London Biscuit Ar 2010

Annual Report

2 0 1 0LONDON BISCUITS BERHAD

(72057-H)

Contents

1

2

3 - 4

5 - 6

7 - 10

11 - 17

Corporate Social Responsibility 17

18 - 19

20 - 24

25 - 26

27 - 81

82 - 83

84 - 87

88 - 91

Appendix A

Proxy Form

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Corporate Information

Board of Directors

Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP Datin Sri Lim Yook Lan Non-Independent Non-Executive Chairman Non-Independent Non-Executive Director

Dato’ Sri Liew Yew Chung, SSAP, DIMP Dato’ Liew Yew Cheng, DIMP Group Managing Director / Group CEO Non-Independent Non-Executive Director

Ms Liew Yet Mei Dato’ Liew Yet Lee, DIMP Non-Independent Non-Executive Director Non-Independent Non-Executive Director

Dato’ Cheong Siew Kai, DJMK, AMS, JP Mr Huang Yan Teo, PIS, PPNIndependent Non-Executive Director Independent Non-Executive Director

Mr Leslie Looi MengIndependent Non-Executive Director

Audit Committee

Mr Huang Yan Teo, PIS, PPN (CHAIRMAN) Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JPIndependent & Non-Executive Director Non-Independent Non-Executive Chairman

Mr Leslie Looi MengIndependent & Non-Executive Director

Company Secretaries Auditors

Hoh Leong Ching (MAICSA 7006654) Wong Weng Foo & Co (AF: 0829) Chartered AccountantsHoh Chee Mun (MIA 8891)

Registered Address Share Registrars

No 1, Jalan Istimewa 2 Bina Management (M) Sdn Bhd

Taman Perindustrian Desa Cemerlang Lot 10, the Highway Centre

81800 Ulu Tiram Jalan 51/205

Johor Darul Takzim, Malaysia 46050 Petaling Jaya

Tel : 607-861 5288 Selangor Darul Ehsan, Malaysia

Fax : 607-861 5186 Tel : 603-7784 3922

Website : www.londonbiscuits.com.my Fax : 603-7784 1988

Email : [email protected]

Stock Exchange Listing Principal Bankers

Main Market, Bursa Malaysia Securities Berhad HSBC Bank Malaysia Berhad

HSBC Amanah Malaysia Berhad

OCBC Bank (Malaysia) Berhad

Date of Incorporation23 June 1981

2

Khee San Berhad Kinos Food Industries (M) Sdn. Bhd. TPC Plus Berhad

Khee San

Food

Industries

Sdn. Bhd.

Khee San

Marketing

Sdn. Bhd.

Kinos Food

Trading

Sdn. Bhd.

Kim Choaw

Sdn. Bhd.

Teck Ping Chan

Agriculture

Sdn. Bhd.

Mestika Arif

Sdn. Bhd.

Teck Ping Chan

(1976)

Sdn. Bhd.

Corporate Chart

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32.87%

100% 33.65%

100% 100% 100% 100% 100%

100%

100%

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5 years Group Financial Highlights

138,164

9,257

10,503

57,252

-

152,635

152,635

12.61

-

195.57

184,302

17,612

16,027

73,280

2,617

168,663

168,663

19.20

-

216.11

117,171

14,604

19,885

49,637

2,888

134,003

135,394

27.70

5.00

184.58

107,740

18,644

13,536

37,748

7,996

119,534

120,885

19.01

13.00

168.28

223,434

17,59

15,064

85,726

*

199,330

199,330

17.31

-

-

2010 2009 2008 2007 2006

(As Restated)

Financial Results (RM'000)

Turnover

Profit Before Income Tax (before minority interest)

Profit After Income Tax Attributable to equity holders

of the Company

Retained Profit Attributable To Members

Dividends (Net)

Financed By (RM'000)

Shareholders' Funds

Net Assets Attributable to Equity Holders of the Company

Statistics

Earnings per share (Sen) (Fully diluted)

Gross Dividend per share (Sen)

Net Asset per share (Sen)

* The Directors had on 15 October 2010 declared an interim dividend of 1.5% tax exempted for the financial

year ended 30 June 2010 amounting to RM 1,440,203 which was paid on 26 November 2010.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

10,503 16,027 19,885 13,536

2

2009

3

2008

4

2007

5

2006

1

2010

Profit After Income Tax Attributable to Equity Holders of the Company

15,064

4

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0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

138,164 184,302 223,434 117,171 107,740

0

50,000

100,000

150,000

200,000

2

2009

3

2008

4

2007

5

2006

1

2010

0

5

10

15

20

25

30

12.6119.2017.31 27.70 19.01

Turnover

Shareholders' Fund

Earnings Per Share (Sen) (fully diluted)

152,635 134,003 119,534

2

2009

3

2008

4

2007

5

2006

1

2010

2

2009

3

2008

4

2007

5

2006

1

2010

168,663199,330

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On behalf of the Board of Directors of LONDON BISCUITS BERHAD (“LONDON”), it is my pleasure to present to you the Annual Report and Financial Statements of the Group for the financial year ended 30 June 2010.

Review of Performance

Group’s revenue for the financial year ended 30 June 2010 surged by RM39,131,998 to RM223,434,122, which represented a 21.23% increase over that achieved in the preceding year of RM184,302,124. The Group continues to achieve commendable progressive operating revenue. Internal targets set for management to go all out, not only to sustain our current achievements but to improve substantially on it.

Profit After Income Tax attributable to the Group fell slightly by 6% to RM15,064,018 as compared to RM16,027,316 achieved in the previous year. This is because the Group “suffered” a slight hiccup of having had to write off certain amount against our investment in Lay Hong Berhad in the year under review. If not for this mentioned write off, the Group would have met our internal target of approximately RM20,000,000 profit for the year under review. The Board deliberated on this write off and are of unanimous opinion to allow for this painful stand as a matter of prudence and good accounting policy. With this behind us, we now move forward exciting. Like an old Chinese saying goes, “BITTER FIRST, SWEET TASTE LATER”.

The result of LONDON on its own stands very impressively. We recovered in 2010, with a good financial showing, although the world is still in midst of global economic crisis, with ever rising cost of production and against pressure from competitors and consumers pricing. Profit After Income Tax went up by 61.6% from RM8,422,511 to RM13,610,392.

The basic net earnings per share of the Group for the financial year, 2010 fell accordingly to 17.31sen (2009 – 20.54sen), based on the weighted average number of 96,031,500 ordinary shares (2009 – 78,045,000) of RM1 each, in issue as at 30 June 2010.

As at 30 June 2010, Group’s shareholders’ equity stood at RM199,330,061 (2009 - RM168,662,503 ) whilst Group’s net tangible assets per share fell to RM1.94 in 2010 from RM2.00 per share in 2009.

Outlook and Prospects

Recovery, we believe is in sight. Although, the year ahead should remain difficult and challenging, the Board is confident that LONDON is in for another good year.

We predicted LONDON should end this financial year 2010 with a “bang” and it indeed did so. We went through a string of activities, added another public listed company to our stable and also decided to dispose one off but what we did not expect was the wide media publicity and the regulatory coverage that came along with it.

When we first bought into Lay Hong Berhad (“Lay Hong”), the principal objective was to assure ourselves of a continuous and adequate supply of quality liquid eggs at reasonable prices. Liquid eggs is one of the main raw material ingredients in the manufacturing of our range of cake products. An investment opportunity was extended to us to take up a “controlling” stake in TPC PLUS BERHAD (“TPC”) at a reasonably cheap entry cost. TPC, a company also listed in the main market of Bursa Malaysia, is principally involve in the business of producing chicken eggs for industrial, commercial and consumer use. We believe we made a good buy, so much so that we went ahead to extend a Conditional Mandatory Take-Over Offer (“MGO”) for TPC shares not already owned by LONDON. Although, the MGO was not successful, it nevertheless an indication that, with LONDON as its major shareholder, the remaining TPC shareholders have faith in the future of TPC ahead.

Arising from the acquisition of TPC were subjected to mounting claims of a situation of potential conflict of interest by virtue of our only one Board representation on the Board of Lay Hong as TPC is in similar business as Lay Hong. Your Board deliberated carefully on this matter and it was decided to sell off our interest in Lay Hong, incurring a “paper” loss, which is actually an accumulation of our share of profit after income tax and equity-accounted for on Lay Hong. Having TPC has opened the door to a core of business activities and synergies that will be developed or expanded, whether upstream or downstream on its own or with LONDON, on a win-win situation. The most important is now, we have in the Group, our very own supplier of eggs with assured quality, is cost-effective and will adequately meet our ever growing substantial requirements. This is especially so with the commissioning of our new London Roll cake production line which we believe to be the single biggest such production line in South East Asia. This line, once up and running, will more than double our existing production capacity. This decision to sell Lay Hong, is purely, a commercial and business decision. Rightly or wrongly, only time will tell.

Chairman’s Message

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The construction of a new warehouse with to cater for storage needs is completed in respect of expected increase in

raw materials supply due to the upcoming commissioning of the abovementioned new London Roll cake line and in

anticipation of an increase in demand for our products. Older machines and facilities in the snack manufacturing

division are being reviewed and reassessed for upgrading to custom design and built machines, which will improve

production efficiencies and reduce manpower requirements.

The huge allocation approved for an intensive and aggressive marketing and advertising campaign is maintained

with successful TV programmes in Malaysia and Singapore, supported with strong product campaigns on ground

events such as Suarasa and Karnival Jom Heboh by TV3 to create a continued awareness of our Group Brand Name,

as a mean to build and to retain customers loyalty continues to bring fruitful and meaningful results. These

campaigns also help to promote and to educate on the convenience and health benefits of our products that use

high quality ingredients. The Group is committed to maintain our current performance and to confirm our position

as one of the market leaders not only in Malaysia but also in this part of the region. We have commenced a Brand

Building campaign in Hong Kong and Vietnam and took an active part in the EKSPO BELI BARANG MALAYSIA,

organized by Pejabat Perdagangan Dalam Negeri with aim to introduce our quality Malaysian made products to

Malaysian customers. Our participation in trade missions, exhibitions and fairs held internationally and on local front

(Singapore FHA 2010, Japan Foodex 2010, Dubai Sweet Middle East 2010, Kuala Lumpur MIHAS 2010) received good

reviews from visitors, existing and potential customers.

Dividends

Difficult trading and business conditions and environment are still in year, ahead. The Board is always constantly on

the workout for a solution to conserve financial resources of the Group to meet capital, operating and investing

expenditure and at same time to reward our shareholders for their faith, support and loyalty to the Group. This is the

stance that your Board has adopted consistently over the years. We have work out a “Win-Win” formulation that

should ensure a steady cashflow for the Group’s requirements at same time, able to service our dividends to

shareholders in an orderly manner in line with an improvement in our resources. The Board has already declared an

interim dividend of 1.5 sen (tax-exempt) per share in respect of the financial year ended 30 June 2010, amounting to

RM1,440,203, which will be paid, by month end, on 26 November 2010. Although, we do not intend to propose any

final dividend for the same financial year, the Board may consider to declare an interim dividend in respect of the

financial year ending 30 June 2011 in future.

Acknowledgement and Appreciation

I, take this opportunity to express my sincere appreciation to my fellow directors, the management team and

all our employees for their hard work and dedicated services in the past year. In recognition, the Board has

proposed to terminate the existing Employees’ Share Option Scheme (“ESOS”), to be replaced with a New ESOS

to continue to reward, to motivate and to retain employees and Executive Directors, whose services are

considered vital to LONDON Group.

My heartfelt thanks are also extended to our valued customers, suppliers, bankers and to others whose

supports are invaluable to the continued success of LONDON.

DATO’ SRI LIEW KUEK HIN, SSAP, DIMP, PJK, JP Chairman of the Board

Chairman’s Message (Continued)

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Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP Malaysian, aged 71

Non-Independent Non-Executive Chairman

Dato’ Sri Liew Kuek Hin was appointed to the Board of London Biscuits Berhad on 27 December 1993 and was

subsequently on 26 October 2007, re-designated as the Non-Independent Non-Executive Chairman of the

whole Group. He is also a Member of the Audit Committee and Remuneration Committee.

He started his career by joining his family-owned businesses, which includes logging, transportation,

sawmilling, plywood manufacturing, plantations, palm oil mill and hotel operations, after his study in

Nanyang University, Singapore . His current directorships in other public listed companies include Khee

San Berhad and TPC Plus Berhad.

He is a substantial shareholder of the Company by virtue of his direct and indirect interest shareholdings held

by his immediate family and family-owned company. He is the spouse of Datin Sri Lim Yook Lan and is the

parent to Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng, Ms Liew Yet Mei and Dato’ Liew Yet Lee.

He has attended all the Meetings held during the financial period under review.

Datin Sri Lim Yook LanMalaysian, aged 71

Non-Independent Non-Executive Director

Datin Sri Lim Yook Lan was appointed to the Board on 27 December 1993 as the Non-Independent Non-Executive

Director.

Datin Sri Lim is a substantial shareholder of the Company by virtue of her direct and indirect interest

shareholdings held by her immediate family and family-owned company. She is the spouse of Dato’ Sri

Liew Kuek Hin, and is the parent to Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng, Ms Liew Yet Mei and

Dato’ Liew Yet Lee. Her current directorships in other public listed company include TPC Plus Berhad.

She has attended all the Meetings held during the financial period under review.

Dato’ Sri Liew Yew Chung, SSAP, DIMPMalaysian, aged 40

Group Managing Director/Group CEO

Dato’ Sri Liew Yew Chung was appointed to the Board on 27 December 1993. He was appointed as a General

Manager in 1994 and in 2000, he was appointed as the Managing Director and Chief Executive Officer of LBB.

He obtained his Bachelor of Science in Business Administration from the Drexel University, Philadelphia, United

States in 1991 and majoring in Economics and Finance Accounting. In 1992, he obtained his listed Masters of

Business Administration, majoring in Accounting Control. His current directorships in other public companies

include Khee San Berhad and TPC Plus Berhad.

Board of Directors

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Dato’ Sri Liew is a substantial shareholder of the Company by virtue of his direct and indirect interest

shareholdings held by his immediate family and family-owned company. He is the son of Dato’ Sri Liew

Kuek Hin and Datin Sri Lim Yook Lan, and is the brother of Dato’ Liew Yew Cheng, Ms Liew Yet Mei and Dato’

Liew Yet Lee.

He has attended 5 Meetings held during the financial period under review.

Dato’ Liew Yew Cheng, DIMPMalaysian, aged 37


Dato’ Liew Yew Cheng was appointed as the Non-Independent Non-Executive Director of LBB on 27 December

1993. Presently, he is the Group General Manager of the Customer Services Department of LBB Group.

He obtained his Diploma in Business and Management from the Drexel University, Philadelphia, United States

in 1994. His current directorship in other public listed companies include Khee San Berhad and TPC Plus

Berhad.

Dato’ Liew is a substantial shareholder of the Company by virtue of his direct and indirect interest

shareholdings held by his immediate family and family-owned company. He is the son of Dato’ Sri Liew Kuek

Hin and Datin Sri Lim Yook Lan, and is the brother of Dato’ Sri Liew Yew Chung, Ms Liew Yet Mei and Dato’ Liew

Yet Lee.

He has attended all the Meetings held during the financial period under review.

Liew Yet MeiMalaysian, aged 43


Ms Liew Yet Mei was appointed as the Non-Independent Non-Executive Director of LBB on 27 December 1993.

She is the Chairman of the Nomination Committee and a Member of the Remuneration Committee.

She obtained her Bachelor in Accounting, from Drexel University, Philadelphia, United States in 1992. She is

currently an Alternate Director of Dato‘ Liew Yet Lee in TPC Plus Berhad, a public listed company.

Ms Liew is a substantial shareholder of the Company by virtue of her direct and indirect interest shareholdings

held by her immediate family and family-owned company. She is the daughter of Dato’ Sri Liew Kuek Hin and

Datin Sri Lim Yook Lan, and is the sister to Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Dato’ Liew Yet

Lee.

She has attended 4 Meetings held during the financial period under review.

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Dato’ Liew Yet Lee, DIMPMalaysian, aged 36


Dato’ Liew Yet Lee was appointed to the Board on 27 December 1993 as the Non-Independent Non-Executive

Director and the Chairman of the Remuneration Committee.

She joined LBB as an Executive Manager in 1993 and she is now the General Manager for Special Projects in

LBB. Currently, she is in-charge of the Internal Audit function for the Group.

She obtained her Bachelor of Business majoring in Hospitality Management from Edith Cowan University,

Western Australia in 1996. Her current directorship in other public listed company include TPC Plus Berhad.

Dato’ Liew is a substantial shareholder of the Company by virtue of her direct and indirect interest sharehold-

ings held by her immediate family and family-owned company. She is the daughter of Dato’ Sri Liew Kuek Hin

and Datin Sri Lim Yook Lan, and is the sister to Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Ms Liew Yet

Mei.

She has attended all the Meetings held during the financial period under review.

Dato’ Cheong Siew Kai, DJMK, AMS, JPMalaysian, aged 72

Independent Non-Executive Director

Dato’ Cheong Siew Kai was appointed to the Board on 20 November 2001 as an Independent Non-Executive

Director.

He obtained his Diploma in Accountancy from the Australian National Institute of Accountants in 1961. He

became a Member of the Malaysian Institute of Accountants in year 1973 and the Malaysian Institute of

Taxation in 1992. In October 1997, he obtained his fellowship of Malaysian Institute of Taxation. He is a Member

of the British Institute of Management since 1980 and became a Fellowship Member in 1995. Currently, he is

also a Member of the Malaysian Association of Company Secretaries.

Dato’ Cheong is also a specialist in income tax advisory work. Recently, he leads a group of companies which

provides corporate and consultancy services.

He does not have any family relationship with any Director and/or Major Shareholder of LBB.

He has attended 5 Meetings held during the financial period under review.

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Huang Yan Teo, PIS, PPNMalaysian, aged 63


Mr Huang Yan Teo was appointed to the Board as an Independent Non-Executive Director on 20 November

2001. He is a Chairman of the Audit Committee and a Member of the Nomination Committee.

He became a Member of the Association of Chartered Certified Accountants (UK) in 1975 and obtained his

Fellowship in 1980. In 1975, he also became a Member of the Malaysian Institute of Accountants and as a

Member of the Malaysian Institute of Taxation in 1992.

In 1966, Mr Huang started his career with Messrs Coopers & Lybrand and in 1974, he became the Group

Financial Controller with a commercial firm. He then started his own accounting practice, Messrs Huang Yan

Teo & Co, in 1981 and currently is the Managing Partner.

Mr Huang sit on the Board of Director of other public listed companies include Khee San Berhad,

Connectcounty Holdings Berhad, Denko Industrial Corporation Berhad and TPC Plus Berhad.

He does not have any family relationship with any Director and /or Major Shareholder of LBB.

Mr Huang has attended all the Board Meetings held in the financial year.

Leslie Looi MengMalaysian, aged 40


Mr Leslie Looi Meng on August 2005 was appointed as an Independent Non-Executive Director of LBB and as

a Member of the Audit Committee and the Nomination Committee.

He obtained his Bachelor of Arts (Law) from University of Kent, (Canterbury) in 1991 after graduated from the

University of Kent with a Bachelor of Law in 1990. On 15 July 1993, he was admitted to the Malaysia Bar.

Mr Leslie Looi currently is a partner of the legal firm, Messrs Dennis Nik & Wong and manages the Johor Bahru

Branch. He has also been called to the Singapore Bar. He has been in active practice as an Advocate & Solicitor

till to-date.

The scope of experience in his legal practice include civil and corporate litigation (i.e boardroom and

shareholders disputes, corporate liquidation/insolvency and restructuring), corporate acquisitions,

tax-restructuring schemes, cross-border joint ventures and corporate bank financing.

Mr Leslie Looi sits on the Board of Directors in other public listed companies include Khee San Berhad and TPC

Plus Berhad.

He does not have any family relationship with any Director and /or Major Shareholder of LBB.

Mr Leslie Looi has attended all the Board Meetings held in the financial year.

* None of the Directors have any conviction for any offence for the past 10 years.

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The Board of Directors of London Biscuits Berhad recognizes the importance and commitment of upholding

the highest standards of Corporate Governance throughout the whole Group as expressed in the Principles

and Best Practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance (“MCCG” or “the

Code”).

