguarded.

However, it should be noted that there are

inherent limitations in any system of internal

control as such system put in place by

Management can only reduce rather than

eliminate the risks that may impede the

achievement of the Group‟s corporate

objectives. Therefore, such a system can only

provide reasonable rather than absolute

assurance against material misstatement or

loss.

RISK MANAGEMENT FRAMEWORK

The Board acknowledges that the Group‟s

business activities involve some degree of risks.

On a day-to-day basis, respective Heads of

Departments are responsible for managing the

risks of their departments.

During the financial year ended 31 May 2010,

Management with the assistance of external

consultants completed the development of the

Group‟s key risk profile, which was presented to

the Audit Committee on 23 July 2010. Risks

identified were prioritised in terms of likelihood

of their occurrence and the impact on the

Group. The key risk profile shall be updated on

a regular basis to ensure that all key risks are

identified and adequate responses are devised

in mitigating these risks. The abovementioned

practices / initiatives by Management serves as

the on-going process used to identify, evaluate

and managed significant risks.

Internal Audit

The Group‟s internal audit function is

outsourced to a professional services firm. The

outsourced internal audit function assists the

Board and the Audit Committee in providing

independent assessment of the adequacy,

efficiency and effectiveness of the Group‟s

internal control system.

ANNUAL REPORT 2010

Statement on Internal Control for the financial year ended 31 May 2010 cont‟d

17

OTHER KEY ELEMENTS OF INTERNAL

CONTROLS

The other key elements of the Group‟s internal

control system are:

An organisational structure, which clearly

defines the lines of responsibility, levels of

authority and accountability to facilitate

internal checks and balances;

Quarterly review of key information such as

financial performance, and group accounts

by the Board;

The Executive Directors are closely

involved in overseeing the business and

operations of the Group and they report to

the Board on significant changes (if any) in

the business and external environment,

which affect the operations of the Group at

large;

Monthly management meetings are held to

discuss the Group‟s performances,

business operations and management

issues as well as formulate appropriate

measures to address them; and

The Group has established policies and

procedures to support the Group‟s critical

business activities.

CONCLUSION

The Board is of the view that the Group‟s

system of internal control is adequate to

safeguard shareholders‟ investments and the

Group‟s assets. However, the Board is also

cognizant of the fact that the Group‟s system of

internal control and risk management practices

must continuously evolve to meet the changing

and challenging business environment.

Therefore, the Board will, when necessary, put

in place appropriate action plans to further

enhance the existing system of internal control.

This statement was approved by the Board of

Directors on 27 August 2010.


Statement on Directors‟ Responsibilities In respect of the audited financial statements

18

The Board has the overall responsibility to

prepare the financial statements for each

financial year as required by the Companies

Act, 1965. The financial statements should be

prepared in accordance with the applicable

Malaysian Accounting Standards Board

(“MASB‟) approved accounting standards in

Malaysia, the provisions of the Companies Act,

1965, and the relevant provisions of the Bursa

Securities Listing Requirements so as to present

a true and fair view of the state of affairs of the

Group and of the Company as at the end of the

financial year and of their results and cash flows

for the year then ended.

In preparing the financial statements, the

Directors have:

Selected suitable accounting policies and applied them consistently

Ensured adequate system of internal control exist to safeguard the assets of the Group to prevent and detect fraud and other irregularities

Ensured that the financial statements presents a balanced and understandable assessment of the financial position and prospect of the Group and of the Company; and

Ensured that the accounting estimates included in the financial statements are reasonable and prudent

ANNUAL REPORT 2010

Additional Compliance Information

19

UTILISATION OF PROCEEDS

The status of utilisation of proceeds from the public offering during the financial year ended 31 May 2010

is as follows:

Purposes

Proceeds

raised

RM‟000

Amount

Utilised

RM‟000

Intended

Timeframe for

Utilisation

Balance

Unutilised

RM‟000

%

Explanation

(i) Research & development

activities

1,848 770 18 December

2011

1,078 58 ^

(ii) Purchase of machineries 1,700 - 18 December

2011 1,700 100 ^

(iii) Geographical expansion 1,180 790 18 December

2011 390 33 ^

(iv) Working capital 2,409 3,079 - (670) - *

(v) Estimated listing expenses 2,000 1,330 - 670 - *

Total 9,137 5,969 3,168

^ The approved timeframe for utilisation is 3 years from the date of listing

* The underutilisation of the listing expenses will be adjusted to working capital

SHARE BUYBACKS

During the financial year under review, there were no share buyback by the Company.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

During the financial year under review, the Company has not issued any options, warrants or convertible

securities.

AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR)

PROGRAMME

During the financial year under review, the Company did not sponsor any such programme.


Additional Compliance Information cont‟d

20

IMPOSITION OF SANCTIONS AND/OR PENALTIES

There were no material sanction and/or penalties imposed on the Company and its subsidiary companies,

Directors or management by the regulatory bodies.

NON-AUDIT FEES

Non-audit fees paid to external auditors and affiliated firm amounted to RM29,700.

REVALUATION POLICY

There were no properties acquired during the financial year under review, thus no revaluation policy.

MATERIAL CONTRACT

On 13 July 2010, Hexa Analisa Sdn. Bhd., a wholly owned subsidiary of Fibon Berhad had executed a Sale

and Purchase Agreement for the acquisition of land and Sale of Assets Agreement for the plant and

machineries for a total cash consideration of Ringgit Malaysia Two Million Nine Hundred and Sixty One

Thousand only (RM2,961,000) from CPC Polyply Industries (M) Sdn. Bhd. which constitute a related party

transaction.

The above transactions will be subjected to shareholders‟ approval in an Extraordinary General Meeting

which will be held at a date to be determined later.

PROFIT ESTIMATE, FORECAST OR PROJECTION

The Company and its subsidiary companies did not issue any profit forecast or profit estimate previously

or for the financial year ending 31 May 2010 in any public document hence this information is not

applicable.

PROFIT GUARANTEES

There were no profit guarantees given by the Company for the financial year.

21


22

Financial Statements

Directors‟ Report

Statement by Directors

Statutory Declaration

Independent Auditors‟ Report

Balance Sheets

Income Statements

Statements of Changes in Equity

Cash Flow Statements

Notes to The Financial Statements

23

27

27

28

30

32

33

35

37

ANNUAL REPORT 2010

Directors‟ Report

23

The directors hereby submit their report and the audited financial statements of the Group and of the

Company for the financial year ended 31 May 2010.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding. The principal activities of its

subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in

the nature of these activities during the financial year.

RESULTS

The Group The Company

RM‟000 RM‟000

Profit after tax for the financial year 4,014 1,197

DIVIDENDS

Since the end of the previous financial year, the Company paid a final dividend of RM0.0173 per ordinary

share amounting to RM1,695,400 as proposed in financial year ended 31 May 2009.

At the forthcoming Annual General Meeting, a first and final dividend of RM0.0082 per ordinary share

amounting to RM803,600 in respect of the financial year ended 31 May 2010 will be proposed for

shareholders‟ approval. The financial statements for the current year will not reflect this proposed

dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an

appropriation of retained earnings in the financial year ending 31 May 2011.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except as

disclosed in the Statement of Changes in Equity.

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorized and issued and paid-up share capital of the Company; and

(b) there were no issues of debentures by the Company.


Directors‟ Report cont‟d

24

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued

shares in the Company.

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company 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 there are no bad debts and that no

allowances for doubtful debts is required.

At the date of this report, the directors are not aware of any circumstances that would require the writing

off of bad debts, or the making of additional allowance for doubtful debts in the financial statements of the

Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took

reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised

in the ordinary course of business, including their value 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 circumstances 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 circumstances which have 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

At the date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company that has arisen since the end of the

financial year which secures the liabilities of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the

financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likely to

become enforceable within the period of twelve months after the end of the financial year which, in the

opinion of the directors, will or may substantially affect the ability of the Group and of the Company to

meet their obligations when they fall due.

ANNUAL REPORT 2010


25

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances 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.

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.

DIRECTORS

The directors who served since the date of the last report are as follows:-

Pang Chee Khiong

Pang Fok Seng

Lim Wai Kiew

Pang Nyuk Yin

Chong Peng Khang

Dr. Chen Chaw Min

Datuk Mohamad Saleh Bin Mohd. Ghazali

Pursuant to Article 121 of the Articles of Association of the Company, Pang Fok Seng and Lim Wai Kiew

retire by rotation at the forthcoming annual general meeting and being eligible, offer themselves for re-

election.

