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CONTENTS
Corporate Information
Profile of Directors
Group Structure
Financial Highlights
Audit Committee Report
Chairman‟s Statement
Statement on Corporate Governance
Statement on Internal Control
Statement on Directors‟ Responsibilities
Additional Compliance Information
Financial Statements
Analysis of Shareholdings
Notice of Annual General Meeting
Enclosed : Proxy Form
2
3
5
6
8
12
13
16
18
19
22
68
71
ADVANCE COMPOSITES…
Corporate Information
2
BOARD OF DIRECTORS
Pang Chee Khiong
Executive Chairman
Pang Fok Seng
Managing Director
Lim Wai Kiew
Executive Director
Pang Nyuk Yin
Executive Director
Datuk Mohamad Saleh Bin Mohd Ghazali
Independent Non-Executive Director
Dr. Chen Chaw Min
Independent Non-Executive Director
Chong Peng Khang
Independent Non-Executive Director
COMPANY SECRETARY
Noriah Binti Md Yusof (LS No. 0009298)
AUDITORS AND REPORTING
ACCOUNTANTS
Crowe Horwath (AF 1018)
52, Jalan Kota Laksamana 2/15,
Taman Kota Laksamana,
Seksyen 2, 75200 Melaka.
Tel: (607) 282 5995
Fax: (607) 283 6449
SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd
(378993-D)
Level 6, Symphony House,
Block D13, Pusat Dagangan Dana 1,
Jalan PJU 1A/46,
47301 Petaling Jaya, Selangor.
Tel: (603) 7841 8000
Fax: (603) 7841 8008
REGISTERED OFFICE
31-04, Level 31, Menara Landmark
Mail Box 172, No. 12, Jln Ngee Heng,
80000 Johor Bahru, Johor Darul Takzim.
Tel: (607) 278 1338
Fax: (607) 223 9330
HEAD OFFICE
12A, Jalan 20, Taman Sri Kluang,
86000 Kluang, Johor Darul Takzim
Tel: (607) 773 6918
Fax: (607) 774 2025
Website: www.fibon.com.my
E-mail: hexa@fibon.com.my
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia
Securities Berhad
Stock Name: Fibon
Stock Code: 0149
ANNUAL REPORT 2010
Profile of Directors
3
Pang Chee Khiong
Executive Chairman, Non-Independent
Mr Pang Chee Khiong, a Malaysian aged 46 is a
Non-Independent Executive Chairman since 25
March 2008. He has attended all four Board
meetings held during the financial year under
review. He has more than 22 years of
experience in the industries such as plumbing,
timber logging, construction and housing
development. He is the brother to Pang Fok
Seng and Pang Nyuk Yin. He maintains a clean
record with regard to convictions for offences
and he has no conflict of interest with the group.
Pang Fok Seng
Managing Director, Non-Independent
Mr Pang Fok Seng, a Malaysian aged 44 is a
Non-Independent Managing Director since 25
March 2008. He has attended three out of four
Board meetings held during the financial year
under review. He has more than 16 years of
experience in the advanced polymer matrix fibre
composite industry. He is the brother to Pang
Chee Khiong and Pang Nyuk Yin. He is the
husband to Lim Wai Kiew. He maintains a clean
record with regard to convictions for offences
and he has no conflict of interest with the group.
Pang Nyuk Yin
Executive Director, Non-Independent
Ms Pang Nyuk Yin, a Malaysian aged 50 is a
Non-Independent Executive Director since 9
April 2008. She has attended all four Board
meetings held during the financial year under
review. She was in charge of production
processes, sales, purchases and general
administration from 1990 to 2003 in a private
company. She is sister to Pang Fok Seng and
Pang Chee Khiong. She maintains a clean
record with regard to convictions for offences
and she has no conflict of interest with the
group.
Lim Wai Kiew
Executive Director, Non-Independent
Ms Lim Wai Kiew, a Malaysian aged 44, is a
Non-Independent Executive Director since 9
April 2008. She has attended two out of four
Board meetings held during the financial year
under review. She was a quantity surveyor in
Singapore from 1990 to 1991. She was in
charge of office management and administration
in a private company from 1992 to 2003. She is
wife to Pang Fok Seng She maintains a clean
record with regard to convictions for offences
and she has no conflict of interest with the
group.
Datuk Mohamad Saleh Bin Mohd Ghazali
Independent Non-Executive
Datuk Mohamad Saleh Bin Mohd Ghazali, a
Malaysian aged 66 is an Independent Non-
Executive Director and Chairman of Audit and
Remuneration Committee and member of the
Nomination Committee. He is appointed as
Director on 20 October 2008 and has attended
all four Board meetings held during the financial
year under review. He graduated from the
University of Hawaii, United States with a
Bachelor of Business Administration and went
on to obtain his Masters of Business
Administration from Ohio University in Athens,
United States in 1972.
Datuk Mohamad Saleh began his career by
serving the Fishery Development Authority of
Malaysia as an economist in 1972 and went on
to lecture in Universiti Institut Teknologi Mara in
1973. Prior to retiring in November 1999 he was
the Executive Director/ Chief Executive Officer of
Bank Perusahaan Kecil & Sederhana Malaysia
Berhad (formerly known as Bank Industri
Malaysia Berhad) for eighteen years. His other
working experiences encompasses being a
marketing executive in Tourist Development
Corporation of Malaysia, an assistant director in
the Urban Development Authority, Malaysia and
an assistant general manager in the Armed
ADVANCE COMPOSITES…
Profile of Directors cont‟d
4
Datuk Mohamad Saleh Bin Mohd Ghazali
Independent Non-Executive (Cont’d)
Forces Provident Fund in its investment
department.
He has no conflict of interest with the Group and
has no family relationship with any director
and/or major shareholder of the Group. He
maintains a clean record with regard to
convictions for offences.
Dr. Chen Chaw Min
Independent Non-Executive
Dr. Chen Chaw Min, a Malaysian aged 49, is an
Independent Non-Executive Director and
Chairman of Nomination Committee and
member of the Audit Committee. He is
appointed as Director on 20 October 2008 and
has attended all four Board meetings held
during the financial year under review. He
graduated from the University of Technology,
Malaysia with a Bachelor I
n Surveying (Hons) in 1985. He obtained his
Masters in Business Administration (Finance)
from University of Illinois at Urbana-Champaign,
United States in 1997. He subsequently went on
to obtain his PhD in Finance from University of
Putra, Malaysia in 2005.
Dr. Chen began his career in the Malaysian Civil
Service in 1988 and has held many posts in the
government such as assistant secretary and
principal assistant secretary in the Budget
Division, Investment Division and Finance
Division of the Ministry of Finance. He is
currently the Senior Principal Assistant
Secretary in the Finance Division of Ministry of
Finance. Dr. Chen currently sits on the board of
Kumpulan Modal Perdana, a public venture
capital company which is wholly owned by the
Minister of Finance Incorporated. He has no
conflict of interest with the Group and has no
family relationship with any director and/or major
shareholder of the Group. He maintains a clean
record with regard to convictions for offences.
Chong Peng Khang
Independent Non-Executive
Mr Chong Peng Khang, a Malaysian aged 30, is
an Independent Non-Executive Director and
member of the Audit and Remuneration
Committee for the Group. He is appointed as
Director on 20 October 2008 and has attended
all four Board meetings held during the financial
year under review. He holds a first class
honours Bachelor of Accounting degree from
Multimedia University, Malaysia. He is a
Chartered Accountant by profession as well as a
member of the Association of Chartered
Certified Accountants (ACCA, United Kingdom)
and also member of the Malaysian Institute of
Accountants (MIA).
He began his career as an auditor with Deloitte
Kassim Chan and subsequently Ernst & Young,
involving in audit and business advisory of
companies from various industries. His
experience covers audit and assurance
engagements, corporate reporting and
compliance, taxation and wide-ranging overseas
exposures. He has previously headed the
accounting and finance division of a public listed
company listed on the Main Board of Bursa
Malaysia Securities Berhad and responsible for
the corporate finance, accounting, tax and cash
flow functions of the company and its
subsidiaries. He is currently an Audit Manager
of a chartered accounting firm. He is also an
independent non-executive director of another
company listed on the Main Market of Bursa
Malaysia Securities Berhad. He has no conflict
of interest with the Group and has no family
relationship with any director and/or major
shareholder of the Group. He maintains a clean
record with regard to convictions for offences.
ANNUAL REPORT 2010
Group Structure
5
100% 100% 100%
FIBON BERHAD, incorporated on 25 March 2008, Malaysia
HEXA ANALISA SDN BHD, acquired on 20 October 2008, Malaysia
FIBON UK LIMITED, acquired on 16 April 2009, United Kingdom
FIBON AUSTRALIA PTY LTD, incorporated on 14 July 2009, Australia
FIBON BERHAD
HEXA
ANALISA
SDN BHD
FIBON
UK
LIMITED
FIBON
AUSTRALIA
PTY LTD
ADVANCE COMPOSITES…
Financial Highlights
6
Financial year ended 31 May
2006^ 2007^ 2008^ 2009 2010
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000
Revenue 4,038 7,910 14,305 16,474 12,891
Profit before taxation (“PBT”) 1,952 4,232 8,007 8,693 5,010
Profit after taxation (“PAT”) 1,846 4,210 7,847 8,304 4,014
EARNINGS PER SHARE (“EPS”)
Gross EPS (sen)* 7.23 15.67 13.30 17.86 5.11
Net EPS (sen)* 6.84 15.59 13.04 17.06 4.10
^ Assuming that the Group was in existence since 1 June 2005.
* FYE 2006-2007: Computed based on the PBT and PAT for the relevant financial years under review
and divided by the issued and paid up share capital of 27,000,000 Shares immediately prior to the
Public Issue by Fibon Berhad.
* FYE 2008-2009: Computed based on the PBT and PAT for FYE 2009 and divided by the weighted
average number of shares in issue of 60,187,000 and 48,666,000 during the respective financial
year.
* FYE 2010: Computed based on the PBT and PAT for FYE 2010 and divided by the issued and paid
up share capital of 98,000,000 Shares for the financial year.
REVENUE AND PROFIT FROM ORDINARY ACTIVITY AFTER TAXATION (RM’000)
(RM’000)
ADVANCE COMPOSITES…
Audit Committee Report for the financial year ended 31 May 2010
8
THE AUDIT COMMITTEE
The present Audit Committee consists entirely
of Non-Executive Directors. The Company has
complied with the Listing Requirements of Bursa
Malaysia Securities Berhad, which require all of
Audit Committee members to be non-executive,
with a majority of them being independent
directors. In addition, one of the members of the
Audit Committee is also a member of the
Malaysian Institute of Accountants (“MIA”) and
the Chairman of the Audit Committee is an
Independent Director.
COMPOSITION AND MEETINGS
The Audit Committee was established on 20
October 2008. The composition of the Audit
Committee and their attendance at the 4
meetings held during the year are as follows:
Name of Director Designation Attendance
Datuk Mohamad
Saleh Bin Mohd
Ghazali
Independent
Non-
Executive
Director
Chairman 4/4
Dr. Chen Chaw
Min
Independent
Non-
Executive
Director
Member 4/4
Chong Peng
Khang
Independent
Non-
Executive
Director;
Member of
the MIA
Member 4/4
TERMS OF REFERENCE
Objectives
The principle objective of the Audit Committee is
to assist the Board of Directors in discharging its
statutory duties and responsibilities relating to
accounting and reporting practices of the Group.
In addition, the Committee shall:
1. Ensure the timely and accurate
preparation and publication of financial
statements of our Group;
2. Review the adequacy of provisions against
contingencies and bad and/or doubtful
debts;
3. Review internal control process and
procedures, scope, internal audit findings
and recommend actions to the Board;
4. Recommend and appoint external auditors
and deal with any issues arising from their
audit findings;
5. Review related party transactions that may
arise within our Group;
6. Approve fees relating to external auditors;
and
7. Address any accountability issues that
may arise from time to time within our
Group.
ANNUAL REPORT 2010
Audit Committee Report for the financial year ended 31 May 2010 cont‟d
9
TERMS OF REFERENCE (Cont’d)
Composition
1. The Audit Committee shall be appointed
by the Board of Directors from amongst
their members and comprising not less
than three (3) members, of whom the
majority shall be the Independent Non-
Executive directors.
2. At least one of the members of the Audit
Committee must be a member of the
Malaysian Institute if Accountants, or if he
is not a member of the Malaysian Institute
of Accountants, he must have at least
three (3) years of working experience or
either must have passed the examinations
specified in Part I of the schedule of
Accountants Act 1967, or must be a
member of one of the associations of
accountants specified in Part II of the 1st
Schedule of the Accountant Act, 1967.