The Board is pleased to share the manner in which how the Principles of the Code have been applied in the

Company and the extent to which the Company has complied with the Best Practices of the Code throughout

the financial year ended 30 June 2010 which were regularly reviewed to ensure transparency and accountability.

This Statement was prepared pursuant to Paragraph 15.25 of the Main Market Listing Requirements of Bursa Malaysia

Securities Berhad (Listing Requirements) and approved by the Board on 1 November 2010.

Board of Directors

1. Composition and Board Balance

2. Supply and Access to Information

London Biscuits Berhad is lead and managed by an effective Board of Directors. The Board has nine (9)

members which comprises of the Non-Independent Non-Executive Chairman with an Executive Director, four

(4) Non- Independent Non-Executive Directors and three (3) Independent Non-Executive Directors. The

Directors are professionals in the fields of finance, accounting, legal, administration and management. The

profile of each Director is presented on pages 7 to 10 of this Annual Report.

In line with the Code, the Chairman and Group Managing Director / Group Chief Executive Officer have

distinct roles and responsibilities to ensure that there is a clear and proper balance of power and authority.

The Chairman ensures that conduct and working of the Board is in an orderly and effective manner whilst

the Group Managing Director / Group Chief Executive Officer carries out the day-to-day operational

functions on the running of business and implementation of Board’s policies. The Group Managing Director

/ Group Chief Executive Officer is accountable for the strategic development of the Group including the profit

of the Company, and refers major issues to the Board, for final approvals.

The Board meets the requirements imposed by Bursa Malaysia Securities Berhad (“Bursa Securities”) of

having one-third (1/3) of its Board Members being Independent Non-Executive Directors. This

Board structure provides an effective balance of corporate accountability to the Group given that the

Independent Directors can contribute their independent judgement and knowledge to the management

in conducting the day-to-day duties and also safeguard the shareholders’ interests.

The Board is supplied with and assured of full and timely access to all relevant information to discharge its

duties effectively. The Agenda and Board Papers are distributed to the Board Members prior to the Board

Meetings to enable the Directors to obtain relevant information and have sufficient time to deliberate on

the issues to be raised at the Meeting so as to discharge their duties diligently. The Board Papers provide

information of the previous Meeting, quarterly financial results, supporting management reports, annual

reports, analysis of shareholders and copies of signed resolution for the months in concerned will be

distributed to the Directors.

Corporate Governance Statement

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The Board Members have full unrestricted access to all information pertaining to the Group’s business

operations and have access to the advice and services of the Head of Internal Audit and the Company

Secretary. The Company Secretary is responsible for ensuring the Board’s procedures are adhered to and all

relevant rules and regulations are complied with, especially the Listing Requirements.

The Board may also seek outside independent professional advice as a full Board or in their own individual

capacity, whenever it is required in order to fulfill their duties and specific responsibilities at the expense of

the Company.

3. Board Meetings

The Board meets at least four (4) times a year, with additional meetings convened as and when necessary.

The Company Secretary sends out the Notice of the Board Meetings together with the Agenda at least

seven (7) days prior the date of such Meetings for the Directors to review the Agenda for the Meeting. The

Board has been practicing paperless Board Meetings for the past few years.

During the financial year under review, the Board convened a total of six (6) meetings, mainly to discuss and

review the quarterly and annual financial results, internal audit reports, dividend proposals, recurring related

party transactions and corporate strategies. All Directors have complied with the requirement in respect of

the Board Meeting attendance as provided in the Main Market Listing Requirements. The details of the atten-

dance of each member of the Board are tabulated below :-

Non-Independent

Non-Executive Chairman

Non-Independent

Non-Executive Director

Group Managing Director /

Group Chief Executive Officer

Non-Independent


Non-Independent


Non-Independent


Independent


Independent


Independent


6/6

6/6

5/6

6/6

4/6

6/6

5/6

6/6

6/6

Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP

Datin Sri Lim Yook Lan

Dato’ Sri Liew Yew Chung, SSAP, DIMP

Dato’ Liew Yew Cheng, DIMP

Ms Liew Yet Mei

Dato’ Liew Yet Lee, DIMP

Dato’ Cheong Siew Kai, DJMK, AMS, JP

Mr Huang Yan Teo, PIS, PPN

Mr Leslie Looi Meng

Director DesignationNo. of Meetings

attended

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The Board meets quarterly and also on other occasions, whenever required, to discuss and approve the

Quarterly Reports, the Annual Reports, the Business Plans, acquisitions or disposals of investments, corporate

proposals, announcements and to review the performance of the operating subsidiaries. The Board

Meeting’s agenda is sanctioned by the Chairman prior to its issuance. Some of the decisions were taken by

way of circular resolutions in between the Board Meetings.

4. Appointment to the Board & Re-election

5. Board Committee

The Board had delegated the responsibility to assess the suitability of proposed new appointment,

re-appointment and/or re-election of Directors prior to the approval of the Board to the Nomination

Committee. It also reviews the Board’s structure, size and composition, as well as the Boards’ succession plans.

In accordance of the Company’s Articles of Association, all the Directors of the Company shall retire from

office once at least in every three (3) years but will be eligible for re-election. Directors who are appointed

during the financial year are subject to re-appointment / re-election by the Shareholders at the next Annual

General Meeting (“AGM”) following their appointments. Directors over seventy (70) years of age are

required to submit themselves for re-appointment annually pursuant to Section 129 of the Companies Act,

1965, at the forthcoming AGM.

The Board operates through four (4) committees with delegated authorities and defined terms of reference.

The Board Committees were established to assist the Board in the execution of its duties, power and

authorities. Nevertheless, the Board as a whole retains full responsibility for the direction and control of the

Group. The Chairman of the various Committees will report to the Board on the outcome of the respective

Committee Meetings and such reports will be incorporated in the minutes of the Board Meetings. The

compositions and function of these committees are described as follows :-

Audit Committees

The composition, terms of reference and a summary of the activities of the Audit Committee are set out

separately in the Audit Committee Report as laid out on pages 20 to 24 of this Annual Report.

Nomination Committee

The Committee is responsible for making recommendations for any appointments to the Board and Board

Committees. It also assesses the effectiveness of the Board as a whole, the various Committees and each

individual Director’s contribution to the effectiveness of the decision-making process of the Board.

The Nomination Committee consists of follows :-

, PIS, PPN,

The Committee met once during the financial year ended 30 June 2010.

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6. Directors’ Training

Remuneration Committee

The objectives of Remuneration Committee is to recommend to the Board, the policy and framework for

Directors’ remuneration, fees and meeting allowances of the Directors. The level of fees and allowances of

Non-Executive Directors are determined by the Board as a whole.

The Remuneration Committee consists of follows :-

DIMP (Chairperson), Non-Independent Non-Executive Director

, SSAP, DIMP, PJK, JP, Non-Independent Non-Executive Director

The Committee meets at least once a year or as and when required. During the financial year ended 30 June

2010, the Remuneration Committee had held one (1) meeting.

Employee Share Option Scheme (ESOS) Committee

on 13 January 2010 for a period of five (5) years including all necessary actions and decisions while

performing its duties. For the best interest of the Company, the Committee has ensured that the

, DIMP,

, DIMP,

During the financial year, certain Directors have attended trainings or seminars whether in-house or external

in a various areas to enhance their skills so as to contribute more effectively to the Company. Directors who

were unable to attend any formal training during the financial year, are well-informed of the latest

developments on the various relevant rules and regulations as all Directors were updated by the Company

The training programmes, seminars, workshop and briefings attended by the Directors are as follows :-

15

Executive Director

RM

Non-Executive Directors

RM

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7. Directors’ Remuneration

The level of remuneration of the Company is structured to attract, retain and motivate the Directors

in order to run and manage the Company successfully. The Remuneration Committee to review the

policy and make recommendations to the Board on the remuneration package and benefits annually.

Directors do not participate in decisions regarding their own remuneration packages and directors’

fee must be approved by the Shareholders at the AGM.

The remuneration package for Executive Director is based on their skills, experience, performance and

responsibilities, whereas the remunerations package for Non-Executive Directors will hinge on their

contribution to the Group in terms of their knowledge and experience.

The aggregate remuneration received by the Directors of the Company from the Company and its

subsidiaries for the financial year under review, is as follows :-

Note:

1. For security and confidentially reasons, the details of Directors’ remuneration are not shown with reference to Directors

individually. The Board is of the view that the transparency and accountability aspect of the corporate governance on

Directors’ remuneration are appropriately served by the band disclosure made.

The number of Directors whose remuneration fell within the following ranges (per annum) :-

Remuneration- Salaries & Allowances

- Fees

Range of Remuneration

Below RM50,000

RM50,001 – RM100,000

RM100,001 – RM150,000

RM150,001 – RM200,000

RM200,001 – RM550,000

RM550,001 – RM600,000

RM600,001 – RM750,000

RM750,001 – RM800,000

-

-

-

-

-

1

-

-

3

2

1

1

-

-

-

1

Number of Directors

Executive Director Non-Executive Directors

566,000

16,700

582,700

1,072,700

229,250

1,301,950

16

Accountability and Audit

1. Financial Reporting

2. Internal Control

3. Relationship with Auditors

In preparing of the annual Financial Statements, Annual Report and quarterly announcements of

results to Shareholders, the Board takes steps to ensure a clear, balanced and understandable assessment of

the Group’s financial position, performance and prospects. The Board, with the assistance of the Audit

Committee, takes due care and oversee the Group’s financial reporting process to ensure an accuracy,

adequacy and quality of its financial reporting.

The Board recognises its responsibilities to maintain a sound system of internal controls to safeguard

Shareholders’ investment and Group assets.

Information on the Group’s system of internal control is presented in the Statement on Internal Control set

out on pages 25 to 26 of this Annual Report.

The Audit Committee of the Company works closely and maintains a transparent professional relationship

with the Company’s External Auditors, Messrs Wong Weng Foo & Co. to ensure the Company comply with

the applicable accounting standards in Malaysia.

The Company’s independent External Auditors fills an essential role for the Shareholders by enhancing the

reliability of the Company’s financial statements and giving assurance of that reliability to users of these

financial statements.

A summary of the activities and term of reference of the Audit Committee during the year are set out in the

Audit Committee Report on pages 20 to 24 of this Annual Report.

Shareholders

1. Financial Reporting

The Group recognises the importance of effective communications policy that enables both the Board and

the Management to communicate with Shareholders, Stakeholders and the public. The Company maintains

regular communications and makes sure the Shareholders and Stakeholders are well informed on the

activities, achievements and performance of the Group to enable them to make their own evaluation and

investment decision.

The Investors and Members of the public who wish to contact the Group on any matters, can forward their

queries to :-

The Chairman

London Biscuits Berhad

No.1, Jalan Istimewa 2

Taman Perindustrian Desa Cemerlang

81800 Ulu Tiram, Johor Darul Takzim

Tel : 607 – 861 5288

www.londonbiscuits.com.my

[email protected]

Annual Report


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17

The Group recognizes the importance of a good Corporate Culture that emphasizes good Corporate Social

Responsibility (CSR). The Group has obligations to care, protect and contribute positively to the needs of a

range of stakeholders in the community and environment in which it operates.

The Board acknowledges that a successful CSR programme encompasses ethical and transparency by carrying

out all its business transactions and relationships with its clients, suppliers, employees, business partners, the

community at large and all Shareholders on a highly ethical and transparent manner.

By implementing of good CSR, the Group places high importance on Safety and Health and development of

employees by implementing workplace safety relating committee and internal audit in order to promote

awareness of safety workplace and ensure all the employees’ health and well-being is constantly looked

after. The Board recognizes that constant training and upgrading the knowledge and skills of the employees

enhances the capabilities of the employees in discharging their responsibilities effectively and efficiently.

The Group also ensure HALAL compliances on its products and had participated in MIHAS 2010 held at the

Matrade Exhibition Centre, a trade event exclusively for halal products. During the financial year under

review, the Group has contributed towards various projects, such as the Kiwanis Club, Johor Bahru and also

the Malaysia Pavilion during the CommunicAsia 2010, Singapore.

Corporate Social Responsibility

In accordance with paragraph 15.26 of the Listing Requirements, the Directors are required to give a

responsibility statement in respect of the preparation of the audited financial statements.

Therefore in preparing the financial statements for the year ended 30 June 2010 and to give a true and fair

view of the financial position of the Group and of the Company, the Directors have :

The Directors are responsible for ensuring that the Group and the Company maintain proper accounting

records which disclose with reasonable accuracy at any time the financial position of the Group and of the

Company and have a general responsibility for taking such steps as are reasonably open to them to

safeguard the assets of the Group and of the Company, and to prevent and detect fraud and other

irregularities.

This statement was made in accordance with a resolution by the Board of Directors dated 1 November 2010.

Directors’ Responsibility Statement

2. Annual General Meeting (AGM)

The AGM is the principal forum for dialogue with all the Shareholders who are encouraged to raise any

question pertaining to any key issue regarding the Group including the Group’s business and performance.

The Chairman and the Directors are available to answer any queries and discuss matters pertaining to the

business activities of the Group.

Shareholders are also informed and invited to attend and vote in any Extraordinary General Meetings

through circulars and notice of meeting, if any.

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18

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1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Utilisation of Proceeds

Not applicable.

Share Buy-Back

The Company did not enter into any share buy-back transactions during the financial year under review.

Options or Convertible Securities

The Company has not granted or issued any options convertible securities during the financial year under

review.

Depository Receipt Programme

The Company did not sponsor any Depository Receipt Programme during the financial year under review.

Sanctions and/or Penalties

There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or

management by the relevant regulatory bodies during the financial year under review.

Non-Audit Fees

During the financial year, the non-audit fees paid by the Group to the External Auditors amounted to

RM 114,400.00

Variation in Results

There were no material variations between the Audited Results for the financial year ended 30 June 2010

against the announced unaudited results for the year ended 30 June 2010.

Profit Guarantee

The Company did not provide any profit guarantee during the financial year under review.

Material Contracts

There were no other material contracts entered into by the Company (not being contracts entered into in

the ordinary course of business of the Company) involving the Directors and Major Shareholders for the

financial year under review.

Revaluation Policy

The Company has adopted a policy of revaluation on its landed properties every five (5) years. During the

year ended 30 June 2010, no revaluation exercise was carried out on its landed properties.

Additional Disclosure

19

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11. Recurrent Related Party Transactions of Revenue or Trading Nature

At the Twenty-Eighth Annual General Meeting of the Company held on 24 December 2009, the

Shareholders of the Company has given their approval for the renewal of its existing mandate for the

Group to enter into recurrent related party transactions of a revenue or trading nature (“Recurrent

Related Party Transaction”) with the related party which are necessary for the day-to-day operation and

are in the ordinary course of business of the Group.

The said mandate took effect on 24 December 2009 until the forthcoming Annual General Meeting of the

Company.

The Company intends to seek its Shareholders’ approval to renew the existing mandate for recurrent

related party transactions of a revenue or trading nature at the Twenty-Ninth Annual General Meeting of

the Company.

The details of the Shareholders’ mandate to be sought will be furnished in the Circular to Shareholders

dated 2 December 2010 accompanying this Annual Report.

20

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The Audit Committee (AC) is accountable to the Board of Directors of LBB and assists the Board in its responsibilities

in ensuring an effective system of internal control and the compliance of financial reporting.

Composition and Meetings

The Board has established the Audit Committee and its current Members are :-

, PIS, PPN (Chairman)

(Independent Non-Executive Director)

Member of the Malaysian Institute of Accountants

, SSAP, DIMP, PJK, JP (Member)

(Non-Independent Non-Executive Director)


Terms of Reference

1. Constitution

The AC shall ensure: -

a)

b)

(i)

(ii)

c)

d)

function of being primarily responsible for the management of the financial affairs of a corporation.

Audit Committee Report

21

Annual Report


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have the necessary resources required to perform its duties;

have full and unrestricted access of information on the Company and its subsidiaries;

investigate any activity or matter of the Group within its terms of reference;

promptly report to Bursa Malaysia Securities Berhad (“Bursa Securities”) matters which have not been

resolves satisfactorily thus resulting in a breach of the Bursa Securities Listing Requirements;

obtain external independent professional advice, legal or otherwise, when deemed necessary;

maintain direct communication channels with External Auditors, person(s) carrying out the internal

audit function or activity and with senior management of the Company and its subsidiaries.

The appointed Chairman of the Audit Committee shall be an Independent Director.

All the Members shall retire, at least once in every three (3) years. At the end of each financial year, one-third

(1/3) of the Committee Members shall retire from office. The Members retiring each year shall be the

Members having served the longest term of office.

The appointment of a Committee Member terminates when the Member ceases to be a Director of the

Company. Members of the AC may relinquish their Memberships, with prior written notice to the Company

Secretary of the AC and may continue to serve as Directors of the Company.

If a Member of the Committee resigns, dies or for any other reason ceases to be Member with the result that

the number of Members is reduced below three (3), the Board of Directors shall, within three (3) months of

that event, appoint such number of new Members as may be required to make up the minimum number of

required Members.

The Nomination Committee shall review the terms of office and performance of the AC Members and

thereafter to be approved by the Board.

Secretary

The Company Secretary shall be the Secretary of the Committee.

The Secretary is responsible for :-

a) sending out notices of Meetings; and

b) preparing and keeping minutes of Meetings.

Quorum

Two Members of the Committee present at the Meeting shall constitute a quorum and the majority of

Members present must be Independent Directors.

Authority

In discharging its function, the AC has also been empowered by the Board to:-

a)

b)

c)

d)

e)

f )

2.

3.

4.

22

convene Meetings with Internal and External Auditors, without the attendance of the Management

and Executive Director, whenever deemed necessary.

invite other Directors and / or Employees of the Group, at their discretion, to attend any particular AC

Meetings on specific issues.

g)

h)

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Functions

1. Duties and Responsibilities

The AC shall, amongst others, discharge their functions in the following areas :-

a) Internal Audit

b) External Audit

c) Financial Reporting

d) Recurring Related Party Transactions

To approve the appointment, replacement and / or dismissal of the Senior Staff Members of the

Internal Audit Department.

To review the adequacy of the scope of audits conducted by Internal Audit Department, functions and

resources of Internal Audit Department and that it has the necessary authority to carry out its work.

To evaluate the performance and decide on the remuneration of the Internal Auditors.

To review the External Auditors’ audit plan, scope of their audits and their audit reports.

To assess the performance of the External Auditors and make recommendations to the Board of

Directors on their appointment and / or removal.

To review the independence and objectivity of the External Auditors and their services, including

non-audit services.

To approve the provision of non-audit services by the External Auditors.

To review the quarterly and annual financial statements of LBB and its subsidiaries, for recommendation

to the Board of Directors for approval, particularly focusing on :-

- Changes in or implementation of new accounting policies and practices;

- Significant and unusual events; and

- Compliance with the applicable approved accounting standards and other legal and regulatory

requirements.

To monitor and review any recurring related party transactions that may arise within the LBB Group

and other parties.

23

Designation

Chairman

Member

Member

No. of Meetings attend

5/5

5/5

5/5

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Director

Mr Huang Yan Teo, PIS, PPN Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP

Mr Leslie Looi Meng

Meeting and Reporting Procedure

a)

b)

c)

d)

e)

f )

g)

Meeting Attendance

A total of five (5) Audit Committee (“AC”) Meetings were held during the financial year ended 30 June

2010 (25 August 2009, 28 October 2009, 24 November 2009, 23 February 2010 and 26 May 2010). The

details of attendance of the Audit Committee members are as follows :-

The Committee Meetings’ minutes are to be extended to the Board of Directors of the Company for reporting

purposes.

e) Annual Report

f ) Allocation of ESOS

g) Other Matters

To report the AC’s activities for the financial year.

To review and verify that the allocation of Employee Share Options Scheme is in line with the

prescribed ESOS By-laws.

To consider such other matters as the Committee considers appropriate or as authorized by the Board

of Directors.

The Committee shall meet as the Chairman deems necessary but not less than four (4) times a year.

The External Auditors may request a Meeting if they consider that one is necessary and shall have the right

to appear and be heard at any meeting of the Committee.

The Chairman shall convene a Meeting whenever any Member of the Committee requests for a Meeting.

Members of the Committee and the External Auditor will be given notice of the Meeting together with the

agenda where applicable.

The Head of Internal Audit (where such a function exists) and a representative of the External Auditors will

be invited to attend the AC Meetings.

