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Annual Report

2010

PW CONSOLIDATED BHD (420049-H)

PW CONSOLIDATED BHD. (420049-H)

Annual Report 2010

01

Contents

2 Corporate Information

3 Corporate Structure

4 Financial Highlights

5 - 6 Directors’ Profile

7 - 8 Chairman’s Statement

9 - 11 Corporate Governance Statement

12 - 13 Statement on Internal Control

14 - 15 Audit Committee Report

32 - 73 Notes To The Financial Statements

74 Disclosure of Realised and Unrealised Profits

75 - 76 Shareholdings Statistics

77 - 79 Notice of Annual General Meeting

80 Statement Accompanying Notice of Annual General Meeting

81 Additional Compliance Information

82 - 83 List Of Material Properties Of The Group

Proxy Form

Directors’ Report 16 - 19

Directors’ Statement 20

Statutory Declaration 20

Independent Auditors’ Report To The Members 21

Consolidated Statement Of Financial Position 22

Consolidated Statement Of Comprehensive Income 23

Consolidated Statement Of Changes In Equity 24

Consolidated Statement Of Cash Flows 25 - 27

Statement Of Financial Position 28

Statement Of Comprehensive Income 29

Statement Of Changes In Equity 30

Statement Of Cash Flows 31


Annual Report 2010

02

Corporate Information

SECRETARY CH’NG LAY HOON

AUDIT COMMITTEE ONG KIM NAM (CHAIRMAN)CHEE WAI HONG (MEMBER)SHAMSUDDIN BIN MOHD SALLEH (MEMBER)

REGISTERED OFFICE

SUITE 12-A LEVEL 12MENARA NORTHAMNO. 55 JALAN SULTAN AHMAD SHAH10050 PENANGTEL : 04 - 228 0511FAX : 04 - 228 0518

BUSINESS ADDRESS PLOT 127, JALAN PERINDUSTRIAN BUKIT MINYAK 7TAMAN PERINDUSTRIAN BUKIT MINYAK14100 BUKIT MERTAJAMSEBERANG PERAI TENGAH, PENANG

SHARE REGISTRAR SYMPHONY SHARE REGISTRARS SDN. BHD. LEVEL 6, SYMPHONY HOUSEBLOCK D13, PUSAT DAGANGAN DANA 1JALAN PJU 1A/4647301 PETALING JAYASELANGORTEL : 603 - 7841 8000FAX : 603 - 7841 8008

AUDITORS

GRANT THORNTONCHARTERED ACCOUNTANTS

PRINCIPAL BANKERS

CIMB BANK BERHADALLIANCE BANK MALAYSIA BERHADRHB BANK BERHADEON BANK BERHADUNITED OVERSEAS BANK (MALAYSIA) BHD.OCBC BANK (MALAYSIA) BERHAD BANGKOK BANK BERHADMALAYAN BANKING BERHAD PUBLIC BANK BERHADBANK OF CHINA (MALAYSIA) BERHADBANK KERJASAMA RAKYAT MALAYSIA BERHAD

SOLICITORS

SALINA, LIM KIM CHUAN & CO.GAN TEIK CHEE & HOLOH HAN MENG & CO.WONG-CHOOI & MOHD. NOR

STOCK EXCHANGE LISTING

MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHADSTOCK NAME : PWSTOCK CODE : 7134

DIRECTORS

DATO’ SIAH GIM ENG (EXECUTIVE CHAIRMAN & MANAGING DIRECTOR)

DATIN LAW HOOI LEAN (DEPUTY MANAGING DIRECTOR)

BOAY GOEY GNOH (EXECUTIVE DIRECTOR)

CHEE WAI HONG (INDEPENDENT NON-EXECUTIVE DIRECTOR)

ONG KIM NAM (INDEPENDENT NON-EXECUTIVE DIRECTOR)

SHAMSUDDIN BIN MOHD SALLEH (INDEPENDENT NON-EXECUTIVE DIRECTOR)


Annual Report 2010

03

Corporate StructureAs At 30 April 2011

PW CONSOLIDATED BHD.(420049-H)

PW NUTRIFEED SDN. BHD. (37629-M)

PW LIVESTOCK (M) SDN. BHD.

(613817-M)

PINWEE DUCK FARMS SDN. BHD. (752833-H)

PW NUTRIFARM CORPORATION SDN. BHD.

(149054-P)

EVERAY AGRITECHSDN. BHD. (451057-H)

PINWEE BREEDER FARM (MALACCA) SDN. BHD. (559277-W)

PW BREEDER FARM(TAIPING) SDN. BHD. (346545-D)

PW NUTRIFARM VENTURE SDN. BHD. (208636-P)

PW NUTRI PROCESSING SDN. BHD. (668698-A)

PW TYRES & AUTO SERVICE SDN. BHD.

(750417-M)

PW PROPERTIES SDN. BHD.

(736271-D)

PINWEE FOOD PROCESSING SDN. BHD.

(541912-X)

PINWEE CHICKEN TRADING SDN. BHD.

(594854-W)

100%

100% 100%

100% 100%

100% 100%

100%

100%

100%

80%20%

100% 100%

Note: Pinwee Breeder Farms Sdn Bhd and Pinwee Layer Farm Sdn Bhd, wholly owned subsidiaries of PW Nutrifarm Corporation Sdn Bhd, are pending published in the government gazette for strike-off under the provision of the Companies Act 1965.


Annual Report 2010

04

Five Years Group Financial Highlights

FINANCIAL YEAR ENDED

(Restated)December

2006

(Restated)December

2007

(Restated)December

2008

(Restated)December

2009December

2010

^ Revenue 249,786,629 298,748,068 315,270,389 248,451,445 262,505,982

Shareholders' fund 99,568,351 129,567,365 127,596,569 127,707,859 127,870,251

^ Earnings before interest, tax, depreciation and amortisation (EBITDA) 21,410,143 26,240,500 23,021,268 24,193,436 27,833,191

^ Profit before taxation from continuing operations 7,221,198 8,615,586 2,755,790 3,476,923 6,833,046

Net assets per share (RM) 1.74 2.27 2.12 2.10 2.10

Earnings per share (sen) 7.00 8.76 1.70 0.19 0.26

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

EBITDA (RM) Profit Before Taxation (RM)

2006 20062007 20072008 20082009 20092010 2010

21,4

10,1

43

7,22

1,19

8

26,2

40,5

00

8,61

5,58

6

23,0

21,2

68

2,75

5,79

0

24,1

93,4

36

3,47

6,92

3

27,8

33,1

91

6,83

3,04

6

2.5

2

1.5

1

0.5

0

20.00

15.00

10.00

5.00

0

Net assets per share (RM) Earnings per share (sen)

2006 20062007 20072008 20082009 20092010 2010

1.74

7.00

2.27

8.76

2.12

1.70

2.10

0.19

2.10

0.26

350,000,000

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

140,000,000

120,000,000

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0

Revenue (RM) Shareholders' fund (RM)

2006 20062007 20072008 20082009 20092010 2010

249,

786,

629

99,5

68,3

51

298,

748,

068

129,

567,

365

315,

270,

389

127,

596,

569

248,

451,

445

127,

707,

859

262,

505,

982

127,

870,

251

^ For comparison purposes, the comparative figures have been restated to reflect only the results from continuing operations of the Group.


Annual Report 2010

05

Directors’ Profile

DATO’ SIAH GIM ENG, a Malaysian, aged 52, the co-founder of the Company, was appointed as the Executive Chairman and

Managing Director of the Company on 12 May 2001. He is the driving force in the formulation and implementation of the Group’s corporate

strategy. With more than 30 years of experience in the feedmilling and poultry farming industry, his entrepreneurial skills have steered from

a small establishment to become one of the leading feedmill and farming group in the Northern Region of Malaysia. He is the husband of

Datin Law Hooi Lean, the Deputy Managing Director and the major shareholder of the Company.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010.

DATIN LAW HOOI LEAN, a Malaysian, aged 50, holds a Master Degree in Business Administration from University of Ballarat,

Australia. She is a member of New Zealand Institute of Management. She is also a Fellow of The Society for Professional Management, UK;

Certified Professional Manager from The Society of Business Practitioners (SBP), UK. She was appointed as the Deputy Managing Director of

the Company on 12 May 2001. She is primarily involved in the business development process, strategic planning, providing directions and

overseeing the administration of finance function of the Group. With more than 20 years experience in the area of financial accounting and

company management, she has been instrumental in ensuring the smooth running of the day to day operation of the Company. She is the

wife of Dato’ Siah Gim Eng, the Executive Chairman and Managing Director and the major shareholder of the Company.

She has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010.

BOAY GOEY GNOH, a Malaysian, aged 43, Bachelor of Commerce (Hons) in Accounting, was appointed as an Executive Director

of the Company on 22 June 2009. She joined the Group in 1998. She has 14 years experience in the field of accounting and finance. Prior to

her appointment in the Group, she was attached to Tongkah Mouldings Technologies Sdn. Bhd. and Sony Electronic (M) Sdn. Bhd.

She has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010.

ALLEN CHEE WAI HONG, a Malaysian, 38, was appointed as an Executive Director of the Company on 12 May 2001 and was

re-designated to Non-Independent Non-Executive Director on 22 January 2009 and thereafter as Independent Non-Executive Director on 27

April 2011. A Chartered Accountant by profession, he is a Fellow of the Association of Chartered Certified Accountants of United Kingdom

and a Member of the Malaysian Institute of Accountants. Mr. Allen Chee holds an LLB from University of London, a Masters Degree in

Business Administration from University Utara Malaysia and also has obtained his Certificate of Legal Practice. Prior to stint in the Company,

he was attached to BDO Binder Malaysia. He is currently the Managing Director of a professional advisory and services firm and also sits on

the Board of several private limited companies.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010. He is a member of

the Audit Committee, the Remuneration Committee, the Nominating Committee and the Option Committee.

ONG KIM NAM, a Malaysian, aged 55, was appointed as an Independent Non-Executive Director of the Company on 12 May

2001. A Chartered Accountant by profession, he is a member of Malaysian Institute of Accountants and Association of Chartered Certified

Accountants (United Kingdom). He has over 20 years of experience in the field of auditing, accounting and taxation. Presently he is the sole

practitioner of O.K.Nam Associates, a firm of Chartered Accountants, which is based in Penang. He is the Independent Non-Executive Director

of Eng Kah Corporation Berhad, a Company listed on Main Market of Bursa Malaysia Securities Berhad.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010. He is the Chairman

of the Audit Committee, a member of the Remuneration Committee and the Nominating Committee.


Annual Report 2010

06

Directors’ Profile (Cont’d)

SHAMSUDDIN BIN MOHD. SALLEH, a Malaysian, aged 52, was appointed as an Independent Non-Executive Director

on 12 May 2001. In his career spanning over 30 years with various companies including Loytape Bhd.,Central Industries Corporation Bhd.,

American All-Seasons Sdn. Bhd. and Superbox (M) Sdn. Bhd., he has garnered experience in the area of administration and personnel, sales

and marketing within the manufacturing and agriculture industries. This enables him to participate actively in the overall operation matters of

the Company and as a whole, contribute positively towards the growth of the Company. Presently, as a Managing Director of Ivory Choice

Sdn. Bhd. and Sagarena Sdn. Bhd., Encik Shamsuddin has spread his wing by venturing into property industry, employment agency and oil

and gas industries, namely Anggerik Laksana Sdn. Bhd.. He also sits on the Board of Director of several other private limited companies.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2010. He is the Chairman

of the Remuneration Committee, the Nominating Committee and the Option Committee and a member of the Audit Committee.

Save as disclosed, none of the Directors have:-

1. any family relationship with any Director and/or major shareholders of the Company;

2. any conflict of interest with the Company; and

3. any conviction for offences within 10 years other than traffic offences.


Annual Report 2010

07

Chairman’s Statement

On behalf of the Board of Directors, I am pleased to present the Annual Report

and the audited financial statement of the Group and the Company for the

financial year ended 31 December 2010.

Group Performance

The Group posted an improved performance in the financial year 2010 at the back of a steadily recovering domestic economy as Group annual

turnover increased from RM248.5 million in financial year 2009 to RM262.5 million and profit before taxation from continuing operation doubled

to RM6.8 million from RM3.5 million. The streamlining of operation and cost cutting measures implemented during the year had been effective in

reducing operating cost and this has increased the profitability of the Group. The Group had also benefited from stronger selling price of broiler

and lower raw material cost compared with the preceding financial year.

The Group had discontinued unprofitable operation in chicken processing. There will not be any negative impact on the Group’s core business

in poultry farming and we believe that this will help to minimize business risk and improve assets utilisation of the Group and contribute to the

profitability of the Group in the longer term. Farm performance and productivity continued to improve in the financial year 2010 and we are

pleased that our farmers had been equally rewarded for their hard work and dedication.

Corporate Development

On 30 April 2010, PW Consolidated Bhd,via its wholly owned subsidiary, PW Nutrifarm Corporation Sdn Bhd acquired the balance of 497,492

ordinary shares of RM1.00 each, representing 25% of the entire issued and paid up shares capital of PinWee Breeder Farm (Malacca) Sdn Bhd for

a consideration of RM1,502,622 fully settled by cash. PinWee Breeder Farm (Malacca) Sdn Bhd is now a 100% owned subsidiary of PW Nutrifarm

Corporation Sdn Bhd.

Prospect

It has been forecasted that the economy will grow at a rate 5-6% per annum in the financial year 2011 mainly driven by domestic demand. Barring

unforseen circumstances, we expect demand and market price for broiler to remain firm as the economy and consumer sentiment is expected to

improve.

The financial year 2011 will be a significant for the group as we embark on the diversification of the Group’s business to layer farming. We expect

this investment to further enhance the Group’s earnings in the coming years.

Dividend

The Board did not recommend any dividend payment for financial year 2010.


Annual Report 2010

08

Chairman’s Statement (Cont’d)

Acknowledgement

On behalf of the Board, I would like to express our gratitude to our shareholder, customer and supplier business partner, bankers and government

authorities for their continuing support and confidence in us and to our colleagues at all level of the Group, our heartfelt appreciation for your hard

work, dedication and commitment throughout the past one year.

Dato' Siah Gim EngExecutive Chairman


Annual Report 2010

09

Corporate Governance Statement

The Board of Directors is committed to maintaining high standard of corporate governance throughout the Group. This practice of good corporate governance is fundamental to the performance of duty and responsibilities of the Directors in enhancing shareholder value and safeguarding stakeholder interest of the Group.

The corporate governance practiced by the Group is consistent with the principles and best practices set out in the Malaysian Code on Corporate Governance (“Code”). This statement report on the compliance with the Code by the Company throughout the financial year ended 31 December 2010.

Board of DirectorsThe Board is primarily entrusted with the responsibility of setting the goals and strategic direction of the Group. The Board oversees the operation of the Group’s business and ensuring effective system of control and risk management are in place through identifying and appraisal of risk within the Group. These controls are essential in minimizing the risk exposure of the Group.

Board CompositionThe Board is currently comprised of three Executive Directors, and three Independent Non-Executive Directors. Hence, the Board’s composition meets the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)(“Listing Requirements”) of having at least one-third (1/3) of the membership of the Board comprising independent directors. The wealth of knowledge, skills and experience of the Board members gives added strength to the leadership that is necessary for the effective stewardship of the Group.

The Board has clear division of responsibility and is balance in terms of power and authority. The Executive Directors are responsible for making and implementing operational decisions whilst Independent Non-Executive Directors are independent of the management and are free from any relationship that could materially interfere with the exercise of their independent judgment. Together, they play an important role in ensuring that the strategies proposed by the management are fully deliberated and examined, taking into account the interest of shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business.

Board MeetingThe Board meets on a quarterly basis and additionally as and when required, with a formal schedule of matters specifically reserved for the Board’s deliberation and decision. During the financial year under review, five (5) Board meetings were held and all the Directors have complied with the requirements in respect of board meeting attendance as provided in the Articles of Association.

Dato’ Siah Gim Eng 5/5Datin Law Hooi Lean 5/5Ms Boay Goey Gnoh 5/5 Mr. Allen Chee Wai Hong 5/5Mr. Ong Kim Nam 5/5En Shamsuddin Bin Mohd Salleh 5/5

Board Balance

Supply and Access to InformationThe Directors have full and unrestricted access to all information pertaining to the Group’s business and affairs, whether collectively or in their individual capacity, to enable them to discharge their duties. There are matters specifically reserved for the Board’s decision to ensure that the direction and control of the Group is firmly in its hands. Prior to the Board meetings, the Directors are provided with the agenda together with Board papers containing relevant reports and information.

All Directors have access to the advice and the services of the Company Secretaries and under appropriate circumstances may obtain independent professional advice at the Company’s expense, in furtherance of their duties.

Appointment to the BoardThe Board had established a Nominating Committee which is responsible for the review and assessment of the skills, experience, size and composition of the Board on an ongoing basis to ensure effectiveness of the Board and the contribution of each director. The Nominating Committee is also responsible for assessing the suitability of proposed candidates for directorships and making recommendations to the Board on new appointments including Board Committees.