DIRECTORS’ INTERESTS

According to the register of directors‟ shareholdings, the interests of directors holding office at the end of

the financial year in shares in the Company and its related corporations during the financial year are as

follows:-

Number Of Ordinary Shares Of RM0.10 Each At 1.6.2009 Bought / Allotted Sold At 31.5.2010 Direct Interests Lim Wai Kiew 7,945,096 - (6,475,096) 1,470,000 Pang Chee Khiong 14,822,552 - - 14,822,552 Pang Fok Seng 25,458,892 6,475,096 (8,797,200) 23,136,788 Pang Nyuk Yin - 2,940,000 - 2,940,000 Chong Peng Khang 322 - - 322 Deemed Interests Lim Wai Kiew 25,458,892 6,475,096 (8,797,200) 23,136,788 Pang Fok Seng 7,945,096 - (6,475,096) 1,470,000



26

DIRECTORS’ INTERESTS (CONT’D)

By virtue of their interests in shares in the Company, Lim Wai Kiew, Pang Chee Khiong, Pang Fok Seng

and Pang Nyuk Yin are deemed to have interests in shares in its subsidiaries to the extent of the

Company‟s interest, in accordance with Section 6A of the Companies Act, 1965.

None of the other directors holding office at the end of the financial year had any interest in shares in the

Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any

benefit (other than benefits included in the aggregate amount of emoluments received or due and

receivable by directors, or the fixed salary of a full-time employee of the Company as shown in 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 except as disclosed in Note 30 to the financial statements.

Neither during nor at the end of the financial year was the Group or the Company a party to any

arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of

shares in or debentures of the Company or any other body corporate.

AUDITORS

The auditors, Messrs. Crowe Horwath (formerly known as Messrs. Horwath), have expressed their

willingness to continue in office.

SINGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS

DATED 27 AUGUST 2010

Pang Chee Khiong

Lim Wai Kiew

ANNUAL REPORT 2010

Statement by Directors

27

We, Pang Chee Khiong and Lim Wai Kiew, being two of the directors of Fibon Berhad, state that, in the

opinion of the directors, the financial statements set out on pages 30 to 67 are drawn up in accordance

with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair

view of the state of affairs of the Group and of the Company at 31 May 2010 and of their results and cash

flows for the financial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 27 AUGUST 2010

Pang Chee Khiong Lim Wai Kiew

Statutory Declaration

I, Pang Chee Khiong, I/C No. 640329-01-5175, being the director primarily responsible for the financial

management of Fibon Berhad, do solemnly and sincerely declare that the financial statements set out on

pages 30 to 67 are, to the best of my knowledge and belief, correct and I make this solemn declaration

conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations

Act 1960.

Subscribed and solemnly declared by

Pang Chee Khiong, I/C No. 640329-01-5175,

in the State of Melaka

on 27 August 2010

Pang Chee Khiong

Before me


Independent Auditors‟ Report to the Members of FIBON BERHAD (Incorporated in Malaysia) Company No: 811010-H

28

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Fibon Berhad, which comprise the balance sheets as at 31

May 2010, and the income statements, statements of changes in equity and cash flow statements of the

Group and of the Company for the financial year then ended, and a summary of significant accounting

policies and other explanatory notes, as set out on pages 30 to 67.

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 Financial Reporting Standards and the Companies Act 1965 in Malaysia.

This responsibility includes designing, implementing and maintaining internal controls 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 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 consider internal controls relevant to the Company‟s preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company‟s

internal controls. An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates made by the directors, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial

Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the

financial position of the Group and of the Company as of 31 May 2010 and of their financial performance

and cash flows for the financial year then ended.

ANNUAL REPORT 2010

Independent Auditors‟ Report to the Members of FIBON BERHAD (Incorporated in Malaysia) Company No: 811010-H Cont‟d

29

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the

following:-

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by

the Company and its subsidiaries of which we have acted as auditors have been properly kept in

accordance with the provisions of the Act;

(b) We have considered the accounts and the auditors‟ report of the subsidiaries of which we have not

acted as auditors, which are indicated in Note 6 to the financial statements;

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with

the Company's 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 purpose; and

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or

any adverse comment made 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.

27 August 2010

Crowe Horwath Tan Lin Chun

Firm No: AF 1018 Approval No: 2839/10/11 (J)

Chartered Accountants Chartered Accountant

Melaka


Balance Sheets at 31 May 2010

The annexed notes form an integral part of these financial statements.

30


2010 2009 2010 2009

Note RM‟000 RM‟000 RM‟000 RM‟000

ASSETS

NON-CURRENT ASSETS

Investment in subsidiaries 6 - - 2,701 2,700

Property, plant and equipment 7 1,063 560 * *

Intangible assets 8 1,108 1,067 - -

2,171 1,627 2,701 2,700

CURRENT ASSETS

Inventories 9 1,344 1,084 - -

Trade receivables 10 2,943 6,201 - -

Other receivables, deposits and prepayments 11 111 111 1 3

Amount owing by related companies 12 - - 8,873 9,421

Tax recoverable 46 - - 3 -

Deposits with licensed banks 13 11,993 9,307 202 200

Cash and bank balances 3,453 2,048 4 18

19,890 18,751 9,083 9,642

TOTAL ASSETS 22,061 20,378 11,784 12,342

ANNUAL REPORT 2010

Balance Sheets at 31 May 2010 cont‟d

The annexed notes form an integral part of these financial statements. 31


2010 2009 2010 2009

Note RM‟000 RM‟000 RM‟000 RM‟000

EQUITY AND LIABILITIES

EQUITY

Share capital 14 9,800 9,800 9,800 9,800

Share premium 15 707 707 707 707

Other reserve 16 (2,602) (2,600) - -

Retained profits 17 13,190 10,871 1,202 1,700

SHAREHOLDERS' EQUITY 21,095 18,778 11,709 12,207

NON-CURRENT LIABILITY

Deferred tax liabilities 18 340 414 - -

340 414 - -

CURRENT LIABILITIES

Trade payables 19 279 83 - -

Other payables and accruals 20 331 1,074 75 131

Provision for taxation 16 29 - 4

626 1,186 75 135

TOTAL LIABILITIES 966 1,600 75 135

TOTAL EQUITY AND LIABILITIES 22,061 20,378 11,784 12,342

* - Less than RM1,000.


Income Statements for the financial year ended 31 May 2010


32


2010 2009 2010 2009

Note RM‟000 RM‟000 RM‟000 RM‟000

Restated

REVENUE 21 12,891 16,474 2,000 2,000

COST OF SALES (4,884) (6,311) - - GROSS PROFIT 8,007 10,163 2,000 2,000

OTHER INCOME 594 437 63 17 8,601 10,600 2,063 2,017

SELLING AND DISTRIBUTION

EXPENSES

(119)

(90)

-

-

ADMINISTRATIVE EXPENSES (3,472) (1,817) (866) (306) PROFIT BEFORE TAX 22 5,010 8,693 1,197 1,711

TAX EXPENSE 25 (996) (389) * (4) PROFIT AFTER TAX 4,014 8,304 1,197 1,707

ATTRIBUTABLE TO:

Equity holders of the Company 4,014 8,304 1,197 1,707

EARNINGS PER SHARE

- basic (sen) 26 4.10 17.06

- diluted (sen) 26 N/A N/A


ANNUAL REPORT 2010

Statements of Changes in Equity for the financial year ended 31 May 2010


33

The Group Attributable To Equity Holders Of The Company

Non-Distributable Distributable

Share Share Other Merger Retained

Note Capital Premium Reserve Deficit Profits Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At 31.5.2008 2,700 - - (2,600) 2,567 2,667

Foreign exchange translation

reserve - - Ω - - Ω

Shares issued pursuant to

the listing scheme:-

- public issue 335 8,802 - - - 9,137

- bonus issue 6,765 (6,765) - - - -

Listing expenses - (1,330) - - - (1,330)

Profit after tax for the

financial year - - - - 8,304 8,304 Balance as at

31.5.2009/1.6.2009

9,800 707 Ω (2,600) 10,871 18,778

Foreign exchange translation

reserve - - (2) - - (2)

Profit after tax for the

financial year - - - - 4,014 4,014

Dividends paid 27 - - - - (1,695) (1,695) Balance as at 31.5.2010 9,800 707 (2) (2,600) 13,190 21,095

Ω - Less than RM500.