3. The members of the Audit Committee shall
elect a chairman amongst themselves who
shall be an Independent Non-Executive
director. No alternate director shall be
appointed as a member of the Audit
Committee.
4. If a result that the number of members is
reduced below three (3), the Board of
Directors shall, within three (3) months of
the events, appoints such number of new
members as may be required to make the
minimum number of three (3) members.
Authority
1. The Audit Committee is authorized by the
Board of Directors shall have the authority
to investigate any matter within its items of
reference and shall have unlimited access
to both the internal and external auditors,
as well as the employees of the Group. All
employees are directed to co-operate with
any request made by the Committee.
2. The Committee shall have unlimited
access to all information and documents
relevant to its activities, to the internal and
external auditors, and to senior
management of the Group.
3. The Committee shall have the authority to
obtain independent legal or other
professional advices as it considers
necessary.
4. The Committee shall be able to convene
meetings with the external auditors,
excluding the attendance of the executive
members of the Committee, whenever
deemed necessary.
5. The Audit Committee shall have the power
to establish Sub-Audit Committee(s) to
carry out certain investigation on behalf of
the Committee in such manner, as the
Committee deem fit and necessary.
Meetings
The Committee is at liberty to determine the
frequency of the meetings as least four times
annually. The quorum shall consist of two (2)
members, where the majority of members
present must be independent directors.
Attendance of the Meetings
1. The external auditors may be invited to
attend to meetings. The Committee may
invite any person to be in attendance to
assist in its deliberations. The other
directors and employees attend any
particular audit committee meeting only at
the audit committee‟s invitation, specific to
the relevant meeting.
2. The Company Secretary shall be the
Secretary of the Committee and shall be
responsible for drawing up the agenda
with concurrence of the chairperson and
circulating it, supporting by explanatory
documentation to committee members
prior to each meeting.
ADVANCE COMPOSITES…
Audit Committee Report for the financial year ended 31 May 2010 cont‟d
10
TERMS OF REFERENCE (Cont’d)
Duties
The duties of the Audit Committee include the
followings:
1. To consider the appointment or re-
appointment of external auditors, the audit
fee and matter relating to the resignation
or dismissal of auditors, if any;
2. To review with the external auditors the
audit plan, their evaluation of the system
of internal accounting controls, their letter
to management and the management‟s
response;
3. To review the quarterly and annual
financial statements before submission to
the Board of Directors for approval,
focusing particularly on:
Changes in accounting policies and
practices;
Significant and unusual events;
Significant adjustments resulting from
the audit;
The going concern assumption; and
Compliance with accounting standard
and other legal requirements
4. To discuss problems and reservations
arising from the interim and final audits,
and any matter the auditors may wish to
discuss (in the absence of management
where necessary);
5. To do followings where an internal audit
function exists;
Review the adequacy of the scope,
function and resources of the internal
audit function and that it has the
necessary to carry out its work;
Review the internal audit programme
and results of the internal audit
process and where necessary ensure
that appropriate action is taken on the
recommendations of the internal audit
function;
Review any appraisal or assessment
of the performance of members of the
internal audit function;
Approve any appointment or
termination of senior staff members of
the internal audit function;
Review the resignation of internal
audit staff members and provide the
staff member the opportunity to
submit his reasons for resigning; and
To consider major findings of internal
investigations and management‟s
response.
6. To consider any related party transaction
and conflict of interest situation that may
arise within the Company or the Group
including any transaction, procedure or
course of conduct that raises questions of
management integrity; and
7. To consider other topics as defined by the
Board.
Reporting
The Audit Committee is authorized to regulate
its own procedures and in particular the calling
of meetings, the notice to be given of such
meetings, the voting and proceeding thereat, the
keeping of minutes and the custody, production
and inspection of such meetings.
The minutes of meetings shall be circulated by
the Secretary of the Committee to the
Committee members and all the other Board
members.
ANNUAL REPORT 2010
Audit Committee Report for the financial year ended 31 May 2010 cont‟d
11
ACTIVITIES OF THE AUDIT COMMITTEE
There were four (4) Audit Committee Meetings
held during the financial year under review.
The main activities undertaken by the Audit
Committee during the financial year included the
following:
Reviewed and commented on the
quarterly financial result before
recommending the same for Board‟s
approval.
Reviewed the audit report and
observations made by external auditors on
the audited financial statements that
require appropriate management action
and the management‟s response thereon
and reporting them to the Board.
Reviewed the external auditors‟ scope of
work and audit plan.
Reviewed the internal audit reports, which
highlighted the audit issues and
management„s response.
INTERNAL AUDIT FUNCTION
The Board engaged an external professional
firm to carry out internal audit function for the
Group. The internal auditors report directly to
the Audit Committee.
The primary role of the internal auditors is to
inter-alia, assist the Audit Committee on an
ongoing basis to:
Review the risk management framework;
Evaluate the state of compliance with the
Bursa Securities Listing Requirements,
Malaysian Code on Corporate
Governance (“the Code”) and other
statutory requirements; and
Provide such other function as requested
by the Audit Committee
The total costs incurred for the internal audit
function of the Group for the financial year was
RM35,829.
ADVANCE COMPOSITES…
Chairman‟s Statement
12
ON behalf of the Board of Directors of FIBON
Berhad, I am pleased to present the Annual
Report and Audited Financial Statements of the
Group and of the Company for the financial year
ended 31 May 2010.
FINANCIAL PERFORMANCE
For the financial year under review, the Group
registered a revenue of approximately RM 12.9
million, a decreased of 21.8% compared to the
preceding year. Profit after tax decrease from
RM 8.3 million to RM 4.0 million. The decrease
is mainly due to decrease in sales and expiry of
pioneer status. The Group continues maintain a
set of healthy and financially sound balance
sheet with cash and cash equivalents of
approximately RM 15.4 million. The lower
revenue achieved in the year is mainly due to
impact of the financial crisis in year 2009.
INDUSTRY OUTLOOK AND PROSPECTS
There were signs of stabilisation towards the
end of first quarter year 2010 as global
economics condition started to improve. The
recovery in the global economy will provide a
further impetus for growth in 2010. However,
economic condition in year 2010 will remain
challenging in view of sovereign debt crisis in
Europe.
Nevertheless, the Group has taken steps to
mitigate the impact of these issues including
focusing on sale expansion of its existing
products and continue to invest in research and
development.
DIVIDENDS
The Board is pleased to recommend a proposed
single tier final dividend of 0.82 sen per ordinary
share for FYE 31 May 2010. The proposed
dividend is subject to Shareholders‟ approval at
the forthcoming Annual General Meeting.
The total dividends payable for the FYE 31 May
2010 would be approximately amounting to
RM 804,000, being a dividend payout ratio of
approximately 20.1% of PAT of RM 4.0 million.
APPRECIATION
On behalf of the Board of Directors, I would like
to express our sincere appreciation to the
management and the staff of the Group for their
continued efforts, commitment and contribution
in instituting the strict strategic and operational
measures needed to stand resilient during these
challenging times. I would like to take this
opportunity to thank all our valued customers,
suppliers, business associates, investors, the
regulatory authorities, bankers for their
continuous support and confidence in the Group
especially during the listing exercise of the
Group.
Finally, I wish to thank my fellow Directors for
their invaluable guidance, advice and support.
Pang Chee Khiong
Chairman
ANNUAL REPORT 2010
Statement on Corporate Governance for the financial year ended 31 May 2010
13
INTRODUCTION
The Board of Directors (“the Board”) of Fibon
Berhad (“the Company”) is committed to
exercise good corporate governance by
supporting and applying the prescriptions of the
principles and best practices set out in Parts 1
and 2 respectively of the Malaysian Code on
Corporate Governance (“the code”).
The Board is pleased to provide the following
statement on how the Group has applied the
principles and best practices set out in Part 1
and 2 of the Code. Unless otherwise stated, the
Board has throughout the financial year ended
31 May 2010 complied with the best practices
indicated in the Code.
The Board acknowledges the importance of
achieving best practice in its standards of
business integrity and corporate accountability
and is committed to subscribe to the
recommendations of the Code.
The Board
The Group recognises the important role played
by the Board in the stewardship of the Group‟s
direction and operations, and ultimately, the
enhancement of long-term shareholders‟ value.
To fulfill this role, the Board is responsible for
the overall corporate governance of the Group,
including its strategic direction, establishing
goals for management and monitoring the
achievement of these goals.
Board Meeting
The Board ordinarily meets at least four (4)
times a year at quarterly intervals with additional
meeting convened when urgent and important
decisions need to be taken between the
scheduled meetings. During the financial year
ended 31 May 2010, the board met on four (4)
occasions, where it deliberated upon and
considered a variety of matters including the
Group‟s financial results, major investments and
strategic decisions and the business plan and
direction of the Group.
The present Board of Directors headed by the
chairman is comprised of:
4 Non-Independent Executive Directors
3 Independent Non-Executive Directors
The composition of the Board is in compliance
with the Bursa Securities Listing Requirements
and the Code. The Board composition has been
balanced to reflect the interests of the major
shareholders, management and minority
shareholders. Collectively, the Directors bring a
wide range of business and financial experience
relevant to the direction of the Group.
Details of Directors‟ attendance at Board
Meetings held in the financial year ended 31
May 2010 as follows:
Name of Directors No. of Meetings
Attended
Datuk Mohamad Saleh
Bin Mohd Ghazali 4/4
Dr Chen Chaw Min 4/4
Chong Peng Khang 4/4
Pang Chee Khiong 4/4
Pang Fok Seng 3/4
Pang Nyuk Yin 4/4
Lim Wai Kiew 2/4
ADVANCE COMPOSITES…
Statement on Corporate Governance for the financial year ended 31 May 2010 cont‟d
14
Appointment of Directors
The Nomination Committee task is to assist the
Board to evaluate and recommend candidates
for appointments to the Board.
In accordance with the Company‟s Articles of
Association (“the Articles”), all Directors who are
appointed by the Board during a financial year,
will retire at the following Annual General
Meeting. The Articles also provide that at least
one-third (1/3) of the Directors for the time
being, or if their numbers is not in multiple of
three (3), then the number nearest to one-third
(1/3) shall retire from office provided always that
all Directors including the Managing
Director/Executive Director shall retire from
office at least once every three years but shall
be eligible for re-election.
At the forthcoming Annual General Meeting,
Pang Fok Seng and Lim Wai Kiew are due to
retire pursuant to Article 121 of the Company‟s
Articles of Association.
The Articles of Association further provide that a
managing director can be appointed for a fixed
term which shall not exceed five (5) years.
The Board, through the Nomination Committee,
appraises the composition of the Board and
believes that the current composition brings the
required mix of skills and core competencies for
the Board to discharge its duties effectively.
New appointees will be considered and
evaluated by the Nomination Committee. The
Nomination Committee will then recommend the
candidates to be approved and appointed by the
Board. The Company Secretary will ensure that
all appointments are properly made and that
legal and regulatory obligations are met.
Directors’ Remuneration
The Directors‟ remuneration is linked to
experience, scope of responsibility, seniority,
performance and industry information. Details of
Directors‟ remuneration for the year ended 31
May 2010 are as follows:
Description Fees Salaries and
Bonus Total
Executive
Directors
174,000 716,500 890,500
Non Executive
Directors
72,000 - 72,000
The number of Directors whose remuneration
falls within the following bands are:
Description Executive
Directors
Non
Executive
Less than RM50,000 - 3
RM50,000 – RM100,000 2 -
RM100,000 – RM150,000 - -
RM150,000 – RM200,000 - -
RM200,000 – RM300,000 1 -
RM300,000 – RM400,000 1 -
Directors’ Training
The Group acknowledges the importance of
continuous education and training to the Board
members.
During the financial year, Mr. Pang Chee
Khiong, Mr. Pang Fok Seng, Ms. Pang Nyuk Yin
and Ms. Lim Wai Kiew attended the forum on
“The Challenges of Implementing Financial
Reporting Standard 139” organised by the
Bursa Malaysia Securities Berhad.
Mr. Chong Peng Khang had attended the
following sessions:-
i) Upgrading of ISO 9001: 2008
ii) Integrating Financial Data and Reports
Presentation For Accountants
iii) ACCA Reception Addressing Challenging
Financial Reporting Areas
iv) Essential Tax Planning for Companies in
2010.