The Nominating Committee consists wholly of Independent Non-Executive Directors. The Committee is chaired by Encik Shamsuddin Bin Mohd Salleh and the other members are Mr. Ong Kim Nam and Mr. Allen Chee Wai Hong. The Committee had one (1) meeting during the financial year.

Re-electionIn accordance with the provisions of the Articles of Association of the Company, all directors are subject to retirement from office at least once in every three (3) years, but shall be eligible for re-election. The Articles also provide that any Director appointed during the year is required to retire and seek re-election at the following Annual General Meeting immediately after such appointment.


Annual Report 2010

10

Corporate Governance Statement (Cont’d)

Directors TrainingAll Directors have completed the Mandatory Accreditation Programme as required by Bursa Securities. The Company continues to identify suitable training programme for the enhancement of Directors’ skill and knowledge from time to time.

DIRECTOR’S REMUNERATION

The Level and Make-up of RemunerationThe remuneration framework for Executive Directors has an underlying objective of attracting and retaining directors needed to run the Company successfully. Remuneration packages of Executive Directors are structured to commensurate with corporate and the individual’s performance. In respect of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the individual concerned.

ProcedureThe Board had established a Remuneration Committee to review and recommend to the Board the remuneration package of the Executive Directors and the determination of remuneration packages of non-executives is a matter for consideration by the Board as a whole. The individuals concerned are required to abstain from discussions pertaining to their own remuneration packages.

The Remuneration Committee is comprised of Independent Non-Executive Directors and is chaired by Encik Shamsuddin Bin Mohd Salleh. The other members include Mr. Ong Kim Nam and Mr. Allen Chee Wai Hong. The Committee met once during the financial year.

DisclosureDetails of the Directors’ remuneration for the financial year ended 31 December 2010 are as follow:

The aggregate remuneration of Directors categorized into appropriate components.

Fees

Salaries, Allowance and Bonus Others Total

RM RM RM RM

Executive 96,000 1,787,460 32,900 1,916,360

Non-Executive 90,000 26,100 - 116,100

186,000 1,813,560 32,900 2,032,460

The number of Directors whose total remuneration falls within the following bands.

Range of Remuneration (RM) Executive Non-executive

0 - 50,000 - 3

100,001 - 200,000 1 -

700,001 - 800,000 1 -

1,000,001 - 1,100,000 1 -

3 3

SHAREHOLDERS

Dialogue between Company and InvestorsThe Board recognizes the importance of timely and equal dissemination of information to shareholders on the Group’s performance and direction. Communication with investor is effected through timely release of information on the Group’s corporate proposal, financial results and other material information to the public.

Information and news on the Company’s operation are also made available to investors and shareholders through the Company website at www.pwconsolidated.com.


Annual Report 2010

11

Corporate Governance Statement (Cont’d)

The Annual General Meeting (“AGM”)The Company’s AGM serves as a forum for dialogue with shareholders. At each AGM, the Chairman of the Board briefs the shareholders on the progress and performance of the business of the Group. The status of all resolutions proposed at the AGM is submitted to Bursa Securities at the end of the meeting day. Apart from contact at general meetings, there is no formal program or schedule of meetings with investors, shareholders, stakeholders and the public generally. However, the management has the option of calling for meetings with investors/analysts if deemed necessary. Thus far, the management is of the opinion that this arrangement has been satisfactory to all parties.

ACCOUNTABILITY AND AUDIT

Financial ReportingThe Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group’s financial position by means of the annual and quarterly reports and other published information. In this regard, the Board is responsible for the preparation of financial statements by applying the appropriate accounting policies and prudent estimates that present a fair and balanced report of the financial state of affairs of the Group in accordance with the provisions in the Companies Act 1965 and applicable approved accounting standard.

Internal ControlThe Statement on Internal Control as set out on pages 12 and 13 of this Annual Report provides an overview of the state of internal controls within the Group.

Relationship with the AuditorsThe Board through the establishment of an Audit Committee maintains a formal and transparent relationship with the Group’s Auditors. The roles of the Audit Committee in relation to the Auditors are detailed on pages 14 and 15 of the Audit Committee Report in the Annual Report.

Corporate Social ResponsibilityOne of the PW Group’s missions is to produce quality and safe products for the Malaysian public. We believe that only by ensuring the sustainability of our operating environment can our long term success and our mission be achieved. In fact many of the practices and policies we implemented in the pursuit of economic benefit and excellence, and the goal of being a socially responsible corporate citizen are congruent.

The Group utilizes modern farming technique in the operation and management of all broiler farms with strict implementation of bio-security measures. All broiler farms are equipped with automated drinking system and semi automated feeding system with silo thereby reducing human contact. Feed performance are constantly monitored and feed backs to the Group’s feed mill for quality improvement and control purposes. Feed is formulated using ingredients and additives which will not result in chemical residue in the final product. The application of ‘green’ concept begin with the formulation of feed in the Group’s feed mill where it contains fiber and nutrient that reduce ammonia content in poultry excretion which results in reduction in ammonia gas released to the detriment of the flocks health and improved fly control. The broilers are almost totally on vegetarian diet thereby eliminating the use of fishmeal which could contribute to the problem of over fishing. In addition, the substitution of fishmeal with other ingredient also reduces the risk of E.Coli and Salmonella contamination. The Group is also moving toward converting existing open house chicken coops to closed-house system which is expected to significantly increase farm productivity, further enhancing bio-security and reducing pollution to surrounding area. To produce safe poultry meat to the consumers, comprehensive vaccination program under scrutiny of qualified veterinarian is in place and the use of hormone is prohibited and antibiotic is only allowed in treatment of sick birds. The Group’s practice also emphasis the welfare of the poultry and all poultry are treated as humanely as possible especially during handling and transporting.

The Group is adopting and committed to the usage of clean technology and environment safe practice as part of its corporate social responsibilities. The areas we focus on are resource conservation; including water conservation and energy conservation, waste reduction, waste treatment and recycling, usage of environmental safe and biodegradable products.

PW Group is an equal opportunity employer that practice meritocracy and the welfare of our work force are high in our agenda where we also provide ample opportunities and incentives for employee’s skill and personal development. Our staff regularly attend seminar and training program to equip themselves with latest knowledge and development in the relevent fields. Our workers and staff's medical needs are covered under comprehensive group personal accident, hospitalisation and surgical insurance and compensation scheme.


Annual Report 2010

12

Statement On Internal Control

Introduction

The Group is committed to maintain a system of internal control and risk management structure that is effective in safeguarding shareholders’ investment and the Group’s asset consistent with the requirement of Malaysian Code on Corporate Governance.

This Statement on Internal Control is made in pursuant with paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, which requires Directors of Malaysian public listed companies to make a statement about their state of internal control within the Group, in their Annual Report.

Boards Responsibility

The Board has overall responsibility for the Group's system of internal control and for reviewing its effectiveness whilst the role of Management is to implement the Board's policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks threatening the Group during the financial year under review and prior to the date of approval of the annual report and financial statements.

Risk Management Framework

The Board maintains continuous commitment in strengthening the Group’s risk management framework and processes. Day-to-day risk management of the individual operating units are delegated to the Managing Director and respective senior managements. In this regard, the Managing Director is responsible for timely identification of the Group’s risks of each business units and implementation of systems to manage these risks. Periodic meetings are held to assess and monitor the Group’s risk as well as discuss, deliberate and appropriately addressed matters associated with strategic, financial and operational facets of the Group. Any significant weaknesses identified during the review together with the improvement measures to strengthen the internal controls were reported to the Audit Committee.

Internal Audit Function

The Group's internal audit function was outsourced to an independent audit firm who report directly to the Audit Committee. The outsource audit firm perform regular reviews of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group. The Audit Committee conducts annual reviews on the adequacy of the internal audit firm's scope of work and resources. The Audit Committee regularly reviews the internal auditor's reports and discusses the highlighted issues with the Management to ensure every issue has been properly resolved.

Other Key Elements of Internal Control

The following key elements of a system of internal control are present in the Group:

(a) Control Environment

The Group has an organizational structure for planning, controlling and monitoring business operations in order to achieve the Group’s objective. Management of each operating unit has clear responsibility for identifying risk affecting their unit and the overall Group’s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis.

(b) Audit Committee

An Audit Committee, comprising a majority of independent non-executive directors was maintained throughout the financial year. The composition of the Audit Committee brings a wide range of deep experience, knowledge and expertise. They continue to meet, have full and unimpeded access to both the internal and external auditors during the financial year.

(c) Policies and Procedures

Clear, formalised and documented internal policies, standards and procedures are in place to ensure compliance with internal controls and relevant laws and regulations. Regular reviews are performed to ensure that documentation remains current and relevant.


Annual Report 2010

13

Statement On Internal Control (Cont’d)

Weakness in internal controls that result in material losses

Based on findings in the internal auditors’ report for the financial year ended 31 December 2010, the Board is of the opinion that the general system of internal control is adequate and appeared to be working satisfactorily. A number of minor internal control weaknesses were identified during the year, all of which have been, or are being, addressed by Management. There were no material losses, contingencies or uncertainties incurred during the financial year as a result of weakness in internal control.

The Board is committed to put in more appropriate action plans, to ensure that the internal control system could continuously evolve to support the type of business and size of the operations of the Group.

The total costs incurred in managing the internal audit function for the financial year ended 31 December 2010 were approximately RM15,060.

This statement is issued in accordance with a resolution of the Directors dated 24 May 2011.


Annual Report 2010

14

Audit Committee Report

The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2010. The Audit Committee was established on May 2001.

MEMBERS AND MEETINGSMembers of the Audit Committee are as follows:-Name DesignationOng Kim Nam Chairman/Independent Non-Executive DirectorShamsuddin Bin Mohd. Salleh Independent Non-Executive DirectorAllen Chee Wai Hong Non-Executive Director

There were five (5) Audit Committee meetings held during the financial year ended 31 December 2010. The details of the attendance of the Audit Committee members are as follows:Name AttendanceOng Kim Nam 5/5Shamsuddin Bin Mohd. Salleh 5/5Allen Chee Wai Hong 5/5

SUMMARY OF ACTIVITIESThe Audit Committee carried out its duties in accordance with its Terms of Reference. During the financial year ended 31 December 2010, the activities of the Audit Committee included the following:- Reviewed the unaudited quarterly financial results of the Group with the management prior to submission to the Board of Directors for

consideration and approval and subsequent announcements; Reviewed the Audit Committee Report, and Statement of Internal Control for the financial year ended 31 December 2010 and recommended

its adoption to the Board; Considered the nomination of the external auditors for recommendation to the Board for re-appointment; Reviewed with the external auditors the results of the annual audit and management letter; Reviewed the scope, functions and resources of the outsourced internal audit function; Reviewed the year end financial statements prior to submission to the Board for consideration and approval; Reviewed the external auditors’ reports for the financial year ended 31 December 2010 in relation to audit and accounting issues arising from

the audit an consider the findings by the external auditors and management responses thereto; Considered the related party transactions that had arisen within the Company or the Group; and Reviewed with the external auditors their audit plan prior to the commencement of audit.

TERMS OF REFERENCEThe Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit Committee.

OBJECTIVESThe primary objective of the Audit Committee is to assist the Board of Directors of the Company in fulfilling its responsibilities relating to corporate accounting, internal controls, management and financial reporting practices of the Group.

COMPOSITIONThe members shall be appointed by the Board of Directors and shall consist of not less than three (3) members of whom a majority shall compose of Independent Directors of the Company. No Alternate Directors shall be appointed members of the Committee. At least one member of the Audit Committee:-• Must be a member of the Malaysian Institute of Accountants; or• If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience; and

- he must have passed the examination specified in Part I of the First Schedule of the Accountants Act, 1967; or - he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967.

ChairmanThe Chairman shall be an Independent Non-Executive Director.

QuorumA quorum shall consist of two (2) members and a majority of the members present must be Independent Directors.

SecretaryThe Secretary of the Audit Committee shall be the Company Secretary or any other person so appointed by the Audit Committee from time to time.


Annual Report 2010

15

Audit Committee Report (Cont’d)

MeetingsThe Audit Committee shall regulate its own proceedings. The Committee shall meet at least four (4) times a year. The Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meeting. The Committee shall meet at least twice a year with the external auditors without the presence of any executive Director of the Board.

AuthorityThe Audit Committee is authorised by the Board of Directors to investigate any activity within its terms of reference. The Committee shall have unrestricted access to the external auditors and to all employees of the Group. The Committee may, with the approval of the Board, consult legal or other professionals where they consider it necessary to discharge their duties at the expense of the Company.

FunctionsThe functions of the Audit Committee shall be: - To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal; To review with the external auditors the nature and scope of the audit plan, the evaluation of the system of internal control, problems and

reservations arising from the audit and any matters which may wish to discuss with the external auditors, the internal auditors or both, in the absence of the Executive Board members and management where necessary;

To review the external auditors management letter and managements’ response; To review and report to the Board of Directors on the quarterly results and year end financial statements, prior to the approval by the Board

of Directors, focusing particularly on:-(i) changes in or implementation of major accounting policies and practices;(ii) significant and unusual events; and(iii) compliance with applicable approved accounting standards and other legal requirements;

To review the adequacy of the scope, function, competency and resources of the internal audit function, and that it has the necessary author-ity to carry out its work;

To review the internal audit programme and results of the internal audit process, and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

To review any appraisal or assessment of the performance of members of the internal audit function including appointment or termination of senior staff members and to provide opportunity for the resigning staff member, if any, to submit his reasons for resigning;

To consider any related party transactions and conflict of interest situation that may arise within the Company or Group; and To undertake such other responsibilities as may be agreed to by the Audit Committee and the Board of Directors.

Reporting ProcedureThe Chairman of the Committee reports to the Board after each Committee meeting the result of the deliberations of the Committee. The Committee shall prepare reports, at least once a year, to the Board summarizing the Committee’s activities during the year in discharging of its duties and responsibilities and the related significant results and findings.

Internal Audit FunctionThe Group has engaged the services of an independent professional firm to assist the Committee in ensuring the adequacy and effectiveness of the Group’s risk management and internal control systems. During the financial year under review, the Internal Auditors have conducted assurance review on adequacy and effectiveness of internal control system on certain operating units and presented its findings together with recommendation and management action plan to the Audit Committee for review.


Annual Report 2010

16

Directors’ Report For The Financial Year Ended 31 December 2010

The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2010.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding and the provision of management services whilst that of the subsidiaries are disclosed in Note 5 to the financial statements.

There have been no significant changes in the nature of these principal activities during the financial year other than the cessation of the chicken trading and processing activity due to recurring operating losses suffered.

RESULTS

GROUP COMPANY

RM RM

Profit/(Loss) after taxation for the year

Continuing operations 5,956,830 1,358,870

Discontinued operations (5,848,280) -

108,550 1,358,870

Attributable to :

Owners of the parent 162,392 1,358,870

Minority interests (53,842) -

108,550 1,358,870

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2010 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report other than the following recognised in profit or loss of the Group :

(i) Write-off of property, plant and equipment with carrying amount of RM4,241,100, and

(ii) Impairment loss on trade receivables amounting to RM993,161.

DIVIDENDS

No dividends have been declared or paid by the Company since the end of the previous financial year.

The directors do not recommend any dividend payment for the financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the notes to the financial statements.

SHARE CAPITAL AND DEBENTURE

During the financial year, the Company did not issue any share or debenture and did not grant any option to anyone to take up unissued shares of the Company.


Annual Report 2010

17

Directors’ Report For The Financial Year Ended 31 December 2010 (Cont’d)

TREASURY SHARES

During the financial year, the Company did not repurchase any of its issued ordinary shares from the open market.

Of the total 60,911,250 issued and fully paid ordinary shares as at 31 December 2010, 1,133,500 are held as treasury shares by the Company, and accordingly the number of outstanding ordinary shares in issue and fully paid as at that date is therefore 59,777,750 ordinary shares of RM1 each.

Further relevant details are disclosed in Note 14 to the financial statements.

EMPLOYEE SHARE OPTION SCHEME

The Company’s Employee Share Option Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 18 November 2003. The ESOS will be in force for a period of five years expiring on 14 January 2009. The Company has extended the existing ESOS for another 5 years until 14 January 2014.

As at end of the reporting period, no options were granted.

The salient features of the ESOS are disclosed in Note 13 to the financial statements.

DIRECTORS

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

Dato’ Siah Gim Eng Datin Law Hooi Lean Boay Goey Gnoh Chee Wai Hong Ong Kim Nam Shamsuddin Bin Mohd Salleh

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Directors’ Shareholdings, the interests of directors in 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 RM1 each -----

Balance Balance

at at

1.1.10 Bought Sold 31.12.10

The Company

Direct Interest :

Dato’ Siah Gim Eng 9,719,215 - - 9,719,215

Datin Law Hooi Lean 7,961,798 - - 7,961,798

Chee Wai Hong 605,878 - - 605,878

Ong Kim Nam 7,500 - - 7,500

Deemed Interest :

Dato’ Siah Gim Eng 14,390,548 1,150,000 - 15,540,548

Datin Law Hooi Lean 16,147,965 1,150,000 - 17,297,965

By virtue of their shareholdings in the Company, Dato’ Siah Gim Eng and Datin Law Hooi Lean are also deemed interested in the shares of all the subsidiaries of the Company, to the extent that the Company has interests.