Statements of Changes in Equity for the financial year ended 31 May 2010 cont‟d


The Company

Non-

Distributable Distributable

Share Share Retained

Capital Premium Profits Total

Note RM‟000 RM‟000 RM‟000 RM‟000

At 31.5.2008 # - (7) (7)

Acquisition of a subsidiary 2,700 - - 2,700

Shares issued pursuant to the listing

scheme:-

- public issue 335 8,802 - 9,137

- bonus issue 6,765 (6,765) - -

Listing expenses - (1,330) - (1,330)

Profit after taxation for the financial year - - 1,707 1,707 Balance as at 31.5.2009/1.6.2009 9,800 707 1,700 12,207

Profit after taxation for the financial year - - 1,197 1,197

Dividends paid 27 - - (1,695) (1,695) Balance as at 31.5.2010 9,800 707 1,202 11,709

# - RM2.

ANNUAL REPORT 2010

Cash Flow Statements for the financial year ended 31 May 2010


35

The Group The Company 2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES

Profit before tax 5,010 8,693 1,197 1,711

Adjustments for:-

Amortisation of development expenditure 87 58 - - Bad debts written off 7 - - - Depreciation of property, plant and

equipment

111 74 Ω Ω Property, plant and equipment written off 4 - - - Goodwill written off - 5 - - Development expenditure written off 235 153 - - Dividend income - - (2,000) (2,000) Interest income (272) (124) (2) (17) Unrealised loss/(gain) on foreign exchange 203 (231) 79 -

Operating profit/(loss) before working capital changes

5,385 8,628 (726) (306)

Increase in development expenditure (363) - - - (Increase)/Decrease in inventories (260) 94 - - Decrease/(Increase) in trade and other

receivables

3,230 (2,364) 2 (3) (Decrease)/Increase in trade and other

payables

(546) (746) (56) 124

CASH FROM/(FOR) OPERATIONS 7,446 5,612 (780) (185)

Tax paid (1,128) (249) (7) -

NET CASH FROM/(FOR) OPERATING ACTIVITIES 6,318 5,363 (787) (185)

CASH FLOWS (FOR)/FROM INVESTING

ACTIVITIES

Acquisition of a subsidiary - * - -

Dividend received - - 2,000 - Purchase of property, plant and equipment (618) (76) - *

Investment in subsidiary Ω * Ω *

Interest received 272 124 2 17

Repayment from/(Advances to) subsidiaries - - 468 (7,421)

NET CASH (FOR)/FROM INVESTING ACTIVITIES

(346) 48 2,470 (7,404)

BALANCE CARRIED FORWARD 5,972 5,411 1,683 (7,589)


Cash Flow Statements for the financial year ended 31 May 2010 cont‟d



2010 2009 2010 2009

Note RM‟000 RM‟000 RM‟000 RM‟000

BALANCE BROUGHT FORWARD 5,972 5,411 1,683 (7,589)

CASH FLOWS (FOR)/FROM

FINANCING ACTIVITIES

Dividends paid (1,695) (4,000) (1,695) - Proceeds from issuance of shares - 9,137 - 9,137

Listing expenses - (1,330) - (1,330)

Repayment to a related party - (476) - -

Repayment to directors - (13) - -

NET CASH (FOR)/FROM

FINANCING ACTIVITIES

(1,695) 3,318 (1,695) 7,807

EFFECT OF EXCHANGE RATE

CHANGES ON CASH AND

CASH EQUIVALENTS

(186) 136 - - NET INCREASE/(DECREASE) IN

CASH AND CASH

EQUIVALENTS 4,091 8,865 (12) 218

CASH AND CASH EQUIVALENTS

AT BEGINNING OF THE

FINANCIAL YEAR 11,355 2,490 218 # CASH AND CASH EQUIVALENTS

AT END OF THE FINANCIAL

YEAR 28 15,446 11,355 206 218

# - RM2.



ANNUAL REPORT 2010

Notes to the Financial Statements for the financial year ended 31 May 2010

37

1. GENERAL INFORMATION

The Company is incorporated as a public company limited by shares under the Companies Act 1965

in Malaysia. The domicile of the Company is Malaysia. The registered office and principal place of

business are as follows:-

Registered office : 31-04, Level 31

Menara Landmark, Mail Box 172

No.12, Jalan Ngee Heng

80000 Johor Bahru, Johor

Principal place of business : 12A, Jalan 20

Taman Sri Kluang

86000 Kluang, Johor

The financial statements were authorised for issue by the Board of Directors in accordance with a

resolution of the directors dated 27 August 2010.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding whilst the principal

activities of its subsidiaries are set out in Note 6 to the financial statements. There have been no

significant changes in the nature of these activities during the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group‟s financial risk management policy seeks to ensure that adequate financial resources are

available for the development of the Group‟s business whilst managing its market, credit, liquidity

and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign currency risk on sales and purchases that are

denominated in a currency other than Ringgit Malaysia.

Foreign currency risk is closely monitored and kept at an acceptable level.

(ii) Interest Rate Risk

The Group does not have any interest-bearing liabilities. It maintains interest yielding bank

balances and fixed deposits. Interest income arising from these assets is not considered to

be significant.

Surplus funds are placed with licensed financial institutions at the most favourable interest

rates.

(iii) Price Risk

The Group does not have any quoted investments and hence is not exposed to price risks.


Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d

38

3. FINANCIAL RISK MANAGEMENT POLICIES (Cont’d)

(b) Credit Risk

The Group's exposure to credit risks, or the risk of counterparties defaulting, arises mainly from

receivables. The maximum exposure to credit risks is represented by the carrying amounts of

these financial assets in the balance sheet reduced by the effects of any netting arrangements

with counterparties.

The Group does not have any major concentration of credit risk related to any individual

customer or counterparty.

(c) Liquidity and Cash Flow Risk

The Group manages its liquidity risk by maintaining sufficient cash and the availability of funding

through an adequate amount of committed credit facilities to meet estimated commitments

arising from operational expenditure and financial liabilities. The Group also has an effective

control of cash management to ensure that the Group can pay its operating expenses and

targeted dividends to shareholders at appropriate times.

4. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and

modified to include other bases of valuation as disclosed in other sections under significant

accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the

Companies Act 1965 in Malaysia.

The Group has not applied in advance the following accounting standards and interpretations

(including the consequential amendments) that have been issued by the Malaysian Accounting

Standards Board (“MASB”) but are not yet effective for the current financial year:

FRSs/IC Interpretations (including the Consequential Amendments) Effective date

FRS 1 (Revised) First-time Adoption of Financial Reporting Standards 1 July 2010

FRS 3 (Revised) Business Combinations 1 July 2010

FRS 4 Insurance Contracts 1 January 2010

FRS 7 Financial Instruments: Disclosures 1 January 2010

FRS 8 Operating Segments 1 July 2009

FRS 101 (Revised) Presentation of Financial Statements 1 January 2010

FRS 123 (Revised) Borrowing Costs 1 January 2010

FRS 127 (Revised) Consolidated and Separate Financial Statements 1 July 2010

FRS 139 Financial Instruments: Recognition and Measurement 1 January 2010

ANNUAL REPORT 2010


39

4. BASIS OF PREPARATION (Cont’d)

FRSs/IC Interpretations (including the Consequential Amendments (Cont’d) Effective date

Amendments to FRS 1 and FRS 127: Cost of an Investment in a Subsidiary,

Jointly Controlled Entity or Associate

1 January 2010

Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures

for First-time Adopters

1 January 2011

Amendments to FRS 2: Vesting Conditions and Cancellations 1 January 2010

Amendments to FRS 2: Scope of FRS 2 and FRS 3 (Revised) 1 July 2010

Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010

Amendments to FRS 7, FRS 139 and IC Interpretation 9 1 January 2010

Amendments to FRS 7: Improving Disclosure about Financial Instruments 1 January 2011

Amendments to FRS 101 and FRS 132: Puttable Financial Instruments and

Obligations Arising on Liquidation

1 January 2010

Amendments to FRS 132: Classification of Rights Issues and the Transitional

Provision in Relation to Compound Instruments

1 January 2010/

1 March 2010

Amendments to FRS 138: Consequential Amendments Arising from FRS 3

(Revised)

1 July 2010

IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010

IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010

IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions 1 January 2010

IC Interpretation 12 Service Concession Arrangements 1 July 2010

IC Interpretation 13 Customer Loyalty Programmes 1 January 2010

IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum

Funding Requirements and their Interaction

1 January 2010

IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012

IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010

IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010

Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and FRS 3

(Revised)

1 July 2010



40


FRSs/IC Interpretations (including the Consequential Amendments (Cont’d) Effective date

Annual Improvements to FRSs (2009) 1 January 2010

The above accounting standards and interpretations (including the consequential amendments) are

not relevant to the Group‟s operations except as follows:

FRS 3 (Revised)

The FRS 3 (Revised) introduces significant changes to the accounting for business combinations,

both at the acquisition date and post acquisition, and requires greater use of fair values. In addition,

all transaction costs, other than share and debt issue costs, will be expensed as incurred. This

revised standard will be applied prospectively and therefore there will not have any financial impact

on the financial statements of the Group for the current financial year but may impact the accounting

for future transactions or arrangements.

FRS 7, FRS 139 and Subsequent Amendments

The possible impacts of FRS 7 (including the subsequent amendments) and FRS 139 on the

financial statements upon their initial applications are not disclosed by virtue of the exemptions given

in these standards.

FRS 8

FRS 8 replaces FRS 1142004 Segment Reporting and requires a “management approach”, under

which segment information is presented on the same basis as that used for internal reporting

purposes. The adoption of this standard only impacts the form and content of disclosures presented

in the financial statements of the Group. This FRS is expected to have no material impact on the

financial statements of the Group upon its initial application.

FRS 101 (Revised)

The FRS 101 (Revised) has introduced terminology changes (including revised titles for the financial

statements) and changes in the format and content of the financial statements. In addition, a

statement of financial position is required at the beginning of the earliest comparative period

following a change in accounting policy, the correction of an error or the reclassification of items in

the financial statements. The adoption of this revised standard will only impact the form and content

of the presentation of the Group‟s financial statements in the next financial year.

FRS 123 (Revised)

This change in accounting policy will not have any financial impact on the financial statements for

the current financial year but may impact the accounting for future transactions or arrangements.