ANNUAL REPORT 2010
Statement on Corporate Governance for the financial year ended 31 May 2010 cont‟d
15
ACCOUNTABILTY AND AUDIT
Financial Reporting
The Board takes responsibility for ensuring that
the financial statements of the Group and of the
Company give a true and fair view of the state of
affairs of the Group and of the Company as
required under Section 169 (15) of the
Companies Act, 1965 efforts are made to
ensure that the financial statements comply with
the provisions of the Companies Act, 1965 and
the applicable approved accounting standards in
Malaysia. The Board also ensures the accurate
and timely release of the Group‟s quarterly and
annual financial results to Bursa Malaysia.
External Audit Function
The Company‟s independent external auditors
fill an essential role by enhancing the reliability
of the financial statements of the Group and of
the Company and giving assurance of that
reliability to users of these financial statements.
The external auditors, Messrs. Crowe Horwath
had reported to the members of the Company
on their findings which has been included as
part of the Group‟s and the Company‟s financial
reports with respect to the audit on the statutory
financial statements for the year ended 31 May
2010. In doing so, the Group and the Company
have established a transparent arrangement
with the auditors to meet their professional
requirements. From time to time, the auditors
highlight to the Audit Committee and the Board
on matters that require the Board‟s attention.
Internal Control
The Board is fully aware of its responsibility to
safeguard and enhance the value of
shareholders in the Group. Since the listing of
the Company, the Board has continuously
placed emphasis on the need for maintaining a
sound system of the internal control.
RELATIONS WITH SHAREHOLDERS
AND INVESTORS
Annual General Meeting
Annual General Meeting (“AGM”) is the principal
forum for dialogue with shareholders. At the
Company‟s AGM, shareholders have direct
access to the Board and are given opportunities
to ask questions. The shareholders are
encouraged to participate in the question and
answer session. The Chairman of the Board in
the AGM often presents to the shareholders, the
Company‟s operations in the financial year and
outlines future prospects of the Group. Further,
the Group‟s Company Secretary could provide
shareholders and investors with a channel of
communication on which they can provide
feedback to the Group. Queries regarding the
Group may be conveyed to the Company
Secretary at the Company‟s registered address.
Investor Relations
In line with the Main Market Listing
Requirements, shareholders, investors and
member of public can access the company‟s
announcements, quarterly financial results,
annual reports, circulars to shareholders etc via
the company‟s website.
Corporate Social Responsibilities
The Company recognises the importance of
Corporate Social Responsibilities and is
committed to conduct its business activities in a
socially, economically and environmentally
sustainable manner.
The Company has taken a proactive approach
wherever possible to provide monetary
contributions to non-profitable and charitable
organisations. In support of the local
universities, the Company accepts
undergraduates to perform their industrial
training.
ADVANCE COMPOSITES…
Statement on Internal Control for the financial year ended 31 May 2010
16
INTRODUCTION
The Malaysia Code on Corporate Governance
requires listed companies to maintain a sound
system of internal control exists in order to
safeguard shareholders‟ investments and the
Group‟s assets.
Pursuant to Paragraph 15.26(b) of the Main
Market Listing Requirements of Bursa Malaysia
Securities Berhad and as guided by the Bursa
Malaysia‟s Statement on Internal Control:
Guidance for Directors of Public Listed
Companies („the Guidance"), the Board of
Directors ("the Board") of Fibon Berhad is
pleased to include a statement on the state of
the Group‟s internal control in this annual report.
BOARD RESPONSIBILITY
The Board acknowledges its overall
responsibility for the Group‟s system of internal
control, which includes the establishment of an
appropriate internal control environment and
framework, and the review of its adequacy and
integrity to ensure that the Group‟s assets and
shareholders‟ interests are safeguarded.
However, it should be noted that there are
inherent limitations in any system of internal
control as such system put in place by
Management can only reduce rather than
eliminate the risks that may impede the
achievement of the Group‟s corporate
objectives. Therefore, such a system can only
provide reasonable rather than absolute
assurance against material misstatement or
loss.
RISK MANAGEMENT FRAMEWORK
The Board acknowledges that the Group‟s
business activities involve some degree of risks.
On a day-to-day basis, respective Heads of
Departments are responsible for managing the
risks of their departments.
During the financial year ended 31 May 2010,
Management with the assistance of external
consultants completed the development of the
Group‟s key risk profile, which was presented to
the Audit Committee on 23 July 2010. Risks
identified were prioritised in terms of likelihood
of their occurrence and the impact on the
Group. The key risk profile shall be updated on
a regular basis to ensure that all key risks are
identified and adequate responses are devised
in mitigating these risks. The abovementioned
practices / initiatives by Management serves as
the on-going process used to identify, evaluate
and managed significant risks.
Internal Audit
The Group‟s internal audit function is
outsourced to a professional services firm. The
outsourced internal audit function assists the
Board and the Audit Committee in providing
independent assessment of the adequacy,
efficiency and effectiveness of the Group‟s
internal control system.
ANNUAL REPORT 2010
Statement on Internal Control for the financial year ended 31 May 2010 cont‟d
17
OTHER KEY ELEMENTS OF INTERNAL
CONTROLS
The other key elements of the Group‟s internal
control system are:
An organisational structure, which clearly
defines the lines of responsibility, levels of
authority and accountability to facilitate
internal checks and balances;
Quarterly review of key information such as
financial performance, and group accounts
by the Board;
The Executive Directors are closely
involved in overseeing the business and
operations of the Group and they report to
the Board on significant changes (if any) in
the business and external environment,
which affect the operations of the Group at
large;
Monthly management meetings are held to
discuss the Group‟s performances,
business operations and management
issues as well as formulate appropriate
measures to address them; and
The Group has established policies and
procedures to support the Group‟s critical
business activities.
CONCLUSION
The Board is of the view that the Group‟s
system of internal control is adequate to
safeguard shareholders‟ investments and the
Group‟s assets. However, the Board is also
cognizant of the fact that the Group‟s system of
internal control and risk management practices
must continuously evolve to meet the changing
and challenging business environment.
Therefore, the Board will, when necessary, put
in place appropriate action plans to further
enhance the existing system of internal control.
This statement was approved by the Board of
Directors on 27 August 2010.
ADVANCE COMPOSITES…
Statement on Directors‟ Responsibilities In respect of the audited financial statements
18
The Board has the overall responsibility to
prepare the financial statements for each
financial year as required by the Companies
Act, 1965. The financial statements should be
prepared in accordance with the applicable
Malaysian Accounting Standards Board
(“MASB‟) approved accounting standards in
Malaysia, the provisions of the Companies Act,
1965, and the relevant provisions of the Bursa
Securities Listing Requirements so as to present
a true and fair view of the state of affairs of the
Group and of the Company as at the end of the
financial year and of their results and cash flows
for the year then ended.
In preparing the financial statements, the
Directors have:
Selected suitable accounting policies and applied them consistently
Ensured adequate system of internal control exist to safeguard the assets of the Group to prevent and detect fraud and other irregularities
Ensured that the financial statements presents a balanced and understandable assessment of the financial position and prospect of the Group and of the Company; and
Ensured that the accounting estimates included in the financial statements are reasonable and prudent
ANNUAL REPORT 2010
Additional Compliance Information
19
UTILISATION OF PROCEEDS
The status of utilisation of proceeds from the public offering during the financial year ended 31 May 2010
is as follows:
Purposes
Proceeds
raised
RM‟000
Amount
Utilised
RM‟000
Intended
Timeframe for
Utilisation
Balance
Unutilised
RM‟000
%
Explanation
(i) Research & development
activities
1,848 770 18 December
2011
1,078 58 ^
(ii) Purchase of machineries 1,700 - 18 December
2011 1,700 100 ^
(iii) Geographical expansion 1,180 790 18 December
2011 390 33 ^
(iv) Working capital 2,409 3,079 - (670) - *
(v) Estimated listing expenses 2,000 1,330 - 670 - *
Total 9,137 5,969 3,168
^ The approved timeframe for utilisation is 3 years from the date of listing
* The underutilisation of the listing expenses will be adjusted to working capital
SHARE BUYBACKS
During the financial year under review, there were no share buyback by the Company.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
During the financial year under review, the Company has not issued any options, warrants or convertible
securities.
AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR)
PROGRAMME
During the financial year under review, the Company did not sponsor any such programme.
ADVANCE COMPOSITES…
Additional Compliance Information cont‟d
20
IMPOSITION OF SANCTIONS AND/OR PENALTIES
There were no material sanction and/or penalties imposed on the Company and its subsidiary companies,
Directors or management by the regulatory bodies.
NON-AUDIT FEES
Non-audit fees paid to external auditors and affiliated firm amounted to RM29,700.
REVALUATION POLICY
There were no properties acquired during the financial year under review, thus no revaluation policy.
MATERIAL CONTRACT
On 13 July 2010, Hexa Analisa Sdn. Bhd., a wholly owned subsidiary of Fibon Berhad had executed a Sale
and Purchase Agreement for the acquisition of land and Sale of Assets Agreement for the plant and
machineries for a total cash consideration of Ringgit Malaysia Two Million Nine Hundred and Sixty One
Thousand only (RM2,961,000) from CPC Polyply Industries (M) Sdn. Bhd. which constitute a related party
transaction.
The above transactions will be subjected to shareholders‟ approval in an Extraordinary General Meeting
which will be held at a date to be determined later.
PROFIT ESTIMATE, FORECAST OR PROJECTION
The Company and its subsidiary companies did not issue any profit forecast or profit estimate previously
or for the financial year ending 31 May 2010 in any public document hence this information is not
applicable.
PROFIT GUARANTEES
There were no profit guarantees given by the Company for the financial year.
22
Financial Statements
Directors‟ Report
Statement by Directors
Statutory Declaration
Independent Auditors‟ Report
Balance Sheets
Income Statements
Statements of Changes in Equity
Cash Flow Statements
Notes to The Financial Statements
23
27
27
28
30
32
33
35
37
ANNUAL REPORT 2010
Directors‟ Report
23
The directors hereby submit their report and the audited financial statements of the Group and of the
Company for the financial year ended 31 May 2010.
PRINCIPAL ACTIVITIES
The Company is principally engaged in the business of investment holding. The principal activities of its
subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in
the nature of these activities during the financial year.
RESULTS
The Group The Company
RM‟000 RM‟000
Profit after tax for the financial year 4,014 1,197
DIVIDENDS
Since the end of the previous financial year, the Company paid a final dividend of RM0.0173 per ordinary
share amounting to RM1,695,400 as proposed in financial year ended 31 May 2009.
At the forthcoming Annual General Meeting, a first and final dividend of RM0.0082 per ordinary share
amounting to RM803,600 in respect of the financial year ended 31 May 2010 will be proposed for
shareholders‟ approval. The financial statements for the current year will not reflect this proposed
dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an
appropriation of retained earnings in the financial year ending 31 May 2011.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year except as
disclosed in the Statement of Changes in Equity.
ISSUES OF SHARES AND DEBENTURES
During the financial year,
(a) there were no changes in the authorized and issued and paid-up share capital of the Company; and
(b) there were no issues of debentures by the Company.
ADVANCE COMPOSITES…
Directors‟ Report cont‟d
24
OPTIONS GRANTED OVER UNISSUED SHARES
During the financial year, no options were granted by the Company to any person to take up any unissued
shares in the Company.
BAD AND DOUBTFUL DEBTS
Before the financial statements of the Group and of the Company were made out, the directors took
reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the
making of allowance for doubtful debts, and satisfied themselves that there are no bad debts and that no
allowances for doubtful debts is required.
At the date of this report, the directors are not aware of any circumstances that would require the writing
off of bad debts, or the making of additional allowance for doubtful debts in the financial statements of the
Group and of the Company.
CURRENT ASSETS
Before the financial statements of the Group and of the Company were made out, the directors took
reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised
in the ordinary course of business, including their value as shown in the accounting records of the Group
and of the Company, have been written down to an amount which they might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances which would render the values
attributed to the current assets in the financial statements of the Group and of the Company misleading.
VALUATION METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which
render adherence to the existing methods of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:-
(a) any charge on the assets of the Group and of the Company that has arisen since the end of the
financial year which secures the liabilities of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the
financial year.
No contingent or other liability of the Group and of the Company has become enforceable or is likely to
become enforceable within the period of twelve months after the end of the financial year which, in the
opinion of the directors, will or may substantially affect the ability of the Group and of the Company to
meet their obligations when they fall due.
ANNUAL REPORT 2010
Directors‟ Report cont‟d
25
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this
report or the financial statements of the Group and of the Company which would render any amount
stated in the financial statements misleading.
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and of the Company during the financial year were not, in the
opinion of the directors, substantially affected by any item, transaction or event of a material and unusual
nature.
There has not arisen in the interval between the end of the financial year and the date of this report any
item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect
substantially the results of the operations of the Group and of the Company for the financial year.