At least twice a year, the Committee shall meet with the External Auditors without the presence of the

Executive Director.

The Chairman shall be entitled, where deemed appropriate, to invite other Board Members, employees,

professionals and/or any person(s) with the relevant experience and expertise to attend Meetings of the

Committee.

24

Annual Report


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a)

b)

c)

d)

e)

f )

g)

h)

The AC Members had meetings with the External Auditors separately on more than three occasions without

the presence of the Executive Director during the year under review to advise and clarify the financial issues.

Activities During The Year

The following activities were carried out by the AC Members during the financial year under review :-

Internal Audit

The Internal Audit Department (“IAD”) was been established to assist the AC and the Board of Directors, in

overseeing the Group’s risk management internal control and good governance.

The IAD works covered monitoring all the business operations systems, departments for the Company and

its subsidiaries / suppliers and also to resolve such issues within the Group to ensure effectiveness and

smoothness of the operations.

Quarterly reporting by the IAD to the AC during the AC Meetings were supplied with updated reports,

independent reviews and suggestions, which will be deliberated by the AC before recommending to the

Board of Directors and / or the Management for immediate action, if and when necessary.

Reviewed the quarterly unaudited financial reports before recommending them to the Board of Directors

for approval and subsequent release to Bursa Malaysia Securities Berhad;

Reviewed the audited financial statements before submitting them to the Board, ensuring that the

financial statements were prepared in accordance with the applicable approved accounting standards

and provisions of the Companies Act, 1965;

Evaluated the performance of the External Auditors and made recommendations on their re-appointment

to the Board;

Discussed and addressed the key aspects of business operations that would affect the profitability and

growth of the Company and its subsidiaries;

Reviewed the internal control systems of the Group;

Reviewed and discussed Related Party Transactions (“RPTs”) and Recurrent Related Party Transactions

(“RRPTs”) with the Group Accountant, the External Auditors and the Company Secretary, to ascertain if the

transactions were conducted at arm’s length and on normal commercial terms, and such transactions were

not detrimental to the interest of minority Shareholders; and

Reviewed and verified the allotment of shares under the ESOS.

Ensure the compliance of financial standards and disclosure including transparency throughout the

financial year.

25

Annual Report


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The Board of Directors (“the Board”) is committed to maintain a sound system of Internal Control as

promulgated by the Malaysian Code on Corporate Governance with the objective of safeguarding its

Shareholders’ investment and the Group’s assets.

Responsibility of the Board

The Board has the overall responsibility for the Group’s system of internal control and reviews its effectiveness to

ensure the policies and procedures implemented are adequate for the identification and management of risks.

Risk Management

Risk Management is regarded by the Board to be an integral part of the business operations. The Board

preserves a lifelong responsibility to increase the Group’s control mechanism. The Boards always put Risk

Management as first mechanism to protect the Group’s asset. The Group’s key risks which involved the daily

operations, strategic and business plans were addressed at the Management’s periodic meetings. Besides that,

the Board will confront every crucial risk identified at their scheduled meetings. The risk management policy

which was set up to identify efficacious risk management framework, will be reviewed periodically.

Internal Audit Function

The In-house Internal Audit Department is responsible to assist the Audit Committee in providing

independent assessment on the adequacy, efficiency and effectiveness of internal control system and

ensuring operational compliance with Operating Manuals, Internal Control Guidance, HACCP and ISO

Standards, as set out by Llyod’s Register Quality Assurance, within the Group.

The Internal Audit Department performs regular and systematic review of the internal controls in identifying

and addressing risk. Quarterly reports are produced and presented to the Audit Committee which will assess

the issues and review remedial action implemented by the Management. The yearly Internal Audit Plan was

also tabled at the Audit Committee Meeting for approval before implementation.

Other key elements

Other key elements of internal control process that were in place in the financial year under review are

summarised below :-

Established procedures for delegating authority, which ensures decisions that were significant, either

because of the value or the impact on the other parts of the Group, were taken at appropriate level.

Monthly operational meetings were conducted among senior management to deliberate and review the

business plans, budgets, financial and operational performances of the Company. The quarterly financial

statements containing key financial results and comparisons were tabled to the Board for their review.

Review of a comprehensive and full set of system of budgetary control, including monthly performance

reviews were used.

Each of the Company Functional Departments goals set by respective Departments was aligned to the

Group’s overall strategic goals.

Appraisal and approval of capital expenditure and treasury operations were evaluated against the defined

policies and procedures set and approved according to formalize limits of authority.

Internal Control Statement

26

Annual Report


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Conclusion

Risk management and control is an integral part of the Board’s commitment to providing consistent and high

quality returns to the shareholders.

The Board is of the view that the Group’s Risk Management Policy has been in place for the year under review

and up to the date of Annual Report is sound and sufficient. Moreover, the identification, evaluation and mitigation

of risk is an on-going process as all the control procedures are reviewed regularly by the Board to ensure the

effectiveness and adequacy of the systems to safeguard shareholders’ investments and the Group’s assets.

This statement was made in accordance with a resolution of the Board of Directors dated 1 November 2010.

Review of Statement By External Auditors

The External Auditors have reviewed the Statement on Internal Control for the inclusion in the Annual Report

of the Group for the financial year ended 30 June 2010 and reported to the Board that nothing has come to

their attention that causes them to believe that this statement is inconsistent with understanding of the

process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.

Board representation was mandatory in companies in which material interest exists to facilitate the review

of performance of the companies.

Audit Committee held regular quarterly meetings to deliberate upon findings and recommendations for

improvement by both, the internal and external auditors, on the state of the internal control system and

these were reported to the Board.

27

Annual Report


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Report On The Financial Statements

We have audited the financial statements of London Biscuits Berhad, which comprise the balance sheets as at

30th June, 2010 of the Group and of the Company, and the income statements, statements of changes in equity

and cash flow statements of the Group and of the Company for the year then ended, and a summary of

significant accounting policies and other explanatory notes, as set out on pages 37 to 80.

Directors' Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation and fair presentation of these financial

statements in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards

in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to

the preparation and fair presentation of financial statements that are free from material misstatement,

whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting

estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our

audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on our judgment, including the assessment of risks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk

assessments, we consider internal control relevant to the Company's preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the Company's internal 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.

Opinion

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

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

financial position of the Group and of the Company as of 30th June, 2010 and of their financial performance

and cash flow for the 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.

INDEPENDENT AUDITORS’ REPORTto the members of London Biscuits Berhad

28

Annual Report


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(b)

(c)

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.

We are satisfied that the accounts 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.

The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse

comment made under Section 174(3) of the Act.

WONG WENG FOO & CO.AF: 0829

CHARTERED ACCOUNTANTS

WONG WENG FOO1218/03/12 (J/PH)

CHARTERED ACCOUNTANTKUALA LUMPUR

Dated this : 25th October, 2010

Report on other Legal and Regulatory Requirements (Continued)

29

Annual Report


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The Directors hereby submit their report together with the audited financial statements of the Group and of

the Company for the financial year ended 30th June, 2010.

Principal Activities

The principal activities of the Company consist of manufacturing and trading of confectionery and other related

foodstuffs. The principal activities of the subsidiary companies are disclosed in Note 6 to the financial statements.

The principal activities of the Company and its subsidiary companies in the course of the financial year

remained unchanged.

Results

Dividends

Since the end of the previous financial year, a first and final dividend of 3% tax exempted for the financial year

ended 30th June, 2009 amounting to RM2,617,500 was paid on 22nd March, 2010. The directors had on 15th

October, 2010 declared an interim dividend of 1.5% tax exempted for the financial year ended 30th June, 2010

amounting to RM1,440,203 to be paid on 26th November, 2010.

The Directors do not recommend a final dividend to be paid in respect of the financial year ended 30th June, 2010.

Issue of Shares or Debentures

During the financial year, the fully and paid up share capital of the Company was increased from 78,045,000 to

96,013,500 by allotments of:-

i)

ii)

The purpose of these allotments was to allow equity participation by employees of the Company.

There were no issue of debentures during the financial year.

4,775,000 new ordinary shares of RM1.00 each for cash at par exercised on 20th July, 2009 and 670,000 new

ordinary shares of RM1.00 each for cash at par exercised on 30th July, 2009 under the Old Employees’ Share

Option Scheme; and

3,760,000 new ordinary shares of RM1.00 each for cash at RM1.04 per share exercised on 11th February, 2010,

483,500 new ordinary shares of RM1.00 each for cash at RM1.04 per share exercised on 5th March, 2010,

8,000,000 new ordinary shares of RM1.00 each for cash at RM1.01 per share exercised on 23rd March, 2010

and 280,000 new ordinary shares of RM1.00 each for cash at RM1.01 per share exercised on 20th April, 2010

under the New Employees’ Shares Option Scheme.

Directors’ Report

Profit after taxation

Retained profit brought forward

Profit available for appropriation

Minority interest

First and final dividend of 3% tax exempted,

paid on 22nd March, 2010

Retained profit carried forward

18,065,326

73,279,626

91,344,952

(3,001,308)

(2,617,500)

85,726,144

13,610,392

59,771,161

73,381,553

-

(2,617,500)

70,764,053

Group

RM

Company

RM

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Options Granted Over Unissued Shares

At an Extraordinary General Meeting held on 24th December, 2009, the shareholders had approved the

termination of the Old Employees’ Share Option Scheme (“ESOS I”)

At the same Extraordinary General Meeting, the shareholders had also approved the establishment of the

New Employees’ Share Option Scheme (“ESOS II”). Bursa Malaysia Securities Berhad has vide its letter

dated 26th November, 2009 approved the listing of such number of additional new ordinary shares of

RM1.00 each, representing up to fifteen percent (15%) of the issued and paid-up ordinary share capital of

the Company, to be issued pursuant to the exercise of options under ESOS II.

Other than options granted and exercised under the ESOS, there were no share options granted over

unissued shares by the Company during the financial year.

Employees’ Share Option Scheme

i) The Company’s ESOS I is governed by the by-laws approved by the shareholders at the Extraordinary

General Meeting held on 29th May, 2007, had been terminated as approved by the shareholders at an

Extraordinary General Meeting held on 24th December, 2009.

The principal features of ESOS I are as follows:

a)

b)

c)

d)

e)

Scheme shall be in force for a period of five years from 3rd July, 2007 (the date of the first offer made)

expiring on 2nd July, 2012 but subject to any extension or renewal for a further period of five years as

may be approved by the shareholders in a general meeting and any other relevant regulatory authority

whose approval is necessary.

Eligible persons are employees of the Group, who is a Malaysian citizen who has attained eighteen

(18) years of age (including full time Executive Directors) and have been confirmed and has served at

least six (6) months in the employment of the Group on the date of the offer or where the Executive

Director or employee is under an employment contract, the contract is for a duration of at least one (1)

year and has not expired within three (3) months from the date of offer. The eligibility for participation

in ESOS I shall be at the discretion of the ESOS Committee appointed by the Board of Directors.

The total number of shares to be issued under ESOS I shall not exceed 15% of the issued and paid-up

share capital of the Company being, the maximum allowable allotment of shares, at any point of time

during the duration of Scheme.

The option price for each new RM1.00 share to be offered shall be determined by the ESOS Committee

in the following manner:

i)

ii) the par value of the Company’s shares of RM1.00 each,

whichever is the higher.

No option shall be granted for less than 100 shares and shall always be in multiples of 100 shares.

a price at a discount of not more than ten percent (10%) from the five (5) days weighted average

market price of the Company’s shares as shown in the daily official list issued by Bursa Malaysia

Securities Berhad immediately preceding the Date of Offer; or

31

Annual Report


(72057-H)

ii)

f )

g)

During the financial year, the number of options over the ordinary shares of RM1.00 each of the Company

granted under ESOS I are as follows:

The Company’s ESOS II is governed by the by-laws approved by the shareholders at the Extraordinary

General Meeting held on 24th December, 2009.

The principal features of ESOS II are as follows:

a)

An offer made by the ESOS Committee to a selected employee shall be valid for a period of forty-five

days from the date of offer and may be accepted within this prescribed period by the selected

employee to whom the offer is made by written notice to the ESOS Committee. Upon acceptance of an

offer, the Grantee may during the option period exercise his options in full or in part in such manner as

stipulated in the offer letter.

All new ordinary shares issued upon exercise of the options granted under ESOS I will rank pari-passu

in all respects with the existing ordinary shares of the Company except that the shares so issued will

not be entitled to any dividends, rights allotments and/or other distributions, the entitlement date of

which is prior to the date of allotment of the new ordinary shares.

Scheme shall be in force for a period of five years from 14th January, 2010 (the date of the first offer

made) expiring on 13th January, 2015 but subject to any extension or renewal for a further period of

five years as may be approved by the shareholders in a general meeting and any other relevant

regulatory authority whose approval is necessary.

Number of options over ordinary

shares of RM1.00 each

Option

date

12.5.2009

6.7.2009

1.00

1.00

5,325,000

-

5,325,000

-

120,000

120,000

(5,325,000)

(120,000)

(5,445,000)

-

-

-

Option

price

per share

RM

Balance

at

1.7.2009 Granted Exercised

Balance

at

30.6.2010

20.7.2009

30.7.2009

0.85

0.88

1.00

1.00

4,775,000

670,000

5,445,000

Exercise

date

Fair value of shares at

share issue date

RM/ share

Exercised price

RM/ share

Number of

shares

issued

2010

5,445,000

2010

RM

Details relating to options exercised during the financial year are as follows:

Proceeds received on exercise of the above shares options

Employees’ Share Option Scheme (Continued)

32



Option

date

14.1.2010

4.3.2010

1.04

1.01

-

-

-

4,243,500

8,280,000

12,523,500

(4,243,500)

(8,280,000)

(12,523,500)

-

-

-

Option

price

per share

RM

Balance

at


Balance

at

30.6.2010

Annual Report


(72057-H)

b)

c)

d)

e)

f )

g)

During the financial year, the number of options over the ordinary shares of RM1.00 each of the Company

granted under ESOS II are as follows:

Eligible persons are employees of the Group, who is a Malaysian citizen who has attained eighteen (18)

years of age (including full time Executive Directors) and have been confirmed and has served at least

six (6) months in the employment of the Group on the date of the offer or where the Executive



in ESOS II shall be at the discretion of the ESOS Committee appointed by the Board of Directors.

The total number of shares to be issued under ESOS II shall not exceed 15% of the issued and paid-up

share capital of the Company being, the maximum allowable allotment of shares, at any point of time

during the duration of Scheme.

The option price for each new RM1.00 share to be offered shall be determined by the ESOS Committee

in the following manner:

i)

ii)


An offer made by the ESOS Committee to a selected employee shall be valid for a period of forty-five

days from the date of offer and may be accepted within this prescribed period by the selected

employee to whom the offer is made by written notice to the ESOS Committee. Upon acceptance of an

offer, the Grantee may during the option period exercise his options in full or in part in such manner as

stipulated in the offer letter.

All new ordinary shares issued upon exercise of the options granted under ESOS II will rank pari-passu

in all respects with the existing ordinary shares of the Company except that the shares so issued will

not be entitled to any dividends, rights allotments and/or other distributions, the entitlement date of

which is prior to the date of allotment of the new ordinary shares.




the par value of the Company’s shares of RM1.00 each,



33

11.2.2010

5.3.2010

23.3.2010

20.4.2010

1.15

1.05

1.01

1.01

1.04

1.04

1.01

1.01

3,760,000

483,500

8,000,000

280,000

12,523,500

Exercise

date


share issue date

RM/ share

Exercised price

RM/ share

Number of

shares

issued

2010

12,776,040

2010

RM


Proceeds received on exercise of the above shares options

Annual Report


(72057-H)

Reserves and Provisions

Other than as disclosed in the financial statements, there were no material transfers to or from reserves or

provisions during the financial year.

Bad and Doubtful Debts

Before the income statements and balance sheets of the Group and of the Company were made out, the Directors

took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the

making of allowance for doubtful debts and are satisfied that there are no known bad debts and adequate

allowance had been made for doubtful debts.

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

of bad debts or render the amount of allowance made for doubtful debts inadequate to any substantial extent.

Current Assets

Before the income statements and balance sheets of the Group and of the Company were made out, the

Directors took reasonable steps to ascertain whether any current assets which were unlikely to realise in the

ordinary course of business their values as shown in the accounting records of the Group and of the Company

and to the extent so ascertained were written down to an amount that they might be expected to realise.

At the date of this report, the Directors are not aware of any circumstances that would render the values

attributed to the current assets of the Group and of the Company misleading.

Valuation Methods

At the date of this report, the Directors are not aware of any circumstances which have arisen which render

adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company

misleading or inappropriate.


34

Annual Report


(72057-H)

Contingent And Other Liabilities

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

(i)

(ii)

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.

Change of Circumstances

At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in

this report or in the financial statements of the Group and of the Company that would render any amount

stated in the respective financial statements misleading.

Items of an Unusual Nature

The results of the operations of the Group and of the Company for the financial year were not, in the opinion

of the Directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any

item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to

affect substantially the results of the operations of the Group and of the Company for the financial year

in which this report is made.

Directors of the Company

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

Dato' Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP




Liew Yet Mei


Dato' Cheong Siew Kai, DJMK, AMS, JP

Huang Yan Teo, PIS, PPN

Leslie Looi Meng

any charge on the assets of the Group and of the Company that has arisen since the end of the financial

year that secures the liabilities of any other person; or

any contingent liability in respect of the Group and of the Company that has arisen since the end of the

financial year.

35

Annual Report


(72057-H)

Directors' Interest

According to the register of directors shareholdings, the interest of directors in office at the end of the financial year

in shares of the Company and related corporations during the financial year ended 30th June, 2010 are follows:-

Number of ordinary shares of RM1 each

Dato' Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP

(Chairman, Non-Executive, Non-Independent Director)

- direct

- indirect


(Non-Executive, Non-Independent Director)

- direct

- indirect


(Group Managing Director/ Group CEO)

- direct

- indirect



- direct

- indirect

Liew Yet Mei


- direct

- indirect



- direct

- indirect

Dato' Cheong Siew Kai, DJMK, AMS, JP


- direct

- indirect



- direct

- indirect

Leslie Looi Meng


- direct

- indirect

1,510,250

35,892,433

224,487

37,178,196

1,631,785

35,770,898

75,231

37,327,452

39,671

37,363,012

39,671

37,363,012

-

-

-

-

-

-

250

37,871,733

224,487

37,647,496

1,631,785

36,240,198

75,231

37,796,752

39,671

37,832,312

39,671

37,832,312

-

-

-

-

-

-

-

1,979,300

-

1,979,300

-

1,979,300

-

1,979,300

-

1,979,300

-

1,979,300

-

-

-

-

-

-

1,510,000

-

-

1,510,000

-

1,510,000

-

1,510,000

-

1,510,000

-

1,510,000

-

-

-

-

-

-

Shares in the Company Balance at

1.7.2009 Bought Sold

Balance at

30.6.2010

36

Annual Report


(72057-H)

Directors' Interest (Continued)

By virtue of their substantial shareholdings in the Company, Dato’ Sri Liew Kuek Hin, SSAP, DIMP, PJK, JP, Datin Sri

Lim Yook Lan, Dato’ Sri Liew Yew Chung, SSAP, DIMP, Dato’ Liew Yew Cheng, DIMP, Messrs Liew Yet Mei and Dato’

Liew Yet Lee, DIMP are also deemed interested in shares in all the subsidiary companies to the extent the

Company has an interest.

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 as disclosed in the financial statements) by reason of a contract made by the

Company or a related corporation with the Director or with a firm of which the Director is a member, or with

a company in which a Director has a substantial financial interest.

Neither during nor at the end of the financial year, was the Company a party to any arrangement whose object

is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the

Company or any other body corporate.

Auditors

The auditors, Messrs Wong Weng Foo & Co., have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors.