ANNUAL REPORT 2010


41


FRS 127 (Revised)

The FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a

subsidiary, while maintaining control, to be recognised as an equity transaction. When the group

loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair

value with the gain or loss recognised in profit or loss. The revised standard also requires all losses

attributable to the minority interest to be absorbed by the minority interest instead of by the parent.

The Group will apply the major changes of FRS 127 (Revised) prospectively and therefore there will

not have any financial impact on the financial statements of the Group for the current financial year

but may impact the accounting for future transactions or arrangements.

Amendments to FRS 1 and FRS 127

Amendments to FRS 1 and FRS 127 remove the definition of “cost method” currently set out in FRS

127, and instead require an investor to recognise all dividend from subsidiaries, jointly controlled

entities or associates as income in its separate financial statements. In addition, FRS 127 has also

been amended to deal with situations where a parent reorganises its group by establishing a new

entity as its new parent. Under this circumstance, the new parent shall measure the cost of its

investment in the original parent at the carrying amount of its share of the equity items shown in the

separate financial statements of the original parent at the reorganisation date. The amendments will

be applied prospectively and therefore there will not have any financial impact on the financial

statements of the Company for the current financial year but may impact the accounting for future

transactions or arrangements.

Amendments to FRS 138

Amendments to FRS 138 clarify the requirements under FRS 3 (Revised) regarding accounting for

intangible assets acquired in a business combination. These amendments are expected to have no

material impact on the financial statements of the Group upon their initial application.

IC Interpretation 10

IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill,

investments in equity instruments and financial assets carried at cost to be reversed at a

subsequent balance sheet date. This interpretation is expected to have no material impact on the

financial statements of the Group upon its initial application.

Annual Improvements 2009

Annual Improvements to FRSs (2009) contain amendments to 21 accounting standards that result in

accounting changes for presentation, recognition or measurement purposes and terminology or

editorial amendments. These amendments are expected to have no material impact on the financial

statements of the Group upon their initial application.



42

5. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated by the directors and management and are

based on historical experience and other factors, including expectations of future events that

are believed to be reasonable under the circumstances. The estimates and judgements that

affect the application of the Group‟s accounting policies and disclosures, and have a significant

risk of causing a material adjustment to the carrying amounts of assets, liabilities, incomes and

expenses are discussed below:-

(i) Depreciation of Property, Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the

property, plant and equipment are based on commercial and production factors which

could change significantly as a result of technical innovations and competitors‟ actions in

response to the market conditions.

The Group anticipates that the residual values of its property, plant and equipment will be

insignificant. As a result, residual values are not being taken into consideration for the

computation of the depreciable amount.

Changes in the expected level of usage and technological development could impact the

economic useful lives and the residual values of these assets, therefore future

depreciation charges could be revised.

(ii) Income Taxes

There are certain transactions and computations for which the ultimate tax determination

may be different from the initial estimate. The Group recognises tax liabilities based on its

understanding of the prevailing tax laws and estimates of whether such taxes will be due

in the ordinary course of business. Where the final outcome of these matters is different

from the amounts that were initially recognised, such difference will impact the income tax

and deferred tax provisions in the period in which such determination is made.

(iii) Impairment of Assets

When the recoverable amount of an asset is determined based on the estimate of the

value-in-use of the cash-generating unit to which the asset is allocated, the management

is required to make an estimate of the expected future cash flows from the cash-

generating unit and also to apply a suitable discount rate in order to determine the present

value of those cash flows.

(iv) Amortisation of Development Costs

Changes in the expected level of usage and technological development could impact the

economic useful lives. Therefore, future amortisation charges could be revised.

(v) Allowance for Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving

inventories. These reviews require judgement and estimates. Possible changes in these

estimates could result in revisions to the valuation of inventories.

ANNUAL REPORT 2010


43

5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(a) Critical Accounting Estimates and Judgements (Cont’d)

(vi) Allowance for Doubtful Debts of Receivables

The Group makes allowance for doubtful debts based on an assessment of the

recoverability of receivables. Allowances are applied to receivables where events or

changes in circumstances indicate that the carrying amounts may not be recoverable.

Management specifically analyses historical bad debt, customer creditworthiness and

changes in customer payment terms when making a judgement to evaluate the adequacy

of the allowance for doubtful debts of receivables. Where the expectation is different from

the original estimate, such difference will impact the carrying value of receivables.

(b) Functional and Foreign Currency

(i) Functional and Presentation Currency

The functional currency of each entity in the Group is the currency of the primary

economic environment in which the entity operates.

The Group financial statements are presented in Ringgit Malaysia (“RM”) which is also the

Company‟s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currency are measured in the respective functional currencies of

each entities in the Group and are recorded on initial recognition in the functional

currencies at exchange rates approximating those ruling at the transaction dates.

Monetary assets and liabilities at the balance sheet date are translated at the rates ruling

as of that date. Non-monetary assets and liabilities are translated using exchange rates

that existed when the values were determined. All exchange differences are taken to the

income statement.

(iii) Foreign Operations

The results and financial position of all Group entities that have a functional currency

different from the presentation currency are translated into the presentation currency as

follows:-

(i) assets and liabilities for each balance sheet presented are translated at the closing

rate at the date of the balance sheet;

(ii) income and expenses for the income statement are translated at average exchange

rates for the year; and

(iii) all resulting exchange differences are recognised as a separate component of

equity, as a foreign currency translation reserve. On disposal, accumulated

translation differences are recognised in the consolidated income statements as part

of the gain or loss on sale.



44


(c) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party

to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of

the contractual arrangement. Interest, dividends, gains and losses relating to a financial

instrument classified as a liability are reported as an expense or income. Distributions to holders

of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and

intends to settle either on a net basis or to realise the asset and settle the liability

simultaneously.

Financial instruments recognised in the balance sheets are disclosed in the individual policy

statement associated with each item.

(d) Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its

subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are

prepared for the same reporting date as the Company.

All the subsidiaries are consolidated using the acquisition method of accounting except for the

subsidiary, Hexa Analisa Sdn. Bhd., which are accounted for under the merger method.

Acquisition of subsidiaries that meets the conditions of a merger are accounted for using the

merger method. Under the merger method of accounting, the results of subsidiaries are

presented as if the merger had been effected throughout the current and previous years. In the

consolidated financial statements, the cost of the merger is cancelled with the nominal values of

the shares received. Any resulting debit difference is shown as merger deficit.

Subsidiaries accounted for using the purchase method are consolidated from the date of

acquisition, being the date on which the Group obtains control, and continue to be consolidated

until the date that such control ceases.

The purchase method of accounting involves allocating that cost of the acquisition to the fair

value of the assets acquired and liabilities and contingent liabilities assumed at the date of

acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the

date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments

issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group‟s interest in the net fair value of the

identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the

Group‟s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities

over the cost of the acquisition is recognised immediately in profit or loss.

ANNUAL REPORT 2010


45


(d) Basis of Consolidation (Cont’d)

Intragroup transactions, balances and unrealised gains on transactions are eliminated;

unrealised losses are also eliminated unless cost cannot be recovered. Where necessary,

adjustments are made to the financial statement of subsidiary to ensure consistency of

accounting policies with those of the Group.

(e) Investments in Subsidiaries

Investments in subsidiaries are initially stated at cost in the balance sheet of the Company and

are reviewed for impairment at the end of the financial year if events or changes in

circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal

proceeds and the carrying amount of the investments is taken to the income statement.

(f) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment

losses, if any.

Depreciation is calculated under the straight-line method to write off the depreciable amounts of

the assets over their estimated useful lives. Depreciation of an asset does not cease when the

asset become idle or is retired from active use unless the asset is fully depreciated. The

principal annual rates used for this purpose are:-

Plant and machinery 10%

Motor vehicles 10%

Office equipment, furniture and fittings 10%

The depreciation method, useful life and residual values are reviewed, and adjusted if

appropriate, at each balance sheet date to ensure that the amount, method and period of

depreciation are consistent with previous estimates and the expected pattern of consumption of

the future economic benefits embodied in the items of the property, plant and equipment.

Plant and machinery under construction represents assets which are not ready for commercial

use at the balance sheet date. Plant and machinery under construction are stated at cost, and

are depreciated accordingly when the assets are completed and ready for commercial use.

An item of property, plant and equipment is derecognised upon disposal or when no future

economic benefits are expected from its use. Any gain or loss arising from derecognition of the

asset is included in the income statement in the year the asset is derecognised.



46


(g) Impairment of Assets

The carrying values of assets, other than financial assets and inventories are reviewed at each

balance sheet date for impairment when there is an indication that the assets might be

impaired. Impairment is measured by comparing the carrying values of the assets with their

recoverable amounts. The recoverable amount of the assets is the higher of the assets‟ net

selling price and its value-in-use, which is measured by reference to discounted future cash

flow. An impairment loss is charged to the income statement immediately.

In respect of assets other than goodwill, and when there is a change in the estimates used to

determine the recoverable amount, a subsequent increase in the recoverable amount of an

asset is treated as a reversal of the previous impairment loss and is recognised to the extent of

the carrying amount of the asset that would have been determined (net of amortisation and

depreciation) had no impairment loss been recognised. The reversal is recognised in the

income statement immediately.