DIRECTORS
The directors who served since the date of the last report are as follows:-
Pang Chee Khiong
Pang Fok Seng
Lim Wai Kiew
Pang Nyuk Yin
Chong Peng Khang
Dr. Chen Chaw Min
Datuk Mohamad Saleh Bin Mohd. Ghazali
Pursuant to Article 121 of the Articles of Association of the Company, Pang Fok Seng and Lim Wai Kiew
retire by rotation at the forthcoming annual general meeting and being eligible, offer themselves for re-
election.
DIRECTORS’ INTERESTS
According to the register of directors‟ shareholdings, the interests of directors holding office at the end of
the financial year in shares in the Company and its related corporations during the financial year are as
follows:-
Number Of Ordinary Shares Of RM0.10 Each At 1.6.2009 Bought / Allotted Sold At 31.5.2010 Direct Interests Lim Wai Kiew 7,945,096 - (6,475,096) 1,470,000 Pang Chee Khiong 14,822,552 - - 14,822,552 Pang Fok Seng 25,458,892 6,475,096 (8,797,200) 23,136,788 Pang Nyuk Yin - 2,940,000 - 2,940,000 Chong Peng Khang 322 - - 322 Deemed Interests Lim Wai Kiew 25,458,892 6,475,096 (8,797,200) 23,136,788 Pang Fok Seng 7,945,096 - (6,475,096) 1,470,000
ADVANCE COMPOSITES…
Directors‟ Report cont‟d
26
DIRECTORS’ INTERESTS (CONT’D)
By virtue of their interests in shares in the Company, Lim Wai Kiew, Pang Chee Khiong, Pang Fok Seng
and Pang Nyuk Yin are deemed to have interests in shares in its subsidiaries to the extent of the
Company‟s interest, in accordance with Section 6A of the Companies Act, 1965.
None of the other directors holding office at the end of the financial year had any interest in shares in the
Company or its related corporations during the financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no director has received or become entitled to receive any
benefit (other than benefits included in the aggregate amount of emoluments received or due and
receivable by directors, or the fixed salary of a full-time employee of the Company as shown in the
financial statements) by reason of a contract made by the Company or a related corporation with the
director or with a firm of which the director is a member, or with a company in which the director has a
substantial financial interest except as disclosed in Note 30 to the financial statements.
Neither during nor at the end of the financial year was the Group or the Company a party to any
arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of
shares in or debentures of the Company or any other body corporate.
AUDITORS
The auditors, Messrs. Crowe Horwath (formerly known as Messrs. Horwath), have expressed their
willingness to continue in office.
SINGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS
DATED 27 AUGUST 2010
Pang Chee Khiong
Lim Wai Kiew
ANNUAL REPORT 2010
Statement by Directors
27
We, Pang Chee Khiong and Lim Wai Kiew, being two of the directors of Fibon Berhad, state that, in the
opinion of the directors, the financial statements set out on pages 30 to 67 are drawn up in accordance
with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair
view of the state of affairs of the Group and of the Company at 31 May 2010 and of their results and cash
flows for the financial year ended on that date.
SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 27 AUGUST 2010
Pang Chee Khiong Lim Wai Kiew
Statutory Declaration
I, Pang Chee Khiong, I/C No. 640329-01-5175, being the director primarily responsible for the financial
management of Fibon Berhad, do solemnly and sincerely declare that the financial statements set out on
pages 30 to 67 are, to the best of my knowledge and belief, correct and I make this solemn declaration
conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations
Act 1960.
Subscribed and solemnly declared by
Pang Chee Khiong, I/C No. 640329-01-5175,
in the State of Melaka
on 27 August 2010
Pang Chee Khiong
Before me
ADVANCE COMPOSITES…
Independent Auditors‟ Report to the Members of FIBON BERHAD (Incorporated in Malaysia) Company No: 811010-H
28
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Fibon Berhad, which comprise the balance sheets as at 31
May 2010, and the income statements, statements of changes in equity and cash flow statements of the
Group and of the Company for the financial year then ended, and a summary of significant accounting
policies and other explanatory notes, as set out on pages 30 to 67.
Directors’ Responsibility for the Financial Statements
The directors of the Company are responsible for the preparation and fair presentation of these financial
statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia.
This responsibility includes designing, implementing and maintaining internal controls relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error, selecting and applying appropriate accounting policies, and making accounting
estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on our judgment, including the assessment of
risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, we consider internal controls relevant to the Company‟s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company‟s
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Financial
Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the
financial position of the Group and of the Company as of 31 May 2010 and of their financial performance
and cash flows for the financial year then ended.
ANNUAL REPORT 2010
Independent Auditors‟ Report to the Members of FIBON BERHAD (Incorporated in Malaysia) Company No: 811010-H Cont‟d
29
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the
following:-
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by
the Company and its subsidiaries of which we have acted as auditors have been properly kept in
accordance with the provisions of the Act;
(b) We have considered the accounts and the auditors‟ report of the subsidiaries of which we have not
acted as auditors, which are indicated in Note 6 to the financial statements;
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with
the Company's financial statements are in form and content appropriate and proper for the purposes
of the preparation of the financial statements of the Group and we have received satisfactory
information and explanations required by us for those purpose; and
(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or
any adverse comment made under Section 174(3) of the Act.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of
the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any
other person for the content of this report.
27 August 2010
Crowe Horwath Tan Lin Chun
Firm No: AF 1018 Approval No: 2839/10/11 (J)
Chartered Accountants Chartered Accountant
Melaka
ADVANCE COMPOSITES…
Balance Sheets at 31 May 2010
The annexed notes form an integral part of these financial statements.
30
The Group The Company
2010 2009 2010 2009
Note RM‟000 RM‟000 RM‟000 RM‟000
ASSETS
NON-CURRENT ASSETS
Investment in subsidiaries 6 - - 2,701 2,700
Property, plant and equipment 7 1,063 560 * *
Intangible assets 8 1,108 1,067 - -
2,171 1,627 2,701 2,700
CURRENT ASSETS
Inventories 9 1,344 1,084 - -
Trade receivables 10 2,943 6,201 - -
Other receivables, deposits and prepayments 11 111 111 1 3
Amount owing by related companies 12 - - 8,873 9,421
Tax recoverable 46 - - 3 -
Deposits with licensed banks 13 11,993 9,307 202 200
Cash and bank balances 3,453 2,048 4 18
19,890 18,751 9,083 9,642
TOTAL ASSETS 22,061 20,378 11,784 12,342
ANNUAL REPORT 2010
Balance Sheets at 31 May 2010 cont‟d
The annexed notes form an integral part of these financial statements. 31
The Group The Company
2010 2009 2010 2009
Note RM‟000 RM‟000 RM‟000 RM‟000
EQUITY AND LIABILITIES
EQUITY
Share capital 14 9,800 9,800 9,800 9,800
Share premium 15 707 707 707 707
Other reserve 16 (2,602) (2,600) - -
Retained profits 17 13,190 10,871 1,202 1,700
SHAREHOLDERS' EQUITY 21,095 18,778 11,709 12,207
NON-CURRENT LIABILITY
Deferred tax liabilities 18 340 414 - -
340 414 - -
CURRENT LIABILITIES
Trade payables 19 279 83 - -
Other payables and accruals 20 331 1,074 75 131
Provision for taxation 16 29 - 4
626 1,186 75 135
TOTAL LIABILITIES 966 1,600 75 135
TOTAL EQUITY AND LIABILITIES 22,061 20,378 11,784 12,342
* - Less than RM1,000.
ADVANCE COMPOSITES…
Income Statements for the financial year ended 31 May 2010
The annexed notes form an integral part of these financial statements.
32
The Group The Company
2010 2009 2010 2009
Note RM‟000 RM‟000 RM‟000 RM‟000
Restated
REVENUE 21 12,891 16,474 2,000 2,000
COST OF SALES (4,884) (6,311) - - GROSS PROFIT 8,007 10,163 2,000 2,000
OTHER INCOME 594 437 63 17 8,601 10,600 2,063 2,017
SELLING AND DISTRIBUTION
EXPENSES
(119)
(90)
-
-
ADMINISTRATIVE EXPENSES (3,472) (1,817) (866) (306) PROFIT BEFORE TAX 22 5,010 8,693 1,197 1,711
TAX EXPENSE 25 (996) (389) * (4) PROFIT AFTER TAX 4,014 8,304 1,197 1,707
ATTRIBUTABLE TO:
Equity holders of the Company 4,014 8,304 1,197 1,707
EARNINGS PER SHARE
- basic (sen) 26 4.10 17.06
- diluted (sen) 26 N/A N/A
* - Less than RM1,000.
ANNUAL REPORT 2010
Statements of Changes in Equity for the financial year ended 31 May 2010
The annexed notes form an integral part of these financial statements.
33
The Group Attributable To Equity Holders Of The Company
Non-Distributable Distributable
Share Share Other Merger Retained
Note Capital Premium Reserve Deficit Profits Total
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000
At 31.5.2008 2,700 - - (2,600) 2,567 2,667
Foreign exchange translation
reserve - - Ω - - Ω
Shares issued pursuant to
the listing scheme:-
- public issue 335 8,802 - - - 9,137
- bonus issue 6,765 (6,765) - - - -
Listing expenses - (1,330) - - - (1,330)
Profit after tax for the
financial year - - - - 8,304 8,304 Balance as at
31.5.2009/1.6.2009
9,800 707 Ω (2,600) 10,871 18,778
Foreign exchange translation
reserve - - (2) - - (2)
Profit after tax for the
financial year - - - - 4,014 4,014
Dividends paid 27 - - - - (1,695) (1,695) Balance as at 31.5.2010 9,800 707 (2) (2,600) 13,190 21,095
Ω - Less than RM500.
ADVANCE COMPOSITES…
Statements of Changes in Equity for the financial year ended 31 May 2010 cont‟d
The annexed notes form an integral part of these financial statements. 34
The Company
Non-
Distributable Distributable
Share Share Retained
Capital Premium Profits Total
Note RM‟000 RM‟000 RM‟000 RM‟000
At 31.5.2008 # - (7) (7)
Acquisition of a subsidiary 2,700 - - 2,700
Shares issued pursuant to the listing
scheme:-
- public issue 335 8,802 - 9,137
- bonus issue 6,765 (6,765) - -
Listing expenses - (1,330) - (1,330)
Profit after taxation for the financial year - - 1,707 1,707 Balance as at 31.5.2009/1.6.2009 9,800 707 1,700 12,207
Profit after taxation for the financial year - - 1,197 1,197
Dividends paid 27 - - (1,695) (1,695) Balance as at 31.5.2010 9,800 707 1,202 11,709
# - RM2.
ANNUAL REPORT 2010
Cash Flow Statements for the financial year ended 31 May 2010
The annexed notes form an integral part of these financial statements.
35
The Group The Company 2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
CASH FLOWS FROM/(FOR) OPERATING ACTIVITIES
Profit before tax 5,010 8,693 1,197 1,711
Adjustments for:-
Amortisation of development expenditure 87 58 - - Bad debts written off 7 - - - Depreciation of property, plant and
equipment
111 74 Ω Ω Property, plant and equipment written off 4 - - - Goodwill written off - 5 - - Development expenditure written off 235 153 - - Dividend income - - (2,000) (2,000) Interest income (272) (124) (2) (17) Unrealised loss/(gain) on foreign exchange 203 (231) 79 -
Operating profit/(loss) before working capital changes
5,385 8,628 (726) (306)
Increase in development expenditure (363) - - - (Increase)/Decrease in inventories (260) 94 - - Decrease/(Increase) in trade and other
receivables
3,230 (2,364) 2 (3) (Decrease)/Increase in trade and other
payables
(546) (746) (56) 124
CASH FROM/(FOR) OPERATIONS 7,446 5,612 (780) (185)
Tax paid (1,128) (249) (7) -
NET CASH FROM/(FOR) OPERATING ACTIVITIES 6,318 5,363 (787) (185)
CASH FLOWS (FOR)/FROM INVESTING
ACTIVITIES
Acquisition of a subsidiary - * - -
Dividend received - - 2,000 - Purchase of property, plant and equipment (618) (76) - *
Investment in subsidiary Ω * Ω *
Interest received 272 124 2 17
Repayment from/(Advances to) subsidiaries - - 468 (7,421)
NET CASH (FOR)/FROM INVESTING ACTIVITIES
(346) 48 2,470 (7,404)
BALANCE CARRIED FORWARD 5,972 5,411 1,683 (7,589)
ADVANCE COMPOSITES…
Cash Flow Statements for the financial year ended 31 May 2010 cont‟d
The annexed notes form an integral part of these financial statements. 36
The Group The Company
2010 2009 2010 2009
Note RM‟000 RM‟000 RM‟000 RM‟000
BALANCE BROUGHT FORWARD 5,972 5,411 1,683 (7,589)
CASH FLOWS (FOR)/FROM
FINANCING ACTIVITIES
Dividends paid (1,695) (4,000) (1,695) - Proceeds from issuance of shares - 9,137 - 9,137
Listing expenses - (1,330) - (1,330)
Repayment to a related party - (476) - -
Repayment to directors - (13) - -
NET CASH (FOR)/FROM
FINANCING ACTIVITIES
(1,695) 3,318 (1,695) 7,807
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND
CASH EQUIVALENTS
(186) 136 - - NET INCREASE/(DECREASE) IN
CASH AND CASH
EQUIVALENTS 4,091 8,865 (12) 218
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE
FINANCIAL YEAR 11,355 2,490 218 # CASH AND CASH EQUIVALENTS
AT END OF THE FINANCIAL
YEAR 28 15,446 11,355 206 218
# - RM2.
Ω - Less than RM500.