Annual Report 2010

18


DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements.

During and at the end of the year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION

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

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts, and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

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

(i) that would render the amount written off for bad debts, or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, or

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, or

(iv) 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.

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

(i) 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

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability 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 as and when they fall due.

EVENTS AFTER THE REPORTING PERIOD

The events after the reporting period are disclosed in Note 36 to the Financial Statements.


Annual Report 2010

19


AUDITORS

The auditors, Grant Thornton, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the directors :

........................................…….......................... ........................................……..........................Dato’ Siah Gim Eng Datin Law Hooi Lean

Penang,

Date : 27 April 2011


Annual Report 2010

20

We, Dato’ Siah Gim Eng and Datin Law Hooi Lean, being two of the directors of PW Consolidated Bhd. state that in the opinion of the

directors, the financial statements set out on pages 22 to 73 are 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 at 31 December

2010 and of their financial performance and cash flows for the financial year then ended.

Signed in accordance with a resolution of the directors :

........................................…….......................... ........................................……..........................

Dato’ Siah Gim Eng Datin Law Hooi Lean

Date : 27 April 2011

Statutory Declaration

I, Boay Goey Gnoh, the director primarily responsible for the financial management of PW Consolidated Bhd. do solemnly and sincerely declare

that the financial statements set out on pages 22 to 73 are to the best of my knowledge and belief, correct and I make this solemn declaration

conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

the abovenamed at Penang, this 27th )

day of April 2011. ) ........................................……..........................

Boay Goey Gnoh

Before me,

........................................……..........................

Goh Suan Bee

No.: P125

Commissioner for Oaths

Directors’ Statement


Annual Report 2010

21

Report on the Financial Statements

We have audited the financial statements of PW Consolidated Bhd., which comprise the statements of financial position as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows 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 22 to 73.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of these financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements 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 at 31 December 2010 and of their financial performance and cash flows for the financial year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following :(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have

been properly kept in accordance with the provisions of the Act,(b) We are satisfied that the 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 purposes, and

(c) The auditors’ 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 Reporting Responsibilities

The supplementary information set out in page 74 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Grant Thornton Dato’ N.K. JasaniNo. AF : 0042 PartnerChartered Accountants No. 708/03/12 (J/PH) Chartered AccountantDate : 27 April 2011

Penang

Independent Auditors‘ Report To The Members Of PW Consolidated Bhd. Company No. 420049-H (Incorporated In Malaysia)


Annual Report 2010

22

(Restated) (Restated)

31.12.10 31.12.09 1.1.09

NOTE RM RM RM

ASSETS

Non-current assets

Property, plant and equipment 3 153,659,454 180,338,710 194,855,632

Investment properties 4 125,000 125,000 125,000

Intangible assets 6 5,240,569 5,186,163 5,186,163

159,025,023 185,649,873 200,166,795

Current assets

Inventories 7 66,130,935 60,969,759 61,796,519

Trade receivables 8 27,055,805 24,145,981 37,095,543

Other receivables, deposits and prepayments 9 4,207,324 10,847,671 3,535,846

Tax recoverable 238,724 224,559 213,641

Fixed deposit with a licensed bank 11 65,000 65,000 65,000

Cash and bank balances 1,961,612 1,599,653 2,145,737

99,659,400 97,852,623 104,852,286

Non-current assets held for sale 12 11,494,492 6,769,907 -

111,153,892 104,622,530 104,852,286

TOTAL ASSETS 270,178,915 290,272,403 305,019,081

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Share capital 13 60,911,250 60,911,250 60,911,250

Treasury shares 14 (805,815) (805,815) (805,815)

Share premium 918,539 918,539 918,539

Capital reserve 15 17,366,908 20,770,495 24,743,238

Retained profits 49,479,369 45,913,390 41,829,357

127,870,251 127,707,859 127,596,569

Minority interests - 1,490,364 1,514,639

Total equity 127,870,251 129,198,223 129,111,208

Non-current liabilities

Borrowings 17 3,994,389 6,190,738 9,078,989

Deferred tax liabilities 18 12,997,378 14,470,932 15,995,554

16,991,767 20,661,670 25,074,543

Current liabilities

Trade payables 19 18,002,323 29,012,658 35,600,811

Other payables and accruals 20 6,677,117 6,783,945 16,583,224

Borrowings 17 99,353,667 103,475,231 98,040,080

Provision for taxation 1,283,790 1,140,676 609,215

125,316,897 140,412,510 150,833,330

Total liabilities 142,308,664 161,074,180 175,907,873

TOTAL EQUITY AND LIABILITIES 270,178,915 290,272,403 305,019,081

Consolidated Statement Of Financial PositionAs At 31 December 2010

The notes set out on pages 32 to 73 form an integral part of these financial statements.


Annual Report 2010

23


Consolidated Statement Of Comprehensive Income For The Financial Year Ended 31 December 2010

(Restated)

2010 2009

NOTE RM RM

Revenue 21 262,505,982 248,451,445

Cost of sales (233,218,444) (221,482,534)

Gross profit 29,287,538 26,968,911

Other income 22 3,386,669 3,198,328

Administrative expenses (18,146,490) (20,004,025)

Selling and distribution expenses (1,408,504) (1,528,238)

Profit from operations 13,119,213 8,634,976

Finance costs 23 (6,286,167) (5,158,053)

Profit before taxation 24 6,833,046 3,476,923

Taxation 25 (876,216) (601,455)

Profit for the year from continuing operations 5,956,830 2,875,468

Discontinued operations *Loss for the year from discontinued operations 26 (5,848,280) (2,788,453)

Profit for the year 108,550 87,015

Other comprehensive income :

Realisation of revaluation surplus upon disposal and write off of properties 456,116 425,944

Realisation of revaluation surplus upon depreciation 2,947,471 3,546,799

Transfer of capital reserve to retained profits (3,403,587) (3,972,743)

Other comprehensive income for the year - -

Total comprehensive income for the year 108,550 87,015

Profit/(Loss)/Total comprehensive income for the year attributable to : Owners of the parent

- Continuing operations 6,010,672 2,899,743

- Discontinued operations (5,848,280) (2,788,453)

162,392 111,290

Minority interests (53,842) (24,275)

108,550 87,015

Basic earnings per share attributable to owners of the parent (Sen) 27Basic, for profit from continuing operations 10.05 4.85

Basic, loss from discontinued operations (9.78) (4.66)

Basic, for net profit for the year 0.27 0.19

* This represents the chicken trading and processing division under the processed chickens and ducks business segment of the Group which ceased operation during the financial year. Accordingly the comparative figures have been restated to conform with FRS 5 : Non-current Asset Held for Sale and Discontinued Operations.


Annual Report 2010

24


Consolidated Statement Of Changes In Equity For The Financial Year Ended 31 December 2010

Minority Total

---------------------------- Attributable to Equity Holders of the Company ----------------------------- Interests Equity

------------------ Non-distributable ----------------- Distributable

Share Treasury Share Capital Retained

Capital Shares Premium Reserve Profits Total

RM RM RM RM RM RM RM RM

2010

At 1 January 60,911,250 (805,815) 918,539 20,770,495 45,913,390 127,707,859 1,490,364 129,198,223

Total comprehensive income

for the year - - - (3,403,587) 3,565,979 162,392 (53,842) 108,550

Acquisition of remaining equity

interest from existing subsidiary - - - - - - (1,436,522) (1,436,522)

At 31 December 60,911,250 (805,815) 918,539 17,366,908 49,479,369 127,870,251 - 127,870,251

(Restated)

2009

At 1 January 60,911,250 (805,815) 918,539 24,743,238 41,829,357 127,596,569 1,514,639 129,111,208

Total comprehensive income

for the year - - - (3,972,743) 4,084,033 111,290 (24,275) 87,015

At 31 December 60,911,250 (805,815) 918,539 20,770,495 45,913,390 127,707,859 1,490,364 129,198,223


Annual Report 2010

25

2010 2009

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation

- continuing operations 6,833,046 3,476,923

- discontinued operations (5,922,724) (2,791,338)

910,322 685,585

Adjustments for :

Bad debts 2,476 49,990

Depreciation 14,106,050 14,862,547

Impairment loss on trade receivables 993,161 2,964,464

Interest expense 6,286,187 5,159,144

Interest income (356,881) (423,596)

Gain on disposal of long-term leasehold land - (839,322)

Gain on disposal of non-current assets held for sale (1,898,314) -

Loss/(Gain) on disposal of property, plant and equipment 340,314 (1,276,205)

Goodwill on consolidation written off 11,694 -

Property, plant and equipment written off 4,241,100 96,892

Operating profit before working capital changes 24,636,109 21,279,499

* (Increase)/Decrease in inventories (4,340,620) 1,434,688

Decrease/(Increase) in receivables 2,734,886 (1,482,180)

Decrease in payables (11,117,163) (16,387,432)

Cash generated from operations 11,913,212 4,844,575

Income tax paid (2,313,817) (1,603,250)

Income tax refund 167,440 601

Interest paid (6,286,187) (5,159,144)

Interest received 356,881 310,286

Net cash from/(used in) operating activities

carried forward 3,837,529 (1,606,932)

Consolidated Statement Of Cash FlowsFor The Financial Year Ended 31 December 2010



Annual Report 2010

26

Consolidated Statement Of Cash FlowsFor The Financial Year Ended 31 December 2010 (Cont’d)

2010 2009

RM RM

Net cash from/(used in) operating activities

brought forward 3,837,529 (1,606,932)

CASH FLOWS FROM INVESTING ACTIVITIES

** Acquisition of property, plant and equipment (2,472,263) (2,722,692)

*** Acquisition of additional equity interests of existing subsidiaries (1,502,622) -

Acquisition of long-term leasehold land - (1,526,042)

Interest received - 113,310

Proceeds from disposal of long-term leasehold land - 2,302,142

Proceeds from disposal of non-current assets held for sale 6,328,221 -

Proceeds from disposal of property, plant and equipment 1,735,371 4,285,486

Net cash from investing activities 4,088,707 2,452,204

CASH FLOWS FROM FINANCING ACTIVITIES

(Repayment)/Drawdown of bankers acceptance (784,985) 9,315,000

Payment of finance lease (3,575,636) (4,383,223)

(Repayment)/Drawdown of promissory note (7,381,000) 12,211,000

Drawdown/(Repayment) of term loans 70,949 (3,066,095)

Drawdown/(Repayment) of trust receipts 12,189,450 (16,692,459)

Net cash from/(used in) financing activities 518,778 (2,615,777)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 8,445,014 (1,770,505)

CASH AND CASH EQUIVALENTS AT BEGINNING (20,645,052) (18,874,547)

CASH AND CASH EQUIVALENTS AT END (12,200,038) (20,645,052)

Represented by :

Cash and bank balances 1,961,612 1,599,653

Bank overdrafts (14,161,650) (22,244,705)

(12,200,038) (20,645,052)



Annual Report 2010

27

2010 2009

RM RM

* Inventories

Cash flow from inventories (5,161,176) 826,760

Adjustment for depreciation 820,556 607,928

(4,340,620) 1,434,688

** Acquisition of property, plant and equipment

Total cost 3,718,627 9,766,411

Acquired under finance lease (1,246,364) (3,938,256)

Acquired in exchange for settlement of debt by a receivable - (3,105,463)

Total cash consideration 2,472,263 2,722,692

*** Cash flow on acquisition of additional equity interests of existing subsidiary

Property, plant and equipment 1,776,935 -

Inventories 435,857 -

Receivables 37,690 -

Cash and bank balances 16,473 -

Payables (337,077) -

Borrowings (224,573) -

Deferred tax liabilities (268,783) -

Share of net assets acquired from minority interests 1,436,522 -

Goodwill on consolidation 66,100 -

Total cash consideration paid 1,502,622 -

Consolidated Statement Of Cash FlowsFor The Financial Year Ended 31 December 2010 (Cont’d)



Annual Report 2010

28


Statement Of Financial PositionAs At 31 December 2010

2010 2009

NOTE RM RM

ASSETS

Non-current assets

Investment in subsidiaries 5 39,188,963 39,188,963

Current assets

Other receivables 9 3,352 -

Amount due from subsidiaries 10 23,579,810 22,272,177

Cash and bank balances 42,738 29,470

23,625,900 22,301,647

TOTAL ASSETS 62,814,863 61,490,610

EQUITY AND LIABILITIES

Share capital 13 60,911,250 60,911,250

Treasury shares 14 (805,815) (805,815)

Share premium 918,539 918,539

Retained profit/(Accumulated loss) 16 1,350,165 (8,705)

Total equity 62,374,139 61,015,269

Current liabilities

Other payables and accruals 20 440,724 458,541

Provision for taxation - 16,800

440,724 475,341

TOTAL EQUITY AND LIABILITIES 62,814,863 61,490,610


Annual Report 2010

29


2010 2009

NOTE RM RM

Revenue 21 1,712,117 348,000

Administrative expenses (351,627) (343,345)

Profit before taxation 24 1,360,490 4,655

Taxation 25 (1,620) (16,800)

Net profit/(loss), representing total comprehensive income/(loss) for the year 1,358,870 (12,145)

Statement Of Comprehensive Income For The Financial Year Ended 31 December 2010


Annual Report 2010

30


Statement Of Changes In Equity For The Financial Year Ended 31 December 2010

-------------- Non-distributable --------------

Retained

Profit/

Share Treasury Share (Accumulated Total

Capital Shares Premium loss) Equity

RM RM RM RM RM

2010

At 1 January 60,911,250 (805,815) 918,539 (8,705) 61,015,269

Total comprehensive income for the year - - - 1,358,870 1,358,870

At 31 December 60,911,250 (805,815) 918,539 1,350,165 62,374,139

2009

At 1 January 60,911,250 (805,815) 918,539 3,440 61,027,414

Total comprehensive loss for the year - - - (12,145) (12,145)

At 31 December 60,911,250 (805,815) 918,539 (8,705) 61,015,269


Annual Report 2010

31


Statement Of Cash FlowsFor The Financial Year Ended 31 December 2010

2010 2009

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 1,360,490 4,655

Working capital changes :

Increase in receivables (3,352) -

(Decrease)/Increase in payables (17,817) 12,182

Net cash from operating activities 1,339,321 16,837

Income tax paid (18,420) -

Net cash generated from operating activities 1,320,901 16,837

CASH FLOWS FROM FINANCING ACTIVITIES

Net change in subsidiaries balances (1,307,633) (4,128)

NET INCREASE IN CASH 13,268 12,709

CASH AT BEGINNING 29,470 16,761

CASH AT END 42,738 29,470


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Notes To The Financial Statements31 December 2010

1. CORPORATE INFORMATION

General

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 27 April 2011.

Principal activities

The principal activities of the Company consist of investment holding and the provision of management services whilst that of the subsidiaries are disclosed in Note 5 to the financial statements.

There have been no significant changes in the nature of these principal activities during the financial year other than the cessation of the chicken trading and processing activity due to recurring operating losses suffered.

2. SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies adopted by the Group and by the Company are consistent with those adopted in the previous financial years unless otherwise indicated below.

2.1 Basis of Preparation

The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and in accordance with applicable Financial Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia.

At the beginning of the current financial year, the Group and the Company have adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 July 2009 and 1 January 2010 as described fully in Note 2.3.

In addition to the above, the Group has changed the accounting policy on the treatment of revaluation surplus arising from property.

Prior to 1 January 2010, revaluation surplus is only transferred to retained profits when the property is retired from use or disposed of by the Group notwithstanding the underlying property are being used by the Group. With effect from this financial year the revaluation surplus of the underlying property is transferred to retained profits as the property is being used by the Group.

The effects of the change have been accounted for retrospectively as disclosed in Note 37(ii) to the financial statements. However, this change does not impact on the profit or loss of the Group.

The financial statements are presented in Ringgit Malaysia (“RM”).

2.2 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

2.2.1 Judgements made in applying accounting policies

There are no significant area of critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements.


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Notes To The Financial Statements31 December 2010 (Cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)

2.2.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below :

(i) Useful lives of depreciable assets

The depreciable costs of property, plant and equipment are allocated on the straight line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 5 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual value of these assets.

A 5% difference in the expected useful lives of the property, plant and equipment from the management’s estimates would result in approximately 12.23% (2009 : 25.99%) variance in the Group’s profit for the financial year from continuing operations.

(ii) Impairment of property, plant and equipment

The Group performs an impairment review as and when there are impairment indicators to ensure that the carrying value of the property, plant and equipment does not exceed its recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from continuing operations. Therefore, in arriving at the recoverable amount, management exercise judgement in estimating the future cash flows, growth rate and discount rate.

(iii) Impairment of goodwill The Group determines whether goodwill is impaired at least once a year or more frequently if events or changes in

circumstances indicate that the goodwill may be impaired. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are in Note 6 to the financial statements.

(iv) Inventories The management reviews for slow-moving and obsolete inventories. These reviews require judgement and estimates. Possible

changes in these estimates could result in a revision to the valuation of inventories.

(v) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk charactericstics.