DATO' SRI LIEW KUEK HIN,SSAP, DIMP, PJK, JP

Director

DATO’ SRI LIEW YEW CHUNG, SSAP, DIMP

DirectorKUALA LUMPUR

25th October, 2010

37

The attached notes form an integral part of the Financial Statements

ASSETS

Non-Current Assets

Property, plant and equipment

Prepaid lease payments

Investment properties

Interest in associated companies

Investments

Intangible assets

Current Assets

Inventories

Trade receivables

Other receivables, deposits & prepayments

Deposits, cash & bank balances

Total Assets

EQUITY

Share capital

Reserves

Shareholders' equity

Share application monies

Minority interest

Total Equity

LIABILITIES

Non-Current Liabilities

Hire-purchase payables

Term loans

Deferred income tax liabilities

Current Liabilities

Trade payables

Bankers' acceptances

Revolving credits

Other payables & accruals


Term loans

Bank overdrafts

Current income tax liabilities

Total Liabilities

Total Equity and Liabilities

Consolidated Balance SheetAs At 30th June 2010

Annual Report


(72057-H)

Note

2010

RM

2009

RM

3

4

5

7

8

9

10

11

12

13

14

15

16

17

18

17

17

19

16

17

17

348 ,820,122

6,227,271

3,410,000

20,232,260

825,746

12,659,547

392,174,946

31,562,835

26,305,732

29,814,752

21,505,607

109,188,926

501,363,872

96,013,500

103,316,561

199,330,061

-

49,447,048

248,777,109

26,626,090

72,937,980

644,238

100,208,308

52,273,136

44,224,114

17,000,000

6,571,027

12,674,351

19,053,887

398,295

183,645

152,378,455

252,586,763

501,363,872

314,627,232

6,377,900

3,410,000

14,521,970

1,303,702

12,659,547

352,900,351

33,055,440

22,772,367

23,222,480

15,805,394

94,855,681

447,756,032

78,045,000

90,617,503

168,662,503

5,325,000

46,823,359

220,810,862

29,940,443

40,550,210

2,313,238

72,803,891

29,154,001

62,450,092

34,000,000

7,214,377

11,508,800

8,981,520

582,653

249,836

154,141,279

226,945,170

447,756,032

38

Consolidated Income StatementFor The Year Ended 30th June 2010

Annual Report


(72057-H)

Note

2010

RM

2009

RM

OPERATING REVENUE

COST OF SALES

GROSS PROFIT

SELLING & DISTRIBUTION EXPENSES

ADMINISTRATIVE EXPENSES

OTHER OPERATING INCOME

PROFIT FROM OPERATIONS

FINANCE COST

SHARE OF PROFIT IN ASSOCIATED COMPANIES

PROFIT BEFORE INCOME TAX

INCOME TAX

PROFIT AFTER INCOME TAX

Attributable to:

Equity holders of the Company

Minority interest

EARNINGS PER SHARE (sen)

- Basic

- Fully diluted

223,434,122

(169,284,276)

54,149,846

(11,241,536)

(22,185,039)

2,925,583

23,648,854

(8,192,781)

2,138,618

17,594,691

470,635

18,065,326

15,064,018

3,001,308

18,065,326

17.31

17.31

20

20

21

22

22

184,302,124

(133,770,347)

50,531,777

(11,209,626)

(17,177,799)

3,267,998

25,412,350

(10,535,259)

2,735,399

17,612,490

(490,912)

17,121,578

16,027,316

1,094,262

17,121,578

20.54

19.20


39

Consolidated Statement of Changes in EquityFor The Year Ended 30th June 2010

Annual Report


(72057-H)

Share

capital

(Note 14)

RM

Share

application

monies

RM

Share

premium

(Note 15)

RM

Revaluation

reserve

(Note 15)

RM

Retained

profits

(Note 15)

RM

Minority

interest

RM

Total

RM

At 1st July, 2008

Minority interest

share of net assets

in subsidiary

companies

Share application

monies

Profit after income tax

At 30th June, 2009/

1st July, 2009

Minority interest

share of dividend

paid by a subsidiary

company

Employee’s shares

option scheme

First and final

dividend of 3% tax

exempted, paid on

22nd March, 2010


At 30th June, 2010

78,045,000

-

-

-

78,045,000

-

17,968,500

-

-

96,013,500

-

-

5,325,000

-

5,325,000

-

(5,325,000)

-

-

-

13,521,926

-

-

-

13,521,926

-

252,540

-

-

13,774,466

3,815,951

-

-

-

3,815,951

-

-

-

-

3,815,951

57,252,310

-

-

16,027,316

73,279,626

-

-

(2,617,500)

15,064,018

85,726,144

-

45,729,097

-

1,094,262

46,823,359

(377,619)

-

-

3,001,308

49,447,048

152,635,187

45,729,097

5,325,000

17,121,578

220,810,862

(377,619)

12,896,040

(2,617,500)

18,065,326

248,777,109


40

Consolidated Cash Flow StatementFor The Year Ended 30th June 2010

Annual Report


(72057-H)

Cash Flow From Operating Activities

2010

RM

2009

RM

Profit before income tax

Adjustments for:-

Share of profit of associated company

Amortisation of prepaid lease payments

Gain on disposal of investments

Impairment loss on investments

Depreciation

Property, plant and equipment written off

Gain on disposal of property, plant and equipment

Loss on foreign exchange – unrealised

Allowance for doubtful debts no longer required

Allowance for doubtful debts

Dividend income

Interest expense

Interest income

Operating profit before working capital changes

Decrease/ (Increase) in inventories

(Increase)/ Decrease in receivables

Increase/ (Decrease) in payables

Cash generated from operations

Dividend received

Dividend paid

Interest received

Interest paid

Tax paid

Tax refund

Net cash provided by operating activities

Cash Flow From Investing Activities

#Net cash flow from acquisition of subsidiary companies

Investment in an associated company

Net decrease in portfolio investments in

quoted shares and in money markets

*Purchase of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Prepaid lease payments

Net cash used in investing activities

17,594,691

(2,138,618)

180,559

(46,636)

4,774,668

9,865,174

-

(876,011)

6,509

-

456,258

(900)

8,192,781

(39,454)

37,969,021

1,492,605

(9,959,864)

22,475,785

51,977,547

107,289

(2,995,119)

39,454

(8,192,781)

(1,914,822)

21,950

39,043,518

-

(8,223,412)

295,050

(47,665,804)

15,532,097

(29,930)

(40,091,999)

17,612,490

(2,735,399)

178,052

(53,394)

3,745,501

8,243,295

267,726

(1,095,667)

171,143

(13,992)

50,824

(12,925)

10,535,259

(133,410)

36,759,503

(3,643,096)

4,676,445

(895,562)

36,897,290

9,641

-

133,410

(10,535,259)

(1,605,554)

2,793,962

27,693,490

(2,789,735)

-

2,717,455

(32,395,939)

19,107,400

(182,362)

(13,543,181)

41

Annual Report


(72057-H)

Consolidated Cash Flow Statement (Continued)

For The Year Ended 30th June 2010

Cash Flow From Operating Activities

2010

RM

2009

RM

2010

RM

2009

RM

Proceeds from issue of shares


Net (decrease)/ increase in bankers’ acceptances

Net (decrease)/ increase in revolving credits

Proceeds from term loans

Repayment of term loans

Hire-purchase instalments paid

Net cash provided by/ (used in) financing activities

Net changes in cash & cash equivalents

Cash & cash equivalents brought forward (Note 23)

Cash & cash equivalents carried forward (Note 23)

*

#Net cash flow from acquisition of subsidiary companies

Net assets acquired

Goodwill on consolidation

Minority interest

Acquisition cost

Less: Amount previously recognised as interest in

associated company

Cash & cash equivalents acquired

Net cash flow on acquisition

68,117,426

6,854,076

(45,729,097)

29,242,405

(29,208,447)

2,755,777

2,789,735

12,896,040

-

(18,225,978)

(17,000,000)

56,000,000

(13,539,862)

(13,197,148)

6,933,052

5,884,571

15,222,741

21,107,312

-

5,325,000

19,450,092

12,498,484

4,157,924

(48,699,200)

(9,842,580)

(17,110,280)

(2,959,971)

18,182,712

15,222,741

-

-

-

-

-

-

-


Property, plant and equipment at aggregate cost of RM58,714,150 (2009 – RM50,780,152) was acquired

during the financial year of which RM11,048,346 (2009 – RM18,384,213) was acquired by means of

hire-purchase.

42

Annual Report


(72057-H)

Balance SheetAs At 30th June 2010

Note

2010

RM

2009

RMASSETS

Non-Current Assets

Property, plant and equipment

Interest in subsidiary companies

Interest in associated companies

Investments

Current Assets

Inventories

Trade receivables

Other receivables, deposits & prepayments

Deposits, cash & bank balances

Total Assets

EQUITY

Share capital

Reserves


Total Equity

LIABILITIES

Non-Current Liabilities


Term loans

Deferred income tax liabilities

Current Liabilities

Trade payables

Bankers' acceptances

Revolving credits

Other payables & accruals


Term loans

Current income tax liabilities

Total Liabilities

Total Equity and Liabilities

224,835,707

56,286,142

20,075,172

825,745

302,022,766

12,864,729

18,444,775

24,594,239

17,018,695

72,922,438

374,945,204

96,013,500

88,354,470

184,367,970

-

184,367,970

16,457,380

72,937,980

3,200,000

92,595,360

26,198,454

29,135,114

13,000,000

2,706,383

7,714,891

19,053,887

173,145

97,981,874

190,577,234

374,945,204

3

6

7

8

10

11

12

13

14

15

16

17

18

17

17

19

16

17

202,522,764

53,158,700

12,088,798

1,055,287

268,825,549

14,402,264

19,085,216

17,888,947

12,295,411

63,671,838

332,497,387

78,045,000

77,109,038

155,154,038

5,325,000

160,479,038

19,134,046

40,550,210

2,200,000

61,884,256

9,389,915

50,458,092

30,000,000

3,504,828

7,549,902

8,981,520

249,836

110,134,093

172,018,349

332,497,387


43

Annual Report


(72057-H)

Income StatementFor The Year Ended 30th June 2010

Note

2010

RM

2009

RM

OPERATING REVENUE

COST OF SALES

GROSS PROFIT

SELLING & DISTRIBUTION EXPENSES

ADMINISTRATIVE EXPENSES

OTHER OPERATING INCOME

PROFIT FROM OPERATIONS

FINANCE COST

PROFIT BEFORE INCOME TAX

INCOME TAX

PROFIT AFTER INCOME TAX

EARNINGS PER SHARE (sen)

- Basic

- Fully diluted

161,972,843

(119,451,119)

42,521,724

(9,549,785)

(12,680,890)

1,561,904

21,852,953

(6,032,744)

15,820,209

(2,209,817)

13,610,392

15.64

15.64

20

20

21

22

22

154,148,984

(114,015,278)

40,133,706

(9,727,347)

(12,205,185)

2,090,695

20,291,869

(9,408,544)

10,883,325

(2,460,814)

8,422,511

10.79

10.09


44

Annual Report


(72057-H)

Statement of Changes in EquityFor The Year Ended 30th June 2010

Share

capital

(Note 14)

RM

Share

application

monies

RM

Share

premium

(Note 15)

RM

Revaluation

reserve

(Note 15)

RM

Retained

profits

(Note 15)

RM

Total

RM

At 1st July, 2008



At 30th June, 2009/

1st July, 2009

Employee’s shares

option scheme

First and final

dividend of 3% tax

exempted, paid on

22nd March, 2010


At 30th June, 2010

78,045,000

-

-

78,045,000

17,968,500

-

-

96,013,500

-

5,325,000

-

5,325,000

(5,325,000)

-

-

-

13,521,926

-

-

13,521,926

252,540

-

-

13,774,466

3,815,951

-

-

3,815,951

-

-

-

3,815,951

51,348,650

-

8,422,511

59,771,161

-

(2,617,500)

13,610,392

70,764,053

146,731,527

5,325,000

8,422,511

160,479,038

12,896,040

(2,617,500)

13,610,392

184,367,970


45

Annual Report


(72057-H)

Cash Flow StatementFor The Year Ended 30th June 2010

2010

RM

2009

RMCash Flow From Operating Activities


Adjustments for:-



Allowance for doubtful debts no longer required

Depreciation

Gain on disposal of property, plant and equipment

Dividend income

Interest expense

Interest income

Operating profit before working capital changes

Decrease in inventories

Increase in receivables

Increase in payables

Cash generated from operations

Dividend received

Dividend paid

Interest received

Interest paid

Tax paid

Tax refund

Net cash provided by operating activities

Cash Flow From Investing Activities

Net decrease in portfolio investments in quoted shares

and in money markets

Investment in an associated company

* Purchase of property, plant and equipment

Proceeds from disposal of property, plant and equipment

Net cash used in investing activities

Cash Flow From Financing Activities

Proceeds from issue of shares


Net (decrease)/ increase in bankers' acceptances

Net (decrease)/ increase in revolving credits

Proceeds from term loans

Repayment of term loans

Hire-purchase instalments paid

Net cash provided by/ (used in) financing activities

15,820,209

359,966

-

-

6,283,940

(876,010)

(247,404)

6,032,744

(19,642)

27,353,803

1,537,535

(8,780,466)

15,598,267

35,709,139

292,167

(2,617,500)

19,642

(6,032,744)

(1,224,657)

-

26,146,047

-

(8,223,412)

(37,204,604)

15,532,096

(29,895,920)

12,896,040

-

(21,322,978)

(17,000,000)

56,000,000

(13,539,863)

(8,560,042)

8,473,157

10,883,325

3,790,915

(53,394)

(13,992)

6,039,299

(1,095,667)

(675)

9,408,544

(67,449)

28,890,906

1,103,741

(2,486,609)

3,275,152

30,783,190

506

-

67,449

(9,408,544)

(849,996)

1,642,429

22,235,034

2,717,455

-

(40,453,584)

26,320,168

(11,415,961)

-

5,325,000

22,458,092

9,000,000

4,157,924

(48,699,200)

(7,173,446)

(14,931,630)

46

Annual Report


(72057-H)

Cash Flow Statement (Continued)

For The Year Ended 30th June 2010

2010

RM

2009

RM

Net changes in cash & cash equivalents

Cash & cash equivalents brought forward (Note 23)

Cash & cash equivalents carried forward (Note 23)

4,723,284

12,295,411

17,018,695

(4,112,557)

16,407,968

12,295,411


* Property, plant and equipment at aggregate cost of RM43,252,969 (2009 – RM42,260,390) was acquired

during the financial year of which RM6,048,365 (2009 – RM1,806,806) was acquired by means of

hire-purchase.

47

1. General Information

1.1

1.2

1.3

1.4

2. Significant Accounting Policies

2.1 Basis of Preparation

2.2 Changes in Accounting Policies and Effects from Adoption of New and Revised FRSs

The Company is a public limited company, incorporated and domiciled in Malaysia, and listed on the

Main Market of Bursa Malaysia Securities Berhad.

The principal place of business is located at No 1, Jalan Istimewa 2, Taman Perindustrian Desa Cemer-

lang, 81800 Ulu Tiram, Johor Darul Takzim.

The principal activities of the Company consist of manufacturing and trading of confectionery and

other related foodstuffs. The principal activities of the subsidiary companies are disclosed in Note 6 to

the financial statements.

The financial statements of the Group and of the Company were authorised for issue by the Board of

Directors in accordance with a resolution dated

The financial statements of the Group and of the Company have been prepared under the historical

cost convention except as disclosed in this summary of significant accounting policies.

The preparation of financial statements, in conformity with the provisions of the Companies Act,

1965 and Financial Reporting Standards in Malaysia requires the Directors to make estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial

statements and the reported amounts of revenue and expenses during the reported financial year

as disclosed in Note 2.4. Although these estimates are based on the Directors’ best knowledge of

current events and actions, actual results could differ from those estimates.

The directors of the Group have chosen not to early adopt the following FRS, amendments and

interpretations which were in issue but not yet effective:-

Unless otherwise stated, the following significant accounting policies have been used consistently in

dealing with items which are considered material in relation to the financial statements.

Notes to the Financial Statements30th June 2010

Annual Report


(72057-H)

Effective for

financial period

beginning on or

after

FRS 1

Amendments to FRS 1

First-time Adoption of Financial Reporting

Standards (revised)

- Limited Exemption from Comparative

FRS 7 Disclosure for First-time Adopters

- Additional Exemption for First-time Adopters

1.7.2010

1.1.2011

48

2.2 Changes in Accounting Policies and Effects from Adoption of New and Revised FRSs (Continued)

Annual Report


(72057-H)

Effective for

financial period

beginning on or

after

Amendments to FRS 2

FRS 3

FRS 4

Amendments to FRS 5

FRS 7

Amendments to FRS 7

FRS 101

Amendments to FRS 101

FRS 123




FRS 139


IC Interpretation 4

IC Interpretation 9

Amendments to

IC Interpretation 9

IC Interpretation 10

Share-based Payment

- Vesting Conditions and Cancellations

- Group Cash settled Share Based Payment

Business Combinations (revised)

Insurance Contracts

Non-current Assets Held for Sale and

Discontinued Operations

Financial Instruments: Disclosures

- Improving Disclosures about Financial Instrments

Presentation of Financial Statements (revised)

- Puttable Financial Instruments and

Obligation Arising on Liquidation

Borrowing Costs (revised)

Consolidated and Separate Financial Statements

Financial Instruments: Presentation

- Puttable Financial Instruments and

Obligation Arising on Liquidation

- Separation of Compound Instrument

- Classification of Rights Issues

Intangible Assets

Financial Instruments: Recognition and Measurement

- Reclassification of Financial Assets

- Collective Assessment of Impairment for

Banking Institutions

Determining whether on Arrangement

contain a Lease

Reassessment of Embedded Derivatives

- Reassessment of Embedded Derivatives

Interim Financial Reporting and Impairment

1.7.2010

1.1.2010

1.1.2011

1.7.2010

1.1.2010

1.7.2010

1.1.2011

1.1.2010

1.1.2010

1.1.2010

1.1.2010

1.1.2010

1.1.2010

1.3.2010

1.7.2010

1.1.2010

1.1.2010

1.1.2010

1.1.2011

1.1.2010

1.7.2010

1.1.2010

49

Annual Report


(72057-H)

2.2 Changes in Accounting Policies and Effects from Adoption of New and Revised FRSs (Continued)

2.3 Summary of Significant Accounting Policies

a) Subsidiary Companies and Basis of Consolidation

Subsidiary companies are enterprises controlled by the Company. Control exists when the Company

has the power to govern the financial and operating policies of the enterprises so as to obtain

benefits from their activities.

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

subsidiary companies made up to the balance sheet date using the purchase method of accounting.

Under this method, the results of the subsidiary companies acquired are included in the consolidated

financial statements from the dates of acquisition.

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

assets, liabilities and contingent liabilities represents goodwill.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contin-

gent liabilities over the cost of acquisition is recognised immediately in income statement.

All inter-company balances and transactions are eliminated on consolidation and the consolidated

financial statements reflect external transactions only.

Effective for

financial period

beginning on or

after









FRS2 – Group and Treasury Share Transactions

Service Concession Arrangements

Customer Loyalty Programmes

FRS119 – The Limit on a Defined Benefit Asset,

Minimum Funding Requirements’ and Their Interaction

Agreements for the Construction of Real Estate

Hedges of a Net Investment in a Foreign Operations

Distributions of Non-cash Assets to Owners

Transfer of Assets from Customers

1.1.2010

1.7.2010

1.1.2010

1.1.2010

1.7.2012

1.7.2010

1.7.2010

1.1.2011

These new and revised FRS’S are not expected to have any significant impact on the financial statements

of the Group and of the Company.

50

Annual Report


(72057-H)

2.3 Summary of Significant Accounting Policies (Continued)

b) Property, Plant and Equipment and Depreciation

c) Leases

i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and

rewards incidental to ownership. Leases of land and buildings are classified as operating or finance

leases in the same way as leases of other assets and the land and buildings elements of a lease of

land and buildings are considered separately for the purposes of lease classification. All leases that

do not transfer substantially all the risks and rewards are classified as operating leases.

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are

included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when

it is probable that future economic benefits associated with the item will flow to the Group and the

cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised.

All other repairs and maintenance are charged to the income statement during the financial period

in which they are incurred.

Subsequent to recognition, property, plant and equipment are stated at cost as modified by the

revaluation of certain freehold land and buildings and certain plant and machinery less accumulated

depreciation and accumulated impairment loss, if any.

No depreciation is provided on freehold land, freehold land and buildings-in-progress and plant and

machinery under installation.