* - Less than RM1,000.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010
37
1. GENERAL INFORMATION
The Company is incorporated as a public company limited by shares under the Companies Act 1965
in Malaysia. The domicile of the Company is Malaysia. The registered office and principal place of
business are as follows:-
Registered office : 31-04, Level 31
Menara Landmark, Mail Box 172
No.12, Jalan Ngee Heng
80000 Johor Bahru, Johor
Principal place of business : 12A, Jalan 20
Taman Sri Kluang
86000 Kluang, Johor
The financial statements were authorised for issue by the Board of Directors in accordance with a
resolution of the directors dated 27 August 2010.
2. PRINCIPAL ACTIVITIES
The Company is principally engaged in the business of investment holding whilst the principal
activities of its subsidiaries are set out in Note 6 to the financial statements. There have been no
significant changes in the nature of these activities during the financial year.
3. FINANCIAL RISK MANAGEMENT POLICIES
The Group‟s financial risk management policy seeks to ensure that adequate financial resources are
available for the development of the Group‟s business whilst managing its market, credit, liquidity
and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-
(a) Market Risk
(i) Foreign Currency Risk
The Group is exposed to foreign currency risk on sales and purchases that are
denominated in a currency other than Ringgit Malaysia.
Foreign currency risk is closely monitored and kept at an acceptable level.
(ii) Interest Rate Risk
The Group does not have any interest-bearing liabilities. It maintains interest yielding bank
balances and fixed deposits. Interest income arising from these assets is not considered to
be significant.
Surplus funds are placed with licensed financial institutions at the most favourable interest
rates.
(iii) Price Risk
The Group does not have any quoted investments and hence is not exposed to price risks.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
38
3. FINANCIAL RISK MANAGEMENT POLICIES (Cont’d)
(b) Credit Risk
The Group's exposure to credit risks, or the risk of counterparties defaulting, arises mainly from
receivables. The maximum exposure to credit risks is represented by the carrying amounts of
these financial assets in the balance sheet reduced by the effects of any netting arrangements
with counterparties.
The Group does not have any major concentration of credit risk related to any individual
customer or counterparty.
(c) Liquidity and Cash Flow Risk
The Group manages its liquidity risk by maintaining sufficient cash and the availability of funding
through an adequate amount of committed credit facilities to meet estimated commitments
arising from operational expenditure and financial liabilities. The Group also has an effective
control of cash management to ensure that the Group can pay its operating expenses and
targeted dividends to shareholders at appropriate times.
4. BASIS OF PREPARATION
The financial statements of the Group are prepared under the historical cost convention and
modified to include other bases of valuation as disclosed in other sections under significant
accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the
Companies Act 1965 in Malaysia.
The Group has not applied in advance the following accounting standards and interpretations
(including the consequential amendments) that have been issued by the Malaysian Accounting
Standards Board (“MASB”) but are not yet effective for the current financial year:
FRSs/IC Interpretations (including the Consequential Amendments) Effective date
FRS 1 (Revised) First-time Adoption of Financial Reporting Standards 1 July 2010
FRS 3 (Revised) Business Combinations 1 July 2010
FRS 4 Insurance Contracts 1 January 2010
FRS 7 Financial Instruments: Disclosures 1 January 2010
FRS 8 Operating Segments 1 July 2009
FRS 101 (Revised) Presentation of Financial Statements 1 January 2010
FRS 123 (Revised) Borrowing Costs 1 January 2010
FRS 127 (Revised) Consolidated and Separate Financial Statements 1 July 2010
FRS 139 Financial Instruments: Recognition and Measurement 1 January 2010
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
39
4. BASIS OF PREPARATION (Cont’d)
FRSs/IC Interpretations (including the Consequential Amendments (Cont’d) Effective date
Amendments to FRS 1 and FRS 127: Cost of an Investment in a Subsidiary,
Jointly Controlled Entity or Associate
1 January 2010
Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures
for First-time Adopters
1 January 2011
Amendments to FRS 2: Vesting Conditions and Cancellations 1 January 2010
Amendments to FRS 2: Scope of FRS 2 and FRS 3 (Revised) 1 July 2010
Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010
Amendments to FRS 7, FRS 139 and IC Interpretation 9 1 January 2010
Amendments to FRS 7: Improving Disclosure about Financial Instruments 1 January 2011
Amendments to FRS 101 and FRS 132: Puttable Financial Instruments and
Obligations Arising on Liquidation
1 January 2010
Amendments to FRS 132: Classification of Rights Issues and the Transitional
Provision in Relation to Compound Instruments
1 January 2010/
1 March 2010
Amendments to FRS 138: Consequential Amendments Arising from FRS 3
(Revised)
1 July 2010
IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010
IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010
IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions 1 January 2010
IC Interpretation 12 Service Concession Arrangements 1 July 2010
IC Interpretation 13 Customer Loyalty Programmes 1 January 2010
IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
1 January 2010
IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012
IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010
IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010
Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and FRS 3
(Revised)
1 July 2010
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
40
4. BASIS OF PREPARATION (Cont’d)
FRSs/IC Interpretations (including the Consequential Amendments (Cont’d) Effective date
Annual Improvements to FRSs (2009) 1 January 2010
The above accounting standards and interpretations (including the consequential amendments) are
not relevant to the Group‟s operations except as follows:
FRS 3 (Revised)
The FRS 3 (Revised) introduces significant changes to the accounting for business combinations,
both at the acquisition date and post acquisition, and requires greater use of fair values. In addition,
all transaction costs, other than share and debt issue costs, will be expensed as incurred. This
revised standard will be applied prospectively and therefore there will not have any financial impact
on the financial statements of the Group for the current financial year but may impact the accounting
for future transactions or arrangements.
FRS 7, FRS 139 and Subsequent Amendments
The possible impacts of FRS 7 (including the subsequent amendments) and FRS 139 on the
financial statements upon their initial applications are not disclosed by virtue of the exemptions given
in these standards.
FRS 8
FRS 8 replaces FRS 1142004 Segment Reporting and requires a “management approach”, under
which segment information is presented on the same basis as that used for internal reporting
purposes. The adoption of this standard only impacts the form and content of disclosures presented
in the financial statements of the Group. This FRS is expected to have no material impact on the
financial statements of the Group upon its initial application.
FRS 101 (Revised)
The FRS 101 (Revised) has introduced terminology changes (including revised titles for the financial
statements) and changes in the format and content of the financial statements. In addition, a
statement of financial position is required at the beginning of the earliest comparative period
following a change in accounting policy, the correction of an error or the reclassification of items in
the financial statements. The adoption of this revised standard will only impact the form and content
of the presentation of the Group‟s financial statements in the next financial year.
FRS 123 (Revised)
This change in accounting policy will not have any financial impact on the financial statements for
the current financial year but may impact the accounting for future transactions or arrangements.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
41
4. BASIS OF PREPARATION (Cont’d)
FRS 127 (Revised)
The FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a
subsidiary, while maintaining control, to be recognised as an equity transaction. When the group
loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair
value with the gain or loss recognised in profit or loss. The revised standard also requires all losses
attributable to the minority interest to be absorbed by the minority interest instead of by the parent.
The Group will apply the major changes of FRS 127 (Revised) prospectively and therefore there will
not have any financial impact on the financial statements of the Group for the current financial year
but may impact the accounting for future transactions or arrangements.
Amendments to FRS 1 and FRS 127
Amendments to FRS 1 and FRS 127 remove the definition of “cost method” currently set out in FRS
127, and instead require an investor to recognise all dividend from subsidiaries, jointly controlled
entities or associates as income in its separate financial statements. In addition, FRS 127 has also
been amended to deal with situations where a parent reorganises its group by establishing a new
entity as its new parent. Under this circumstance, the new parent shall measure the cost of its
investment in the original parent at the carrying amount of its share of the equity items shown in the
separate financial statements of the original parent at the reorganisation date. The amendments will
be applied prospectively and therefore there will not have any financial impact on the financial
statements of the Company for the current financial year but may impact the accounting for future
transactions or arrangements.
Amendments to FRS 138
Amendments to FRS 138 clarify the requirements under FRS 3 (Revised) regarding accounting for
intangible assets acquired in a business combination. These amendments are expected to have no
material impact on the financial statements of the Group upon their initial application.
IC Interpretation 10
IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill,
investments in equity instruments and financial assets carried at cost to be reversed at a
subsequent balance sheet date. This interpretation is expected to have no material impact on the
financial statements of the Group upon its initial application.
Annual Improvements 2009
Annual Improvements to FRSs (2009) contain amendments to 21 accounting standards that result in
accounting changes for presentation, recognition or measurement purposes and terminology or
editorial amendments. These amendments are expected to have no material impact on the financial
statements of the Group upon their initial application.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
42
5. SIGNIFICANT ACCOUNTING POLICIES
(a) Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated by the directors and management and are
based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. The estimates and judgements that
affect the application of the Group‟s accounting policies and disclosures, and have a significant
risk of causing a material adjustment to the carrying amounts of assets, liabilities, incomes and
expenses are discussed below:-
(i) Depreciation of Property, Plant and Equipment
The estimates for the residual values, useful lives and related depreciation charges for the
property, plant and equipment are based on commercial and production factors which
could change significantly as a result of technical innovations and competitors‟ actions in
response to the market conditions.
The Group anticipates that the residual values of its property, plant and equipment will be
insignificant. As a result, residual values are not being taken into consideration for the
computation of the depreciable amount.
Changes in the expected level of usage and technological development could impact the
economic useful lives and the residual values of these assets, therefore future
depreciation charges could be revised.
(ii) Income Taxes
There are certain transactions and computations for which the ultimate tax determination
may be different from the initial estimate. The Group recognises tax liabilities based on its
understanding of the prevailing tax laws and estimates of whether such taxes will be due
in the ordinary course of business. Where the final outcome of these matters is different
from the amounts that were initially recognised, such difference will impact the income tax
and deferred tax provisions in the period in which such determination is made.
(iii) Impairment of Assets
When the recoverable amount of an asset is determined based on the estimate of the
value-in-use of the cash-generating unit to which the asset is allocated, the management
is required to make an estimate of the expected future cash flows from the cash-
generating unit and also to apply a suitable discount rate in order to determine the present
value of those cash flows.
(iv) Amortisation of Development Costs
Changes in the expected level of usage and technological development could impact the
economic useful lives. Therefore, future amortisation charges could be revised.
(v) Allowance for Inventories
Reviews are made periodically by management on damaged, obsolete and slow-moving
inventories. These reviews require judgement and estimates. Possible changes in these
estimates could result in revisions to the valuation of inventories.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
43
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(a) Critical Accounting Estimates and Judgements (Cont’d)
(vi) Allowance for Doubtful Debts of Receivables
The Group makes allowance for doubtful debts based on an assessment of the
recoverability of receivables. Allowances are applied to receivables where events or
changes in circumstances indicate that the carrying amounts may not be recoverable.
Management specifically analyses historical bad debt, customer creditworthiness and
changes in customer payment terms when making a judgement to evaluate the adequacy
of the allowance for doubtful debts of receivables. Where the expectation is different from
the original estimate, such difference will impact the carrying value of receivables.
(b) Functional and Foreign Currency
(i) Functional and Presentation Currency
The functional currency of each entity in the Group is the currency of the primary
economic environment in which the entity operates.
The Group financial statements are presented in Ringgit Malaysia (“RM”) which is also the
Company‟s functional and presentation currency.