2.3 Adoption of New and Revised FRSs

The accounting policies adopted by the Group and by the Company are consistent with those of the previous financial year except for the adoption of the following new and revised FRSs and IC Interpretations mandatory for annual financial periods beginning on or after 1 July 2009 and 1 January 2010 :

(a) Mandatory for financial period beginning on or after 1 July 2009

FRS 8 Operating Segments


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2.3 Adoption of New and Revised FRSs (cont'd)

(b) Mandatory for financial period beginning on or after 1 January 2010

FRS 7 Financial Instruments : Disclosures

FRS 101 Presentation of Financial Statements (Revised)

FRS 123 Borrowing Costs (Revised)

FRS 139 Financial Instruments : Recognition and Measurement

Amendments to FRS 1 and

FRS 127

First-time Adoption of Financial Reporting Standards and Consolidated and Separate Financial Statements. Amendments relating to cost of an investment in a subsidiary, jointly controlled entity or associate

Amendments to FRS 2 Share Based Payment. Amendments relating to vesting conditions and cancellations

Amendments to FRS 132

Financial Instruments : Presentation. Amendments relating to puttable financial instruments and effective date and transition of the classification of compound instruments

Amendments to FRS 139, FRS 132 and IC Interpretation 9

Financial Instruments : Recognition and Measurement, Financial Instruments : Disclosure and Reassessment of Embedded Derivatives. Amendments relating to eligible hedged items, reclassification of financial assets and embedded derivatives

Improvements to FRSs issued in 2009 and mandatory for annual financial periods beginning on or after 1 January 2010.

IC Interpretation 9 Reassessment of Embedded Derivatives

IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions

IC Interpretation 13 Customer Loyalty Programmes

IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction

FRS 4 Insurance Contract and TR i-3 Presentation of Financial Statements of Islamic Financial Institutions are effective for annual financial period beginning on or after 1 January 2010, however, they are not relevant to the operations of the Group and of the Company.

Initial application of the above standards, amendments and interpretations did not have any material impact on the financial statements of the Group and of the Company except for the following :

FRS 7 Financial Instruments : Disclosures

Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments : Disclosure and Presentation. FRS 7 and the consequential amendment to FRS 101 Presentation of Financial Statements require disclosure of qualitative and quantitative information about the significance of financial instruments for the Group’s and the Company’s financial position and performance, the nature and extent of risks arising from financial instruments and the objectives, policies and processes for managing capital.

The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the financial year ended 31 December 2010.

FRS 8 Operating Segments

FRS 8, which replaces FRS 1142004

Segment Reporting, requires the identification of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segments and to assess their performance. The standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers.


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FRS 8 Operating Segments (cont'd)

Prior to 1 January 2010, the Group identifies business segments using a risks and rewards approach, with the Group’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. Following the adoption of FRS 8, the Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 114

2004.

FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement.

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 revised FRS 101 also requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital.

The revised FRS 101 was adopted retrospectively by the Group and by the Company.

FRS 123 Borrowing Costs (Revised)

FRS 123 (Revised) eliminates the option available under the previous version of FRS 123 to recognise all borrowing costs immediately as an expense. The Group and the Company shall capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group and the Company have adopted this as a prospective change in accounting policy.

FRS 139 Financial Instruments : Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in accordance with the transitional provisions. The details of the changes in accounting policies arising from the adoption of FRS 139 are discussed below :

• Impairment of receivables :

Prior to 1 January 2010, allowance for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate.

• Financial guarantee contracts :

During the current period and prior years, the Company provided financial guarantees to banks in connection with bank borrowings granted to certain subsidiaries. Prior to 1 January 2010, the Company did not provide for such guarantees unless it was more likely than not that the guarantees would be called upon. The guarantees were disclosed as contingent liabilities. Upon the adoption of FRS 139, all unexpired financial guarantees issued by the Company are recognised as financial liabilities and are measured at their initial fair value less accumulated amortisation as at 1 January 2010.

Improvements to FRSs

The adoption of Improvements to FRSs issued in 2009 and mandatory for annual financial periods beginning on or after 1 January 2010 will have the following impacts on the financial statements :


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Amendment to FRS 117 Leases

The amendment clarifies the classification of lease of land and requires entities with existing leases of land and buildings to reassess the classification of land as finance or operating lease. Leasehold land which in substance is a finance lease will be reclassified to property, plant and equipment. Prior to the adoption of Amendment to FRS 117 Leases, the Group classified its leasehold land as operating leases and had recognised the payment made on acquiring the leasehold land as prepaid lease payments. These leasehold land are amortised over the lease term in accordance with the pattern of benefits provided. On adoption of the Amendment to FRS 117, the Group had reassessed the classification of its leasehold land and concluded that these leasehold land are finance lease in substance. Accordingly, these leasehold land were classified to property, plant and equipment and in accordance with the accounting policy for property, plant and equipment. The effects of this change have been accounted for retrospectively as disclosed in Note 37(i) to the financial statements.

2.4 Standards Issued But Not Yet Effective

The following are Standards and IC Interpretations which are not yet effective and have not been early adopted by the Group and by the Company :

(a) Effective for financial periods beginning on or after 1 March 2010

Amendment to FRS 132 Financial Instruments : Presentation. Amendments relating to classification of rights issues

(b) Effective for financial periods beginning on or after 1 July 2010

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

FRS 3 Business Combinations (Revised)

FRS 127 Consolidated and Separate Financial Statements (Revised)

IC Interpretation 12 Service Concession Arrangements

IC Interpretation 17 Distributions of Non-cash Assets to Owners

Improvements to FRSs issued in 2010 and mandatory for annual financial periods beginning on or after 1 July 2010.

(c) Effective for financial periods beginning on or after 1 January 2011

Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters. Amendment relating to transition provisions for first-time adopters

Amendments to FRS 1 Additional Exemptions for First-time Adopters. Amendment relating to transition provision for first-time adopters in the industry of oil and gas

Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions. Amendments relating to the scope and accounting for group cash-settled share-based payments transactions

Amendments to FRS 7 Improving Disclosures about Financial Instruments. Amendments relating to the fair value measurement using fair value hierarchy and disclosure of liquidity risk

IC Interpretation 4 Determining whether an Arrangement contains a Lease

IC Interpretation 18 Transfers of Assets from Customers *

* During the financial year, MASB approved and issued IC Interpretation 18 - Transfers of Assets from Customers and requires the interpretation to be applied prospectively to all transfers of assets from customers received on or after 1 January 2011.


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2.4 Standards Issued But Not Yet Effective (cont'd)

(d) Effective for financial periods beginning on or after 1 July 2011

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

Amendments to IC Interpretation 14

FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. Amendment relating to the treatment of prepayments of future contributions when there is a minimum funding requirement

(e) Effective for financial periods beginning on or after 1 January 2012

IC Interpretation 15 Agreements for the Construction of Real Estate

FRS 124 Related Party Disclosures (Revised)

The existing FRS 1, FRS 3, FRS 127 and FRS 124 will be withdrawn upon the adoption of the new requirements. IC Interpretation 15 will replace FRS 201

2004. IC Interpretation 8 and IC Interpretation 11 will be withdrawn upon the application of Amendments to FRS

2 - Group Cash-settled Share-based Payment Transactions. IC Interpretation 12 is not expected to be relevant to the operations of the Group and of the Company.

IC Interpretation 12 is not expected to be relevant to the operations of the Group. The directors anticipate that the adoption of these new/revised FRSs, amendments to FRSs and IC Interpretations will have no material impact on the financial statements of the Group in the period for initial application except for the following :

FRS 3 Business Combination (Revised)

The revised standard continues to apply the acquisition method to business combinations, with some significant changes. All payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through profit or loss. There is a choice to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed.

FRS 124 Related Party Disclosures (Revised)

The revised standard modifies the definition of a related party and simplifies disclosures for government-related entities. The disclosure exemptions introduced in the standard do not affect the Company because the Company is not a government-related entity. However, disclosures regarding related party transactions and balances in these consolidated financial statements may be affected when the revised standard is applied in future accounting periods because some counterparties that did not previously meet the definition of a related party may come within the scope of the Standard.

FRS 127 Consolidated and Separate Financial Statements (Revised)

The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in profit or loss. The revised standard requires losses to be allocated to non-controlling interests, even if it results in the non-controlling interest to be in a deficit position.

2.5 Subsidiaries and Basis of Consolidation

Subsidiaries

Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom.

Investment in subsidiaries which is eliminated on consolidation is stated at cost less accumulated impairment losses in the Company’s

separate financial statements.

Upon the disposal of investment in subsidiaries, the difference between net disposal proceeds and their carrying amount is included in profit or loss.


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2.5 Subsidiaries and Basis of Consolidation (cont'd)

Basis of Consolidation

The financial statements of the Group include the audited financial statements of the Company and all its subsidiaries made up to the end of the financial year. The Group adopts both the merger and acquisition method of consolidation.

The acquisitions of the subsidiaries prior to 31 October 2001 are accounted for using merger accounting principles in compliance with Malaysian Accounting Standard No. 2 “Accounting for Acquisitions and Mergers” the generally accepted accounting principles prevailing at that time. The results of the companies being merged are included for the full financial year and the consolidated financial statements are presented as if the companies had been combined throughout the previous financial years. Merger debit arising on consolidation which represents the excess of the nominal value of shares in subsidiaries acquired and the nominal value of shares issued for the acquisition is set off against Group reserves.

Under the acquisition method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements.

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 and is retained in the consolidated statement of financial position.

Any excess of the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the profit or loss.

Inter-company balances and transactions are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interest is measured at the minorities’ share of the acquisition fair values of the identifiable assets and liabilities of the acquiree company. Separate disclosure is made of minority interest.

2.6 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment except for freehold land, long-term leasehold land, short-term leasehold land, buildings and farm development are stated at cost less accumulated depreciation and accumulated impairment losses.

Freehold land, long-term leasehold land, short-term leasehold land, buildings and farm development are stated at revalued amount, which is the fair value at the date of revaluation less accumulated impairment losses. Subsequent additions are shown at cost while disposals are at valuation or cost as appropriate. Fair value is determined by market-based evidence appraisal that is undertaken by external independent professionally qualified valuers. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the end of each reporting period. Surplus arising on revaluation are credited to asset revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the asset revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is included in profit or loss.

Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rates :

Long-term leasehold land Amortised over lease period of 57 - 99 years Short-term leasehold land Amortised over lease period of 22 - 30 years Buildings 2% Farm development 10% Plant and machinery 7% - 10% Equipment, furniture and fittings 8% - 20% Motor vehicles 20% Freehold land is not depreciated as it has an infinite life.

Depreciation on capital expenditure in progress commences when the assets are ready for their intended use.


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2.6 Property, Plant and Equipment (cont'd)

The residual value, useful life and depreciation method are reviewed at each reporting 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 property, plant and equipment.

The difference between the net disposal proceeds and its carrying amount is charged or credited to the profit or loss and the

attributable portion of the revaluation surplus is taken into other comprehensive income. 2.7 Investment Properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties.

Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

2.8 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments for the right to use an asset for an agreed period of time.

(i) Finance lease

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. Title may or may not eventually be transferred.

Plant and equipment acquired by way of finance leases are stated at amounts equal to the lower of their fair values and the present value of minimum lease payments at the inception of the leases, less accumulated depreciation and any impairment losses.

In calculating the present value of the minimum lease payments, the discount rate is the interest rate implicit in the lease, if this is determinable; if not, the Group’s incremental borrowing rate is used.

(ii) Operating Leases

An operating lease is a lease other than a finance lease.

Operating lease income or operating lease rentals are credited or charged to profit or loss on a straight line basis over the period of the lease.

2.9 Intangible Assets

Goodwil

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

2.10 Impairment of Non-Financial Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.


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2.10 Impairment of Non-Financial Assets (cont'd)

For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.11 Inventories Inventories are stated at the lower of cost and net realisable value.

Cost of finished goods includes materials, direct labour and attributable production overheads.

Cost of livestock consists of purchase price of livestock plus growing costs which include feeds and vaccines, direct labour, subcontract wages and attributable farming overheads.

Cost of parent stock consists of purchase price of parent stock and attributable costs including relevant overheads in rearing the parent stock and is amortised over its estimated economic egg-laying life of ten to twelve months.

All inventories costs are determined on the first-in, first-out basis.

Net realisable value is the estimated selling price less the estimated cost necessary to make the sale.

2.12 Financial Assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value

through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and categorise their financial assets as loans and receivables as well as available-for-sale financial assets.

A financial asset is derecognised where the contractual right to achieve cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.


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2.12 Financial Assets (cont'd)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

2.13 Impairment of Financial Assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default in receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

2.14 Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value against which bank overdraft balances, if any, are deducted.

2.15 Non-current Assets Held for Sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets are measured at the lower of carrying amount and fair value less costs to sell.

2.16 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each end of the reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.


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2.17 Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a

financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. The Group and the Company classified its financial liabilities as other financial liabilities.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Other Financial Liabilities

The Group’s and the Company’s other financial liabilities include trade and other payables, intercompany balances, and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method, unless the effect of discounting would be immaterial, in which case they are stated at cost.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after reporting date.

For other financial liabilities, gains and losses recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

2.18 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

2.19 Income Recognition

Sale of goods

Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.

Management fees

Management fees are recognised on the accrual basis.

2.20 Employee Benefits

Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Defined contribution plans

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund. Such contributions are recognised as an expense in the profit or loss as incurred.

Share-based compensation The Company’s Employee Share Option Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows the Group’s

employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.


Annual Report 2010

43



2.20 Employee Benefits (cont'd)

Share-based compensation (cont'd) At each reporting period, the Group revises its estimates of the number of options that are expected to become exercisable on vesting

date. It recognises the impact of the revision of original estimates in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained profits.

The proceeds received net of any directly attributable transaction costs are credited to equity when the options are exercised.

2.21 Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted by the end of the reporting period.

Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

2.22 Foreign Currency Translations

Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each reporting period, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date, unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contract are used. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange gains or losses are included in the profit or loss.

2.23 Segment Reporting

Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Board of Directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

2.24 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.

2.25 Share Capital and Share Issuance Expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are

classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.26 Discontinued Operations

Discontinued operations are carried at the lower of carrying amount and fair value.

A component of the Group is classified as discontinued operations when the Group had formally announced its intention to discontinue the operations and has initiated the process of cessation.

The comparative information of the Group relating to the discontinued operations have been represented accordingly.


Annual Report 2010

44


3. PROPERTY PLANT AND EQUIPMENT

GROUP2010

---------------------------------------------------------------------------------------- At Valuation/Cost ------------------------------------------------------------------------------------------

Reclassified toAt non-current assets At

1 January Additions Disposals Written off held for sale Reclassification 31 DecemberRM RM RM RM RM RM RM

At valuation :Freehold land 46,901,273 - (1,182,000) - (2,310,000) - 43,409,273 Long-term leasehold land 5,500,000 - - - - - 5,500,000 Short-term leasehold land 4,309,435 - - - (775,568) - 3,533,867 Buildings 18,296,340 20,000 - (3,930,000) (970,000) - 13,416,340 Farm development 70,847,039 - (310,398) - (4,540,000) 94,965 66,091,606

At cost :Long-term leasehold land 1,991,314 - - - - - 1,991,314 Buildings 2,043,286 - - - - 225,500 2,268,786 Farm development 21,153,754 262,860 (66,702) (241,546) (1,206,777) (94,965) 19,806,624 Plant and machinery 32,080,744 314,317 (505,705) (994,673) (708,395) 500,000 30,686,288 Equipment, furniture and fittings 29,954,371 1,856,581 (91,164) (250,118) (448,198) - 31,021,472 Motor vehicles 14,404,762 194,151 (376,621) (7,800) - - 14,214,492 Capital expenditure in progress 2,070,769 1,070,718 (488,470) - - (725,500) 1,927,517

249,553,087 3,718,627 (3,021,060) (5,424,137) (10,958,938) - 233,867,579

------------------------------------------------------------------------------- Accumulated depreciation ----------------------------------------------------------------------------------

Reclassified toAt Current non-current assets At

1 January charge Disposals Written off held for sale Reclassification 31 DecemberRM RM RM RM RM RM RM

At valuation :Freehold land - - - - - - - Long-term leasehold land 1,153,813 95,346 - - - - 1,249,159 Short-term leasehold land 868,975 193,547 - - (93,066) - 969,456 Buildings 737,834 344,061 - (216,150) (59,059) (16,500) 790,186 Farm development 13,726,632 5,423,498 (179,868) - (914,000) - 18,056,262

At cost :Long-term leasehold land 70,662 34,927 - - - - 105,589 Buildings 46,403 59,400 - - - 16,500 122,303 Farm development 7,583,992 2,707,681 (43,486) (159,017) (276,006) - 9,813,164 Plant and machinery 17,351,108 2,025,277 (361,177) (640,212) (343,936) - 18,031,060 Equipment, furniture and fittings 15,807,073 2,914,606 (32,768) (160,034) (118,379) - 18,410,498 Motor vehicles 11,867,885 1,128,263 (328,076) (7,624) - - 12,660,448