All other property, plant and equipment are depreciated on a straight line basis to write off the cost

of each asset to their residual value over the estimated useful lives of the assets concerned. The

principal annual rates used are as follows:-

Freehold buildings 1%

Plant & machinery 5%

Plant and machinery at group cost 6 2/3%

Motor vehicles 20%

Furniture & fittings 10%

Office & laboratory equipment 10%

Renovations & electrical fittings 10%

The Group and Company adopts a policy to revalue its freehold land and buildings every 5 years

from the date of last revaluation. Surplus arising from revaluation is credited directly to revaluation

reserve. Deficit in excess of the revaluation reserve arising from previous revaluation is taken to the

income statement.

The residual value, useful life and depreciation method are reviewed at each financial year end to

ensure that the amount, method and period of depreciation are consistent with previous estimates

and the expected pattern of consumption of the future economic benefits embodied in the items of

property, plant and equipment.

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

economic benefits are expected from its use or disposal. The difference between the net disposal

proceeds, if any and the net carrying amount is recognised in income statement.

51

Annual Report


(72057-H)


c) Leases (Continued)

ii) Finance Leases

d) Investment Properties

iii) Operating Leases

Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair

values and the present value of the minimum lease payments at the inception of the leases, less

accumulated depreciation and impairment losses. The corresponding liability is included in the

balance sheet as borrowings. In calculating the present value of the minimum lease payments, the

discount factor used is the interest rate implicit in the lease, when it is practicable to determine,

otherwise, the Group’s or Company's incremental borrowing rate is used. Any initial direct costs are

also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding

liability. Finance costs, which represent the difference between the total leasing commitments and

the fair value of the assets acquired, are recognised in income statement over the term of the

relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the

obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant

and equipment as described in Note 2.3(b).

Investment properties are properties held either to earn rental income or for capital appreciation or

for both. Gain or losses arising from changes in the fair values of investment properties are included

in the income statement in the year in which they arise.

Investment properties are derecognised when they have either been disposed of or when the investment

property is permanently withdrawn from use and no future benefit is expected from its disposal. On

the derecognition of an investment property, the difference between the net disposal proceeds and

the carrying amount is charged to the income statement; any amount in the revaluation reserve

relating to the investment property is transferred to retained earnings.

e) Intangible Assets

(i) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration

over the Group's share of the fair values of the identifiable net assets of subsidiaries at the date of

acquisition.

Operating lease payments are recognised as an expense on a straight-line basis over the term of

the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a

reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front

payments made are allocated, whenever necessary, between the land and the buildings elements

in proportion to the relative fair values for leasehold interests in the land element and buildings

element of the lease at the inception of the lease. The up-front payment represents prepaid lease

payments and are amortised on a straight-line basis over the lease terms.

52

Annual Report


(72057-H)


e) Intangible Assets (Continued)

(i) Goodwill on Consolidation

f) Inventories

Goodwill on consolidation is retained in the consolidated balance sheet. The carrying amount of

the goodwill is reviewed annually and is written down for impairment where it is considered necessary.

The impairment value of goodwill is taken to the consolidated income statement.

If after reassessment, the Group's interest in the fair values of the identifiable net assets of the

subsidiaries exceed the cost of the business combinations, the excess is recognised immediately in

the consolidated income statement.

(ii) Other Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible

assets acquired in a business combination is their fair values as at the date of acquisition. Following

initial recognition, intangible assets are carried at cost less any accumulated amortisation and any

accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite

or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the

estimated economic useful lives and assessed for impairment whenever there is an indication that the

intangible asset may be impaired. The amortisation period and the amortisation method for an

intangible asset with a finite useful life are reviewed at least at each balance sheet date.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually

or more frequently if the events or changes in circumstances indicate that the carrying value may

be impaired either individually or at the cash-generating unit level. The useful life of an intangible

asset with an indefinite life is also reviewed annually to determine whether the useful life assessment

continues to be supportable.

Inventories are valued at the lower of cost and net realisable value on the weighted average cost basis. Cost

of raw materials comprise the cost of purchase plus the cost of bringing the inventories to their present

location and condition. For finished goods and work-in-progress cost consist of raw materials, direct labour

and an appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less selling expenses. In

arriving at net realisable value, due allowance is made for all obsolete and slow moving inventories.

g) Investments

Investments in subsidiaries are stated at cost less impairment losses, if any. Investments in quoted

shares, portfolio investment in quoted shares and money market and unquoted bonds held as long

term investments are stated at cost less accumulated impairment losses, if any. Marketable securities

are carried at lower of cost and market value. Market value is calculated by reference to stock

exchange quoted price at close of business on the balance sheet date.

h) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when identified.

Allowance is made for doubtful debts based on a review of all outstanding amounts as at the balance

sheet date.

53

Annual Report


(72057-H)


Cash and cash equivalents comprise cash in hand, bank balances and deposits with licensed banks, net of outstanding bank overdrafts which are subject to an insignificant risk of changes in value.

Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

Provisions are recognised when there is a present obligation, legal or constructive 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 can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Property, plant and equipment acquired under hire-purchase are capitalised and are depreciated in accordance with the policy stated in Note 2.3(b) and the corresponding obligations relating to the remaining capital payments are treated as liabilities. Finance charges are charged to the income statement over the period of the plan and accounted for on a straight line method.

Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs.

Borrowing costs directly attributable to the acquisition of property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred.

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Cost incurred directly attributable to the issuance of the shares are accounted for as a deduction from share premium, otherwise it is charged to the income statement.

Dividends to shareholders are recognised in equity in the period in which they are declared or approved by shareholders at general meeting.

Income tax on the profit for the year comprises current and deferred income tax liabilities. Current income tax liabilities 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 at the balance sheet date.

i) Cash and Cash Equivalents

j) Payables

k) Provisions

l) Hire-Purchase

m) Interest-Bearing Borrowings

n) Share Capital

o) Income Tax

54

Annual Report


(72057-H)


Deferred income tax liabilities is provided for using the liability method, on temporary fifferences at

the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in

the financial statements. In principle, deferred income tax liabilities are recognised for all taxable

temporary differences and deferred income 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.

A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be

available against which the deductible temporary differences can be utilised. The carrying amount of

a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient

taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised,

the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable

that sufficient taxable profit will be available, such reduction will be reversed to the extent of the

taxable profit.

Foreign currency transactions are converted into Ringgit Malaysia, the Group’s functional

currency, at the rates of exchange ruling on the transaction dates. Monetary assets and liabilities

in foreign currencies at balance sheet date are translated into Ringgit Malaysia at the exchange

rates ruling at that date. All exchange gains and losses are taken up in the income statement.

The principal closing rates used in translation are as follows:-

o) Income Tax (Continued)

p) Foreign Currencies

The carrying values of assets, other than inventories, are reviewed for impairment when there is an

indication that the assets might be impaired. Impairment is measured by comparing the carrying

values of the assets with their recoverable amounts. An impairment loss is charged to the income

statement immediately unless the asset is carried at revalued amount. Any impairment loss of a

revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation

surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous

impairment loss and is recognised to the extent of the carrying amount of the asset that would have

been determined (net of depreciation) had no impairment loss been recognised. The reversal is

recognised in the income statement immediately, unless the asset is carried at revalued amount. A

reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However,

to the extent that an impairment loss on the same revalued asset was previously recognised as an

expense in the income statement, a reversal of that impairment loss is recognised as income in the

income statement.

q) Impairment of Assets

2010

RM

3.2

2.8

2.3

4.0

2009

RM

3.2

3.1

2.4

5.1

Foreign currency

1 US Dollar

1 Australian Dollar

1 Singapore Dollar

1 Euro

55

Annual Report


(72057-H)


i)

ii) Fair value estimation for disclosure purposes

Operating revenue of the Group and of the Company represents invoiced value of goods sold net of

returns and discounts.

Financial instruments are recognised in the respective balance sheets when the Group have become

a party to the contractual provisions of the instruments. The particular recognition methods

adopted are disclosed in the individual accounting policy statements associated with each item.

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

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

classified as liability are reported as expense or income. Distributions to holders of financial

instruments classified as equity are charged directly to equity. Financial instruments are offset

when the Group have a legally enforceable right to set off the recognised amounts and intends

either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(a)

(b)

(c)

i)

ii)

iii)

Short term employees benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non monetary benefits are accrued

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

Post-employment benefits

Defined contribution plan

The Group’s contribution to the defined contribution plan (“Employees Provident Fund”) are

charged to the income statement in the period in which they relate. Once the contributions have

been paid, the Group have no further payment obligations.

Equity compensation benefits

The Employees Share Option Scheme allows the employees to acquire shares of the Company. No

compensation cost or obligation is recognised. When the options are exercised, equity is increased

by the amount of the proceeds received.

The carrying amounts of financial assets and liabilities with a maturity of less than one year

are assumed to approximate their fair values.

The fair values of publicly traded securities are estimated based on quoted market prices at

the balance sheet date.

The fair values of long term borrowings and hire-purchase creditors are estimated using

discounted cash flow analysis at current market interest rate available for similar types of

lending and borrowing arrangements.

r) Financial Instruments

s) Employees Benefits

t) Revenue

56

Annual Report


(72057-H)


i)

ii)

iii)

iv)

The residual values for certain major plant and machinery of the Group are ascertained annually at a

percentage of cost to reflect their approximate fair value at the end of their estimated useful lives.

Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives.

Management estimates the useful lives of the plant and equipment to be 5 to 20 years. Changes in the

expected level of usage and technological developments could impact the economic useful lives and

residual values of the plant and equipment. Therefore the future depreciation charges could be revised.

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

These reviews require judgement and estimates. Possible changes in these estimates could result in

revisions to the valuations of inventories.

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

receivables. Allowances are applied to receivables where events or changes in circumstances indicate

that the carrying amounts may not be recoverable. Management specifically analysed historical bad

debts, customer concentrations, customer credit worthiness, current ecomic trends and changes in

customer payment terms when making a judgement to evaluate the adequacy of the allowance for

doubtful debts of receivables. Where the expectation is different from the original estimate, such

difference will impact the carrying value of receivables.

Revenue from sale of goods is recognised when the risks and rewards of ownership of the goods

have been transferred to the buyers.

Other sources of income earned, including interest income and rental income are recognised on an

accrual basis.

Interest from investment in bonds is accounted for in the income statement when the right to

receive payment is established.

Dividend income from investment in quoted shares is accounted for in the income statement

when the right to receive payment is established.

t) Revenue (Continued)

Revenue Recognition

The key assumptions concerning the future and other key sources of estimation uncertainty at the

balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts

of assets and liabilities within the next financial year are as stated below:-

a) Depreciation of property, plant and equipment

b) Net realisable values of inventories

c) Recoverability of receivables

2.4 Significant Accounting Estimates and Assumptions

57

Annual Report


(72057-H)

Com

pany

No:

720

57-H

34

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PRO

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)-

(864

,692

)-

- -

(6,1

78,3

38)

At 3

0th

June

70

3,62

5 1,

719,

036

838,

627

62,3

86,8

31-

1,98

0,85

13,

713,

690

5,45

6,54

78,

247,

027

85,0

46,2

34

NET

BO

OK

VA

LUE

49,7

71,3

75

2,71

7,96

417

,092

,155

198,

457,

551

65,4

29,9

952,

497,

148

1,49

0,88

53,

928,

231

7,43

4,81

834

8,82

0,12

2

58

Annual Report


(72057-H)

Com

pany

No:

720

57-H

35

PR

OPE

RTY

, PLA

NT

AN

D E

QU

IPM

ENT

(CO

NTI

NU

ED)

A

t va

luat

ion

At g

roup

co

st

At c

ost

2009

Pl

ant &

Fr

eeho

ld

Fr

eeho

ld

m

achi

nery

O

ffice

&

Ren

ovat

ions

C

OST

/ la

nd &

Pl

ant &

la

nd &

Pl

ant &

un

der

Mot

or

Furn

iture

la

bora

tory

&

ele

ctric

al

VA

LUA

TIO

N

build

ings

m

achi

nery

build

ings

m

achi

nery

in

stal

latio

n ve

hicl

es

& fi

tting

s eq

uipm

ent

fittin

gs

Tota

l

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

At 1

st J

uly

21,2

00,0

00

4,43

7,00

03,

292,

772

194,

163,

415

40,1

80,2

29

3,31

0,25

84,

541,

275

2,37

4,21

37,

331,

770

280,

830,

932

Add

ition

s -

- 6,

071,

453

11,9

95,5

6831

,411

,840

-

8,26

620

2,39

31,

090,

632

50,7

80,1

52

Rec

lass

ifica

tion

- -

- 29

,021

,204

(29,

021,

204)

-

- -

- -

Acq

uisi

tion

of

sub

sidi

arie

s

29,2

75,0

00

- -

59,2

10,1

76-

1,55

4,42

056

9,53

08,

504,

693

2,97

5,21

4 10

2,08

9,03

3

Dis

posa

ls

- -

(3,4

04,3

33)

(32,

224,

746)

- (2

75,4

82)

- (1

,808

,926

)-

(37,

713,

487)

A

t 30t

h Ju

ne

50,4

75,0

00

4,43

7,00

05,

959,

892

262,

165,

617

42,5

70,8

65

4,58

9,19

65,

119,

071

9,27

2,37

311

,397

,616

395,

986,

630

AC

CU

MU

LATE

D

DEP

REC

IATI

ON

At 1

st J

uly

70,6

66

1,06

8,06

0-

42,5

92,5

38-

956,

554

2,64

6,11

71,

493,

088

4,38

7,12

553

,214

,148

C

harg

e fo

r the

yea

r 33

8,36

6 32

5,48

8-

5,65

4,00

1-

436,

724

328,

001

453,

421

707,

294

8,24

3,29

5 R

ecla

ssifi

catio

n -

- -

- -

- -

- -

- A

cqui

sitio

n of

s

ubsi

diar

ies

(1

41,1

08)

- -

31,7

58,6

45-

918,

127

274,

263

4,92

8,59

01,

597,

134

39,3

35,6

51

Dis

posa

ls

- -

- (1

7,81

4,64

3)-

(22,

867)

- (1

,596

,186

)-

(19,

433,

696)

A

t 30t

h Ju

ne

267,

924

1,39

3,54

8-

62,1

90,5

41-

2,28

8,53

83,

248,

381

5,27

8,91

36,

691,

553

81,3

59,3

98

NET

BO

OK

VA

LUE

50,2

07,0

76

3,04

3,45

25,

959,

892

199,

975,

076

42,5

70,8

65

2,30

0,65

81,

870,

690

3,99

3,46

04,

706,

063

314,

627,

232

2,975,214

59

Annual Report


(72057-H)C

ompa

ny N

o: 7

2057

-H

36

PR

OPE

RTY

, PLA

NT

AN

D E

QU

IPM

ENT

(CO

NTI

NU

ED)

Com

pany

A

t va

luat

ion

At c

ost

Plan

t &

20

10

Free

hold

Fr

eeho

ld

m

achi

nery

Offi

ce &

R

enov

atio

ns

la

nd &

la

nd &

Pl

ant &

un

der

Mot

or

Furn

iture

lab

orat

ory

& e

lect

rical

C

OST

/ V

ALU

ATI

ON

bu

ildin

gs

build

ings

m

achi

nery

inst

alla

tion

vehi

cles

&

fitti

ngs

equi

pmen

tfit

tings

To

tal

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

At 1

st J

uly

21,2

00,0

00

5,95

9,89

216

2,06

2,40

337

,205

,865

3,24

6,65

84,

325,

180

2,02

5,63

98,

422,

402

244,

448,

039

Add

ition

s -

7,69

8,85

556

3,71

833

,433

,743

1,21

8,93

349

,066

112,

405

176,

249

43,2

52,9

69R

ecla

ssifi

catio

n -

4,27

2,03

53,

072,

000

(11,

349,

613)

- -

- 4,

005,

578

- D

ispo

sals

-

- (1

9,50

4,29

4)-

(1,2

81,5

10)

- -

- (2

0,78

5,80

4)A

t 30t

h Ju

ne

21,2

00,0

00

17,9

30,7

8214

6,19

3,82

759

,289

,995

3,18

4,08

14,

374,

246

2,13

8,04

412

,604

,229

266,

915,

204

AC

CU

MU

LATE

D

D

EPR

ECIA

TIO

N

A

t 1st

Jul

y 21

1,99

9 -

31,3

33,7

50-

1,36

9,44

82,

741,

263

1,26

9,43

64,

999,

379

41,9

25,2

75R

ecla

ssifi

catio

n -

709,

834

(709

,834

)-

- -

- -

- C

harg

e fo

r the

yea

r 21

2,00

1 12

8,79

33,

795,

670

- 47

2,51

538

5,66

317

7,63

41,

111,

664

6,28

3,94

0D

ispo

sals

-

- (5

,313

,646

)-

(816

,072

)-

- -

(6,1

29,7

18)

At 3

0th

June

42

4,00

0 83

8,62

729

,105

,940

- 1,

025,

891

3,12

6,92

61,

447,

070

6,11

1,04

3 42

,079

,497

NET

BO

OK

VA

LUE

20,7

76,0

00

17,0

92,1

5511

7,08

7,88

759

,289

,995

2,15

8,19

01,

247,

320

690,

974

6,49

3,18

6 22

4,83

5,70

7

60

Annual Report


(72057-H)

Com

pany

No:

720

57-H

37

PR

OPE

RTY

, PLA

NT

AN

D E

QU

IPM

ENT

(CO

NTI

NU

ED)

A

t val

uatio

n A

t cos

t

Pl

ant &

2009

Fr

eeho

ld

Free

hold

mac

hine

ry

Offi

ce &

R

enov

atio

ns

la

nd &

la

nd &

Pl

ant &

un

der

Mot

or

Furn

iture

la

bora

tory

& e

lect

rical

CO

ST/

VA

LUA

TIO

N

build

ings

bu

ildin

gs

mac

hine

ry

inst

alla

tion

vehi

cles

&

fitti

ngs

equi

pmen

tfit

tings

To

tal

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

A

t 1st

Jul

y 21

,200

,000

3,

292,

772

165,

742,

867

33,3

37,2

293,

251,

638

4,32

5,18

01,

878,

773

7,33

1,77

0 24

0,36

0,22

9A

dditi

ons

- 6,

071,

453

8,90

4,59

926

,046

,840

- -

146,

866

1,09

0,63

2 42

,260

,390

Rec

lass

ifica

tion

- -

16,6

16,2

55(1

6,61

6,25

5)-

- -

- -

Dis

posa

ls

- (3

,404

,333

)(2

9,20

1,31

8)(5

,561

,949

)(4

,980

) -

- -

(38,

172,

580)

At 3

0th

June

21

,200

,000

5,

959,

892

162,

062,

403

37,2

05,8

653,

246,

658

4,32

5,18

02,

025,

639

8,42

2,40

2 24

4,44

8,03

9

A

CC

UM

ULA

TED

D

EPR

ECIA

TIO

N

A

t 1st

Jul

y 70

,666

-

39,9

34,9

63-

897,

934

2,44

6,05

61,

097,

311

4,38

7,12

5 48

,834

,055

Cha

rge

for t

he y

ear

141,

333

- 4,

346,

866

- 47

1,51

4 29

5,20

717

2,12

561

2,25

4 6,

039,

299

Dis

posa

ls

- -

(12,

948,

079)

- -

- -

- (1

2,94

8,07

9)A

t 30t

h Ju

ne

211,

999

- 31

,333

,750

- 1,

369,

448

2,74

1,26

31,

269,

436

4,99

9,37

9 41

,925

,275

NET

BO

OK

VA

LUE

20,9

88,0

01

5,95

9,89

213

0,72

8,65

337

,205

,865

1,87

7,21

0 1,

583,

917

756,

203

3,42

3,02

3 20

2,52

2,76

4

61

Annual Report


(72057-H)

a)

b)

c)

The freehold properties of the Company and a subsidiary company were last revalued in the financial

year ended 30th June, 2008 and 30th June, 2009, respectively, by a firm of professional valuers Messrs

Collier Jordan Lee & Jaafar.

Surplus arising from the valuation of certain subsidiaries properties and plant and machinery totalling

RM1,998,362 (2009 – RM1,998,362), have been incorporated in the consolidated financial statements, to

restate these assets at fair value thereof to the Group.