(ii) Transactions and Balances
Transactions in foreign currency are measured in the respective functional currencies of
each entities in the Group and are recorded on initial recognition in the functional
currencies at exchange rates approximating those ruling at the transaction dates.
Monetary assets and liabilities at the balance sheet date are translated at the rates ruling
as of that date. Non-monetary assets and liabilities are translated using exchange rates
that existed when the values were determined. All exchange differences are taken to the
income statement.
(iii) Foreign Operations
The results and financial position of all Group entities that have a functional currency
different from the presentation currency are translated into the presentation currency as
follows:-
(i) assets and liabilities for each balance sheet presented are translated at the closing
rate at the date of the balance sheet;
(ii) income and expenses for the income statement are translated at average exchange
rates for the year; and
(iii) all resulting exchange differences are recognised as a separate component of
equity, as a foreign currency translation reserve. On disposal, accumulated
translation differences are recognised in the consolidated income statements as part
of the gain or loss on sale.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
44
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(c) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party
to the contractual provisions of the instruments.
Financial instruments are classified as liabilities or equity in accordance with the substance of
the contractual arrangement. Interest, dividends, gains and losses relating to a financial
instrument classified as a liability are reported as an expense or income. Distributions to holders
of financial instruments classified as equity are charged directly to equity.
Financial instruments are offset when the Group has a legally enforceable right to offset and
intends to settle either on a net basis or to realise the asset and settle the liability
simultaneously.
Financial instruments recognised in the balance sheets are disclosed in the individual policy
statement associated with each item.
(d) Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are
prepared for the same reporting date as the Company.
All the subsidiaries are consolidated using the acquisition method of accounting except for the
subsidiary, Hexa Analisa Sdn. Bhd., which are accounted for under the merger method.
Acquisition of subsidiaries that meets the conditions of a merger are accounted for using the
merger method. Under the merger method of accounting, the results of subsidiaries are
presented as if the merger had been effected throughout the current and previous years. In the
consolidated financial statements, the cost of the merger is cancelled with the nominal values of
the shares received. Any resulting debit difference is shown as merger deficit.
Subsidiaries accounted for using the purchase method are consolidated from the date of
acquisition, being the date on which the Group obtains control, and continue to be consolidated
until the date that such control ceases.
The purchase method of accounting involves allocating that cost of the acquisition to the fair
value of the assets acquired and liabilities and contingent liabilities assumed at the date of
acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the
date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments
issued, plus any costs directly attributable to the acquisition.
Any excess of the cost of the acquisition over the Group‟s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the
Group‟s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
over the cost of the acquisition is recognised immediately in profit or loss.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
45
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(d) Basis of Consolidation (Cont’d)
Intragroup transactions, balances and unrealised gains on transactions are eliminated;
unrealised losses are also eliminated unless cost cannot be recovered. Where necessary,
adjustments are made to the financial statement of subsidiary to ensure consistency of
accounting policies with those of the Group.
(e) Investments in Subsidiaries
Investments in subsidiaries are initially stated at cost in the balance sheet of the Company and
are reviewed for impairment at the end of the financial year if events or changes in
circumstances indicate that their carrying values may not be recoverable.
On the disposal of the investments in subsidiaries, the difference between the net disposal
proceeds and the carrying amount of the investments is taken to the income statement.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses, if any.
Depreciation is calculated under the straight-line method to write off the depreciable amounts of
the assets over their estimated useful lives. Depreciation of an asset does not cease when the
asset become idle or is retired from active use unless the asset is fully depreciated. The
principal annual rates used for this purpose are:-
Plant and machinery 10%
Motor vehicles 10%
Office equipment, furniture and fittings 10%
The depreciation method, useful life and residual values are reviewed, and adjusted if
appropriate, at each balance sheet date to ensure that the amount, method and period of
depreciation are consistent with previous estimates and the expected pattern of consumption of
the future economic benefits embodied in the items of the property, plant and equipment.
Plant and machinery under construction represents assets which are not ready for commercial
use at the balance sheet date. Plant and machinery under construction are stated at cost, and
are depreciated accordingly when the assets are completed and ready for commercial use.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use. Any gain or loss arising from derecognition of the
asset is included in the income statement in the year the asset is derecognised.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
46
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(g) Impairment of Assets
The carrying values of assets, other than financial assets and inventories are reviewed at each
balance sheet date for impairment when there is an indication that the assets might be
impaired. Impairment is measured by comparing the carrying values of the assets with their
recoverable amounts. The recoverable amount of the assets is the higher of the assets‟ net
selling price and its value-in-use, which is measured by reference to discounted future cash
flow. An impairment loss is charged to the income statement immediately.
In respect of assets other than goodwill, and when there is a change in the estimates used to
determine the recoverable amount, a subsequent increase in the recoverable amount of an
asset is treated as a reversal of the previous impairment loss and is recognised to the extent of
the carrying amount of the asset that would have been determined (net of amortisation and
depreciation) had no impairment loss been recognised. The reversal is recognised in the
income statement immediately.
(h) Intangible Assets
(i) Research and Development Expenditure
Research expenditure is recognised as an expense when it is incurred.
Development expenditure is recognised as an expense except that expenditure incurred on
development projects are capitalised as long-term assets to the extent that such
expenditure is expected to generate future economic benefits. Development expenditure is
capitalised if, and only if an entity can demonstrate all of the following:-
(i) its ability to measure reliably the expenditure attributable to the asset under
development;
(ii) the product or process is technically and commercially feasible;
(iii) its future economic benefits are probable;
(iv) its ability to use or sell the developed asset;
(v) the availability of adequate technical, financial and other resources to complete the
asset under development; and
(vi) its intention to complete the intangible asset and use or sell.
Capitalised development expenditure is measured at cost less accumulated amortisation
and impairment losses, if any. Development expenditure initially recognised as an
expense is not recognised as assets in the subsequent period.
The development expenditure is amortised on a straight-line method over a period of not
exceeding 5 years when the products are ready for sale or use. In the event that the
expected future economic benefits are no longer probable of being recovered, the
development expenditure is written down to its recoverable amount.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
47
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(h) Intangible Assets (Cont’d)
(ii) Industrial Operating Right
Industrial operating right represent costs incurred by the Group to obtain Association of
Short Circuit Testing Authority (ASTA) certifications for capabilities to design, construct
and develop low-voltage switchboards to meet international standards. As the ASTA
certifications do not have any expiry date, the Group does not amortise these costs.
Instead, impairment is tested annually or more frequently if events or changes in circumstances indicate that the industrial operating right might be impaired.
(i) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the
standard cost basis, which approximates the actual costs incurred in bringing the inventories to
their present location and condition. Cost of finished goods and work-in-progress includes the
cost of materials, labour and an appropriate proportion of production overheads.
Net realisable value represents the estimated selling price less the estimated costs of
completion and the estimated costs necessary to make the sale.
Where necessary, due allowance is made for all damaged, obsolete and slow-moving items.
(j) Receivables
Receivables are carried at anticipated realisable value. Bad debts are written off in the period in
which they are identified. An estimate is made for doubtful debts based on a review of all
outstanding amounts at the balance sheet date.
(k) Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the future
for goods and services rendered.
(l) Income Taxes
Income taxes for the year comprise current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the taxable profit for
the year and is measured using the tax rates that have been enacted or substantively enacted
at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements.
Deferred tax liabilities are recognised for all taxable temporary differences.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
48
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(l) Income Taxes (Cont’d)
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses
and unused tax credits to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences, unused tax losses and unused tax credits
can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period when the asset is realised or the liability is settled, based on the tax rates that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax is recognised in the income statement. The carrying amounts of deferred tax
assets are reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient future taxable profits will be available to allow all or part of the deferred
tax assets to be utilised.
(m) Equity Instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax from proceeds.
Dividends on ordinary shares are recognised as liabilities when approved for appropriation.
(n) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, and
short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
(o) Employee Benefits
(i) Short-term Benefits
Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the
period in which the associated services are rendered by employees of the Group.
(ii) Defined Contribution Plans
The Group's contributions to defined contribution plans are charged to the income
statement in the period to which they relate. Once the contributions have been paid, the
Group has no further liability in respect of the defined contribution plans.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
49
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(p) Related Parties
For the purposes of these financial statements, a party is considered to be related if:-
(i) directly, or indirectly through one or more intermediaries, the party:-
controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);
has an interest in the entity that gives it significant influence over the entity; or
has joint control over the entity;
(ii) the party is an associate of the entity;
(iii) the party is a joint venture in which the entity is a venturer;
(iv) the party is a member of the key management personnel of the entity or its parent;
(v) the party is a close member of the family of any individual referred to in (i) or (iv);
(vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for
which significant voting power in such entity resides with, directly or indirectly, any
individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of
any entity that is a related party of the entity.
Close members of the family of an individual are those family members who may be expected
to influence, or be influenced by, that individual in their dealings with the entity.
(q) Contingent Liabilities and Contingent Assets
A contingent liability is a possible obligation that arises from past events and whose existence
will only be confirmed by the occurrence of one or more uncertain future events not wholly
within the control of the Group. It can also be a present obligation arising from past events that
is not recognised because it is not probable that outflow of economic resources will be required
or the amount of obligation cannot be measured reliably.
A contingent asset is a probable asset that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly
within the control of the Group.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
50
5. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(r) Revenue Recognition
(i) Sale of Goods
Sales are recognised upon the transfer of risks and rewards of ownership of goods and net
of sales tax, returns and trade discounts.
(ii) Dividend Income
Dividend income is recognised when the right to receive payment has been established.
(iii) Interest Income
Interest income is recognised on an accrual basis.
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ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
51
6. INVESTMENT IN SUBSIDIARIES
The Company 2010 2009 RM‟000 RM‟000
Unquoted shares, at cost 2,701 2,700
(a) Subsidiaries
The details of the subsidiaries are as follows:-
Name of Companies
Country of Incorporation
Effective Equity Interest
Principal Activities
2010 2009
Direct subsidiaries:
Hexa Analisa Sdn. Bhd. (HASB)
Malaysia 100% 100% Formulation of advanced polymer matrix fibre composites, manufacturing and sales of electrical insulators, electrical enclosures and meter boards
Fibon UK Limited (FUL)*
UK 100% 100% Dormant company
Fibon Australia Pty Ltd (FAU)*
Australia 100% - Manufacturing and sales of electrical insulators and trading of relevant industry products
* Audited by auditor other than Crowe Horwath.
(b) Acquisition of Subsidiary
During the financial year, the Company acquired the entire issued and paid-up share capital of
FAU for a total purchase consideration of RM28. The purchase consideration of FAU was by
cash.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
52
7. PROPERTY, PLANT AND EQUIPMENT
At Written Depreciation Exchange At
1.6.2009 Additions Off Charge Difference 31.5.2010
The Group RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000
Net Book Value
Plant and machinery 463 73 - (72) Ω 464
Motor vehicles 55 407 - (29) Ω 433
Office equipment,
furniture and fittings 42 79 (4) (10) Ω 107
Plant and machinery
under construction - 59 - - - 59
560 618 (4) (111) Ω 1,063
At Depreciation At
1.6.2008 Additions Charge 31.5.2009
RM‟000 RM‟000 RM‟000 RM‟000
Net Book Value
Plant and machinery 524 6 (67) 463
Motor vehicles - 57 (2) 55
Office equipment, furniture and fittings 34 13 (5) 42
558 76 (74) 560
At Accumulated Net Book
Cost Depreciation Value
RM‟000 RM‟000 RM‟000
At 31.5.2010
Plant and machinery 745 (281) 464
Motor vehicles 464 (31) 433
Office equipment, furniture and fittings 128 (21) 107
Plant and machinery under construction 59 - 59
1,396 (333) 1,063
Ω - less than RM500.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
53
7. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
At Accumulated Net Book
Cost Depreciation Value
The Group RM‟000 RM‟000 RM‟000
At 31.5.2009
Plant and machinery 672 (209) 463
Motor vehicles 57 (2) 55
Office equipment, furniture and fittings 55 (13) 42
784 (224) 560
8. INTANGIBLE ASSETS
Intangible assets can be broken down into:- The Group 2010 2009 RM‟000 RM‟000 Development expenditure 372 331 Industrial operating rights 736 736
1,108 1,067
The Group 2010 2009 RM‟000 RM‟000 (i) Development Expenditure Net book value at 1.6.2009/2008 331 542 Additional development expenditure capitalised 363 - Development expenditure written off (235) (153) Amortisation charge for the year (87) (58)
Carrying value at 31.5.2010/2009 372 331
The Group 2010 2009 RM‟000 RM‟000 At cost 452 433 Accumulated amortisation (80) (102)
372 331
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
54
8. INTANGIBLE ASSETS (Cont’d)
The Group 2010 2009 RM‟000 RM‟000 (ii) Industrial Operating Rights
At cost 736 736
9. INVENTORIES
The Group
2010 2009
RM‟000 RM‟000
At cost:-
Raw materials 830 637
Work-in-progress 376 338
Finished goods 104 91
Trading goods 34 18
1,344 1,084
None of the inventories are carried at net realisable value.