69,214,377 14,926,606 (945,375) (1,183,037) (1,804,446) - 80,208,125

Carryingamount at

31 DecemberRM

At valuation :Freehold land 43,409,273 Long-term leasehold land 4,250,841 Short-term leasehold land 2,564,411 Buildings 12,626,154 Farm development 48,035,344

At cost :Long-term leasehold land 1,885,725 Buildings 2,146,483 Farm development 9,993,460 Plant and machinery 12,655,228 Equipment, furniture and fittings 12,610,974 Motor vehicles 1,554,044 Capital expenditure in progress 1,927,517

153,659,454


Annual Report 2010

45


3. PROPERTY, PLANT AND EQUIPMENT (cont’d)

GROUP2009

------------------------------------------------------------------------------------- At Valuation/Cost -------------------------------------------------------------------------------------At Effects of

1 January adopting the Reclassified toas previously amendment to non-current assets At

stated FRS 117 As restated Additions Disposals Written off held for sale Reclassification 31 DecemberRM RM RM RM RM RM RM RM RM

At valuation :Freehold land 53,723,673 - 53,723,673 1,309,463* (2,690,000) - (5,441,863) - 46,901,273 Long-term leasehold land - 5,500,000 5,500,000 - - - - - 5,500,000 Short-term leasehold land - 4,309,435 4,309,435 - - - - - 4,309,435 Buildings 18,404,424 - 18,404,424 - - (108,084) - - 18,296,340 Farm development 69,554,135 - 69,554,135 1,796,000* - - (503,096) - 70,847,039

At cost :Long-term leasehold land - 1,928,092 1,928,092 1,526,042 (1,462,820) - - - 1,991,314 Buildings 1,827,586 - 1,827,586 215,700 - - - - 2,043,286 Farm development 20,402,252 - 20,402,252 738,739 - - - 12,763 21,153,754 Plant and machinery 28,945,312 - 28,945,312 2,694,657 (17,295) - - 458,070 32,080,744 Equipment, furniture and fittings 27,209,944 - 27,209,944 2,120,231 (55,639) (6,560) - 686,395 29,954,371 Motor vehicles 14,384,204 - 14,384,204 279,323 (621,765) - - 363,000 14,404,762 Capital expenditure in progress 2,978,699 - 2,978,699 612,298 - - - (1,520,228) 2,070,769

237,430,229 11,737,527 249,167,756 11,292,453 (4,847,519) (114,644) (5,944,959) - 249,553,087

----------------------------------------------------------------------------- Accumulated depreciation -----------------------------------------------------------------------------At Effects of

1 January adopting the Reclassified toas previously amendment to Current non-current assets At

stated FRS 117 As restated charge Disposals Written off held for sale Reclassification 31 DecemberRM RM RM RM RM RM RM RM RM

At valuation :Freehold land - - - - - - - - - Long-term leasehold land - 1,058,467 1,058,467 95,346 - - - - 1,153,813 Short-term leasehold land - 675,429 675,429 193,546 - - - - 868,975 Buildings 395,737 - 395,737 358,260 - (16,163) - - 737,834 Farm development 6,916,488 - 6,916,488 6,985,196 - - (175,052) - 13,726,632

At cost :Long-term leasehold land - 36,906 36,906 33,756 - - - - 70,662 Buildings 9,172 - 9,172 37,231 - - - - 46,403 Farm development 5,865,107 - 5,865,107 1,718,885 - - - - 7,583,992 Plant and machinery 15,367,613 - 15,367,613 1,986,138 (2,643) - - - 17,351,108 Equipment, furniture and fittings 13,235,010 - 13,235,010 2,589,183 (15,531) (1,589) - - 15,807,073 Motor vehicles 10,752,195 - 10,752,195 1,472,934 (357,244) - - - 11,867,885 Capital expenditure in progress - - - - - - - - -

52,541,322 1,770,802 54,312,124 15,470,475 (375,418) (17,752) (175,052) - 69,214,377

Carryingamount at

31 DecemberRM

At valuation :Freehold land 46,901,273 Long-term leasehold land 4,346,187 Short-term leasehold land 3,440,460 Buildings 17,558,506 Farm development 57,120,407

At cost :Long-term leasehold land 1,920,652 Buildings 1,996,883 Farm development 13,569,762 Plant and machinery 14,729,636 Equipment, furniture and fittings 14,147,298 Motor vehicles 2,536,877 Capital expenditure in progress 2,070,769

180,338,710

* This is in respect of acquisition in exchange for settlement of debt by a receivable.


Annual Report 2010

46


3. PROPERTY, PLANT AND EQUIPMENT (cont'd)

(i) The valuation of the freehold land, long-term leasehold land, short-term leasehold land, buildings and farm development was updated on 1 September 2007 by CH Williams Talhar & Wong Sdn. Bhd., an independent professional valuer, based on the open market value basis. The updated valuation figures were approved by the directors on 31 December 2007 and incorporated into the books.

The historical cost and net carrying amount of properties stated at valuation are as follows :

Long-term Short-term

Freehold leasehold leasehold Farm

land land land Buildings Development Total

RM RM RM RM RM RM

GROUP

2010

Cost 34,221,829 2,737,901 1,886,503 12,313,131 54,683,706 105,843,070

Accumulated

depreciation - (707,365) (731,564) (1,997,839) (34,819,874) (38,256,642)

Carrying amount 34,221,829 2,030,536 1,154,939 10,315,292 19,863,832 67,586,428

2009

Cost 39,367,104 2,737,901 1,886,503 17,073,806 59,528,147 120,593,461

Accumulated

depreci ation - (660,749) (651,111) (2,599,276) (36,020,148) (39,931,284)

Carrying amount 39,367,104 2,077,152 1,235,392 14,474,530 23,507,999 80,662,177

(ii) The carrying amount of properties charged to licensed banks as securities for banking facilities granted to certain subsidiaries are as follows :

GROUP

2010 2009

RM RM

At valuation :

Freehold land 26,918,892 25,911,204

Long-term leasehold land 4,250,841 -

Short-term leasehold land 2,182,195 1,966,289

33,351,928 27,877,493

(iii) Included in the carrying amount are the following property, plant and equipment being acquired under finance lease liabilities :

GROUP

2010 2009

RM RM

Plant and machinery 1,014,010 1,148,368

Motor vehicles 218,880 485,338

Equipment, furniture and fittings 8,154,887 9,291,829

9,387,777 10,925,535


Annual Report 2010

47


3. PROPERTY, PLANT AND EQUIPMENT (cont'd)

(iv) During the financial year, the Group decided to ceased its chicken trading and processing business in Selangor, Malaysia due to recurring operating losses suffered. As a result, the Group decided to write-off the factory building which was erected on a leasehold land not owned by the Group together with the equipment, furniture and fittings since these assets can no longer generate a return to the Group and that there were no other use for the building. The total carrying amount written-off amounted to RM4,112,091.

4. INVESTMENT PROPERTIES

GROUP

2010 2009

RM RM

At fair value :

At 1 January/31 December 125,000 125,000

Analysed as :

Residential apartment 125,000 125,000 The above investment properties are held to earn rental income and for capital appreciation.

The amount recognised in the income statement are as follows :

GROUP

2010 2009

RM RM

Rental income from investment properties 5,500 2,500

Direct operating expenses arising from investment properties that generated rental income during the year 2,271 2,096

The fair value of investment properties is derived based on directors’ valuation by reference to market evidence of transaction prices for

similar properties.

5. INVESTMENT IN SUBSIDIARIES

COMPANY

2010 2009

RM RM

Unquoted shares, at cost 39,188,963 39,188,963


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5. INVESTMENT IN SUBSIDIARIES (cont'd)

Details of the subsidiaries which are all incorporated in Malaysia are as follows :

Name of CompanyEffective Equity

Interest Principal Activities2010 2009

Direct

PW Nutrifarm Corporation Sdn. Bhd. 100% 100% Broiler farming and investment holding.

PW Nutrifeed Sdn. Bhd. 100% 100% Manufacturing and selling of broiler feeds.

Everay Agritech Sdn. Bhd. 100% 100% Trading of agriculture products.

Indirect - held through PW Nutrifarm Corporation Sdn. Bhd.

PinWee Breeder Farm (Malacca) Sdn. Bhd. 100% 75% Farming of day-old chicks.

PinWee Food Processing Sdn. Bhd. 100% 100% Slaughtering and processing of chicken. However, the company has not commenced operations as at reporting date.

PinWee Chicken Trading Sdn. Bhd. 100% 100% Trading and processing of chicken. The company ceased its operations

during the financial year.

Indirect - held through PW Nutrifarm Corporation Sdn. Bhd.

PW Nutrifarm Venture Sdn. Bhd. 100% 100% Chicken processing, broiler farming, dealing in poultry, animal feed and veterinary products. For the financial year, the company did not undertake any of these activities except for dealing of animal feeds.

PW Breeder Farm (Taiping) Sdn. Bhd. 100% 100% Farming of day-old chicks.

PinWee Breeder Farms Sdn Bhd. 100% 100% Dormant.

PinWee Layer Farm Sdn. Bhd. 100% 100% Dormant.

PW Nutri Processing Sdn. Bhd. 100% 100% Trading and processing of chicken and ducks. The company ceased its chicken processing activity during the financial year.

PW Properties Sdn. Bhd. 100% 100% Poultry farming.

PW Tyres & Auto Service Sdn. Bhd. 80% 80% Trading of tyres, all kinds of motor accessories, spare parts, servicing, maintenance and repairs for both private and commercial vehicles.

Indirect - held through PW Nutrifeed Sdn. Bhd.

PW Livestock (M) Sdn. Bhd. 100% 100% Rearing and selling of cattles. However the Company ceased its operations during the financial year.

PinWee Duck Farms Sdn. Bhd. 100% 100% Rearing and processing of ducks.

Indirect – held through PW Properties Sdn. Bhd.

PW Tyres & Auto Service Sdn. Bhd. 20% 20% Trading of tyres, all kinds of motor accessories, spare parts, servicing, maintenance and repair for both private and commercial vehicles.

2010

On 30 April 2010, the Company via its wholly-owned subsidiary, PW Nutrifarm Corporation Sdn. Bhd. increased its equity interest in PinWee Breeder Farm (Malacca) Sdn. Bhd. through acquisition of an additional 497,492 ordinary shares of RM1.00 each for a total cash consideration of RM1,502,622. Resulting from the acquisition, PinWee Breeder Farm (Malacca) Sdn. Bhd. became a wholly-owned subsidiary of the Company.


Annual Report 2010

49


6. INTANGIBLE ASSETS

GROUP

2010 2009

RM RM

Goodwill

At 1 January 5,186,163 5,186,163

Arising from acquisition of additional equity interests in an existing subsidiary 66,100 -

Written off (11,694) -

At 31 December 5,240,569 5,186,163 The goodwill on consolidation arose from the acquisition of certain subsidiaries and have been allocated to its livestock farming segment as

the cash-generating unit (CGU).

For annual impairment testing purposes, the recoverable amount of the CGU is determined based on its value-in-use, which applies a discounted cash flow model using cash flow projections based on financial budget and projections approved by management.

No impairment loss was required for the goodwill as its recoverable amount is in excess of its carrying amount.

The key assumptions on which the management has based on for the computation of value-in-use are as follows :

(i) Cash flow projections and growth rate

The three-year cash flow projections are based on the most recent budget approved by the management and extrapolated using a steady growth rate for the subsequent years.

(ii) Discount rate

The discount rate of 6.30% is applied to the cash flow projections.

The values assigned to the key assumptions represent management’s assessment of future trends in the industry.

The above estimates are particularly sensitive in the following areas :

(i) A 10% decrease in future planned revenues would have resulted in an impairment loss of approximately RM139,500.

(ii) An increase of 1% in the discount rate used would not result in any impairment loss.

7. INVENTORIES

GROUP

2010 2009

RM RM

At cost :

Consumables 668,510 705,473

Finished goods 827,430 1,991,873

Livestock 29,436,827 30,626,326

Parent stock 3,946,118 5,405,834

Raw materials 31,252,050 21,952,541

Trading goods - 287,712

66,130,935 60,969,759


Annual Report 2010

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7. INVENTORIES (cont'd) Included in the parent stock and livestock are the following expenses :

2010 2009

RM RM

Depreciation 820,556 607,928

Rental of land - 6,674

Staff costs 586,193 386,326

8. TRADE RECEIVABLES

GROUP

2010 2009

RM RM

Trade receivables 32,110,264 35,156,318

Less : Allowance for impairment

At 1 January (11,010,337) (8,267,361)

Current year (993,161) (2,964,464)

Doubtful debts recovered 15,700 162,660

Written off 6,933,339 58,828

At 31 December (5,054,459) (11,010,337)

27,055,805 24,145,981

Included in trade receivables is an amount of RM6,316,958 (2009 : RM3,614,433) which is interest bearing at 7.00% to 7.80% (2009 : 7.00% to 8.25%) per annum.

Trade receivables amounting to RM1,261,820 (2009 : RM Nil) have pledged their properties to a subsidiary of the Group as security for their outstanding balance.

Trade receivables are generally on 7 to 90 days (2009 : 7 to 90 days) credit terms. They are recognised at their original invoice amounts which

represent their fair values on initial recognition.

9. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Other receivables 2,476,762 8,767,210 3,352 -

Refundable deposits 303,963 534,745 - -

Prepayments 1,426,599 1,545,716 - -

4,207,324 10,847,671 3,352 -


Annual Report 2010

51


9. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (cont'd)

As at the report date, there was no indication that the other receivables and deposits are not recoverable.

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Analysis by currencies:

Ringgit Malaysia 4,207,324 7,233,353 3,352 -

US Dollar - 3,614,318 - -

4,207,324 10,847,671 3,352 - 10. AMOUNT DUE FROM SUBSIDIARIES

COMPANY The amount due from subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand.

11. FIXED DEPOSIT WITH A LICENSED BANK

GROUP The fixed deposit is pledged to a licensed bank for bank guarantee facilities granted to a subsidiary.

The effective interest rate of fixed deposit as at the end of the reporting period is 2.60% (2009 : 2.50%) per annum. The maturity of the fixed deposit is 12 months (2009: 12 months).

12. NON-CURRENT ASSETS HELD FOR SALE

GROUP

2010 2009

RM RM

At 1 January 6,769,907 -

Reclassified from property, plant and equipment 10,994,492 5,769,907

Reverse to property, plant and equipment (1,840,000)^ -

Addition during the year - 1,000,000*

Disposed during the year (4,429,907) -

At 31 December 11,494,492 6,769,907


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12. NON-CURRENT ASSETS HELD FOR SALE (cont'd)

GROUP

2010 2009

RM RM

Represented by :

Freehold land 4,620,000 6,441,863#

Short-term leasehold land and building 1,593,443 -

Plant and machinery 395,469 -

Farm development 4,586,771 328,044

Equipment, furniture and fixtures 298,809 -

11,494,492 6,769,907

Subsequent to the end of the reporting period, certain subsidiaries of the Group have entered into sale and purchase agreements with third parties to dispose of certain properties. These transactions are due to be completed in the next financial year.

^ This is in relation to freehold land of the Group which have been reclassified to property, plant and equipment as the proposed sale was unsuccessful due to disagreement in selling price. Arising from this, the Group decided to retain the freehold land for its livestock farming business.

* This is in respect of acquisition in exchange for settlement of debt by a receivable.

# The freehold land with carrying amount of RM891,861 was pledged to licensed banks for banking facilities granted to certain subsidiaries.

13. SHARE CAPITAL

Number of ordinary

shares of RM1 each Amount

2010 2009 2010 2009

RM RM

Authorised :

At 1 January/ 31 December 100,000,000 100,000,000 100,000,000 100,000,000

Issued and fully paid :

At 1 January/ 31 December 60,911,250 60,911,250 60,911,250 60,911,250

EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

The Company’s ESOS is governed by the by-law approved by the shareholders at an Extraordinary General Meeting held on 18 November 2003. The ESOS will be in force for a period of five years expiring on 14 January 2009. The Company has extended the existing ESOS for another 5 years until 14 January 2014.