(h) Intangible Assets

(i) Research and Development Expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that expenditure incurred on

development projects are capitalised as long-term assets to the extent that such

expenditure is expected to generate future economic benefits. Development expenditure is

capitalised if, and only if an entity can demonstrate all of the following:-

(i) its ability to measure reliably the expenditure attributable to the asset under

development;

(ii) the product or process is technically and commercially feasible;

(iii) its future economic benefits are probable;

(iv) its ability to use or sell the developed asset;

(v) the availability of adequate technical, financial and other resources to complete the

asset under development; and

(vi) its intention to complete the intangible asset and use or sell.

Capitalised development expenditure is measured at cost less accumulated amortisation

and impairment losses, if any. Development expenditure initially recognised as an

expense is not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of not

exceeding 5 years when the products are ready for sale or use. In the event that the

expected future economic benefits are no longer probable of being recovered, the

development expenditure is written down to its recoverable amount.

ANNUAL REPORT 2010


47


(h) Intangible Assets (Cont’d)

(ii) Industrial Operating Right

Industrial operating right represent costs incurred by the Group to obtain Association of

Short Circuit Testing Authority (ASTA) certifications for capabilities to design, construct

and develop low-voltage switchboards to meet international standards. As the ASTA

certifications do not have any expiry date, the Group does not amortise these costs.

Instead, impairment is tested annually or more frequently if events or changes in circumstances indicate that the industrial operating right might be impaired.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the

standard cost basis, which approximates the actual costs incurred in bringing the inventories to

their present location and condition. Cost of finished goods and work-in-progress includes the

cost of materials, labour and an appropriate proportion of production overheads.

Net realisable value represents the estimated selling price less the estimated costs of

completion and the estimated costs necessary to make the sale.

Where necessary, due allowance is made for all damaged, obsolete and slow-moving items.

(j) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in

which they are identified. An estimate is made for doubtful debts based on a review of all

outstanding amounts at the balance sheet date.

(k) 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.

(l) Income Taxes

Income taxes for the year comprise current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for

the year and is measured using the tax rates that have been enacted or substantively enacted

at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising

between the tax bases of assets and liabilities and their carrying amounts in the financial

statements.

Deferred tax liabilities are recognised for all taxable temporary differences.



48


(l) Income Taxes (Cont’d)

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses

and unused tax credits to the extent that it is probable that future taxable profit will be available

against which the deductible temporary differences, unused tax losses and unused tax credits

can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in

the period when the asset is realised or the liability is settled, based on the tax rates that have

been enacted or substantively enacted at the balance sheet date.

Deferred tax is recognised in the income statement. The carrying amounts of deferred tax

assets are reviewed at each balance sheet date and reduced to the extent that it is no longer

probable that sufficient future taxable profits will be available to allow all or part of the deferred

tax assets to be utilised.

(m) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

new shares or options are shown in equity as a deduction, net of tax from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(n) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, and

short-term, highly liquid investments that are readily convertible to known amounts of cash and

which are subject to an insignificant risk of changes in value.

(o) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the

period in which the associated services are rendered by employees of the Group.

(ii) Defined Contribution Plans

The Group's contributions to defined contribution plans are charged to the income

statement in the period to which they relate. Once the contributions have been paid, the

Group has no further liability in respect of the defined contribution plans.

ANNUAL REPORT 2010


49


(p) Related Parties

For the purposes of these financial statements, a party is considered to be related if:-

(i) directly, or indirectly through one or more intermediaries, the party:-

controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);

has an interest in the entity that gives it significant influence over the entity; or

has joint control over the entity;

(ii) the party is an associate of the entity;

(iii) the party is a joint venture in which the entity is a venturer;

(iv) the party is a member of the key management personnel of the entity or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for

which significant voting power in such entity resides with, directly or indirectly, any

individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of

any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may be expected

to influence, or be influenced by, that individual in their dealings with the entity.

(q) Contingent Liabilities and Contingent Assets

A contingent liability is a possible obligation that arises from past events and whose existence

will only be confirmed by the occurrence of one or more uncertain future events not wholly

within the control of the Group. It can also be a present obligation arising from past events that

is not recognised because it is not probable that outflow of economic resources will be required

or the amount of obligation cannot be measured reliably.

A contingent asset is a probable asset that arises from past events and whose existence will be

confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly

within the control of the Group.



50


(r) Revenue Recognition

(i) Sale of Goods

Sales are recognised upon the transfer of risks and rewards of ownership of goods and net

of sales tax, returns and trade discounts.

(ii) Dividend Income

Dividend income is recognised when the right to receive payment has been established.

(iii) Interest Income

Interest income is recognised on an accrual basis.

[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

ANNUAL REPORT 2010


51

6. INVESTMENT IN SUBSIDIARIES

The Company 2010 2009 RM‟000 RM‟000

Unquoted shares, at cost 2,701 2,700

(a) Subsidiaries

The details of the subsidiaries are as follows:-

Name of Companies

Country of Incorporation

Effective Equity Interest

Principal Activities

2010 2009

Direct subsidiaries:

Hexa Analisa Sdn. Bhd. (HASB)

Malaysia 100% 100% Formulation of advanced polymer matrix fibre composites, manufacturing and sales of electrical insulators, electrical enclosures and meter boards

Fibon UK Limited (FUL)*

UK 100% 100% Dormant company

Fibon Australia Pty Ltd (FAU)*

Australia 100% - Manufacturing and sales of electrical insulators and trading of relevant industry products

* Audited by auditor other than Crowe Horwath.

(b) Acquisition of Subsidiary

During the financial year, the Company acquired the entire issued and paid-up share capital of

FAU for a total purchase consideration of RM28. The purchase consideration of FAU was by

cash.



52

7. PROPERTY, PLANT AND EQUIPMENT

At Written Depreciation Exchange At

1.6.2009 Additions Off Charge Difference 31.5.2010

The Group RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Net Book Value

Plant and machinery 463 73 - (72) Ω 464

Motor vehicles 55 407 - (29) Ω 433

Office equipment,

furniture and fittings 42 79 (4) (10) Ω 107

Plant and machinery

under construction - 59 - - - 59

560 618 (4) (111) Ω 1,063

At Depreciation At

1.6.2008 Additions Charge 31.5.2009

RM‟000 RM‟000 RM‟000 RM‟000

Net Book Value

Plant and machinery 524 6 (67) 463

Motor vehicles - 57 (2) 55

Office equipment, furniture and fittings 34 13 (5) 42

558 76 (74) 560

At Accumulated Net Book

Cost Depreciation Value

RM‟000 RM‟000 RM‟000

At 31.5.2010

Plant and machinery 745 (281) 464

Motor vehicles 464 (31) 433

Office equipment, furniture and fittings 128 (21) 107

Plant and machinery under construction 59 - 59

1,396 (333) 1,063

Ω - less than RM500.

ANNUAL REPORT 2010


53

7. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

At Accumulated Net Book

Cost Depreciation Value

The Group RM‟000 RM‟000 RM‟000

At 31.5.2009

Plant and machinery 672 (209) 463

Motor vehicles 57 (2) 55

Office equipment, furniture and fittings 55 (13) 42

784 (224) 560

8. INTANGIBLE ASSETS

Intangible assets can be broken down into:- The Group 2010 2009 RM‟000 RM‟000 Development expenditure 372 331 Industrial operating rights 736 736

1,108 1,067

The Group 2010 2009 RM‟000 RM‟000 (i) Development Expenditure Net book value at 1.6.2009/2008 331 542 Additional development expenditure capitalised 363 - Development expenditure written off (235) (153) Amortisation charge for the year (87) (58)

Carrying value at 31.5.2010/2009 372 331

The Group 2010 2009 RM‟000 RM‟000 At cost 452 433 Accumulated amortisation (80) (102)

372 331



54

8. INTANGIBLE ASSETS (Cont’d)

The Group 2010 2009 RM‟000 RM‟000 (ii) Industrial Operating Rights

At cost 736 736

9. INVENTORIES

The Group

2010 2009

RM‟000 RM‟000

At cost:-

Raw materials 830 637

Work-in-progress 376 338

Finished goods 104 91

Trading goods 34 18

1,344 1,084

None of the inventories are carried at net realisable value.

10. TRADE RECEIVABLES

The Group‟s normal trade credit terms range from 30 to 180 days (2009: 30 to 180 days). Other

credit terms are assessed and approved on a case-by-case basis.

The foreign currency exposure profile of the trade receivables at the balance sheet date are as

follows:-

The Group

2010 2009

RM‟000 RM‟000

Australian Dollar 473 186

Singapore Dollar 1,399 2,809

South Africa Rand - 58

Thai Baht 70 -

United States Dollar 98 143

2,040 3,196

ANNUAL REPORT 2010


55

11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Other receivables 41 21 - 2

Deposits 29 19 1 1

Prepayments 41 71 - -

111 111 1 3

12. AMOUNT OWING BY RELATED COMPANIES


2010 2009 2010 2009

Non-trade related balances RM‟000 RM‟000 RM‟000 RM‟000

Subsidiaries

-

-

8,873 9,421

Amount owing by subsidiaries

The amount owing by subsidiaries are non-trade in nature, unsecured, interest-free and repayable

on demand. The amount owing is to be settled in cash.