Had the revalued property, plant and equipment been carried at historical cost less accumulated

depreciation, the net book value of each class of property, plant and equipment as at 30th June,

2010 would be as follows:-

d) Included herein for the year ended 30th June, 2010 are the following plant and equipment at cost

acquired under hire-purchase instalment plans:-

e) Included in plant and machinery of the Group and of the Company for the year ended 30th June, 2010

was an amount of RM2,470,743 (2009 – RM1,695,577) and RM2,470,743 (2009 – RM1,545,977), respectively,

of hire-purchase, term loan and revolving credit interest capitalised during period of installation of those

plant and machinery.

At group cost:

At 1st July

Additions

Amortisation for the year

At 30th June

6,377,900

29,930

(180,559)

6,227,271

6,373,590

182,362

(178,052)

6,377,900

The leasehold properties of the subsidiaries were revalued by a firm of professional valuers Messrs Colliers

Jordan Lee & Jaafar in financial year ended 30th June, 2005.

Property, Plant And Equipment (Continued)

4. Prepaid Lease Payments

Freehold land and buildings

Plant and machinery

Group

2010

RM

2009

RM

Company

2010

RM

2009

RM

26,629,741

628,288

26,689,895

928,288

17,159,658

-

17,280,129

-

Plant and machinery

Motor vehicles

Group

2010

RM

2009

RM

Group 2010

RM

2009

RM

Company

2010

RM

2009

RM

67,863,467

3,184,081

49,274,187

3,246,657

48,625,536

3,184,081

35,951,411

3,246,657

62

Annual Report


(72057-H)

4. Prepaid Lease Payments (Continued)

Had the leasehold land and buildings been carried at historical cost less accumulated amortisation the

carrying amount of the revalued assets as at 30th June, 2010 would be as follows :

* Wholly owned subsidiaries of Khee San Berhad

** Wholly owned subsidiaries of Kinos Food Industries (M) Sdn. Bhd.

Khee San Berhad was consolidated as a subsidiary to the Group with effect from 1st November, 2008

Group

Leasehold land and buildings

2010

RM

4,046,211

2009

RM

4,106,365

5. Investment Properties

Group

Fair value, at 30th June

2010

RM

3,410,000

2009

RM

3,410,000

6. Interest In Subsidiary Companies

Group

Unquoted shares, at cost

Quoted shares, in Malaysia at cost

Amount due from a subsidiary company

Amount due to a subsidiary company

The subsidiary companies, incorporated in Malaysia, are as follows:-

2010

RM

2009

RM

Name of Company Equity

2010

%

EffectiveInterest

2009

%


31,725,687

28,584,434

60,310,121

6,052,827

(10,076,806)

56,286,142

31,725,687

28,584,434

60,310,121

3,337,212

(10,488,633)

53,158,700

Khee San Berhad

* Khee San Marketing Sdn Bhd

* Khee San Food Industries Sdn Bhd

Kinos Food Industries (M) Sdn Bhd

**Kim Choaw Sdn Bhd

**Kinos Food Trading Sdn Bhd

Investment holding

Temporary ceased operations

Manufacturing of candy

confectionery and wafer

products

Investment holding, manufacturing

and trading of confectioneries

and snack food

Letting of property and trading of

confectioneries and general

food stuffs

Temporary ceased operations

32.87

32.87

32.87

100.00

100.00

100.00

32.87

32.87

32.87

100.00

100.00

100.00

63

Annual Report


(72057-H)

7. Interest In Associated Companies

Quoted shares in Malaysia, at cost

Distribution of dividend

Impairment of investment

Share of profit in associated

companies

Market value

The associated companies, incorporated in Malaysia, are as follows:-

2010

RM

2009

RM

20,312,210

(106,614)

(4,545,126)

4,571,790

20,232,260

15,940,982

12,088,798

-

-

2,433,172

14,521,970

7,960,540

As disclosed in Note 29(i) to the Financial Statements, the Company had as announced on Bursa Malaysia

Securities Berhad on 23rd August, 2010, the Company, had disposed of its entire equity interest in Lay Hong

Berhad, its associated company in the open market and via off market transactions on a willing buyer

willing seller basis for a total consideration of RM11,851,760, resulting in an impairment on this investment

of RM4,545,126 to the Group.

Name of Company Equity

2010

%

EffectiveInterest

2009

%


Lay Hong Berhad

TPC Plus Berhad

Poultry farming and related activities and

liquid eggs processing

Poultry farming and related activities and

liquid eggs processing

24.59

33.65

24.59

-

Group

2010

RM

2009

RM

20,312,210

(106,614)

(130,424)

-

20,075,172

15,940,982

12,088,798

-

-

-

12,088,798

7,960,540

Company

8. Investments

Group

Quoted (in Malaysia)

Shares in corporations

Unquoted (in Malaysia)

Bonds

Quoted (outside Malaysia)

Shares in a corporation (At group cost)

Less: Impairment loss on investments

Cost

RM

Market

value

RM

2010 2009

Cost

RM

Market

value

RM

2,252,993

4,000,000 6,252,993

1 6,252,994

(5,427,248)825,746

825,745 2,501,407

4,000,000 6,501,407

1 6,501,408

(5,197,706)1,303,702

1,303,701

64

Annual Report


(72057-H)

9. Intangible Assets

i) Goodwill On Consolidation

Goodwill on consolidation Less: Accumulated amortisation At 1st July Add: Arising from investment in subsidiary companies At 30th June

ii) Other Intangible Assets

Trademarks, at cost

The directors regards these trademarks to have indefinite useful lives.

2010

RM

2009

RM

10. Inventories

11,568,174(508,627)

11,059,547 -

11,059,547

1,600,000 12,659,547

4,714,098 (508,627)4,205,4716,854,076

11,059,547

1,600,00012,659,547

Raw materials

Work-in-progress

Finished goods

Factory consummables

At cost:

2010

RM

2009

RM

22,597,618

4,414,781

4,345,412

205,024

31,562,835

22,207,195

4,299,943

6,364,523

183,779

33,055,440

Group

Group

2010

RM

2009

RM

8,647,463

3,117,672

1,099,594

-

12,864,729

9,243,306

3,118,942

2,040,016

-

14,402,264

Company

11. Trade Receivables

Trade receivables

Less: Allowance for doubtful debts

2010

RM

2009

RM

27,682,040

(1,376,308)

26,305,732

23,692,417

(920,050)

22,772,367

Group

2010

RM

2009

RM

18,543,481

(98,706)

18,444,775

19,183,922

(98,706)

19,085,216

Company

8. Investments (Continued)

Company

Quoted (in Malaysia)

Shares in corporations

Unquoted (in Malaysia)

Bonds

Less: Impairment loss oninvestments

Cost

RM

Market

value

RM

2010 2009

Cost

RM

Market

value

RM

2,252,993

4,000,000 6,252,993

(5,427,248)825,745

825,745 2,252,993

4,000,000 6,252,993

(5,197,706)1,055,287

1,055,287

65

Annual Report


(72057-H)

12. Other Receivables, Deposits And Prepayments

Other receivables

Tax recoverable

Sundry deposits

Deposits for purchase of property,

plant and equipment

Prepayments

Amount due from associated

company

2010

RM

2009

RM

3,709,895

1,497,156

642,610

13,907,021

790,612

9,267,458

29,814,752

2,526,593

806,990

990,935

17,287,682

1,610,280

-

23,222,480

Group

2010

RM

2009

RM

348,489

-

435,828

13,907,021

635,443

9,267,458

24,594,239

1,804,535

-

447,233

14,887,583

749,596

-

17,888,947

Company

13. Deposits, Cash And Bank Balances

Fixed deposits with licensed banks

Cash and bank balances

The average interest rate ranges and maturity periods of fixed deposits at the balance sheet date were

as follows:

2010

RM

2009

RM

149,452

21,356,155

21,505,607

27,065

15,778,329

15,805,394

Group

2010

RM

2009

RM

149,452

16,869,243

17,018,695

27,065

12,268,346

12,295,411

Company

Interest rate

Maturity period

2010

RM

2009

RM

2.5%

12 months

3.7%

12 months

Group

2010

RM

2009

RM

2.5%

12 months

3.7%

12 months

Company

14. Share Capital

Company

Authorised:

Issued and Fully Paid:

At 1st July

ESOS I

ESOS II

At 30th June

Number of

ordinary

shares of

RM1 each RM

2010 2009

Number of

ordinary

shares of

RM1 each RM

150,000,000

78,045,0005,445,000

12,523,50096,013,500

150,000,000

78,045,0005,445,000

12,523,50096,013,500

150,000,000

78,045,000- -

78,045,000

150,000,000

78,045,000- -

78,045,000

66

Annual Report


(72057-H)

i) Company’s ESOS I is governed by the by-laws approved by the shareholders at the Extraordinary

General Meeting held on 29th May, 2007, had been terminated as approved by the shareholders at an

Extraordinary General Meeting held on 24th December, 2009.

The principal features of ESOS I are as follows:

a)

b)

c)

d)

e)

f)

g)

Scheme shall be in force for a period of five years from 3rd July, 2007 (the date of the first offer

made) expiring on 2nd July, 2012 but subject to any extension or renewal for a further period of five

years as may be approved by the shareholders in a general meeting and any other relevant

regulatory authority whose approval is necessary.

Eligible persons are employees of the Group, who is a Malaysian citizen who has attained

eighteen (18) years of age (including full time Executive Directors) and have been confirmed

and has served at least six (6) months in the employment of the Group on the date of the offer

or where the Executive Director or employee is under an employment contract, the contract is

for a duration of at least one (1) year and has not expired within three (3) months from the date

of offer. The eligibility for participation in ESOS I shall be at the discretion of the ESOS Committee

appointed by the Board of Directors.

The total number of shares to be issued under ESOS I shall not exceed 15% of the issued and

paid-up share capital of the Company being, the maximum allowable allotment of shares, at

any point of time during the duration of Scheme.

The option price for each new RM1.00 share to be offered shall be determined by the ESOS

Committee in the following manner:

i)

ii)


An offer made by the ESOS Committee to a selected employee shall be valid for a period of forty-

five days from the date of offer and may be accepted within this prescribed period by the selected

employee to whom the offer is made by written notice to the ESOS Committee. Upon acceptance

of an offer, the Grantee may during the option period exercise his options in full or in part in such

manner as stipulated in the offer letter.

All new ordinary shares issued upon exercise of the options granted under ESOS will rank

pari-passu in all respects with the existing ordinary shares of the Company except that the shares

so issued will not be entitled to any dividends, rights allotments and/or other distributions, the

entitlement date of which is prior to the date of allotment of the new ordinary shares.






14. Share Capital (Continued)

67

During the financial year, the number of options over the ordinary shares of RM1.00 each of the

Company granted under ESOS I are as follows:

Annual Report


(72057-H)

ii) The Company’s ESOS II is governed by the by-laws approved by the shareholders at the Extraordinary

General Meeting held on 24th December, 2009.

The principal features of ESOS II are as follows:

a)

b)

c)

Scheme shall be in force for a period of five years from 3rd July, 2007 (the date of the first offer

made) expiring on 2nd July, 2012 but subject to any extension or renewal for a further period of five

years as may be approved by the shareholders in a general meeting and any other relevant regulatory

authority whose approval is necessary.

Eligible persons are employees of the Group, who is a Malaysian citizen who has attained eighteen

(18) years of age (including full time Executive Directors) and have been confirmed and has served at

least six (6) months in the employment of the Group on the date of the offer or where the Executive



in ESOS II shall be at the discretion of the ESOS Committee appointed by the Board of Directors.

The total number of shares to be issued under ESOS II shall not exceed 15% of the issued and paid-

up share capital of the Company being, the maximum allowable allotment of shares, at any point of

time during the duration of Scheme.


Option date

Option

price

per share

RM

Balance

at


Balance

at

30.6.2010



12.5.2009

6.7.2009

20.7.2009

30.7.2009

0.85

0.88

1.00

1.00

4,775,000

670,000

5,445,000

1.00

1.00

5,325,000

-

5,325,000

-

120,000

120,000

(5,325,000)

(120,000)

(5,445,000)

-

-

-


Exercise

date


share issue date

RM/ share

Exercise price

RM/ share

Number of

shares

issued

2010

5,445,000Proceeds received on exercise of the above shares options

2010

RM

68

Annual Report


(72057-H)

d)

e)

f)

g)

The option price for each new RM1.00 share to be offered shall be determined by the ESOS Committee in the following manner:

i)

ii)


An offer made by the ESOS Committee to a selected employee shall be valid for a period of forty-five days from the date of offer and may be accepted within this prescribed period by the selected employee to whom the offer is made by written notice to the ESOS Committee. Upon acceptance of an offer, the Grantee may during the option period exercise his options in full or in part in such manner as stipulated in the offer letter.

All new ordinary shares issued upon exercise of the options granted under ESOS will rank pari-passu in all respects with the existing ordinary shares of the Company except that the shares so issued will not be entitled to any dividends, rights allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares.

During the financial year, the number of options over the ordinary shares of RM1.00 each of the Company granted under ESOS II are as follows:

a price at a discount of not more than ten percent (10%) from the five (5) days weighted average market price of the Company’s shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad immediately preceding the Date of Offer; or




Option date

Option

price

per share

RM

Balance

at


Balance

at

30.6.2010



14.1.2010

4.3.2010

11.2.2010

5.3.2010

23.3.2010

20.4.2010

1.15

1.05

1.04

1.14

1.04

1.04

1.01

1.01

3,760,000

483,500

8,000,000

280,000

12,523,500

1.04

1.01

-

-

-

4,243,500

8,280,000

12,523,500

(4,243,500)

(8,280,000)

(12,523,500)

-

-

-


Exercise

date


share issue date

RM/ share

Exercise price

RM/ share

Number of

shares

issued

2010

12,776,040Proceeds received on exercise of the above shares options

2010

RM

69

17. Term Loans And Other Credit Facilities

Group & Company

Unsecured

Term loan I: fixed interest at commercial banking

rate per annum, repayable by 84 monthly

instalments commencing on April, 2007

2010

RM

2009

RM

5,440,000 6,880,000

Non-distributable:-

Share premium

Revaluation reserve

Distributable:-

Retained profits

2010

RM

2009

RM

13,774,466

3,815,951

85,726,144

103,316,561

13,521,926

3,815,951

73,279,626

90,617,503

Group

2010

RM

2009

RM

13,774,466

3,815,951

70,764,053

88,354,470

13,521,926

3,815,951

59,771,161

77,109,038

Company

Annual Report


(72057-H)

15. Reserves

Minimum payments:

- not later than 1 year

- later than 1 year and not

later than 5 years

- later than 5 years

Less: Future hire-purchase charges

Present value

Total payable

Less: Payable within 1 year

Payable after 1 year

2010

RM

2009

RM

15,528,213

29,964,430

691,776

46,184,419

(6,883,978)

39,300,441

39,300,441

(12,674,351)

26,626,090

13,468,688

35,120,439

-

48,589,127

(7,139,884)

41,449,243

41,449,243

(11,508,800)

29,940,443

Group

2010

RM

2009

RM

9,744,543

18,024,830

691,776

28,461,149

(4,288,878)

24,172,271

24,172,271

(7,714,891)

16,457,380

8,874,978

22,538,309

-

31,413,287

(4,729,339)

26,683,948

26,683,948

(7,549,902)

19,134,046

Company

16. Hire-Purchase Creditors

The term for hire-purchase is 4 to 9 (2009 – 3 to 7) years. In respect of the financial year ended 30th June,

2010, the effective borrowing rate ranges from 2.45% to 3.75% (2009 – 2.45% to 3.65%) per annum. The

interest rates are fixed at the inception of the hire purchase arrangements.

70

17. Term Loans And Other Credit Facilities (Continued)

Group & Company

Unsecured

2010

RM

2009

RM

1,144,497

3,967,529

2,577,077

10,308,006

1,625,130

11,393,417

3,599,560

18,879,982

2,806,669

30,250,000

91,991,867

1,416,628

5,378,261

4,614,661

12,680,255

1,909,018

12,476,236

4,176,671

-

-

-

49,531,730

Annual Report


(72057-H)

Term loan II: fixed interest at commercial banking rates

per annum, repayable by 84 equal monthly instalment

commencing on March, 2007

Term loan III: interest at commercial banking rates above

the bank’s base lending rate per annum, repayable by

60 monthly instalments commencing December, 2007

Term loan IV: fixed interest at commercial banking rates

per annum, repayable by 60 monthly instalment

commencing on October, 2006

Term loan V: fixed interest at commercial banking rates

per annum, repayable by 80 equal monthly instalments

commencing February, 2009

Term loan VI: interest at commercial rate per annum,

repayable by 84 monthly instalments commencing

June, 2009

Term loan VII: fixed interest at commercial rate per

annum, repayable by 120 monthly instalments

commencing July, 2009

Term loan VIII: interest at commercial banking rates

above the bank’s base lending rate per annum,

repayable by 84 monthly instalments commencing

October, 2009

Term loan IX: fixed interest at commercial banking rates

per annum, repayable by 84 monthly instalments

commencing on February 2010

Term loan X: interest at commercial banking rates above

the bank’s base lending rate per annum, repayable by

84 monthly instalments commencing January, 2010

Term loan XI: fixed interest at commercial banking rate

per annum, repayable by 60 monthly instalments

commencing on February, 2010

71

Annual Report


(72057-H)

At 1st July

Acquisition of subsidiaries

Transferred (to)/ from income

statement (Note 21)

At 30th June

The deferred income tax liabilities

are principally due to the

following:-

Temporary differences between

tax bases of assets and carrying

amounts in financial statements

Reinvestment allowances

Unabsorbed capital allowance

Unrealised loss on foreign exchange

2010

RM

2009

RM

2,313,238

-

(1,669,000)

644,238

27,761,238

(21,289,000)

(5,828,000)

-

644,238

2,116,238

1,610,900

(1,413,900)

2,313,238

28,060,038

(22,333,000)

(3,371,000)

(42,800)

2,313,238

Group

2010

RM

2009

RM

2,200,000

-

1,000,000

3,200,000

16,300,000

(13,100,000)

-

-

3,200,000

1,600,000

-

600,000

2,200,000

19,900,000

(17,700,000)

-

-

2,200,000

Company

18. Deferred Income Tax Liabilities

Other payables

Accruals

Deposits

2010

RM

2009

RM

3,624,440

2,743,754

202,833

6,571,027

4,785,285

2,429,092

-

7,214,377

Group

2010

RM

2009

RM

1,683,009

1,023,374

-

2,706,383

2,666,025

838,803

-

3,504,828

Company

19. Other Payables And Accruals

17. Term Loans And Other Credit Facilities (Continued)

2010

RM

2009

RM

19,053,887

17,855,282

43,410,698

11,672,000

72,937,980

91,991,867

8,981,520

9,349,855

21,761,478

9,438,877

40,550,210

49,531,730

Repayments due:

Within twelve months

Between 1 and 2 years

Between 2 and 5 years

After 5 years

The bankers' acceptances and revolving credits and bank overdrafts bear interest negotiated and

agreed at commercial banking rates per annum.