The salient features of the ESOS are as follows :

(i) the maximum number of new shares of the Company which may be subscribed on the exercise of options granted under the ESOS shall not exceed ten per centum (10%) of the issued and paid-up share capital of the Company or such maximum percentages as allowable by any relevant authorities at any point of time during the existence of the ESOS,


Annual Report 2010

53


13. SHARE CAPITAL (cont'd)

EMPLOYEE SHARE OPTION SCHEME (“ESOS”) (cont'd)

(ii) any employee (including Executive Directors) shall be eligible to participate in the ESOS if, as at the date of offer, the employee is at least eighteen (18) years of age or above and who is a Malaysian citizen; is employed full time by and on the payroll of any company in the Group (provided that the subsidiaries are not dormant); and is confirmed in writing as a full time employee of any company in the Group (provided that the subsidiaries are not dormant) for at least one (1) year immediately preceding the date of offer. Eligibility, however, does not confer an eligible employee a claim or right to participate in the ESOS unless an offer has been extended to the eligible employee,

(iii) not more than fifty per centum (50%) (or such percentage as allowable by the relevant authorities) of the shares available under the ESOS should be allocated, in aggregate, to directors and senior management of the Group (provided that the subsidiaries are not dormant). In addition, not more than ten per centum (10%) (or such percentage as allowable by the relevant authorities) of the shares available under the ESOS should be allocated to any individual director or employee who, either singly or collectively through his/her associates, holds twenty per centum (20%) or more in the issued and paid-up share capital of the Company,

(iv) the ESOS shall continue to be in force for a period of five (5) years from the date of confirmation letter to the Securities Commission. However, the ESOS may, at the discretion of the Option Committee, be extended or renewed (as the case may be) provided always that the initial ESOS period stipulated above and such extension of the ESOS made pursuant to the By-Laws shall not in aggregate exceed a duration of ten (10) years. For the avoidance of doubt, no further sanction, approval or authorisation of the shareholders of the Company in a general meeting is required for any such extension or renewal (as the case may be),

(v) the price at which the grantee is entitled to subscribe for each new share shall be fixed based on the 5-day weighted average market price of the Company’s shares as quoted on Bursa Malaysia Securities Berhad, at the date of offer with a discount of not more than ten per centum (10%), if deemed appropriate, or such lower or higher limit in accordance with any prevailing guidelines issued by the Securities Commission or any other relevant authorities as amended from time to time, or at the par value of each of the share of the Company, whichever is higher,

(vi) an offer made by the Option Committee to an eligible employee shall be valid for a period of thirty (30) days from the date of offer and shall be accepted within this prescribed period by the eligible employee to whom the offer is made by a written notice to the Option Committee in such form as may be prescribed by the Option Committee of such acceptance accompanied by a payment to the Company of a non-refundable cash consideration of RM1 only for the grant of the option. The day of receipt of such written notice shall constitute the date of acceptance, and

(vii) the new shares shall, upon allotment and issue, rank pari passu in all respects with the existing issued and paid-up shares of the Company except that the new shares shall not be entitled to any dividends, rights, allotments and/or other distribution unless the shares so allotted have been credited into the relevant securities accounts maintained by the Bursa Malaysia Depository Sdn. Bhd. before the entitlement date and will be subject to all the provisions of the Articles of Association of the Company relating to the transfer, transmission or otherwise of the shares of the Company.

As at the end of the reporting period, no options were offered.

14. TREASURY SHARES This amount represents the acquisition cost of treasury shares.

The shareholders of the Company, by resolution passed at the Annual General Meeting held on 30 June 2010, approved the Company’s plan and mandate to authorise the Directors of the Company to buy back its own shares up to 10% of the existing total issued and paid-up share capital.

Of the total 60,911,250 issued and fully paid ordinary shares as at 31 December 2010, 1,133,500 (2009 : 1,133,500) are held as treasury shares by the Company, and accordingly the number of outstanding ordinary shares in issue and fully paid as at that date is therefore 59,777,750 ordinary shares of RM1 each.

Treasury shares have no rights to voting, dividends and participation in other distribution.

15. CAPITAL RESERVE GROUP This is in respect of revaluation surplus net of deferred tax arising from the revaluation of certain freehold land, leasehold land, buildings and

farm development and is non distributable.


Annual Report 2010

54


16. RETAINED PROFIT COMPANY

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay dividends to their shareholders under limited circumstances.

Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2008 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act, 2007.

As at end of the reporting period, the Company has sufficient credit under the 108 balance to frank all of its retained profits if paid out as dividends.

17. BORROWINGS

GROUP

2010 2009

RM RM

Non-current liabilities

Secured

Term loans 2,456,640 3,146,806

Finance lease liabilities 1,537,749 3,043,932

3,994,389 6,190,738

Current liabilities

Secured

Bank overdrafts 4,973,413 6,819,527

Bankers acceptance 26,672,000 20,936,985

Finance lease liabilities 2,420,023 3,243,112

Promissory note 7,363,000 14,744,000

Trust receipts 10,994,922 650,392

Term loans 2,689,772 1,928,657

55,113,130 48,322,673

Unsecured

Bank overdrafts 9,188,237 15,425,178


Trust receipts 5,979,300 4,134,380

44,240,537 55,152,558

99,353,667 103,475,231


Annual Report 2010

55


17. BORROWINGS (cont'd)

The borrowings of the subsidiaries are secured by way of :

(i) legal charges over certain landed properties of certain subsidiaries, (ii) negative pledge over certain assets of certain subsidiaries both present and future, (iii) corporate guarantee of the Company and of a subsidiary, and (iv) facility agreement of the subsidiary.

The unsecured borrowings of the group are secured by corporate guarantee of the Company.

The repayment terms of term loans are as follows :

Term loan Principal Drawdown Repayment terms

RM RM

I 425,000 425,000 96 monthly instalments of RM5,164 each. This loan was fully settled during the year ended 31 December 2010.

II 5,000,000 5,000,000 60 monthly instalments comprising 59 monthly instalments of RM83,333 each and a final instalment of RM83,353.

III 7,200,000 3,340,000 First 12 monthly instalments of RM46,500 each, next 107 monthly instalments of RM92,804 each and a final instalment of RM92,845. This loan was fully settled during the year ended 31 December 2010.

IV 3,800,000 1,010,000 First 12 monthly instalments of RM11,875 each, next 71 monthly instalments of RM59,020 each and a final instalment of RM59,007. This loan was fully settled during the year ended 31 December 2010.

V 2,000,000 2,000,000 60 monthly instalments of RM39,650 each commencing April 2010.

VI 11,000,000 1,438,891 Monthly instalments of RM148,879 over 8 years commencing one month after full drawdown.

A summary of the effective interest rates and the maturities of the borrowings are as follows :

Average More than More than

effective one year and two years

interest rate Within less than and less than

per annum Total one year two years five years

(%) RM RM RM RM

2010

Bank overdrafts 6.30 to 7.80 14,161,650 14,161,650 - -

Bankers acceptance 2.23 to 5.09 55,745,000 55,745,000 - -

Finance lease liabilities :

Minimum lease payments 3.30 to 4.70 4,201,783 2,610,274 1,536,354 55,155

Finance charge (244,011)

Present value of minimum lease payments 3,957,772

Promissory note 4.86 to 4.89 7,363,000 7,363,000 - -

Term loans 6.80 to 7.80 5,146,412 2,689,772 1,339,528 1,117,112

Trust receipts 6.50 to 7.75 16,974,222 16,974,222 -


Annual Report 2010

56


17. BORROWINGS (cont'd)

Average More than More thaneffective one year and two years

interest rate Within less than and less than

per annum Total one year two years five years

(%) RM RM RM RM

2009

Bank overdrafts 6.30 to 7.80 22,244,705 22,244,705 - -Bankers acceptance 2.19 to 4.34 56,529,985 56,529,985 - -Finance lease liabilities :

Minimum lease payments 2.32 to 4.55 6,751,615 3,541,865 2,138,830 1,070,920Finance charge (464,571)

Present value of minimum lease payments 6,287,044

Promissory note 4.05 to 4.10 14,744,000 14,744,000 - -Term loans 3.75 to 6.55 5,075,463 1,928,657 1,966,673 1,180,133Trust receipts 6.80 to 7.75 4,784,772 4,784,772 - -

18. DEFERRED TAX LIABILITIES

GROUP

2010 2009

RM RM

Revaluation surplus

At 1 January 8,936,455 10,369,213

Transfer to profit or loss (1,148,761) (1,420,676)

Realisation upon disposal and write off of properties (94,905) (12,082)

At 31 December 7,692,789 8,936,455

Excess of capital allowances over depreciation on property, plant and equipment

At 1 January 6,018,762 6,060,451

Transfer (to)/from profit or loss (318,973) 647,246

5,699,789 6,707,697

Under/(Over) provision in prior year 97,783 (688,935)

At 31 December 5,797,572 6,018,762

13,490,361 14,955,217

Other temporary difference

At 1 January (484,285) (434,110)

Transfer to profit or loss (480,391) (471,693)

(964,676) (905,803)

Over provision in prior year 471,693 421,518

At 31 December (492,983) (484,285)

12,997,378 14,470,932


Annual Report 2010

57


19. TRADE PAYABLES

GROUP

2010 2009

RM RM

Analysis by currencies :

Ringgit Malaysia 17,094,991 28,331,739

US Dollar 907,332 680,919

18,002,323 29,012,658 Trade payables are non-interest bearing and are generally on 30 to 120 days (2009 : 30 to 120 days) credit terms.

20. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Other payables 3,870,288 4,481,409 35,374 34,941

Accruals 2,799,968 2,292,675 405,350 423,600

Deposit received 6,861 9,861 - -

6,677,117 6,783,945 440,724 458,541

Analysis by currencies :

Ringgit Malaysia 6,677,117 6,782,678 440,724 458,541

Singapore Dollar - 1,267 - -

6,677,117 6,783,945 440,724 458,541

GROUP

Included in other payables is an amount of RM Nil (2009 : RM1,000) due to a director of the Company. It is unsecured, non-interest bearing and is repayable on demand.


Annual Report 2010

58


21. REVENUE

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Sales of goods 262,505,982 248,451,445 - -

Management fee from subsidiaries - - - 348,000

Dividend income - - 1,712,117 -

262,505,982 248,451,445 1,712,117 348,000

22. OTHER INCOME

GROUP

2010 2009

RM RM

Compensation received 272,021 -

Doubtful debts recovered 15,200 152,998

Gain on disposal of long-term leasehold land - 839,322

Gain on disposal of non-current assets held for sale 1,898,314 -

Gain on disposal of property, plant and equipment 134,540 1,313,789

Interest income 356,881 423,596

Realised gain on foreign exchange 34,990 -

Rental income 33,501 26,700

Others 641,222 441,923

3,386,669 3,198,328

23. FINANCE COSTS

GROUP

2010 2009

RM RM

Bank overdrafts 1,466,781 1,540,985


Finance lease liabilities 388,565 364,417

Promissory note 550,195 481,084

Term loans 542,191 197,563

Trust receipts 1,380,934 533,892

6,286,167 5,158,053


Annual Report 2010

59


24. PROFIT BEFORE TAXATION

This is arrived at :

GROUP COMPANY

(Restated)

2010 2009 2010 2009

RM RM RM RM

After charging :

# Audit fee

- current year 115,400 112,500 17,000 15,000

- under provision in prior year 2,000 2,000 - 2,000

# Bad debts 2,476 49,990 - -

# * Depreciation 14,713,978 15,558,460 - -

Directors’ fee

- Non-executive directors 90,000 105,000 90,000 105,000

Directors’ emoluments

- Non-executive directors 26,100 21,100 26,100 21,100

# Impairment loss on trade receivables 993,161 2,964,464 - -

# Interest expense 6,286,187 5,159,144 - -

# Loss on disposal of property, plant and equipment 444,854 40,584 - -

# Property, plant and equipment written off 4,241,100 96,892 - -

Realised loss on foreign exchange - 135,695 - -

Rental of farm 27,350 16,200 - -

** Rental of land and building 6,445 139,133 - -

# Rental of premises 6,750 29,496 - -

#*** Staff costs 11,750,710 13,742,374 106,500 96,500

And crediting :

# Doubtful debts recovered 15,700 162,660 - -

Gain on disposal of non-current assets held for sale 1,898,314 - - -

Gain on disposal of property, plant and equipment 134,540 1,314,789 - -

Gain on disposal of long-term leasehold land - 839,322 - -

Goodwill on consolidation written off 11,694 - - -

Interest income 356,881 423,596 - -

Realised gain on foreign exchange 34,990 - - -

Rental income 33,501 26,700 - -

* Depreciation

- Current charge (Note 3) 14,926,606 15,470,475 - -

- Deferred under inventories (820,556) (607,928) - -

14,106,050 14,862,547 - -

- Realisation of depreciation previously deferred under inventories 607,928 695,913 - -

14,713,978 15,558,460 - -


Annual Report 2010

60


24. PROFIT BEFORE TAXATION (cont'd)

GROUP COMPANY

(Restated)

2010 2009 2010 2009

RM RM RM RM

** Rental of land and building

- Current charge (229) 145,807 - -

- Deferred under inventories - (6,674) - -

(229) 139,133 - -

- Realisation of rental of land and building previously deferred under inventories 6,674 - - -

6,445 139,133 - -

*** Staff costs

- Salaries, allowances and bonus 10,652,429 12,537,126 106,500 96,500

- EPF 1,001,582 1,085,148 - -

- SOCSO 96,699 120,100 - -

11,750,710 13,742,374 106,500 96,500

- Current charge of staff costs 11,950,577 13,751,346 106,500 96,500

- Deferred under inventories (586,193) (386,326) - -

11,364,384 13,365,020 106,500 96,500

- Realisation of staff costs previously deferred under inventories 386,326 377,354 - -

11,750,710 13,742,374 106,500 96,500

Included in the staff costs of the Group and of the Company are the aggregate amount of remuneration received and receivable by directors of the Company and its subsidiaries as shown below :

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Directors’ emoluments

Executive directors of the Company

- Salaries, allowances and bonus 1,546,500 1,431,500 10,500 15,500

- EPF 240,960 226,560 - -

Directors’ fee

Executive directors of the Company 96,000 81,000 96,000 81,000

1,883,460 1,739,060 106,500 96,500

Benefit-in-kind

Executive directors of the Company 32,900 32,900 - -

1,916,360 1,771,960 106,500 96,500


Annual Report 2010

61


24. PROFIT BEFORE TAXATION (cont'd)

# Included herein are the breakdown of the following expenses/(income) categorised as discontinued operations :

GROUP

2010 2009

RM RM

Audit fee 10,000 10,000

Bad debts - 49,990

Depreciation 358,372 524,204

Impairment loss on trade receivables 596,726 625,017

Interest expense - 1,091

Loss/(Gain) on disposal of property, plant and equipment 438,860 (10,000)

Property, plant and equipment written off 4,126,376 4,971

Rental of premises 1,950 8,800

Staff costs 252,952 912,608

Doubtful debts recovered 500 9,662

25. TAXATION

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Continuing operations

Malaysian income tax :

Based on results for the year

- Current tax (2,236,766) (2,258,745) - (16,800)

- Deferred tax relating to origination and reversal of temporary differences 1,968,586 1,254,320 - -

(268,180) (1,004,425) - (16,800)

Over/(Under) provision in prior years

- Current tax (38,560) 135,553 (1,620) -

- Deferred tax (569,476) 267,417 - -

(608,036) 402,970 (1,620) -

Discontinued operations

Malaysian income tax :

Based on results for the year

Deferred tax relating to origination and reversal of temporary differences 74,444 2,885 - -

(801,772) (598,570) (1,620) (16,800)


Annual Report 2010

62


25. TAXATION (cont'd)

The reconciliation of income tax expense of the Group and of the Company is as follows :

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Profit before taxation

- Continuing operations 6,833,046 3,476,923 1,360,490 4,655

- Discontinued operations (5,922,724) (2,791,338) - -

Profit before taxation 910,322 685,585 1,360,490 4,655

Income tax at Malaysian statutory tax rate of 25% (227,580) (171,396) (340,123) (1,164)

Effects of :

- Income not subject to tax 963,448 542,398 428,029 -

- Expenses not deductible for tax purposes (1,057,439) (2,015,368) (76,991) (25,480)

- Utilisation of reinvestment allowance 195,428 460,410 - -

- Movement of deferred tax assets not recognised (1,311,259) (1,250,342) (10,915) 9,844

- Realisation of deferred tax upon disposal and write off of properties 94,905 12,082 - -

- Annual crystallisation of deferred tax on revaluation 1,148,761 1,420,676 - -

(193,736) (1,001,540) - (16,800)

(Over)/Under provision in prior years (608,036) 402,970 (1,620) -

(801,772) (598,570) (1,620) (16,800)

The amount and future availability of unabsorbed tax losses and capital allowances are as follows :

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Unabsorbed tax losses 11,543,075 8,392,135 - -

Unabsorbed capital allowances 12,845,404 13,255,238 - -

The unabsorbed tax losses and capital allowances are available to be carried forward for set off against future assessable income of a nature and amount sufficient for the tax losses and capital allowances to be utilised.

The deferred tax (assets)/liabilities not recognised at reporting period are as follows :

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Property, plant and equipment 1,446,752 1,795,328 - -

Unabsorbed tax losses (2,886,050) (2,099,530) - -

Unabsorbed capital allowances (3,149,555) (3,168,119) - -

(4,588,853) (3,472,321) - -


Annual Report 2010

63


26. DISCONTINUED OPERATIONS

2010 2009

RM RM

Analysis of the results of discontinued operations are as follows :

Revenue 6,848,299 24,038,924

Cost of goods sold (7,178,808) (24,944,453)

Gross loss (330,509) (905,529)

Other income 500 10,662

Administrative expenses (5,592,715) (1,220,373)

Selling and distribution expenses - (675,007)

(5,922,724) (2,790,247)

Finance cost - (1,091)

Loss before taxation (Note 24) (5,922,724) (2,791,338)

Taxation (Note 25) 74,444 2,885

Loss for the year (5,848,280) (2,788,453)

The cash flows attributable to the discontinued operations are as follows :

Operating activities 14,831 (501)

Investing activities 146,406 120,110

Financing activities - (41,011)

161,237 78,598

2010

During the financial year, the Group decided to ceased its chicken trading and processing activities due to recurring operating losses suffered. Accordingly, the results of the said business segment have been separately disclosed under discontinued operations to conform with FRS 5: Non-current Asset Held for Sale and Discontinued Operations.