13. DEPOSITS WITH LICENSED BANKS

The deposits of RM31,741 (2009: RM22,435) were held in trust for the Group by a director of the

Group. The deposits will be transferred to the Group at a time directed by the Group.

The effective interest rate per annum of the deposits at the balance sheet date ranges from 0.9% to

4.3% (2009: 1% to 3.7%). The deposits have maturity ranging from 1 day to 12 months.



56

14. SHARE CAPITAL

The Company

2010 2009

Number Number

Par Of Share Par Of Share

Value Shares Capital Value Shares Capital

RM '000 RM‟000 RM '000 RM‟000

Ordinary Shares

Authorised

At 31.5.2010/2009 0.10 250,000 25,000 0.10 250,000 25,000

The Company

2010 2009

Number Number

Par Of Share Par Of Share

Ordinary Shares Value Shares Capital Value Shares Capital

RM '000 RM‟000 RM '000 RM‟000

Issued and Fully Paid -up At 31.5.2010/2009 0.10 98,000 9,800 0.10 98,000 9,800

15. SHARE PREMIUM

The share premium is not distributable by way of cash dividends and may be utilised in the manner

set out in Section 60 (3) of the Companies Act 1965.

16. OTHER RESERVE

Foreign

Currency

Translation Merger

Reserve Deficit Total

RM‟000 RM‟000 RM‟000

At 1.6.2009 Ω (2,600) (2,600)

Addition during the year (2) - (2) At 31.5.2010 (2) (2,600) (2,602)


ANNUAL REPORT 2010


57

16. OTHER RESERVE (Cont’d)

The nature and purpose of the reserve is as follows:

Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the

translation of the financial statements of foreign operation whose functional currencies are different

from that of the Group‟s presentation currency. It is also used to record the exchange differences

arising from monetary items which form part of the Group‟s net investment in foreign operations,

where the monetary item is denominated in either the functional currency of the reporting entity or

the foreign operation.

Merger Deficit

The merger deficit in the financial year was related to the subsidiary which was consolidated under

the merger method of accounting.

The merger deficit arose from the difference between the carrying value of the investment and the

nominal value of the shares of the subsidiaries upon consolidation using merger accounting

principles.

17. RETAINED PROFITS

At the balance sheet date, the Company will be able to distribute dividends out of its entire retained

profits under the single tier tax system.

18. DEFERRED TAX LIABILITIES

The Group

2010 2009

RM‟000 RM‟000

At 1.6.2009/2008 414 228

Recognised in income statement for the financial year

(Note 25) (74) 186

Exchange difference Ω -

At 31.5.2010/2009 340 414




58

18. DEFERRED TAX LIABILITIES (Cont’d)

The deferred tax liabilities arise as a result of:-

The Group

2010 2009

RM‟000 RM‟000

An excess of carrying value over tax base 116 89

Industrial operating rights capitalized 184 184

Development expenditure capitalized 93 83

Others (53) 58

Exchange difference Ω -

340 414

The components and movements of deferred tax liability and asset during the financial year are as

follows:-

Deferred tax liability:-

Accelerated

capital

allowance

Industrial

operating

rights

capitalised

Development

expenditure

capitalised Others

Exchange

difference Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Balance at 1.6.2009 89 184 83 58 - 414

Recognised in income

statement 27 - 10 (111) Ω (74) Balance at 31.5.2010 116 184 93 (53) Ω 340

Balance at 1.6.2008 76 136 - 16 - 228

Recognised in income

statement 13 48 83 42 - 186 Balance at 31.5.2009 89 184 83 58 - 414


19. TRADE PAYABLES

The normal trade credit terms granted to the Group range from 30 to 90 days (2009: 30 to 90 days).

ANNUAL REPORT 2010


59

20. OTHER PAYABLES AND ACCRUALS


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Other payables 39 849 - 31

Accrued expenses 89 134 12 100

Payroll liabilities 203 91 63 -

331

1,074

75

131

The foreign currency exposure profiles of the other payables and accruals at the balance sheet date

are as follows:-

The Group

2010 2009

RM‟000 RM‟000

Australian Dollar 22 -

Singapore Dollar - 736

Pound Sterling 7 4

29 740

21. REVENUE


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Dividend income

- - 2,000 2,000

Sale of goods 12,891 16,474 - -

12,891 16,474 2,000 2,000



60

22. PROFIT BEFORE TAX


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Profit before tax is arrived at after charging:-

Audit fee

- for the financial year 42 26 12 12

- over provision in previous financial year - (1) - -

Amortisation of development expenditure 87 58 - -

Bad debts written off 7 - - -

Depreciation of property, plant and equipment 111 74 Ω Ω

Directors‟ fee 246 113 246 113

Directors‟ non-fee emoluments 499 77 8 3

Goodwill written off - 5 - -

Loss on foreign exchange:

- realised * - * -

- unrealised 203 - 79 -

Property, plant and equipment written off 4 - - -

Rental of premises 92 64 - -

Research and development expenditure 269 460 - -

Development expenditure written off 235 153 - -

and after crediting:-

Gain on foreign exchange:

- realised (243) (18) - -

- unrealised - (231) - -

Interest income (272) (124) (2) (17)


* - less than RM1,000.

Included in research and development expenditure are employee benefits which comprise of:-

- Director‟s remuneration - EPF contribution of RM10,936 (2009 : RM28,080)

- Director‟s remuneration - other emoluments of RM60,924 (2009 : RM234,620)

- Staff costs of RM143,860 (2009 : RM143,494)

ANNUAL REPORT 2010


61

23. Directors’ Remuneration

The aggregate amount of emoluments received and receivable by directors of the Group and of the

Company during the financial year are as follows:-

The breakdown of the directors‟ remuneration:-


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Non-executive directors:

- Fees 72 33 72 33

- Other emoluments 8 3 8 3

80 36 80 36

Executive directors:

- Fees 174 80 174 80

- Salaries, bonus and other

emoluments 719 300 - -

- Employees provident fund 131 36 - -

1,024 416 174 80

1,104 452 254 116

The breakdown of the categories charged out to:-


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Charged to income statement 817 452 254 116

Capitalised to development

expenditure

287

-

-

-

1,104 452 254 116



62

24. EMPLOYEE BENEFITS


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Short term employee benefits 2,040 1,259 254 116

Contribution to a defined contribution plan 213 87 - -

2,253 1,346 254 116

Included in employee benefits is key management personnel compensation as disclosed in Note 30

to the financial statements.

25. TAX EXPENSE


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Current tax expense:

- Malaysian tax for the current financial year 1,053 212 * 4

- Over provision of Malaysian tax in prior years - (9) - -

- Foreign tax 17 - - -

1,070 203 * 4

Deferred tax (Note 18):

- Relating to origination or reversal of temporary differences (53) 186 - -

- Over provision in prior years (21) - - -

(74) 186 - -

Total tax expense 996 389 * 4


ANNUAL REPORT 2010


63

25. TAX EXPENSE (Cont’d)

A subsidiary of the Company has been granted the Pioneer Status incentive under Section 41 of the

Promotion of Investments Act, 1986 by the Ministry of International Trade And Industry, Malaysia

which qualifies the subsidiary for 100% exemption from income tax on its statutory income from

pioneer activities for five years from 1 September 2004 to 31 August 2009.

A reconciliation of the statutory tax rate to the Group and the Company‟s effective tax rates applicable to

profit before tax are as follows:-


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

Profit before tax 5,010 8,693 1,197 1,711

Malaysian taxation at statutory rate 1,253 2,173 299 428

Tax effects of:-

Non-deductible expenses 293 81 216 76 Non-taxable income (15) - (515) (500) Pioneer income not subject to tax (521) (1,831) - - Over provision of Malaysian income

tax in prior years - (9) - - Over provision of deferred tax in

prior years (21)

- - - Effect of different tax rates - (25) - - Effect of different tax rates in

foreign jurisdiction 7

- - - Others Ω - - -

Tax expense for the financial year 996 389 * 4



26. EARNINGS PER SHARE

The basic earnings per share (“EPS”) is arrived at by dividing the Group‟s profit attributable to the equity

holders of the Company of RM4,014,000 (2009: RM8,304,000) by the weighted average number of

ordinary shares in issue during the financial year of 98,000,000 (2009: 48,666,000).

The fully diluted earnings per share for the Group are not presented as there were no potential dilutive

ordinary shares outstanding at the balance sheet date.