72

Annual Report


(72057-H)

a) Profit before income tax is

arrived at after charging/

(crediting):-

Auditors’ remuneration

Directors' remuneration

- Fees

- current directors

- past directors

- Salaries and allowances

- Attendance allowances

Rental of premises

Rental of motor vehicles

Rental of equipment

Staff costs

Depreciation (Note 3)

Property, plant & equipment

written off

Unrealised loss on foreign exchange

Amortisation of prepaid lease

payments (Note 4)



Lease rental

Workers’ quarters rental

Dividend paid


no longer required


Realised gain on foreign exchange

Finance cost:

Interest paid for:-

- Bank overdrafts

- Hire-purchase

- Term loans

- Bankers' acceptances

- Revolving credit

- Others

Rental income

Gain on disposal of property,

plant and equipment

Dividend from Malaysian

quoted investments (gross)

Interest income

- Fixed and short term deposits

- Other interest

2010

RM

2009

RM

250,000

290,150

10,613

1,569,700

69,000

337,796

607,411

10,920

15,220,299

9,865,174

-

6,509

180,559

4,774,668

456,258

785,618

30,470

-

-

(46,636)

(1,263,973)

1,216,569

2,206,022

2,366,547

2,037,516

170,346

195,781

8,192,781

(232,800)

(876,011)

(247,404)

(19,642)

(19,812)

204,000

280,500

-

1,541,700

65,000

512,054

-

10,920

15,499,778

8,243,295

267,726

171,143

178,052

3,745,501

50,824

-

-

-

(13,992)

(53,394)

(1,727,569)

1,313,761

1,350,610

4,973,311

2,068,774

779,954

48,849

10,535,259

(232,546)

(1,095,667)

(12,925)

(67,449)

(65,961)

Group

2010

RM

2009

RM

150,000

118,000

-

1,569,700

69,000

223,376

284,536

-

6,761,631

6,283,940

-

-

-

359,966

-

785,618

-

2,617,500

-

-

(413,761)

841,368

1,440,580

2,366,547

1,188,468

-

195,781

6,032,744

-

(876,010)

(247,404)

(19,642)

-

120,000

108,000

1,541,700

65,000

230,404

-

-

6,012,757

6,039,299

-

-

-

3,790,915

-

-

-

-

(13,992)

(53,394)

(816,682)

1,012,820

1,069,445

4,973,311

1,714,203

589,916

48,849

9,408,544

-

(1,095,667)

(675)

(67,449)

-

Company

20. Profit Before Income Tax

73

Annual Report


(72057-H)

Group

b) Directors' remuneration

Directors' remuneration of the Company is

analysed as follows:-

Executive Directors

- salaries and allowances

- fees

- attendance allowances

Non-Executive Directors

- salaries and allowances

- fees

- attendance allowances

Directors on the board of subsidiary

companies are analysed as follows:-

Executive

- fees

Non-Executive

- fees

2010

RM

2009

RM

561,000

16,700

5,000

1,008,700

229,250

64,000

16,700

27,500

631,000

23,700

5,000

910,700

182,800

60,000

24,000

50,000

Group 2010 2009

Executive

Non-

executive

-

-

-

-

-

-

-

1

-

-

4

2

1

-

-

-

-

-

-

1

Executive

Non-

executive

-

-

-

-

-

1

-

-

-

-

3

2

1

1

-

-

-

-

-

1

20. Profit Before Income Tax (Continued)

The number of Directors of the

Company whose remuneration

fell within the following ranges

(per annum) are:-

RM1 – RM50,000

RM50,001 – RM100,000

RM100,001 – RM150,000

RM150,001 – RM200,000

RM200,001 – RM550,000

RM550,001 – RM600,000

RM600,001 – RM650,000

RM650,001 – RM700,000

RM700,001 – RM750,000

RM750,001 – RM800,000

74

Annual Report


(72057-H)

Current income tax liabilities:

Estimated for the year

(Over) / Underprovision in

prior years

Deferred income tax liabilities:

Transferred (from)/ to deferred

income tax liabilities (Note 18)

Reconciliation of effective tax rate:


Taxation using statutory tax

rate of 25%

Reduction in statutory tax rate

Non-deductible expenses

for tax purposes

Capital allowances utilised

Reinvestment allowance utilised

Increase in unused tax losses

Non taxable gain

Expenses eligible for double

deduction

Balancing charge

Other items

Transferred (from)/ to deferred

income tax liabilities

(Over)/ Under provision in

prior years

2010

RM

2009

RM

1,402,050

(203,685)

(1,669,000)

(470,635)

17,594,691

4,398,672

-

4,529,984

(6,919,504)

(2,959,190)

4,216

(11,660)

(11,873)

2,825,573

(454,168)

(1,669,000)

(266,950)

(203,685)

(470,635)

1,104,950

799,862

(1,413,900)

490,912

17,612,490

4,403,122

(415)

3,840,589

(7,236,768)

(2,121,320)

-

(270,457)

(4,279)

2,513,483

(19,005)

(1,413,900)

(308,950)

799,862

490,912

Group

2010

RM

2009

RM

1,335,000

(125,183)

1,000,000

2,209,817

15,820,209

3,955,052

-

2,359,377

(4,844,800)

(2,959,190)

-

-

(4,571)

2,825,573

3,559

1,000,000

2,335,000

(125,183)

2,209,817

1,100,000

760,814

600,000

2,460,814

10,883,325

2,720,831

-

3,718,511

(5,419,030)

(2,121,320)

-

(250,341)

(3,897)

2,474,874

(19,628)

600,000

1,700,000

760,814

2,460,814

Company

21. Income Tax

Subject to agreement by the Inland Revenue Board, the Company has tax exempt account under

Schedule 7A of the Income Tax Act 1967 and tax exempt account under Section 12 of the Income Tax

(Amendment) Act, 2001 to frank the payment of dividends out of approximately RM38,300,000 of its

retained profits as at 30th June, 2010 without incurring any additional tax liability.

The Finance Act 2007 introduced a single tier company income tax system with effect from year of

assessment 2008. As such, the Section 108 tax credit as at 31st December, 2007 will be available to the

Company until such time the credit is fully utilised or upon expiry of the six year transitional period on

31st December, 2013, whichever is earlier.

75

Annual Report


(72057-H)

Profit attributable to the equity

holders of the Company

Weighted average number of

ordinary shares in issue

Basic earnings per share (sen)

2010

RM

2009

RM

15,064,018

87,031,119

17.31

16,027,316

78,045,000

20.54

Group

2010

RM

2009

RM

13,610,392

87,031,119

15.64

8,422,511

78,045,000

10.79

Company

Profit attributable to the equity

holders of the Company

Weighted average number of

ordinary shares in issue

Adjustment for assumed

exercise of share options

Adjusted weighted average

number of ordinary shares in

issue and issueable

Diluted earnings per share (sen)

2010

RM

2009

RM

15,064,018

87,031,119

-

87,031,119

17.31

16,027,316

78,045,000

5,445,000

83,490,000

19.20

Group

2010

RM

2009

RM

13,610,392

87,031,119

-

87,031,119

15.64

8,422,511

78,045,000

5,445,000

83,490,000

10.09

Company

22. Earnings Per Share

Basic

Basic earnings per share is calculated by dividing the profit after income tax by the weighted average

number of ordinary shares in issue during the financial year.

Fully diluted

For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue is

adjusted to assume conversion of all dilutive potential ordinary shares.

The dilutive potential ordinary shares for the year of the Group and of the Company are share options

granted to employees.

Share options are deemed to have been converted into ordinary shares at the beginning of the year or on

the date when the options were granted whichever is the later.

76

Fixed deposits with

licensed banks

Cash and bank balances

Bank overdrafts

2010

RM

2009

RM

149,452

21,356,155

(398,295)

21,107,312

27,065

15,778,329

(582,653)

15,222,741

Group

2010

RM

2009

RM

149,452

16,869,243

-

17,018,695

27,065

12,268,346

-

12,295,411

Company

23. Cash and Cash Equivalents

Cash and cash equivalents included in the respective cash flow statements comprise the following:

273,298,901

-

273,298,901

20,725,436

(8,239,375)

2,138,618

2,882,171

379,032

482,136,822

13,980,673

251,580,918

817,383

58,714,150

10,045,733

-

180,000

180,000

44,429

-

-

43,412

91,603

5,070,347

176,030

177,962

10,500

-

-

(49,864,779)

(180,000)

(50,044,779)

-

-

-

-

-

-

-

-

-

-

-

223,434,122

-

223,434,122

20,769,865

(8,239,375)

2,138,618

2,925,583

17,594,691

470,635

18,065,326

(3,001,308)

15,064,018

487,207,169

14,156,703

501,363,872

251,758,880

827,883

252,586,763

58,714,150

10,045,733

Manufacturing

And Trading

RM

# Others

RM

Eliminations

RM

Total

RM

24. Segmental Reporting

Group

2010

Revenue

External revenue

Inter-segment revenue

Results

Segment results

Finance cost


Companies

Other operating income


Income tax


Minority interest

Profit after income tax attributable

to equity holders of the company

Other information

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Capital expenditure

Depreciation and amortisation

Annual Report


(72057-H)

*

^

77

226,698,343

-

226,698,343

22,203,554

(10,535,259)

2,735,399

3,241,220

(490,912)

431,391,679

13,397,177

224,261,484

2,563,074

50,780,152

8,421,347

-

350,000

350,000

(59,202)

-

-

26,778

-

2,897,816

69,360

120,612

-

-

-

(42,396,219)

(350,000)

(42,746,219)

-

-

-

-

-

-

-

-

-

-

-

184,302,124

-

184,302,124

22,144,352

(10,535,259)

2,735,399

3,267,998

17,612,490

(490,912)

17,121,578

(1,094,262)

16,027,316

434,289,495

13,466,537

477,756,032

224,382,096

2,563,074

226,945,170

50,780,152

8,421,347

Manufacturing

And Trading

RM

# Others

RM

Eliminations

RM

Total

RM

24. Segmental Reporting (Continued)

Group

2009

Revenue

External revenue

Inter-segment revenue

Results

Segment results

Finance cost


Companies

Other operating income


Income tax


Minority interes

Profit after income tax attributable

to equity holders of the company

Other information

*Segment assets

Unallocated assets

Total assets

^Segment liabilities

Unallocated liabilities

Total liabilities

Capital expenditure

Depreciation and amortisation

# - Others represent companies in the business of investment holding and letting of properties.

* - Segment assets comprise total current and non-current assets, less tax recoverable and intangible

assets.

^ - Segment liabilities comprise total current and long-term liabilities, less current income tax liabilities

and deferred income tax liabilities.

The Group operates predominantly in Malaysia and accordingly information by geographical location of

the Group is not presented.

Annual Report


(72057-H)

78

Within 1 year

Between 1 to 5 years

2010

RM

2009

RM

1,526,052

4,252,844

5,778,896

-

-

-

Group and Company

2010

RM

2009

RM

-

-

-

11,282,434

6,167,264

(1,647,520)

7,208,002

(2,930,241)

-

-

-

-

5,244,538

(2,424,886)

(177,346)

1,238,446

(810,068)

31,480

Group

2010

RM

2009

RM

(17,090,314)

32,774,465

-

9,296,350

7,310,812

(1,647,520)

7,208,002

(2,930,241)

-

(5,682,877)

34,089,404

(7,460,069)

4,789,594

(2,257,590)

(177,346)

1,238,446

(810,068)

5,000

Company

25. Lease Commitments

With subsidiaries

- sales to

- purchases from

- proceeds from disposal of

property, plant and

equipment

With subsidiary companies

of associated companies

- purchases from

- current account balances

as at 30th June (net)

With companies in which

certain Directors have

financial interests

- sales to

- purchases from

- current account balances

as at 30th June (net)

With a firm in which a

Director is a partner

- professional fees paid

- charged to income

statement

25. Related Parties Transactions

Group and Company

The Group and the Company have an effective annual commitment under a noncancellable operating

lease in respect of plant and equipment which expires as follows:-

Annual Report


(72057-H)

The Directors are of the opinion that the above transactions have been entered into in the normal course

of business and have been established on terms and conditions that are not materially different from

that obtainable in transactions with unrelated parties.

79

27. Financial Instruments

Financial Risk Management Objectives and Policies

The operations of the Group are subject to a variety of financial risks, including credit risk, foreign currency

exchange risk, interest rate risk, liquidity risk and cash flow risk and market risk. The Group has formulated

guidelines and policies as well as internal controls which seek to minimise the Group’s exposure to risks

associated with the financing, investing and operating activities of the Group.

(a) Credit risk

(b) Foreign currency exchange risk

(c) Interest rate risk

(d) Liquidity risk and cash flow risk

(e) Market risk

Fair Values

In the opinion of the Directors, the carrying amounts of financial assets and liabilities of the Group at the

balance sheet date are not materially different from their fair values.

The Group has a credit policy in place to evaluate customers requiring credit over a certain amount or

period. Credit risk is further minimised and is monitored via strictly limiting the Group’s associations to

business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via

the Group’s management reporting procedures.

The Group is exposed to currency risk as a result of the Group’s transactions with foreign vendors of

plant and equipment and foreign trade receivables and payables. The Group monitors the movements

in foreign currency exchange rates closely to ensure their exposure is minimised.

The Group’s exposure to interest rate risk arises from interest-bearing borrowings of which the Group

reviews and monitors the interest rates at regular intervals.

The Group actively manages its operating cash flows and the availability of funding so as to ensure

that all repayment and funding needs are met. As part of its overall prudent liquidity management, the

Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements

and prudently balances its portfolio of short term and long term funding requirements.

The Group is principally involved in the manufacture of extruded corn snacks, chocolates, cakes and

other snack products and is therefore subject to certain risks inherent in the food-processing industry.

These risks include, inter-alia the possible increase in the operating and capital costs due to increase in

the cost of labour and raw materials, changes in consumer demands and changes in general economic

conditions. The Group seeks to limit these risks through, inter-alia, expansion of both existing and new

markets, developing and maintaining a diversified market network and investment in automated

machinery to improve efficiency.

Annual Report


(72057-H)

80

Company

2010

RM

2009

RM

19,487,295 11,462,237

28. Contingent Liabilities – Unsecured

Corporate guarantees given to various financial

institutions for facilities granted to subsidiary

companies

- outstanding balances as at 30th June

Company

Subsequent to balance sheet date;-

i)

ii)

iii)

All amounts are stated in Ringgit Malaysia, the presentation currency of the Group.

29. Subsequent Events

30. Currency

as announced on Bursa Malaysia Securities Berhad on 23rd August, 2010, the Company, had disposed

of its entire equity interest in Lay Hong Berhad, its associated company in the open market and via off

market transactions on a willing buyer willing seller basis for a total consideration of RM11,851,760,

resulting in an impairment on this investment of RM4,545,126.

the directors had on 15th October, 2010 declared an interim dividend of 1.5% tax exempted for the

financial year ended 30th June, 2010 amounting to RM1,440,203 to be paid on 26th November, 2010.

Effective from 1st July, 2010, the accounts of TPC Plus Berhad shall be consolidated with that of the

Group.

Annual Report


(72057-H)

81

Annual Report


(72057-H)

We, DATO’ SRI LIEW KUEK HIN, SSAP, DIMP, PJK, JP and DATO’ SRI LIEW YEW CHUNG, SSAP, DIMP

being two of the Directors of the Company, do hereby state that in the opinion of the Directors, the financial

statements set out on pages 37 to 80 are drawn up in accordance with Financial Reporting Standards and

the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the state of affairs

of the Group and of the Company as at 30th June, 2010 and of their results and cash flows for the year ended

on that date.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors.

I, DATO’ SRI LIEW YEW CHUNG, SSAP, DIMP being the Director responsible for the financial management

of LONDON BISCUITS BERHAD, do solemnly and sincerely declare that the financial statements set out on

pages 37 to 80 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 Kuala Lumpur )

)

This 25th October, 2010 )

Before me:-

ASMAH BT BUROH

Commissioner for Oaths

No. W456

Kuala Lumpur

Directors’ Statements

Statutory Declaration

DATO' SRI LIEW KUEK HIN,SSAP, DIMP, PJK, JP

Director

DATO’ SRI LIEW YEW CHUNG, SSAP, DIMP

Director

KUALA LUMPUR

25th October, 2010

82

List of Properties - 30 June 2010

Properties Held by the Group

Location

H.S.(D) No 191719

PTD No 91908 &

H.S.(D) No 191720

PTD No 91909

Mukim of Plentong

District of Johor Bahru

State of Johor

H.S. (D) No 191403

PTD No 89457 &

H.S.(D) No 191404

PTD No 89458

Mukim of Plentong


State of Johor

H.S. (D) No 136985

PTD No 111739

H.S.(D) No 136986

PTD No 111740

H.S.(D) No 136987

PTD No 111741; &

H.S.(D) No 136988

PTD No 111742

Mukim of Plentong


State of Johor

H.S. (D) No 136983

PTD No 111687

Mukim of Plentong


State of Johor

H.S.(D) No 136984

PTD No 111738

Mukim of Plentong


State of Johor

H.S.(D) No 136874

PTD No 111687

Mukim of Plentong


State of Johor

Industrial land

with office and

factory building

for manufacturing

of corn extruded

products

Industrial land

with office and

factory building

for warehouse

and manufacture

of bakery products

Industrial land

with office and

factory building

for warehouse

and manufacture

of bakery products

Industrial land

with office and

factory building

for warehousing

Industrial land

with office and

factory building

for warehousing

Industrial land with

office and factory

building for

warehousing

Land Area

- 2,378.32 sq m

Land Area

- 1,401.26 sq m

Land Area

- 5,351.21 sq m

Land Area

- 1,337.80 sq m

Land Area

- 1,337.80 sq m

Land Area

- 1,213.28 sq m

15 years

15 years

11 years

11 years

11 years

10 years

3,430

1,666

6,370

1,323

1,323

1,078

2008

(1995)

(Freehold)

2008

(1995)

(Freehold)

2008

(1999)

(Freehold)

2008

(1999)

(Freehold)

2008

(1999)

(Freehold)

2008

(2000)

(Freehold)

Date of lastRevaluation(Acquisition)

(Tenure)

Description / Existing Use

Approximate Size

Approximate age of

Property

Net Book Value as at

30 June 2010RM’000

LONDON BISCUITS BERHAD

Annual Report


(72057-H)

83

H.S.(D) No 136873

PTD No 111686

Mukim of Plentong


State of Johor

H.S. (D) No 136989

PTD No 111743

Mukim of Plentong


State of Johor

H.S.(D) No 391663

PTD No 177199

Mukim of Plentong


State of Johor

Unit 12, 25th Floor

Cable TV Tower

No 9 Hoishing Road

Tsuen Wan, Hong Kong


office and factory

building for

warehousing


office and factory

building for

warehousing

Industrial Land

Warehouse

Land Area

- 891.80 sq m

Land Area

- 5423.03 sq m

Land Area

- 10,494.66 sq m

Land Area

- 292.46 sq m

10 years

7 years

2 years

1 year

2008

(2000)

(Freehold)

2008

(2003)

(Freehold)

-

(2009)

(Freehold)

(2009)

(Leasehold)

Location

Date of lastRevaluation(Acquisition)

(Tenure)

Description / Existing Use

Approximate Size

Approximate age of

Property

Net Book Value as at

30 June 2010RM’000

LONDON BISCUITS BERHAD (cont’d)

PN 6715

Lot No 51709

Mukim of Plentong


State of Johor

Industrial land

with a two storey

office with a

single storey

factory for

manufacturing of

bakery products

Land Area

- 8,093.72 sq m

25 years2005

(1985)

(Leasehold –

60 years)

H.S. (D) No 124988

PTD No 71051

Mukim of Plentong


State of Johor

Industrial land

with a two storey

office with a

single storey

factory for

manufacturing of

bakery product

Land Area

- 8,093.72 sq m

25 years

4,041

2,1862005

(1985)

(Leasehold –

60 years)

KINOS FOOD INDUSTRIES SDN BHD

KIM CHOAW SDN BHD

Note : The Group and Company adopts the policy to revalue its landed properties every five (5) years.

Revalued by Independent Professional Value

882

4,704

15,067

2,026

Annual Report


(72057-H)

85

Annual Report


(72057-H)

Authorised Share Capital : RM150,000,000.00

Issued and Paid-Up Share Capital : RM96,013,500.00

Class of Shares : Ordinary Share at RM 1.00 each

Voting Rights : One (1) vote per share

List of Substantial Shareholders

Notes :

i.

ii.

iii.

iv.

v.

vi.

vii.

Analysis of Shareholders 3 November 2010

Meileelanusa Sdn Bhd

Dato’ Sri Liew Yew Chung, SSAP,DIMP



Liew Yet Mei



337,396,688

1,381,785

224,487

75,231

39,671

39,671

250

-

37,775,998

38,933,296

39,082,552

39,118,112

39,118,112

39,157,533

-

39.34

40.55

40.71

40.74

40.74

40.78

i,iv

i,iii

i,v

i,vii

i,vi

i,ii

38.95

1.44

0.23

0.08

0.04

0.04

0.00

Name No of Shares % No of Shares

Direct Indirect

%

1.

2.

3.

4.

5.

6.

7.

Directors’ Interests in the Company



Dato’ Liew Yew Chung, SSAP, DIMP


Liew Yet Mei


Dato’ Cheong Siew Kai, DJMK, AMS, JP


Leslie Looi Meng

250

224,487

1,381,785

75,231

39,671

39,671

-

-

-

39,157,533 i, ii

38,933,296 i, iii

37,775,998 i, iv

39,082,552 i, v

39,118,112 i, vii

39,118,112 i, vi

-

-

-

40.78

40.55

39.34

40.71

40.74

40.74

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Name No of Shares % No of Shares

Direct Indirect

%

Rights under ESOS

Direct Indirect

1.