Annual Report 2010

64


27. EARNINGS PER SHARE

GROUP Basic earnings per share of the Group is calculated by dividing the net profit attributable to equity holders of the parent for the year by the

weighted average number of ordinary shares in issue during the financial year excluding treasury shares as follow :

2010 2009

Profit attributable to equity owners of the parent (RM) 162,392 111,290

Add : Loss from discontinued operations attributable to owners of the parent (RM) 5,848,280 2,788,453

Profit from continuing operations attributable to owners of the parent used in the computation of basic earnings per share (RM) 6,010,672 2,899,743

Weighted average number of ordinary shares of RM1 each 59,777,750 59,777,750

Basic, for profit from continuing operations (Sen) 10.05 4.85

Basic, loss from discontinued operations (Sen) (9.78) (4.66)

Basic, for net profit for the year (Sen) 0.27 0.19 There are no diluted earnings per share as the Company does not have any convertible financial instruments as at the end of the reporting

period.

28. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group’s business segments. No geographical segment information has been presented as the Group’s activities and customers are all based in Malaysia. As at the end of the reporting period, the Group does not have any major customer with revenue equal or more than 10 percent of the Group’s revenue.

The primary format, business segments is based on the Group’s management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The Group is organised based on the following business segments : Business Segments Business activities (1) Livestock farming Breeding of broilers, ducks, day-old chicks and other livestock.

(2) Animal feeds Manufacturing and sale of broiler feeds.

(3) Agriculture products Trading of agriculture products.

(4) Processed chickens and ducks Trading and processing of chickens and ducks. The chicken processing division has been classified discontinued during the financial year.

(5) Others Trading of tyres, motor accessories and spare parts and servicing and repairs of motor vehicles.

(6) Investment holding Investment and the provision of management services.


Annual Report 2010

65


28.

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Annual Report 2010

66


28.

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revi

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s.


Annual Report 2010

67


29. RELATED PARTY DISCLOSURES

COMPANY

2010 2009

RM RM

(i) Related party transactions

Management fee received from subsidiaries - 348,000

Dividend received from a subsidiary 1,712,117 -

(ii) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows :

GROUP COMPANY

2010 2009 2010 2009

RM RM RM RM

Salaries and other short-term employee benefits 2,032,460 1,928,300 222,600 222,600

Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

30. CONTINGENT LIABILITIES (UNSECURED)

COMPANY

2010 2009

Limit Utilised Limit Utilised

RM RM RM RM

Corporate guarantee extended to banks for credit facilities granted to subsidiaries 166,262,860 103,348,056 146,599,484 103,667,486

The corporate guarantees do not have a determinable effect on the terms of the credit facilities due to the financial institutions requiring parent guarantee as a pre-condition for approving the credit facilities granted to the subsidiaries. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiaries. As such, there is no value on the corporate guarantee to be recognised in the financial statements.

31. CAPITAL COMMITMENT

GROUP

2010 2009

RM RM

Contracted and not provided for :

- Property, plant and equipment 1,025,050 3,946,700


Annual Report 2010

68


32. CATEGORIES OF FINANCIAL INSTRUMENTS

The table below provides an analysis of financial instruments categorised as loans and receivables (“L&R”) and other liabilities measured at amortised cost (“AC”).

Carrying

amount L&R AC Others

RM RM RM RM

2010

GROUP

Financial assets

Trade receivables (Note 8) 27,055,805 27,055,805 - -

Other receivables and refundable deposits (Note 9) 2,780,725 2,780,725 - -

Fixed deposit with licensed banks (Note 11) 65,000 65,000 - -

Cash and bank balances 1,961,612 1,961,612 - -

31,863,142 31,863,142 - -

Financial liabilities

Borrowings (Note 17) 103,348,056 - 99,390,284 3,957,772

Trade payables (Note 19) 18,002,323 - 18,002,323 -

Other payables and accruals (Note 20) 6,677,117 - 6,677,117 -

128,027,496 - 124,069,724 3,957,772

COMPANY

Financial assets

Other receivables (Note 9) 3,352 3,352 - -

Amount due from subsidiaries (Note 10) 23,579,810 23,579,810

Cash and bank balances 42,738 42,738 - -

23,625,900 23,625,900 - -

Financial liabilities

Other payables and accruals (Note 20) 440,724 - 440,724 -

Comparative figures have not been presented for 31 December 2009 by virtue of the exemption given in paragraph 44 AA of FRS 7

33. FINANCIAL RISK MANAGEMENT

The Group and the Company are exposed to a variety of financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and interest rate risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative activities.


Annual Report 2010

69

33. FINANCIAL RISK MANAGEMENT (cont'd)

33.1 Credit risk Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group

and the Company. The Group’s exposure to credit risk arises principally from its trade receivables. The Company’s exposure to credit risk arises principally from advances to its subsidiaries and financial guarantees given.

33.1.1 Trade receivables

The Group typically gives its existing customers credit terms that range between 7 to 90 days. In deciding whether credit shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. The Group subjects new customers to credit verification procedures. In addition, debt monitoring procedures are performed on an on-going basis with the result that the Group’s exposure to bad debts is not significant.

The maximum exposure to credit risk arising from trade receivables is represented by the carrying amounts in the statement of financial position.

GROUP

The ageing of trade receivables and accumulated impairment loss of the Group is as follows :

Gross Impairment loss Net

RM RM RM

Not past due 14,835,056 (4,000) 14,831,056

1 to 30 days past due 1,884,494 - 1,884,494

31 to 60 days past due 3,710,549 - 3,710,549

Past due more than 61 days 11,680,165 (5,050,459) 6,629,706

32,110,264 (5,054,459) 27,055,805

Trade receivables that are neither past due nor impaired are creditworthy customers with good payment record with the Group. Total impairment loss relates to customers that have financial difficulties and have defaulted in repayment.

Certain trade receivables have exceeded the credit terms allowed. However no impairment loss is required as these customers have no recent history of default.

GROUP AND COMPANY

The Group and the Company have no significant concentration of credit risk.

33.1.2 Financial guarantees

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The maximum exposure to credit risk is as disclosed in Note 30, representing the outstanding facilities of the said subsidiaries as at the reporting date. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

33.1.3 Intercompany advances

The Company provides advances to its subsidiaries. The Company monitors the results of the subsidiaries regularly.

The maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries.



Annual Report 2010

70


33.2 Liquidity risk

Liquidity risk is the risk the Group will encounter difficulty in meeting financial obligations due to shortage of funds. In managing its exposure to liquidity risk, the Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as and when they fall due.

The Group aim at maintaining a balance of sufficient cash and cash equivalents and flexibility in funding by keeping diverse sources of credit facilities from various financial institutions.

The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based on the undiscounted contractual payments:

Carryingamount

Contractualcash flows

Withinone year

More thanone year and less

thantwo years

More than two years

and less than five

years

RM RM RM RM RM

2010

GROUP

Interest bearing borrowings 103,348,056 104,095,804 99,810,534 3,012,159 1,273,111

Trade payables 18,002,323 18,002,323 18,002,323 - -

Other payables and accruals 6,677,117 6,677,117 6,677,117 - -

128,027,496 128,775,244 124,489,974 3,012,159 1,273,111

COMPANY

Other payables and accruals 440,724 440,724 440,724 - -

33.3 Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s floating rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The interest rate profile of the Group’s and of the Company’s interest-bearing financial instruments based on the carrying amount as at reporting date is as follows :

GROUP

RM

Fixed rate instruments

Financial assets 6,381,958

Financial liabilities 3,957,772

Floating rate instruments

Financial liabilities 99,390,284



Annual Report 2010

71


33.3 Interest rate risk (cont'd)

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

An increase of 25 basis point at the end of the reporting period would have decreased profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

GROUP

RM

Reduce in profit before taxation (147,678)

33.4 Foreign currency risk

The objectives of the Group’s foreign exchange policies are to allow the Group to manage exposures that arise from trading activities effectively within a framework of controls that does not expose the Group to unnecessary foreign exchange risks.

The Group is exposed to foreign currency risk mainly on purchases that are denominated in a currency other than the functional currency of Group. The currency giving rise to this risk is primarily US Dollar (“USD”). The Group’s exposure to foreign currency risk, based on carrying amount as at the end of the reporting period is RM907,332 recorded in its trade payable.

The sensitivity to a reasonably possible change in the foreign currencies exchange rates (against Ringgit Malaysia), with all other variables held constant, of the Group’s profit before taxation. A 10% strengthening of the RM against USD at the end of the reporting period would have increased profit before taxation by RM90,733 and a corresponding decrease would have an equal but opposite effect.

34. CAPITAL MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. The Directors determine and monitor an optimal gearing ratio as follows :

GROUP

2010 2009

RM RM

Total borrowings 103,348,056 109,665,969

Less : Cash and cash equivalents (2,026,612) (1,664,653)

Net debt 101,321,444 108,001,316

Total equity 127,870,251 129,198,223

Gearing ratio 0.79 0.84



Annual Report 2010

72

35. FAIR VALUE OF FINANCIAL INSTRUMENTS

GROUP AND COMPANY The carrying amounts of fixed deposits, cash and bank balances, receivables, payables and borrowings are reasonable approximation of fair

values, either due to their short-term nature or that they are floating rate instruments that re-priced to market interest rates on or near the reporting date.

COMPANY

No disclosure of fair value is made for intercompany loans/advances, as it is not practicable to determine their fair values with sufficient reliability since these balances are repayable on demand.

36. EVENTS AFTER THE REPORTING PERIOD

(i) During the financial year, PinWee Breeder Farms Sdn. Bhd. and PinWee Layer Farm Sdn. Bhd. have applied to the Companies Commission of Malaysia (“CCM”), to strike their name off from the register and on 7 January 2011, the subsidiaries received a letter from CCM that at the expiration of one month from the date thereof, a notice of strike-off will be published in the Government Gazette of Malaysia and thereafter the abovenamed subsidiaries will be struck off from the register accordingly.

(ii) On 31 March 2011, D.B.E Gurney Resources Berhad (“D.B.E”) had issued a total of 45,000,000 ordinary shares of RM0.10 each, representing 6.68% of the entire issued and paid up capital of D.B.E to certain subsidiaries of the Group as settlement of trade-related debt due and payable by subsidiary of D.B.E, namely D.B.E Poultry Sdn Bhd to the said subsidiaries.

On 17 February 2011, the said subsidiaries have collectively entered into a conditional share sale agreement with a third party to dispose of the entire 45,000,000 ordinary shares of RM0.10 each received from D.B.E for a cash consideration of RM4,500,000.

The share sale agreement was completed on 22 April 2011.

37. COMPARATIVE FIGURES

Certain comparative figures have been restated to conform with current year’s presentation as follows :

(i) Effects of adopting new or revised FRS - Amendment to FRS 117 Leases The reclassification has been made retrospectively and the comparative statement of financial position has been restated to conform

with the revised standard :

Previously

reported Reclassification Restated

RM RM RM

Consolidated statement of financial position 31 December 2009

Property, plant and equipment 170,631,411 9,707,299 180,338,710

Prepaid land lease payment 9,707,299 (9,707,299) -

1 January 2009

Property, plant and equipment 184,888,907 9,966,725 194,855,632

Prepaid land lease payment 9,966,725 (9,966,725) -



Annual Report 2010

73

37. COMPARATIVES FIGURES (cont'd)

(ii) Effects of change in accounting treatment on revaluation surplus as discussed in Note 2.1 :

Previously


RM RM RM

Consolidated statement of changes in equity 31 December 2009

Capital reserve 27,221,030 (6,450,535) 20,770,495


1 January 2009

Capital reserve 27,646,974 (2,903,736) 24,743,238


(iii) In the previous year, certain administrative expenses have been included under cost of sales in the consolidated statement of comprehensive income. As these expenses are not related to production overheads, they are now reclassified to administrative expenses to conform with the current year’s presentation as follows :

Previously


RM RM RM

Consolidated statement of comprehensive income 31 December 2009

Cost of sales* 250,083,510 (3,656,523) 246,426,987

Administrative expenses* 17,567,875 3,656,523 21,224,398 * For continuing operations and discontinued operations.



Annual Report 2010

74

DISCLOSURE OF REALISED AND UNREALISED PROFITS

With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis in the annual audited financial statements.

The breakdown of retained profits as at the reporting date has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants are as follows :

GROUP COMPANY

RM RM

2010

Total retained profits of the Company and its subsidiaries :

- Realised 91,985,985 1,350,165

- Unrealised (12,997,378) -

78,988,607 1,350,165

Less : Consolidation adjustments (29,509,238) -

Total retained profits as per statements of financial position 49,479,369 1,350,165


Annual Report 2010

75

Shareholdings Statisticsas at 9 May 2011

Authorised Share Capital : RM100,000,000.00

Issued and fully paid-up Share Capital : RM60,911,250.00

Class of Shares : Ordinary shares of RM1.00 each

Voting Rights : One vote per RM1.00 share

LIST OF SUBSTANTIAL SHAREHOLDERS OF THE COMPANY

Name Direct % Deemed %

Dato’ Siah Gim Eng 9,719,215 16.26 15,540,548 (i) 26.00

Datin Law Hooi Lean 7,961,798 13.32 17,297,965 (ii) 28.94

SL Gold Sdn Bhd 7,578,750 12.68 - -

Tropical Consolidated Corporation Sdn. Bhd. 6,090,033 10.19 - -

TSY Asset Management Sdn. Bhd. - - 6,090,033 (iii) 10.19

Dato’ Tan Ah Bah @ Tan Boon Pin - - 6,090,033 (iv) 10.19

Notes: -

(i) Deemed interested by virtue of the shareholdings held by his wife and his major shareholdings in SL Gold Sdn Bhd

(ii) Deemed interested by virtue of the shareholdings held by her husband and her major shareholdings in SL Gold Sdn Bhd

(iii) Deemed interested by virtue of its major shareholdings in Tropical Consolidated Corporation (“TCC”)

(iv) Deemed interested by virtue of his major shareholdings in TSY Asset Management Sdn. Bhd., a major shareholder in TCC and the

shareholdings of his son and siblings in TCC

DIRECTORS’ SHAREHOLDINGS IN THE COMPANY

Name Direct % Indirect %

Dato’ Siah Gim Eng 9,719,215 16.26 15,540,548 (i) 26.00

Datin Law Hooi Lean 7,961,798 13.32 17,297,965 (ii) 28.94

Boay Goey Gnoh - - - -

Chee Wai Hong 605,878 1.01 - -

Ong Kim Nam 7,500 0.01 - -

Shamsuddin bin Mohd Salleh - - - -

Notes: -

(i) Deemed interested by virtue of the shareholdings held by his wife and his major shareholdings in SL Gold Sdn Bhd

(ii) Deemed interested by virtue of the shareholdings held by her husband and her major shareholdings in SL Gold Sdn Bhd


Annual Report 2010

76

Shareholdings Statisticsas at 9 May 2011 (Cont’d)

DISTRIBUTION SCHEDULE OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders % No. of Shares %

Less than 100 193 10.03 9,232 0.02

100 to 1,000 166 8.62 116,025 0.19

1,001 to 10,000 1,210 62.86 4,370,514 7.18

10,001 to 100,000 310 16.10 8,857,157 14.54

100,001 to less than 5% 40 2.08 20,066,497 32.94

5% and above 6 0.31 27,491,825 45.13

TOTAL 1,925 100.00 60,911,250 1 00.00

LIST OF THIRTY (30) LARGEST SHAREHOLDERS

NameNo. of

Shares Held%

1. SL Gold Sdn. Bhd. 6,456,850 10.60

2. Tropical Consolidated Corporation Sdn. Bhd. 6,090,033 10.00

3. Siah Gim Eng 3,902,781 6.41

4. Siah Gim Eng 3,902,778 6.41

5. Law Hooi Lean 3,569,692 5.86

6. Law Hooi Lean 3,569,691 5.86

7. Bank Pertanian Malaysia Berhad 2,427,168 3.98

8. Siah Gim Eng 1,902,778 3.12

9. Capital Intel Net Sdn Bhd 1,687,558 2.77

10. Public Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Ang Ee Tan (E-BNM) 1,490,000 2.45

11. Perbadanan Pembangunan Pertanian Negeri Perak 1,305,722 2.14

12. Pinwee Group Bhd - Share Buy-Back Account 1,133,500 1.86

13. SL Gold Sdn. Bhd. 1,121,900 1.84

14. Bumiputera And Technology Venture Capital Sdn. Bhd. 837,158 1.37

15. HDM Nominees (Asing) Sdn. Bhd.

Philip Securities Pte. Ltd. For Mitchell William David 690,100 1.13

16. Yeoh Kean Hua 635,000 1.04

17. Kenanga Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Chee Wai Hong 600,000 0.99

18. Kenanga Nominees (Tempatan) Sdn Bhd

Pledged Securities Account For Law Hooi Lean 543,972 0.89

19. Mayban Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Lee Chong Gee 437,400 0.72

20. Lee Siew Hoon 379,700 0.62

21. Ang Ee Tan 362,700 0.60

22. Tan Moh Kim 292,400 0.48

23. Seah Kean Pin 273,300 0.45

24. Mayban Securities Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Chan Heng Sui (REM110) 273,000 0.45

25. Law Hooi Lean 269,691 0.44

26. Gerald John Richards 257,500 0.42

27. Tan Jin Tuan 257,500 0.42

28. Public Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Foo Siew Foon @ Hoo Siew Foon (E-BNM) 256,700 0.42

29. Ng Ah Boon 242,000 0.40

30. Mayban Nominees (Tempatan) Sdn. Bhd.

Pledged Securities Account For Megat Abdul Munir Bin Megat Abdullah Rafaie (REM 868) 176,250 0.29