10. TRADE RECEIVABLES
The Group‟s normal trade credit terms range from 30 to 180 days (2009: 30 to 180 days). Other
credit terms are assessed and approved on a case-by-case basis.
The foreign currency exposure profile of the trade receivables at the balance sheet date are as
follows:-
The Group
2010 2009
RM‟000 RM‟000
Australian Dollar 473 186
Singapore Dollar 1,399 2,809
South Africa Rand - 58
Thai Baht 70 -
United States Dollar 98 143
2,040 3,196
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
55
11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Other receivables 41 21 - 2
Deposits 29 19 1 1
Prepayments 41 71 - -
111 111 1 3
12. AMOUNT OWING BY RELATED COMPANIES
The Group The Company
2010 2009 2010 2009
Non-trade related balances RM‟000 RM‟000 RM‟000 RM‟000
Subsidiaries
-
-
8,873 9,421
Amount owing by subsidiaries
The amount owing by subsidiaries are non-trade in nature, unsecured, interest-free and repayable
on demand. The amount owing is to be settled in cash.
13. DEPOSITS WITH LICENSED BANKS
The deposits of RM31,741 (2009: RM22,435) were held in trust for the Group by a director of the
Group. The deposits will be transferred to the Group at a time directed by the Group.
The effective interest rate per annum of the deposits at the balance sheet date ranges from 0.9% to
4.3% (2009: 1% to 3.7%). The deposits have maturity ranging from 1 day to 12 months.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
56
14. SHARE CAPITAL
The Company
2010 2009
Number Number
Par Of Share Par Of Share
Value Shares Capital Value Shares Capital
RM '000 RM‟000 RM '000 RM‟000
Ordinary Shares
Authorised
At 31.5.2010/2009 0.10 250,000 25,000 0.10 250,000 25,000
The Company
2010 2009
Number Number
Par Of Share Par Of Share
Ordinary Shares Value Shares Capital Value Shares Capital
RM '000 RM‟000 RM '000 RM‟000
Issued and Fully Paid -up At 31.5.2010/2009 0.10 98,000 9,800 0.10 98,000 9,800
15. SHARE PREMIUM
The share premium is not distributable by way of cash dividends and may be utilised in the manner
set out in Section 60 (3) of the Companies Act 1965.
16. OTHER RESERVE
Foreign
Currency
Translation Merger
Reserve Deficit Total
RM‟000 RM‟000 RM‟000
At 1.6.2009 Ω (2,600) (2,600)
Addition during the year (2) - (2) At 31.5.2010 (2) (2,600) (2,602)
Ω - Less than RM500.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
57
16. OTHER RESERVE (Cont’d)
The nature and purpose of the reserve is as follows:
Foreign Currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the
translation of the financial statements of foreign operation whose functional currencies are different
from that of the Group‟s presentation currency. It is also used to record the exchange differences
arising from monetary items which form part of the Group‟s net investment in foreign operations,
where the monetary item is denominated in either the functional currency of the reporting entity or
the foreign operation.
Merger Deficit
The merger deficit in the financial year was related to the subsidiary which was consolidated under
the merger method of accounting.
The merger deficit arose from the difference between the carrying value of the investment and the
nominal value of the shares of the subsidiaries upon consolidation using merger accounting
principles.
17. RETAINED PROFITS
At the balance sheet date, the Company will be able to distribute dividends out of its entire retained
profits under the single tier tax system.
18. DEFERRED TAX LIABILITIES
The Group
2010 2009
RM‟000 RM‟000
At 1.6.2009/2008 414 228
Recognised in income statement for the financial year
(Note 25) (74) 186
Exchange difference Ω -
At 31.5.2010/2009 340 414
Ω - Less than RM500.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
58
18. DEFERRED TAX LIABILITIES (Cont’d)
The deferred tax liabilities arise as a result of:-
The Group
2010 2009
RM‟000 RM‟000
An excess of carrying value over tax base 116 89
Industrial operating rights capitalized 184 184
Development expenditure capitalized 93 83
Others (53) 58
Exchange difference Ω -
340 414
The components and movements of deferred tax liability and asset during the financial year are as
follows:-
Deferred tax liability:-
Accelerated
capital
allowance
Industrial
operating
rights
capitalised
Development
expenditure
capitalised Others
Exchange
difference Total
RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000
Balance at 1.6.2009 89 184 83 58 - 414
Recognised in income
statement 27 - 10 (111) Ω (74) Balance at 31.5.2010 116 184 93 (53) Ω 340
Balance at 1.6.2008 76 136 - 16 - 228
Recognised in income
statement 13 48 83 42 - 186 Balance at 31.5.2009 89 184 83 58 - 414
Ω - Less than RM500.
19. TRADE PAYABLES
The normal trade credit terms granted to the Group range from 30 to 90 days (2009: 30 to 90 days).
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
59
20. OTHER PAYABLES AND ACCRUALS
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Other payables 39 849 - 31
Accrued expenses 89 134 12 100
Payroll liabilities 203 91 63 -
331
1,074
75
131
The foreign currency exposure profiles of the other payables and accruals at the balance sheet date
are as follows:-
The Group
2010 2009
RM‟000 RM‟000
Australian Dollar 22 -
Singapore Dollar - 736
Pound Sterling 7 4
29 740
21. REVENUE
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Dividend income
- - 2,000 2,000
Sale of goods 12,891 16,474 - -
12,891 16,474 2,000 2,000
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
60
22. PROFIT BEFORE TAX
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Profit before tax is arrived at after charging:-
Audit fee
- for the financial year 42 26 12 12
- over provision in previous financial year - (1) - -
Amortisation of development expenditure 87 58 - -
Bad debts written off 7 - - -
Depreciation of property, plant and equipment 111 74 Ω Ω
Directors‟ fee 246 113 246 113
Directors‟ non-fee emoluments 499 77 8 3
Goodwill written off - 5 - -
Loss on foreign exchange:
- realised * - * -
- unrealised 203 - 79 -
Property, plant and equipment written off 4 - - -
Rental of premises 92 64 - -
Research and development expenditure 269 460 - -
Development expenditure written off 235 153 - -
and after crediting:-
Gain on foreign exchange:
- realised (243) (18) - -
- unrealised - (231) - -
Interest income (272) (124) (2) (17)
Ω - less than RM500.
* - less than RM1,000.
Included in research and development expenditure are employee benefits which comprise of:-
- Director‟s remuneration - EPF contribution of RM10,936 (2009 : RM28,080)
- Director‟s remuneration - other emoluments of RM60,924 (2009 : RM234,620)
- Staff costs of RM143,860 (2009 : RM143,494)
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
61
23. Directors’ Remuneration
The aggregate amount of emoluments received and receivable by directors of the Group and of the
Company during the financial year are as follows:-
The breakdown of the directors‟ remuneration:-
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Non-executive directors:
- Fees 72 33 72 33
- Other emoluments 8 3 8 3
80 36 80 36
Executive directors:
- Fees 174 80 174 80
- Salaries, bonus and other
emoluments 719 300 - -
- Employees provident fund 131 36 - -
1,024 416 174 80
1,104 452 254 116
The breakdown of the categories charged out to:-
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Charged to income statement 817 452 254 116
Capitalised to development
expenditure
287
-
-
-
1,104 452 254 116
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
62
24. EMPLOYEE BENEFITS
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Short term employee benefits 2,040 1,259 254 116
Contribution to a defined contribution plan 213 87 - -
2,253 1,346 254 116
Included in employee benefits is key management personnel compensation as disclosed in Note 30
to the financial statements.
25. TAX EXPENSE
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Current tax expense:
- Malaysian tax for the current financial year 1,053 212 * 4
- Over provision of Malaysian tax in prior years - (9) - -
- Foreign tax 17 - - -
1,070 203 * 4
Deferred tax (Note 18):
- Relating to origination or reversal of temporary differences (53) 186 - -
- Over provision in prior years (21) - - -
(74) 186 - -
Total tax expense 996 389 * 4
* - less than RM1,000.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
63
25. TAX EXPENSE (Cont’d)
A subsidiary of the Company has been granted the Pioneer Status incentive under Section 41 of the
Promotion of Investments Act, 1986 by the Ministry of International Trade And Industry, Malaysia
which qualifies the subsidiary for 100% exemption from income tax on its statutory income from
pioneer activities for five years from 1 September 2004 to 31 August 2009.
A reconciliation of the statutory tax rate to the Group and the Company‟s effective tax rates applicable to
profit before tax are as follows:-
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
Profit before tax 5,010 8,693 1,197 1,711
Malaysian taxation at statutory rate 1,253 2,173 299 428
Tax effects of:-
Non-deductible expenses 293 81 216 76 Non-taxable income (15) - (515) (500) Pioneer income not subject to tax (521) (1,831) - - Over provision of Malaysian income
tax in prior years - (9) - - Over provision of deferred tax in
prior years (21)
- - - Effect of different tax rates - (25) - - Effect of different tax rates in
foreign jurisdiction 7
- - - Others Ω - - -
Tax expense for the financial year 996 389 * 4
Ω - less than RM500.
* - less than RM1,000.
26. EARNINGS PER SHARE
The basic earnings per share (“EPS”) is arrived at by dividing the Group‟s profit attributable to the equity
holders of the Company of RM4,014,000 (2009: RM8,304,000) by the weighted average number of
ordinary shares in issue during the financial year of 98,000,000 (2009: 48,666,000).
The fully diluted earnings per share for the Group are not presented as there were no potential dilutive
ordinary shares outstanding at the balance sheet date.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
64
27. DIVIDENDS
The Group / The Company
2010 2009 RM‟000 RM‟000 Recognised during the year: - final tax-exempt dividend of 0.0173
sen per ordinary share in respect of financial year 2009 1,695 -
1,695 -
28. CASH AND CASH EQUIVALENTS
For the purpose of the cash flow statements, cash and cash equivalents comprise the followings:-
The Group The Company 2010 2009 2010 2009 RM‟000 RM‟000 RM‟000 RM‟000 Fixed deposits with licensed banks 11,993 9,307 202 200 Cash and bank balances 3,453 2,048 4 18
15,446 11,355 206 218
The foreign currency exposure profile of the cash and bank balances at the balance sheet date is as
follows:-
The Group 2010 2009 RM‟000 RM‟000 Australian Dollar 242 801 Pound Sterling 135 1 Singapore Dollar 2,001 409 United States Dollar 664 361
3,042 1,572
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
65
29. SEGMENTAL REPORTING
The Group 2010 2009 RM‟000 RM‟000 Sales revenue by geographical market: - Malaysia 3,897 5,036 - Asia Pacific 8,353 10,923 - Others 641 515
12,891 16,474
No other segmental information such as segment assets, liabilities and results are presented as the
Group‟s sales is predominantly generated from Malaysia.
30. RELATED PARTY DISCLOSURES
(a) For the purpose of the financial statements, the Group and the Company have related party
relationships with:-
(i) its subsidiaries and directors;
(ii) the directors who are the key management personnel; and
(iii) a company in which a close member of the family of certain key management personnel
has significant financial interest.
(b) In addition to the information disclosed elsewhere in the financial statements, the Group and the
Company carried out the following transactions with its related parties during the financial year:-
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
(i) Subsidiaries
Advances to subsidiaries - - 728 7,601
Dividend receivable from a subsidiary - - 2,000 2,000
(ii) A company in which a close
member of the family of certain key management personnel has significant financial interest
Purchase of shares - * - *
Rental paid 60 60 - -
* - less than RM1,000.
ADVANCE COMPOSITES…
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
66
30. RELATED PARTY DISCLOSURES (Cont’d)
Information regarding outstanding balances arising from related party transactions as at 31 May
2010 is disclosed in Note 12 to the financial statements.
The Group The Company
2010 2009 2010 2009
RM‟000 RM‟000 RM‟000 RM‟000
(iii) Key management personnel compensation
Short-term employee benefits 1,104 521 254 116
Post employment benefits - Defined contribution plan 139 41 - -
1,243 562 254 116
In the opinion of the directors, the above transactions have been entered into in the ordinary course
of business on terms mutually agreed between the parties.
31. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
Fair value is defined as the amount at which the financial instrument could be exchanged in a
current transaction between knowledgeable willing parties in an arm‟s length transaction, other than
in a forced sale or liquidation.