2.

3.

4.

5.

6.

7.

8.

9.

Deemed interested by virtue of their interest in Meileelanusa Sdn Bhd

Deemed interested by virtue of the shares held by his spouse, Datin Sri Lim Yook Lan, and his children,

Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng, Liew Yet Mei and Dato’ Liew Yet Lee.

Deemed interested by virtue of the shares held by her spouse, Dato’ Sri Liew Kuek Hin, and her children,


Deemed interested by virtue of the shares held by his parents, Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan,

and his siblings, Dato’ Liew Yew Cheng, Liew Yet Mei and Dato’ Liew Yet Lee.


and his siblings, Dato’ Liew Yew Chung, Liew Yet Mei and Dato’ Liew Yet Lee.

Deemed interested by virtue of the shares held by her parents, Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan,

and her siblings, Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Dato’ Liew Yet Lee.


and her siblings, Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng, Liew Yet Mei.

0.00

0.23

1.44

008

0.08

0.04

-

-

-

85

Annual Report


(72057-H)

List of 30 Top Shareholders as at 3 November 2009

Notes :

i.

ii.

iii.

iv.

v.

vi.

vii.

Distribution of Shareholders

Less than 100

100 to 1,000

1,001 to 10,000

10,001 to 100,000

100,001 to less than 5% of issued shares

5% and above of issued shares

TOTAL

41

565

2,460

798

62

3

4,020

1,112

433,625

12,810,248

24,287,462

24,089,465

34,391,588

96,013,500

0.00

0.45

13.34

25.30

25.09

35.82

100.00

Size of Shareholdings No of Holders No of Shares

Names

1

2

3

4

5

%No of Shares

%

Deemed interested by virtue of their interest in Meileelanusa Sdn Bhd.

Deemed interested by virtue of the shares held by his spouse, Datin Sri Lim Yook Lan, and his children,


Deemed interested by virtue of the shares held by her spouse, Dato’ Sri Liew Kuek Hin, and her children,



and his siblings, Dato’ Liew Yew Cheng, Liew Yet Mei and Dato’ Liew Yet Lee.


and his siblings, Dato’ Sri Liew Yew Chung, Liew Yet Mei and Dato’ Liew Yet Lee.


and her siblings, Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Dato’ Liew Yet Lee.

Deemed interested by virtue of the shares held by her parents, Dato’ Sri Liew Kuek Hin and Datin Sri Lim Yook Lan, and

her siblings, Dato’ Sri Liew Yew Chung, Dato’ Liew Yew Cheng and Liew Yet Mei.

Meileelanusa Sdn Bhd

CIMB Group Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account For Meileelanusa Sdn Bhd

EB Nominees (Tempatan) Sendirian Berhad


Cartaban Nominees (Asing) Sdn Bhd

- Exempt An For Jefferies And Company Incorporated New York

Alliancegroup Nominees (Tempatan) Sdn Bhd


20,315,588

8,320,000

5,756,000

3,000,000

2,999,000

21.16

8.67

5.99

3.12

3.12

86

Annual Report


(72057-H)

Names %No of Shares

2,194,900

1,380,800

1,321,000

1,175,800

706,900

630,000

516,400

440,400

438,800

430,000

372,000

354,000

339,800

321,700

300,000

279,700

260,000

2.29

1.44

1.38

1.22

0.74

0.66

0.54

0.46

0.46

0.45

0.39

0.37

0.35

0.34

0.31

0.29

0.27

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

Alliancegroup Nominees (Tempatan) Sdn Bhd

- Pheim Asset Management Sdn Bhd for Employees

Provident Fund Board

Mayban Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Dato’ Sri Liew Yew Chung

Koperasi Sri Nilam Berhad

Tan Ching Ching

Low Cheng Peng


- Pledged Securities Account for Tay Ong Ngo @ Tay Boon Fang

Citigroup Nominees (Asing) Sdn Bhd

- UBS AG Singapore for Allied Asia Investments Limited


- Pledged Securities Account for Lee Chong Gee

HSBC Nominees (Asing) Sdn Bhd

- Exempt an for HSBC Private Bank (Suisse) S.A. (Hong Kong AC CL)

Lim Soon Huat

Tan Kee Hock

Wong Aun Phui

Teong Peck Joo

Fu Ah Goh @ Foo Sek Cheng

Pang Seng Wee

Multi-purpose Insurans Bhd

ECML Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Leong Kam Chee

87

23

24

25

26

27

28

29

30

Amsec Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Than Ah Loh @ Thab Boon Chong


HLG Nominee (Tempatan) Sdn Bhd

- Pledged Securities Account For Seh Choi Hoo [CCTS]

Kurnia Insurans (Malaysia) Berhad

Chee Ying Lin (See Ah Tai)

Cheng Hon Sang

HLB Nominees (Tempatan) Sdn Bhd

- Pledged Securities Account for Lim Fong Yee (Jane)

RHB Capital Nominees (Tempatan) Sdn Bhd

- Wong Lok Yee

250,000

224,487

220,100

206,000

200,000

200,000

200,000

193,000

53,546,375

0.26

0.23

0.23

0.21

0.21

0.21

0.21

0.20

55.78

Annual Report


(72057-H)

Names %No of Shares

88

Annual Report


(72057-H)

NOTICE IS HEREBY GIVEN THAT the Twenty-Ninth Annual General Meeting of the Company will be held at

The London Room, No 1, Jalan Istimewa 2, Taman Perindustrian Desa Cemerlang, 81800 Ulu Tiram, Johor Darul

Takzim, Malaysia, on Friday, 24 December 2010 at 12.00 pm for the following purposes :-

Notice of the Twenty-Ninth Annual General Meeting

Ordinary Business:

To receive and consider the Audited Financial Statements of the Company and of the Group

for the financial year ended 30 June 2010 together with the Reports of the Directors and

Auditors thereon.

To approve payment of Directors' for the financial year ended 30 June 2010.

To consider and, if thought fit, pass the following resolutions:

"THAT Dato' Sri Liew Kuek Hin, retiring pursuant to Section 129 of the Companies Act

1965, be and is hereby re-appointed as Director of the Company to hold office until the

conclusion of the next Annual General Meeting."

"THAT Datin Sri Lim Yook Lan, retiring pursuant to Section 129 of the Companies Act



"THAT Dato' Cheong Siew Kai, retiring pursuant to Section 129 of the Companies Act



To re-elect Dato' Liew Yew Cheng, who shall retire by rotation pursuant to Article 84

of the Company's Article of Association.

To re-elect Ms Liew Yet Mei, who shall retire by rotation pursuant to Article 84 of the

Company's Article of Association.

To re-appoint Messrs. Wong Weng Foo & Co as the Auditors for the ensuing year and to

authorize the Directors to fix their remuneration.

SPECIAL BUSINESS:

To consider and if thought fit, to pass with or without modification the following

Resolutions :-

Special Resolution - Amendments to the Articles of Association of the Company

"THAT the proposed alterations, modifications, amendments or deletions to the Articles

of Association of the Company as contained in the Appendix A enclosed in the Annual

Report, be and are hereby approved."

1.

2.

3.

4.

5.

6.

7.

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution 9

AGENDA

89

Annual Report


(72057-H)

Ordinary Resolution I - Authority to Issue Shares

"THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals

of the relevant Governmental and/or regulatory authorities, the Directors be and are

hereby empowered to issue shares in the Company, at such 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 shares issued pursuant to this

resolution does not exceed ten per centum (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 from Bursa Malaysia Securities Berhad for the listing and quotation of the

additional shares so issued and that such authority shall continue to be in force until the

conclusion of the next Annual General Meeting of the Company."

Ordinary Resolution II - Proposed Renewal Share Buy-Back Mandate

"THAT subject to the Companies Act, 1965 (the "Act") rules, regulation and orders made

pursuant to the Act, provisions of the Company's Memorandum and Articles of Association

and the Listing Requirements ("LR") of Bursa Malaysia Securities Berhad ("BMSB") and

any other relevant authorities, the Directors of the Company, be and are hereby

authorized to make purchases of ordinary shares of RM1.00 each in Company's issued

and paid-up ordinary share capital on BMSB, subject further to the following :-

(a)

(b)

(c)

AND THAT the Directors of the Company, be and are hereby authorized to take all such

steps as are necessary or expedient to implement or to effect the purchase(s) of the Shares;

AND the Directors of the Company, be and are hereby authorized to deal with any Shares so

purchased and any existing treasury shares ("the Said Shares") in the following manners :

(i)

(ii)

(iii)

8.

9.

Resolution 10

Resolution 11

the maximum number of shares which maybe purchased and/or held by the

Company, shall be equivalent to ten per centum(10%) of the issued and paid-up

ordinary share capital of the Company ("Shares") for the time being;

the maximum fund to be allocated by the Company for the purpose of purchasing

the Shares, shall not exceed the retained profits and/or the share premium account

of the Company. As of 30 June 2010, the audited retained profits and share premium

account of the Company were RM70,764,053.00 and RM13,774,466.00

respectively; and

the authority conferred by the Resolution as set out in paragraph (a) and (b) above

will commence immediately upon passing of this Ordinary Resolution and will

expire at the conclusion of the next Annual General Meeting ("AGM") of the

Company, unless earlier revoked or varied by Ordinary Resolution of the Shareholders

of the Company in a General Meeting or the expiration of the period within which

the next AGM after that date is required by law to be held, whichever occurs first and,

in any event, in accordance with the provisions of the LR of BMSB or any other

relevant authorities;

cancel the Said Shares;

retain part of the Said Shares as treasury shares and cancel the remainder;

distribute all or part of the Said Shares as dividends to Shareholders, and/or cancel

all or part of them;

90

Annual Report


(72057-H)

or in any other manner as may be prescribed by the Act, rules, regulations and orders

made pursuant to the Act and the LR of BMSB and any other relevant authorities for the

time being in force AND THAT the authority to deal with the Said Shares shall continue

to be valid until all the Said Shares have been dealt with by the Directors of the

Company."

Ordinary Resolution III - Proposed Renewal Shareholders' Mandate for Recurrent

Related Party Transactions of a Revenue or Trading Nature

"THAT approval be and is hereby given to the Company to enter into Recurrent Related

Party Transactions of a Revenue or Trading Nature and to give effect to the specified

Recurrent Related Party Transactions with Khee San Food Industries Sdn Bhd and Teck

Ping Chan Agriculture Sdn Bhd, as stated in Section 2.3, Part B of the Circular to

Shareholders dated 2 December 2010 which are necessary for the day-to-day operations

of the Company, provided that: -

(i)

(ii)

(a)

(b)

(c)

whichever is earlier;

AND THAT the Directors and the Secretaries of the Company be and are hereby autho-

rised to complete and do all such acts and things as they may consider expedient or

necessary to give effect to the Proposed Shareholders' Mandate."

10.

To transact any other ordinary business for which due notice shall have been given.11.

Resolution 12

the transactions are carried out in the ordinary course of business and are on normal

commercial terms which are not more favourable to the Related Parties than those

generally available to the public and not detrimental to the Minority Shareholders;

and

disclosure is made in the annual report of the aggregate value of transactions

conducted pursuant to the Shareholders' Mandate during the financial year;

AND THAT such approval shall continue to be in force until:

the conclusion of the next Annual General Meeting ("AGM") of the Company at

which time it will lapse, unless by a resolution passed at the Meeting the authority is

renewed; or

the expiration of the period within which the next AGM of the Company is required

to be held pursuant to Section 143(1) of the Malaysian Companies Act, 1965 ("the

Act") (but shall not extend to such extension as may be allowed pursuant to Section

143(2) of the Act); or

revoked or varied by resolution passed by the Shareholders in General Meeting;

By Order of the Board

HOH LEONG CHING (MAICSA 7006654)HOH CHEE MUN (MIA 8891)SecretariesJohor Bahru2 December 2010

91

Annual Report


(72057-H)

Notes :-

i)

ii)

iii)

iv)

v)

Explanatory Note On Special Business :-

i)

ii)

iii)

iv)

v)

A Member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote

in his stead. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of

the Companies Act, 1965 shall not apply to the Company.

Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the

proportion of his holdings to be represented by each proxy.

Where a Member is an authorized Nominee as defined under the Central Depositories Act, it may appoint at least

one (1) proxy, in respect of each Securities Account it holds with ordinary shares of the Company standing to the

credit of the said Securities Account.

The Proxy Form must be signed by the Appointor or his Attorney duly authorized in writing, or if the Appointor is

a corporation, either under its Common Seal or under the hand of an Officer or Attorney duly authorized.

The Proxy Form must be completed and deposited at the Registered Office located at No 1, Jalan Istimewa Dua,

Taman Perindustrian Desa Cemerlang, 81800 Ulu Tiram, Johor Darul Takzim, Malaysia, not less than forty-eight

(48) hours before the time appointed for holding the Meeting or at any adjournment thereof.

The proposed Special Resolution No.9, if passed, will ensure consistency with the provisions of the Companies

Act, 1965 and in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad and any

prevailing laws, rules, regulations, orders, guidelines or requirements of the relevant authorities thereat.

The proposed Ordinary Resolution No.10, if passed, will give the Directors, the authority to issue and allot

ordinary shares from the unissued capital of the Company, for such purposes as the Directors consider would be

in the interest of the Company and also to avoid any delay and cost involved in convening a General Meeting,

expire at the conclusion of the next Annual General Meeting or the expiration of the period within which the next

Annual General Meeting is required by law, to be held, whichever is earlier.

The general mandate sought for issue of shares up to 10% of the issued capital of the Company is a renewal to

the general mandate which was approved by shareholders at the AGM held last year.

The renewal of the general mandate is to provide flexibility to the Company for any possible fund raising

exercises including but not limited to issuance of new shares for funding investment project(s), working capital

and/or acquisitions.

The proposed Ordinary Resolution No 11, if passed, will empower the Director to purchase LBB shares of up to

ten percent (10%) of the issued and paid-up shares capital of the Company. The detailed information on the

Proposed Renewal Share Buy-Back Mandate is set out in the Circular to Shareholders dated 2 December 2010

which will be despatched together with the LBB 2010 Annual Report.

Ordinary Resolution No 12, is in relation to be approval on the Shareholders Mandate on Recurrent Related

Party Transactions and if passed, will allow its subsidiaries to enter into Recurrent Party Transactions in

accordance with Paragraph 10.09 of the Main Market Listing Requirements of the Bursa Malaysia Securities

Berhad. The explanatory notes on Resolution 12 are set out in the Circular to Shareholders dated 2 December

2010 attached to the Annual Report.

Appendix A

Article 63

(Business at

meetings)

Article 64

(Requirement

in notice

calling

meeting)

Article No Existing Provision New Provision

Subject always to the provisions of

Section 151 of the Act, no business shall

be transacted at an Extraordinary

General Meeting except business of

which notice has been given in the

notice convening the meeting and no

business shall be transacted at an

Annual General Meeting other than

business of which notice has been give

aforesaid, with the exception of

declaring a dividend, the consideration

of the accounts, balance sheets and the

report of the Directions and auditors,

the election of Directors, and the

appointment and fixing of the

remuneration of auditors.

Subject always to be provisions of

Section 151 of the Act, no business shall

be transacted at an Extraordinary

General Meeting except business of

which notice has been given in the

notice convening the meeting and no

Business shall be transacted at an

Annual General Meeting other than

business of which notice has been give

aforesaid, with the exception of

declaring a dividend, the laying of the

financial statements, income

statement, balance sheets and the

report of the Directors and auditors, the

election of Directors, and the

appointment and fixing of the

remuneration of auditors.

In every notice calling a General

Meeting there shall appear with

reasonable prominence a statement

that a Member entitled to attend and

vote is entitled to appoint one or more

proxies to attend and vote instead of

him, and that a proxy may, but need not

be a Member and that where a Member

appoints more than one (1) proxy, the

appointment shall be invalid unless he

specifies the proportion of his holdings

to be represented by each proxy. Where

a Member is an Authorised Nominee, it

may appoint at least one (1) proxy in

respect of each Securities Account it

holds with ordinary shares of the

Company standing to the credit of the

said Securities Account.

In every notice calling a General

Meeting, there shall appear with

reasonable prominence a statement

that a Member entitled to attend and

vote is entitled to appoint not more

than two proxies to attend and vote

instead of him, and that a proxy may,

but need not be a Member and that

where a Member appoints more than

one (1) proxy, the appointment shall be

invalid unless he specifies the

proportion of his holdings to be

represented by each proxy. Where a

Member is an Authorised Nominee, it

may appoint at least one (1) proxy in

respect of each Securities Account it

holds with ordinary shares of the

Company standing to the credit of the

said Securities Account.

92

Annual Report


(72057-H)

Appendix A (Continued)

Article 149

(Payment by

cheque)

Article No Existing Provision New Provision

Any dividend, interest, or other money

payable in cash in respect of shares may

be paid by cheque or warrant sent

through the post directed to the

registered address of the Holder as

shown in the Register of Member or

the Record of Depositors (as the case

may be) or to such person and to such

address as the Holder may in writing

direct. Every such cheque or warrant

shall be made payable to the order of

the person to whom it is sent, and the

payment of any such cheque or warrant

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 shall be

sent at the risk of the person entitled to

the money thereby represented.

Any dividend, interest, or other money

payable in cash in respect of shares may

be paid by cheque or warrant sent

through the post directed to the

registered address of the person

whose name appear in the Record of

Depositors or to such person and to

such address as the Holder may in

writing direct or by way of telegraphic

transfer or electronic transfer or

remittance to such account as

designated by such holder or the

person entitled to such payment.

Every such cheque or warrant or

telegraphic transfer or electronic

transfer or remittance shall be made

payable to the order of the person to

whom it is sent and the payment of any

such cheque or warrant or telegraphic

transfer or electronic transfer or

remittance shall operate as a good and

full discharge to the payment

represented thereby, notwithstanding

that in the case of payment by cheque

or warrant, it may subsequently appear

that the same has been stolen or that

endorsement thereon has been forged.

Every such cheque or warrant or

telegraphic transfer or electronic

transfer or remittance shall be sent at

the risk of the person entitled to the

money represented thereby.

93

Annual Report


(72057-H)

PROXY FORMI/We,_____________________________________________ NRIC No: ______________________________of ___________

____________________________________________________________________________________________________

____________________________________________________________________________________________________

being a Member / Members of LONDON BISCUITS BERHAD, hereby appoint _____________________________________

_______________________________________ NRIC No:____________________________________________________

of __________________________________________________________________________________________________

____________________________________________________________________________________________________

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

Twenty-Ninth Annual General Meeting of the Company to be held at The London Room, No 1, Jalan Istimewa 2, Taman

Perindustrian Desa Cemerlang, 81800 Ulu Tiram, Johor Darul Takzim, Malaysia, on Friday, 24 December 2010, at 12.00 pm

and at any adjournment thereof *for / against the resolution(s) to be proposed thereat:-

* My/Our proxy(ies) is/are to vote as indicated below:-

RESOLUTIONS For Against

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution 9

Resolution 10

Resolution 11

Resolution 12 (Please indicate with “X” how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his discretion).

Dated this ______ of _____________ 2010 __________________________________________

[Signature/Common Seal of Shareholder(s)]

NOTES: -

i)

ii)

iii)

iv)

v)

Number of shares held

CDS Account No.

(FULL NAME IN BLOCK LETTERS)

(FULL ADDRESS)

(FULL NAME IN BLOCK LETTERS)

(FULL ADDRESS)

A Member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

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

Where a Member is an authorized Nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy, in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

The Proxy Form must be signed by the Appointor or his Attorney duly authorized in writing, or if the Appointor is a corporation, either under its Common Seal or under the hand of an Officer or Attorney duly authorized.

The Proxy Form must be completed and deposited at the Registered Office located at No 1, Jalan Istimewa Dua, Taman Perindustrian Desa Cemerlang, 81800 Ulu Tiram, Johor Darul Takzim, Malaysia, not less than forty-eight (48) hours before the time appointed for holding the Meeting or at any adjournment thereof.

LONDON BISCUITS BERHAD(Company No : 72057-H) (Registered in Malaysia)

The Company Secretaries

LONDON BISCUITS BERHAD (72057-H)

No 1, Jalan Istimewa 2,

Taman Perindustrian Desa Cemerlang,

81800 Ulu Tiram,

Johor Darul Takzim,

Malaysia.

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AFFIX

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London Biscuit Ar 2010

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