64

27. DIVIDENDS

The Group / The Company

2010 2009 RM‟000 RM‟000 Recognised during the year: - final tax-exempt dividend of 0.0173

sen per ordinary share in respect of financial year 2009 1,695 -

1,695 -

28. CASH AND CASH EQUIVALENTS

For the purpose of the cash flow statements, cash and cash equivalents comprise the followings:-

The Group The Company 2010 2009 2010 2009 RM‟000 RM‟000 RM‟000 RM‟000 Fixed deposits with licensed banks 11,993 9,307 202 200 Cash and bank balances 3,453 2,048 4 18

15,446 11,355 206 218

The foreign currency exposure profile of the cash and bank balances at the balance sheet date is as

follows:-

The Group 2010 2009 RM‟000 RM‟000 Australian Dollar 242 801 Pound Sterling 135 1 Singapore Dollar 2,001 409 United States Dollar 664 361

3,042 1,572

ANNUAL REPORT 2010


65

29. SEGMENTAL REPORTING

The Group 2010 2009 RM‟000 RM‟000 Sales revenue by geographical market: - Malaysia 3,897 5,036 - Asia Pacific 8,353 10,923 - Others 641 515

12,891 16,474

No other segmental information such as segment assets, liabilities and results are presented as the

Group‟s sales is predominantly generated from Malaysia.

30. RELATED PARTY DISCLOSURES

(a) For the purpose of the financial statements, the Group and the Company have related party

relationships with:-

(i) its subsidiaries and directors;

(ii) the directors who are the key management personnel; and

(iii) a company in which a close member of the family of certain key management personnel

has significant financial interest.

(b) In addition to the information disclosed elsewhere in the financial statements, the Group and the

Company carried out the following transactions with its related parties during the financial year:-


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

(i) Subsidiaries

Advances to subsidiaries - - 728 7,601

Dividend receivable from a subsidiary - - 2,000 2,000

(ii) A company in which a close

member of the family of certain key management personnel has significant financial interest

Purchase of shares - * - *

Rental paid 60 60 - -




66

30. RELATED PARTY DISCLOSURES (Cont’d)

Information regarding outstanding balances arising from related party transactions as at 31 May

2010 is disclosed in Note 12 to the financial statements.


2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000

(iii) Key management personnel compensation

Short-term employee benefits 1,104 521 254 116

Post employment benefits - Defined contribution plan 139 41 - -

1,243 562 254 116

In the opinion of the directors, the above transactions have been entered into in the ordinary course

of business on terms mutually agreed between the parties.

31. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Fair value is defined as the amount at which the financial instrument could be exchanged in a

current transaction between knowledgeable willing parties in an arm‟s length transaction, other than

in a forced sale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of financial

instruments:

(a) Cash and bank balances and other short term receivables

The carrying amounts approximated the fair values due to the relatively short term maturity of

these instruments.

(b) Other current liabilities

The carrying amounts approximated the fair values because of the short period to maturity of

these instruments.

(c) Amount owing by related companies

The carrying amounts approximated the fair values at the balance sheet date.

ANNUAL REPORT 2010


67

32. SIGNIFICANT EVENTS SUBSEQUENT TO BALANCE SHEET DATE

On 13 July 2010, Hexa Analisa Sdn. Bhd., a wholly owned subsidiary of Fibon Berhad had executed a

Sale and Purchase Agreement for the acquisition of land and Sale of Assets Agreement for the plant

and machineries for a total cash consideration of Ringgit Malaysia Two Million Nine Hundred and

Sixty One Thousand only (RM2,961,000) from CPC Polyply Industries (M) Sdn. Bhd. which

constitute a related party transaction.

The above transactions will be subjected to shareholders‟ approval in an Extraordinary General

Meeting which will be held at a date to be determined later.

33. COMPARATIVE FIGURES

As

Restated

As Previously Reported

RM‟000 RM‟000 The Company INCOME STATEMENTS (EXTRACT):- Revenue 2,000 - Other operating income 17 2,017


Analysis of Shareholdings as at 6 September 2010 cont‟d

68

Authorised Share Capital : RM25,000,000

Issued and Paid-Up Share Capital : RM9,800,000

Class of Shares : Ordinary Shares of RM0.10 each

Voting Rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings

No. of

Shareholders /

Depositors

% of

Shareholders /

Depositors

No. of Shares

held

% of Issued

Capital

Less than 100 53 4.70 1,198 0.00

100 to 1,000 957 84.92 321,214 0.33

1,001 to 10,000 79 7.01 262,464 0.26

10,001 to 100,000 20 1.78 639,820 0.65

100,001 to less than 5% of

issued shares

13 1.15 34,216,303 34.92

5% and above of issued shares 5 0.44 62,559,001 63.84

Total 1,127 100.00 98,000,000 100.00

DIRECTOR’S SHAREHOLDINGS

Direct Indirect

Name No. of

Shares Held

% of Issued

Capital

No. of Shares

Held

% of Issued

Capital

Lim Wai Kiew 1,470,000 1.50 *23,136,788 23.61

Pang Chee Khiong 14,822,552 15.13 - -

Pang Fok Seng 23,136,788 23.61 *1,470,000 1.50

Pang Nyuk Yin 2,940,000 3.00 - -

Chong Peng Khang 322 # - -

# less than 1%

* Indirect interest held through spouse

ANNUAL REPORT 2010


69

THIRTY LARGEST SHAREHOLDERS

Direct

Name No. of

Shares Held

% of Issued

Capital

1. CIMSEC Nominees (Tempatan) Sdn. Bhd. CIMB For Pang Fok

Seng (PB)

23,050,618 23.52

2. Pang Chee Khiong 14,822,552 15.13

3. Inflexion PEF Sdn. Bhd. 9,343,563 9.53

4. Malaysia Venture Capital Management Berhad 8,366,949 8.54

5. Expedient Equity Ventures Sdn. Bhd. 6,975,319 7.12

6. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities

Account For Koh Kin Lip

4,888,800 4.99

7. Kumpulan Modal Perdana Sdn. Bhd. 4,874,004 4.97


Account For Koh Siew Kong

4,700,500 4.80


Account For Junior Koh Siew Hui

4,413,800 4.50

10. Pang Nyuk Yin 2,940,000 3.00

11. Pang Yoke Lian 2,940,000 3.00

12. Pang Yoke Wah 2,918,222 2.98

13. Mayban Nominees (Asing) Sdn. Bhd. DBS Bank For Taib-Jaic

Asian Balanced Private Equity Fund

2,228,700 2.27

14. CIMSEC Nominees (Asing) Sdn. Bhd. CIMB For Frigate Equities

Ltd. (PB)

2,139,548 2.18

15. Lim Wai Kiew 1,470,000 1.50

16. Wong Siow May 270,828 0.28

17. Wong Seau Han @ Stella Wan Seau Han 220,100 0.22

18. Ho Si Keiw 211,801 0.22

19. Pang Fok Seng 86,170 0.09

20. ECML Nominees (Tempatan) Sdn. Bhd. Pledged Securities

Account For Jasen Vun Vui Fen

83,500 0.09

21. Alliance Group Nominees (Tempatan) Sdn. Bhd. Pledged

Securities Account For Marianna Binti Hasan (8063216)

79,800 0.08

22. Chong Chee Siong 40,000 0.04

23. Chong Kim Fung 38,748 0.04

24. Chong Kim Fung 33,400 0.03

25. Alliance Group Nominees (Tempatan) Sdn. Bhd. Pledged

Securities Account For Koh Cheng Hsiung (8040110)

30,000 0.03

26. Chan Yen Huat 25,000 0.03

27. Tee Boon Seng 22,800 0.02

28. Lim Teck Huat 22,000 0.02



70

THIRTY LARGEST SHAREHOLDERS (Cont’d)

Direct

Name No. of

Shares Held

% of Issued

Capital

29. Ng Chooi Yuen 21,200 0.02

30. Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities

Account For Thien Syn Yung @ Thien Sin Yung

20,000 0.02

SUBSTANTIAL SHAREHOLDERS

As Per Register of Substantial Shareholders

Direct Indirect

Name No. of

Shares Held

% of Issued

Capital

No. of Shares

Held

% of Issued

Capital

CIMSEC Nominees

(Tempatan) Sdn. Bhd.

CIMB For Pang Fok Seng

23,050,618 23.52 1,470,000 (1) 1.50

Pang Chee Khiong 14,822,552 15.13 - -

Inflexion PEF Sdn. Bhd. 9,343,563 9.53 - -

Malaysia Venture Capital

Management Berhad

8,366,949 8.54 6,975,319 (2) 7.12

Expedient Equipty Ventures

Sdn. Bhd.

6,975,319 7.12 - -

(1) Deemed interest by virtue of Lim Wai Kiew being his spouse

(2) Deemed interest by virtue of its substantial shareholding in expedient equity

ANNUAL REPORT 2010

Notice of Third Annual General Meeting

71

NOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting of FIBON BERHAD will be held at

ORNARESORT BERHAD, Batu 16, Jalan Gapam, Ladang Gapam, Bemban, 77200 Jasin, Melaka,

Malaysia on Friday, 22 October 2010 at 10.00 am to transact the following businesses:

AGENDA

ORDINARY BUSINESSES:

1. To receive and adopt the Audited Financial Report for the financial year ended

31 May 2010 together with the Reports of the Directors and the Auditors thereon.

(Resolution 1)

2. To declare a single tier final dividend of 0.82 sen for the year ended 31 May

2010.