Annual Report 2010

77

Notice Of Annual General Meeting

NOTICE IS HEREBY GIVEN that the 14th Annual General Meeting of the Company will be held at Impiana Room, Penang Golf Resort, No. 1687, Jalan Bertam, 13200 Kepala Batas, Seberang Prai Utara, Penang on 28 June 2011 at 2.00 p.m. for the following purposes:

ORDINARY BUSINESS

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2010. (Resolution 1)

2. To re-elect the following Directors who retire in accordance with Article 95 of the Company’s Articles of Association, and being eligible have offered themselves for re-election: -

(a) Datin Law Hooi Lean (Resolution 2) (b) Encik Shamsuddin Bin Mohd, Salleh (Resolution 3) 3. To approve the Directors’ Fees of RM186,000 for the financial year ended 31 December 2010. (R esolution 4) 4. To re-appoint Messrs. Grant Thornton as Auditors of the Company to hold office until the conclusion of the next annual general meeting and

to authorise the Directors to fix their remuneration. (R esolution 5) SPECIAL BUSINESS

(I) To consider and if thought fit, to pass the following Ordinary Resolutions: -

5. AUTHORITY TO ISSUE SHARES AND ALLOT SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965

“THAT pursuant to Section 132D of the Act and the provisions of the Memorandum and Articles of Association of the Company and approval of any relevant governmental and/or regulatory authorities, where such approval is required, the Directors be and are hereby empowered pursuant to Section 132D of the Act, to issue and allot shares in the capital of the Company, from time to time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of the shares issued pursuant to this resolution does not exceed ten percentum (10%) of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion of the next Annual General Meeting (“AGM”) of the Company.” (Resolution 6)

6. PROPOSED RENEWAL OF THE AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES IN ACCORDANCE WITH SECTION

67A OF THE COMPANIES ACT, 1965

“THAT, subject always to the Act, the provisions of the Memorandum and Articles of Association of the Company and approval of any relevant governmental and/or regulatory authorities, where such approval is required, the Directors be and are hereby authorised to utilise an amount not exceeding the total audited share premium and retained profits of the Company as at 31 December 2010 of RM918,539 and RM1,350,165 espectively to purchase such number of ordinary shares of the Company provided the ordinary shares so purchased shall [in aggregate with the treasury shares as defined under Section 67A of the Act (“Treasury Shares”) then still held by the Company] not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company for the time being AND THAT such authority shall commence upon the passing of this resolution until the conclusion of the next AGM of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in a general meeting AND THAT the Directors may cancel the ordinary shares so purchased or to retain same as Treasury Shares and may distribute the Treasury Shares as share dividend or may resell same in a manner they deem fit and expedient as prescribed by the Act and the applicable regulations and guidelines of Bursa Securities and any other relevant authorities for the time being in force.

AND THAT authority be and is hereby given to the Directors to take such steps to implement, finalise and to give effect to the aforesaid transactions with full power to assent to any conditions, modifications, variations and amendments as may be imposed by the relevant authorities and to do all such acts and things and upon such terms and conditions as the Directors may in their discretion deem fit and expedient in the best interest of the Company in accordance with the Act, regulations and guidelines.” (Resolution 7)


Annual Report 2010

78

Notice Of Annual General Meeting (Cont’d)

(II) To consider and if thought fit, to pass the following resolution, with or without any modification, as Special Resolution of the Company: -

7. PROPOSED AMENDMENTS TO ARTICLES OF ASSOCIATION

“THAT Article 155 of the Company’s Articles of Association be deleted in its entirety and be replaced as follow:-

Article 155 – Mode of payment of dividend

Any dividend, interest or other money payable in cash in respect of securities may be paid by cheque or warrant sent through the post directed to the registered address of the holder or paid via electronic transfer of remittance to such account as designed by such holder whose name appear in Record of Depositors. Every such cheque or warrant or electronic transfer shall be made payable to the order of the person to whom it is sent or to such person as the holder entitled to the share in consequence of the death or bankruptcy of the holder may direct and the payment of any such cheque or warrant or electronic transfer shall operate as a good discharge to the Company in respect of the dividend represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged. Every such cheque or warrant or electronic transfer shall be sent at the risk of the person entitled to the money thereby represented.

AND THAT the Directors of the Company be and are hereby authorized to assent to any modifications, variations and/or amendments as may be considered necessary to give full effect to the proposed amendments to the Articles of Association of the Company.” (Resolution 8)

8. To transact any other ordinary business for which due notice has been given.

By Order of the Board

Ch’ng Lay Hoon (MAICSA No.: 0818580)Company Secretary

Penang

Date: 6 June 2011


Annual Report 2010

79

Notes:

I. Appointment of Proxy

1. A member entitled to attend and vote at the above 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 and the provisions of Section 149(1) (a) and (b) of the Act shall not apply to the Company.

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

3. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or notarially certified or office copy of such power or authority, shall be deposited at the registered office of the Company not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

II. Explanatory Notes On Special Businesses

Ordinary Resolution 6 The proposed resolution is in relation to authority to allot shares pursuant to Section 132D of the Act, and if passed, will give a renewed

mandate to the Directors of the Company, from the date of above AGM, authority to issue and allot shares in the Company up to and not exceeding in total ten percentum (10%) of the issued share capital of the Company for the time being, for such purposes as the Directors consider would be in the interest of the Company (“General Mandate”). This General Mandate, unless revoked or varied at a general meeting of the Company, will expire at the conclusion of the next AGM of the Company or the period within which the next AGM of the Company is required by law to be held whichever is the earlier.

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors of the Company at the 13th AGM held on 30 June 2010 and which will lapse at the conclusion of the 14th AGM.

At this juncture, there is no decision to issue new shares. However, should the need arise to issue new shares the General Mandate would avoid any delay and costs in convening a general meeting of the Company to specifically approve such issue of share. If there should be a decision to issue new shares after the General Mandate is obtained, the Company would make an announcement in respect of the purpose and utilization of the proceeds arising from such issue.

Ordinary Resolution 7 The proposed resolution, if passed, will provide the mandate for the Company to buy back its own shares up to a limit 10% of the total issued

and paid-up share capital of the Company. The explanatory notes on Resolution 7 are set out in Circular dated 6 June 2011 accompanying the Annual Report.

Special Resolution 8 The proposed amendments are to update the Articles of Association of the Company to be in line with the implementation of the Electronic

Dividend (“e-Dividend”) and will streamline the Company’s Articles of Association with the provisions of the Act and the Main Market Listing Requirements of Bursa Securities.

Notice Of Annual General Meeting (Cont’d)


Annual Report 2010

80

Name of Directors Standing for Re-election

Pursuant to Article 95 of the Articles of Association(Retirement by Rotation)

• Datin Law Hooi Lean• Encik Shamsuddin Bin Mohd. Salleh

Details of Directors who are standing for re-election in Agenda 2 of the Notice of the 14th Annual General Meeting are set out in the Directors’ Profile on pages 5 and 6 of the Annual Report.

Statement Accompanying Notice Of Annual General MeetingPursuant to Paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia Securities Berhad


Annual Report 2010

81

Additional Compliance Information

1. VARIATION OF RESULTS

The Group achieved a net profit aftr tax of RM108,550 for the financial year ended 31 December 2010 and there is no significant variance in the Group's audited financial results from the unaudited results as previously announced.

2. MATERIAL CONTRACTS

The Company and its subsidiaries involving directors and substantial shareholders have not entered into any material contracts (not being contracts entered into in the ordinary course of business of the Group) during the financial year ended 31 December 2010.

3. REVALUATION POLICY ON LANDED PROPERTIES

The landed properties are stated as revalued amount, which is the fair value at the date of revaluation less accumulated impairment losses. Fair value is determined by market based evidence appraisal that is undertaken by external independent professional qualified valuers. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued landed properties does not differ materially from that which would be determined using fair values at the balance sheet date. Surplus arising on revaluation are credited to asset revaluation reserve. Any deficit arising thereof is charged against the revaluation reserve from the same assets.

The policy for the recognition and measurement of impairment losses is in accordance with the accounting policy.

4. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE NATURE OR TRADING NATURE

The Company does not have any recurring related party transaction of revenue nature or trading nature for the financial year ended 31 December 2010.

5. SHARE BUY-BACK

The Company had, on 19 June 2006, obtained its shareholders’ approval to purchase up to 10% of the issued and paid-up ordinary shares capital of the Company.

During the financial year ended 31 December 2010, the Company did not repurchase any of the Company’s ordinary shares. All purchased

shares as at todate are held as treasury shares and none of the treasury shares have been resale or cancelled during the financial year ended 31 December 2010.

As at the date of the financial year, the total number of treasury shares retained and held by the Company was 1,133,500 ordinary shares of RM1.00 per share.

6. NON-AUDIT FEES

The amount of non-audit fees paid to the external auditors, Messrs Grant Thornton, by the Company for the financial year ended 31 December 2010 amounted to RM2,100.00.

7. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

The Company had on 18 November 2003 obtained approval from the Securities Commission and the shareholders through an Extraordinary General Meeting respectively to establish an Employee Share Option Scheme (“ESOS”) for a duration of five years expiring on 14 January 2009. The Company has extended the existing ESOS for another 5 years until 14 January 2014 and is governed by the bye-laws.

There were no options being offered during the financial year ended 31 December 2010.


Annual Report 2010

82

List Of Material Properties Of The GroupAs At 31 December 2010

Location / Address DescriptionExisting Use

Tenure Date of Valuation / Date of Purchase

Land Area Build-up Area / Age of Building

Carryingamount

31/12/2010

HS(D) 694 PT67 Mukim 13, Industrial Leasehold 1-Sep-2007 5.874 acres 4,250,841 Seberang Perai Tengah, land ExpiringPenang on 11.6.2055

(60 years)Plot 31 (Factory) erected on 1 Block 3-storey 18,248 sq.m. / 9,359,654 HS (D) 694 PT 67 Mukim 13, Office Building, 14 years Seberang Perai Tengah, 1 Feedmilling PlantPenang and Warehouse

Plot 127, Jln Perindustrian Bkt Minyak 7, Industrial Land Leasehold 1-Sep-2007 / 3.529 acres 1,798,511 Tmn Perindustrian Bkt Minyak, Expiring 14-Apr-200314100 Bkt Minyak, S.P.T, Penang on 14.4.2063

(60 years)

1 Block 2-storey 1-Sep-2007 / 3,813 sq.m. / 4,885,040 Office Building 1-Nov-2006 5 years

Geran Mukim No. 53, Lot No. 78, Vacant Land Freehold 1-Sep-2007/ 0.877 acresMukim 6, Daerah Seberang Perai for future 8-Jan-2007Selatan, Pulau Pinang development





36.153 acres 7,900,000Geran Mukim No. 93, Lot No. 279, Vacant Land Freehold 1-Sep-2007/ 0.638 acresMukim 6, Daerah Seberang Perai for future 8-Jan-2007Selatan, Pulau Pinang development

Geran Mukim No. 59, Lot No. 274, Land with Freehold 1-Sep-2007/ 0.971 acresMukim 6, Daerah Seberang Perai Poultry Farm 8-Jan-2007Selatan, Pulau Pinang



Geran No. 51891, Lot No. 271, Land with Freehold 1-Sep-2007/ 17.819 acresMukim 6, Daerah Seberang Perai Poultry Farm 8-Jan-2007Selatan, Pulau Pinang


Annual Report 2010

83

Location / Address DescriptionExisting Use

Tenure Date of Valuation / Date of Purchase

Land Area Build-up Area / Age of Building

Carryingamount

31/12/2010

Lot 60, 61 Geran Mukim No.GM 3944, 4293 Land with Freehold 1-Sep-2007/ 70.287 acres 39,821 sq.m. 4,120,000 Mukim Ayer Puteh, Daerah Pendang, Kedah Cattle Farm 29-Nov-2005

Lot 6378, 6379, Geran No 42500, 42501 Land with Poutry Freehold 14-Jun-04 95.982 acres 26,760 sq.m. 3,000,000 Mukim Hulu Selama, Perak Breeding Farm

GM 519 Lot No. 571, Land with Freehold 1-Sep-2007 32.492 acres 22,650 sq.m 2,830,000 Geran 16962 Lot 572, Poultry FarmGeran 43767 Lot 573,Mukim 16, Seberang Perai Tengah,Penang

PM No. 1114 Lot No. 2413, Land with Leasehold 1-Sep-2007 / 31.773 acres 25,659 sq.m. 1,834,470 PM No. 1115 Lot No. 2414, Poultry Expiring 5-Dec-2002PM No. 1090 Lot No. 2415, Breeding on 29.11.2024PM No. 1116 Lot No. 2368, Farm (58 years)PM No. 1117 Lot No. 2369, PM No. 1118 Lot No. 2370, Mukim Machap, Daerah Alor Gajah,Melaka

GM841 Lot No 407, GM 842 Land with Freehold 1-Sep-2007 11.568 acres 11,965 sq.m. 1,685,000 Lot 408, Mukim 20, Poultry FarmSeberang Perai Tengah,Penang

GM 453, Lot No 1996 Land with Freehold 1-Sep-2007/ 43.769 acres 17,973 sq.m. 1,520,000 GM 454, Lot No 1992 Poultry 22-Mar-1995GM 455, Lot No 1993 BreedingGM 456, Lot No 2263 FarmGM 457, Lot No 2264GM 458, Lot No 2388GM 598, Lot No 654GM 599, Lot No 656GM 600, Lot No 657EMR 4824, Lot No 667EMR 4825, Lot No 666EMR 4826, Lot No 661EMR 4827, Lot No 1938Mukim Bukit Gantang, District of Larutand Matang, Perak

Lot 2628, 2647 HSD 28259,28275 Land with Freehold 1-Sep-2007 10.192 acres 4,652 sq.m. 1,440,000 Mukim 11, Seberang Perai Selatan Poultry Farm

List Of Material Properties Of The GroupAs At 31 December 2010 (Cont’d)


Annual Report 2010

84

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Annual Report 2010

Please indicate with “√” on the spaces provided on how you wish your votes to be cast. Unless otherwise instructed, your proxy may vote as he thinks fit.

Signed this day of 2011.

(Signature)

NOTES:

1. A member entitled to attend and vote at the above 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 and the provisions of Section 149(1) (a) and (b) of the Act shall not apply to the Company.

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

3. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or notarially certified or office copy of such power or authority, shall be deposited at the registered office of the Company at Suite 12-A, Level 12, Menara Northam, No. 55, Jalan Sultan Ahmad Shah, 10050 Penang, not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

I/We,(BLOCK LETTERS)

of

being a member/members of the above-named company hereby appoint

of

or failing him

of as my/our proxy to vote for me/us on my/our behalf at the 14th Annual General Meeting of the Company, to be held at Impiana Room, Penang Golf Resort, No. 1687, Jalan Bertam, 13200 Kepala Batas, Seberang Prai Utara, Penang on 28 June 2011 at 2.00 p.m. and any adjournment thereof.

Resolution

1. To receive and adopt the Audited Financial Statements

2. To re-elect Datin Law Hooi Lean as Director

3. To re-elect Encik Shamsuddin Bin Mohd. Salleh as Director

4. To approve payment of Directors’ Fees

5. To re-appoint Auditors

6. To empower Directors to issue and allot shares pursuant to Section 132D of the Companies Act 1965

7. To empower Directors for the purchase of Company’s own shares of up to 10% of total issued and paid-up capital

8. To approve the amendments to the Articles of Association

For Against

No. of Shares held

Proxy Form

The Company Secretary


SUITE 12-A LEVEL 12, MENARA NORTHAM

NO. 55 JALAN SULTAN AHMAD SHAH

10050 PENANG

stamp

Please fold across the line and close

Please fold across the line and close

PW CONSOLIDATED BHD (420049-H)

Head Office

Plot 127, Jalan Perindustrian Bukit Minyak 7,

Taman Perindustrian Bukit Minyak,

14100 Bukit Mertajam, S.P.T. Penang, Malaysia.

(Nutrifarm) Tel • 6045081088(Generalline)

Fax • 6045023088&5023099

Manufacturing Plant

Plot31,LorongPerindustrianBukitMinyak9,

Taman Perindustrian Bukit Minyak,

14100 Bukit Mertajam, S.P.T. Penang, Malaysia.

(Nutrifeed) Tel • 6045081099(Generalline)

Fax • 6045081200&5088109

http://www.pwconsolidated.com

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