(Resolution 2)

3. To re-elect the following Directors who are retiring in accordance to the

Company‟s Articles of Association Under Article 121 and being eligible offer

themselves for re-election:

i. Pang Fok Seng (Resolution 3a)

ii. Lim Wai Kiew (Resolution 3b)

4. To approve the payment of Directors‟ fees of RM246,000.00 for the financial year

ended 31 May 2010.

(Resolution 4)

5. To appoint Messrs. Crowe Horwath as Auditors of the Company for the ensuing

year and to authorise the Directors to fix their remuneration.

(Resolution 5)

SPECIAL BUSINESS:

To consider and, if thought fit, pass the following resolution:-

6. Ordinary Resolution – Authority To Directors to Allot and Issue Shares

“THAT subject to the provisions of Section 132D of the Companies Act, 1965

and approvals from the Bursa Malaysia Securities Berhad (“Bursa Securities”)

and other relevant governmental/regulatory authorities where such approvals

shall be necessary, authority be and is hereby given to the Directors of the

Company to allot and issue shares in the Company from time to time and upon

such terms and conditions and for such purposes as the Directors may deem fit

provided that the aggregate number of shares issued pursuant to this resolution

does not exceed 10% of the issued share capital of the Company for the time

being and such authority shall remain in force until the next Annual General

Meeting (“AGM”) of the Company.”

(Resolution 6)


Notice of Third Annual General Meeting cont‟d

72

AGENDA (Cont’d)

SPECIAL BUSINESSES (Cont’d):

7. Special Resolution - Proposed Amendment to the Articles of Association of the

Company

“THAT the existing Article 157 be amended as follows:

Exiting Article 157

Any dividend may be paid by cheque sent through the post to the registered

address, as may appear in the Register of Members or person entitled thereto.

Every such cheque shall be made payable to the order of the person to whom it

is sent, and payment of the cheque shall be a good discharge to the Company

of the dividend to which it relates.

New Article 157

Any dividend may be paid by cheque sent through the post to the registered

address or by directly crediting the dividend entitlement into the members’

bank accounts, as may appear in the Register of Members or the Record of

Depositors, of the Members or person entitled thereto. Every such cheque

shall be made payable to the order of the person to whom it is sent, and

payment of the cheque or directly crediting to the members’ bank accounts

shall be a good discharge to the Company of the dividend to which it relates.

Every such cheque or warrant shall be sent or directly credited at the risk

of the person entitled to the money represented thereby. Where the

members have provided to the Depository the relevant contact details for

purposes of electronic notifications, the Company shall notify them

electronically once the Company has paid the cash dividends out of its

accounts.

(Resolution 7)

8. To transact any other business for which due notice shall have been given in

accordance with the Companies Act, 1965.

(Resolution 8)

ANNUAL REPORT 2010


73

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN that a Single Tier Final Dividend of 0.82 sen per share in respect of

financial year ended 31 May 2010 will be payable on 20 December 2010 to depositors registered in the

Record of Depositors at the close of business on 25 November 2010, if approved by shareholders at the

forthcoming Third Annual General Meeting on Friday, 22 October 2010.

A Depositor shall qualify for entitlement to the dividend only in respect of:

a. Shares transferred into the Depositor‟s Securities Account before 5.00 p.m. on

25 November 2010 in respect of ordinary transfer; and

b. Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to

the Rules of Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

NORIAH BINTI MD YUSOF (LS 0009298)

Secretary

Johor Bahru

Date : 30 September 2010

Notes:

i. A member entitled to attend and vote at this meeting is entitled to appoint more than one proxy to

attend and vote in his stead. Where a member appoints more than one (1) proxy, appointment shall

be invalid unless he specifies the proportion of his holding to be represented by each proxy.

ii. 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 provision of Section 149(1)(b) of the Companies Act, 1965

shall not apply.

iii. Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under

the hand of its attorney.

iv. The instruments appointing a proxy must be deposited at the registered office, 31-04 Level 31

Menara Landmark, Mail Box 172, No 12 Jalan Ngee Heng, 80000 Johor Bahru not less than 48

hours before the time for holding the meeting or at any adjournment thereof.



74

Notes (Cont’d):

v. Explanatory Notes on Special Business:

i) Ordinary Resolution: The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act, 1965 at the Third Annual General Meeting (“AGM”) of the Company (hereinafter referred to as the “General Mandate”). The Company has been granted a general mandate by its shareholders at the Second AGM of the Company held on 24 July 2009 (hereinafter referred to as the “Previous Mandate”). The Previous Mandate granted by the shareholders had not been utilised and hence no proceeds were 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 organize a general meeting. This authority unless revoked or varied by the Company in the general meeting, will expire at the next Annual General Meeting. 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 future investment project(s), working capital and/or acquisitions. All other information remains unchanged.

ii) Special Resolution: Proposed Amendment to the Articles of Association of the Company The proposed Special Resolution is to amend the Company‟s Articles of Association in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to e-Dividend.

FIBON BERHAD (Company No: 811010-H)

(Incorporated In Malaysia)

PROXY FORM Number of Ordinary Shares Held

I/We, (FULL NAME AND NRIC/PASSPORT NO)

of (FULL ADDRESS)

being a member of FIBON BERHAD hereby appoint

(FULL NAME AND NRIC/PASSPORT NO)

of (FULL ADDRESS)

or failing him/her, the Chairman of the Meeting as *my/our proxy to attend and vote for *me/us and on *my/ our

behalf at the Second Annual General Meeting of the Company to be held at ORNARESORT BERHAD, Batu 16, Jalan

Gapam, Ladang Gapam, Bemban, 77200 Jasin, Melaka, Malaysia on Friday, 22 October 2010 at 10.00 am or any

adjournment thereof.

Mark either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting as the proxy thinks fit. If you appoint two proxies and wish them to vote differently this should be specified.

My/our proxy/proxies is/are to vote as indicated below

No. ORDINARY BUSINESS FOR AGAINST 1. Adoption of Audited Financial Statement for the financial year ended 31 May 2010 together

with the Reports of the Directors and the Auditors thereon.

2. Declaration of a single tier final dividend of 0.82 sen for the year ended 31 May 2010. 3 (i). Re-election of Mr Pang Fok Seng as Director 3 (ii). Re-election of Ms Lim Wai Kiew as Director 4. Approval of the payment of Directors’ fees of RM246,000.00 for the financial year ended 31

May 2010.

5. Reappointment of Messrs Horwath as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

No. SPECIAL BUSINESS 6. ORDINARY RESOLUTION – Authority to Issue Shares Pursuant to Section 132D of the Companies act, 1965 “THAT subject to the provisions of Section 132D of the Companies Act, 1965 and approvals

from the Bursa Malaysia Securities Berhad and other relevant governmental/regulatory authorities where such approvals shall be necessary, authority be and is hereby given to the Directors of the Company to allot and issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and such authority shall remain in force until the next Annual General Meeting of the Company.”

7. SPECIAL RESOLUTION – Proposed Amendment to the Articles of Association of the Company Amendment to Article 157 of the Company’s Articles of Association of the company in line

with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to e-Dividend.

* Strike out whichever not applicable (Please indicate with an “x” in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion)

…………………………………………………….…. Signature of Member/Common Seal

Date: ………………………………………………. [Please refer to the next page for the “Notes on Appointment of Proxy]

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

Percentage Proxy 1 % Proxy 2 _________% Total 100 %

Fold This Flap For Sealing

Notes on Appointment of Proxy:

i. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the

Company.

ii. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

iii. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each

proxy.

iv. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in

respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

v. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorized.

vi. The Proxy Form must be deposited at the Registered Office of the Company, located at 31-04, Level 31, Menara Landmark, Mail Box 172, No 12 Jalan Ngee

Heng, 80000 Johor Bahru, not less than forty-eight (48) hours before the time set for the meeting or any adjournment thereof.

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Notes on Appointment of Proxy(Cont’d)

vii. Explanatory Notes on Special Business:

Ordinary Resolution:

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 Third Annual General

Meeting (“AGM”) of the Company (hereinafter referred to as the “General Mandate”). The Company has been granted a general mandate by its shareholders at

the Second AGM of the Company held on 24 July 2009 (hereinafter referred to as the “Previous Mandate”).The Previous Mandate granted by the shareholders

had not been utilized and hence no proceeds were 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 organize a general meeting.This authority unless revoked or varied by the Company in the general meeting, will expire at the next Annual General Meeting.

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 future investment project(s), working capital and/or acquisitions.

All other information remains unchanged.

Special Resolution:

Proposed Amendment to the Articles of Association of the Company

The proposed Special Resolution is to amend the Company’s Articles of Association in line with the amendments to the Listing Requirements of Bursa Malaysia

Securities Berhad in relation to e-Dividend.

Affix Stamp

The Company Secretary

FIBON BERHAD (811011-H) 31-04 Level 31 Menara Landmark,

Mail Box 172, No 12 Jalan Ngee Heng,

80000 Johor Bahru

FIBON BERHAD

12A, JALAN 20,

TAMAN SRI KLUANG,

86000 KLUANG, JOHOR,

MALAYSIA

TEL : ( 607 ) 773 6918

FAX : ( 607 ) 774 2025

E-MAIL : [email protected]

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