The following methods and assumptions are used to estimate the fair value of each class of financial
instruments:
(a) Cash and bank balances and other short term receivables
The carrying amounts approximated the fair values due to the relatively short term maturity of
these instruments.
(b) Other current liabilities
The carrying amounts approximated the fair values because of the short period to maturity of
these instruments.
(c) Amount owing by related companies
The carrying amounts approximated the fair values at the balance sheet date.
ANNUAL REPORT 2010
Notes to the Financial Statements for the financial year ended 31 May 2010 cont‟d
67
32. SIGNIFICANT EVENTS SUBSEQUENT TO BALANCE SHEET DATE
On 13 July 2010, Hexa Analisa Sdn. Bhd., a wholly owned subsidiary of Fibon Berhad had executed a
Sale and Purchase Agreement for the acquisition of land and Sale of Assets Agreement for the plant
and machineries for a total cash consideration of Ringgit Malaysia Two Million Nine Hundred and
Sixty One Thousand only (RM2,961,000) from CPC Polyply Industries (M) Sdn. Bhd. which
constitute a related party transaction.
The above transactions will be subjected to shareholders‟ approval in an Extraordinary General
Meeting which will be held at a date to be determined later.
33. COMPARATIVE FIGURES
As
Restated
As Previously Reported
RM‟000 RM‟000 The Company INCOME STATEMENTS (EXTRACT):- Revenue 2,000 - Other operating income 17 2,017
ADVANCE COMPOSITES…
Analysis of Shareholdings as at 6 September 2010 cont‟d
68
Authorised Share Capital : RM25,000,000
Issued and Paid-Up Share Capital : RM9,800,000
Class of Shares : Ordinary Shares of RM0.10 each
Voting Rights : One vote per share
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
No. of
Shareholders /
Depositors
% of
Shareholders /
Depositors
No. of Shares
held
% of Issued
Capital
Less than 100 53 4.70 1,198 0.00
100 to 1,000 957 84.92 321,214 0.33
1,001 to 10,000 79 7.01 262,464 0.26
10,001 to 100,000 20 1.78 639,820 0.65
100,001 to less than 5% of
issued shares
13 1.15 34,216,303 34.92
5% and above of issued shares 5 0.44 62,559,001 63.84
Total 1,127 100.00 98,000,000 100.00
DIRECTOR’S SHAREHOLDINGS
Direct Indirect
Name No. of
Shares Held
% of Issued
Capital
No. of Shares
Held
% of Issued
Capital
Lim Wai Kiew 1,470,000 1.50 *23,136,788 23.61
Pang Chee Khiong 14,822,552 15.13 - -
Pang Fok Seng 23,136,788 23.61 *1,470,000 1.50
Pang Nyuk Yin 2,940,000 3.00 - -
Chong Peng Khang 322 # - -
# less than 1%
* Indirect interest held through spouse
ANNUAL REPORT 2010
Analysis of Shareholdings as at 6 September 2010 cont‟d
69
THIRTY LARGEST SHAREHOLDERS
Direct
Name No. of
Shares Held
% of Issued
Capital
1. CIMSEC Nominees (Tempatan) Sdn. Bhd. CIMB For Pang Fok
Seng (PB)
23,050,618 23.52
2. Pang Chee Khiong 14,822,552 15.13
3. Inflexion PEF Sdn. Bhd. 9,343,563 9.53
4. Malaysia Venture Capital Management Berhad 8,366,949 8.54
5. Expedient Equity Ventures Sdn. Bhd. 6,975,319 7.12
6. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities
Account For Koh Kin Lip
4,888,800 4.99
7. Kumpulan Modal Perdana Sdn. Bhd. 4,874,004 4.97
8. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities
Account For Koh Siew Kong
4,700,500 4.80
9. Kenanga Nominees (Tempatan) Sdn. Bhd. Pledged Securities
Account For Junior Koh Siew Hui
4,413,800 4.50
10. Pang Nyuk Yin 2,940,000 3.00
11. Pang Yoke Lian 2,940,000 3.00
12. Pang Yoke Wah 2,918,222 2.98
13. Mayban Nominees (Asing) Sdn. Bhd. DBS Bank For Taib-Jaic
Asian Balanced Private Equity Fund
2,228,700 2.27
14. CIMSEC Nominees (Asing) Sdn. Bhd. CIMB For Frigate Equities
Ltd. (PB)
2,139,548 2.18
15. Lim Wai Kiew 1,470,000 1.50
16. Wong Siow May 270,828 0.28
17. Wong Seau Han @ Stella Wan Seau Han 220,100 0.22
18. Ho Si Keiw 211,801 0.22
19. Pang Fok Seng 86,170 0.09
20. ECML Nominees (Tempatan) Sdn. Bhd. Pledged Securities
Account For Jasen Vun Vui Fen
83,500 0.09
21. Alliance Group Nominees (Tempatan) Sdn. Bhd. Pledged
Securities Account For Marianna Binti Hasan (8063216)
79,800 0.08
22. Chong Chee Siong 40,000 0.04
23. Chong Kim Fung 38,748 0.04
24. Chong Kim Fung 33,400 0.03
25. Alliance Group Nominees (Tempatan) Sdn. Bhd. Pledged
Securities Account For Koh Cheng Hsiung (8040110)
30,000 0.03
26. Chan Yen Huat 25,000 0.03
27. Tee Boon Seng 22,800 0.02
28. Lim Teck Huat 22,000 0.02
ADVANCE COMPOSITES…
Analysis of Shareholdings as at 6 September 2010 cont‟d
70
THIRTY LARGEST SHAREHOLDERS (Cont’d)
Direct
Name No. of
Shares Held
% of Issued
Capital
29. Ng Chooi Yuen 21,200 0.02
30. Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities
Account For Thien Syn Yung @ Thien Sin Yung
20,000 0.02
SUBSTANTIAL SHAREHOLDERS
As Per Register of Substantial Shareholders
Direct Indirect
Name No. of
Shares Held
% of Issued
Capital
No. of Shares
Held
% of Issued
Capital
CIMSEC Nominees
(Tempatan) Sdn. Bhd.
CIMB For Pang Fok Seng
23,050,618 23.52 1,470,000 (1) 1.50
Pang Chee Khiong 14,822,552 15.13 - -
Inflexion PEF Sdn. Bhd. 9,343,563 9.53 - -
Malaysia Venture Capital
Management Berhad
8,366,949 8.54 6,975,319 (2) 7.12
Expedient Equipty Ventures
Sdn. Bhd.
6,975,319 7.12 - -
(1) Deemed interest by virtue of Lim Wai Kiew being his spouse
(2) Deemed interest by virtue of its substantial shareholding in expedient equity
ANNUAL REPORT 2010
Notice of Third Annual General Meeting
71
NOTICE IS HEREBY GIVEN THAT the Third Annual General Meeting of FIBON BERHAD will be held at
ORNARESORT BERHAD, Batu 16, Jalan Gapam, Ladang Gapam, Bemban, 77200 Jasin, Melaka,
Malaysia on Friday, 22 October 2010 at 10.00 am to transact the following businesses:
AGENDA
ORDINARY BUSINESSES:
1. To receive and adopt the Audited Financial Report for the financial year ended
31 May 2010 together with the Reports of the Directors and the Auditors thereon.
(Resolution 1)
2. To declare a single tier final dividend of 0.82 sen for the year ended 31 May
2010.
(Resolution 2)
3. To re-elect the following Directors who are retiring in accordance to the
Company‟s Articles of Association Under Article 121 and being eligible offer
themselves for re-election:
i. Pang Fok Seng (Resolution 3a)
ii. Lim Wai Kiew (Resolution 3b)
4. To approve the payment of Directors‟ fees of RM246,000.00 for the financial year
ended 31 May 2010.
(Resolution 4)
5. To appoint Messrs. Crowe Horwath as Auditors of the Company for the ensuing
year and to authorise the Directors to fix their remuneration.
(Resolution 5)
SPECIAL BUSINESS:
To consider and, if thought fit, pass the following resolution:-
6. Ordinary Resolution – Authority To Directors to Allot and Issue Shares
“THAT subject to the provisions of Section 132D of the Companies Act, 1965
and approvals from the Bursa Malaysia Securities Berhad (“Bursa Securities”)
and other relevant governmental/regulatory authorities where such approvals
shall be necessary, authority be and is hereby given to the Directors of the
Company to allot and issue shares in the Company from time to time and upon
such terms and conditions and for such purposes as the Directors may deem fit
provided that the aggregate number of shares issued pursuant to this resolution
does not exceed 10% of the issued share capital of the Company for the time
being and such authority shall remain in force until the next Annual General
Meeting (“AGM”) of the Company.”
(Resolution 6)
ADVANCE COMPOSITES…
Notice of Third Annual General Meeting cont‟d
72
AGENDA (Cont’d)
SPECIAL BUSINESSES (Cont’d):
7. Special Resolution - Proposed Amendment to the Articles of Association of the
Company
“THAT the existing Article 157 be amended as follows:
Exiting Article 157
Any dividend may be paid by cheque sent through the post to the registered
address, as may appear in the Register of Members or person entitled thereto.
Every such cheque shall be made payable to the order of the person to whom it
is sent, and payment of the cheque shall be a good discharge to the Company
of the dividend to which it relates.
New Article 157
Any dividend may be paid by cheque sent through the post to the registered
address or by directly crediting the dividend entitlement into the members’
bank accounts, as may appear in the Register of Members or the Record of
Depositors, of the Members or person entitled thereto. Every such cheque
shall be made payable to the order of the person to whom it is sent, and
payment of the cheque or directly crediting to the members’ bank accounts
shall be a good discharge to the Company of the dividend to which it relates.
Every such cheque or warrant shall be sent or directly credited at the risk
of the person entitled to the money represented thereby. Where the
members have provided to the Depository the relevant contact details for
purposes of electronic notifications, the Company shall notify them
electronically once the Company has paid the cash dividends out of its
accounts.
(Resolution 7)
8. To transact any other business for which due notice shall have been given in
accordance with the Companies Act, 1965.
(Resolution 8)
ANNUAL REPORT 2010
Notice of Third Annual General Meeting cont‟d
73
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that a Single Tier Final Dividend of 0.82 sen per share in respect of
financial year ended 31 May 2010 will be payable on 20 December 2010 to depositors registered in the
Record of Depositors at the close of business on 25 November 2010, if approved by shareholders at the
forthcoming Third Annual General Meeting on Friday, 22 October 2010.
A Depositor shall qualify for entitlement to the dividend only in respect of:
a. Shares transferred into the Depositor‟s Securities Account before 5.00 p.m. on
25 November 2010 in respect of ordinary transfer; and
b. Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to
the Rules of Bursa Malaysia Securities Berhad.
BY ORDER OF THE BOARD
NORIAH BINTI MD YUSOF (LS 0009298)
Secretary
Johor Bahru
Date : 30 September 2010
Notes:
i. A member entitled to attend and vote at this meeting is entitled to appoint more than one proxy to
attend and vote in his stead. Where a member appoints more than one (1) proxy, appointment shall
be invalid unless he specifies the proportion of his holding to be represented by each proxy.
ii. A proxy may but need not be a member of the Company and a member may appoint any person to
be his proxy without limitation and the provision of Section 149(1)(b) of the Companies Act, 1965
shall not apply.
iii. Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under
the hand of its attorney.
iv. The instruments appointing a proxy must be deposited at the registered office, 31-04 Level 31
Menara Landmark, Mail Box 172, No 12 Jalan Ngee Heng, 80000 Johor Bahru not less than 48
hours before the time for holding the meeting or at any adjournment thereof.
ADVANCE COMPOSITES…
Notice of Third Annual General Meeting cont‟d
74
Notes (Cont’d):
v. Explanatory Notes on Special Business:
i) Ordinary Resolution: The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act, 1965 at the Third Annual General Meeting (“AGM”) of the Company (hereinafter referred to as the “General Mandate”). The Company has been granted a general mandate by its shareholders at the Second AGM of the Company held on 24 July 2009 (hereinafter referred to as the “Previous Mandate”). The Previous Mandate granted by the shareholders had not been utilised and hence no proceeds were raised therefrom. The purpose to seek the General Mandate is to enable the Directors of the Company to issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time and cost-consuming to organize a general meeting. This authority unless revoked or varied by the Company in the general meeting, will expire at the next Annual General Meeting. The proceeds raised from the General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions. All other information remains unchanged.
ii) Special Resolution: Proposed Amendment to the Articles of Association of the Company The proposed Special Resolution is to amend the Company‟s Articles of Association in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to e-Dividend.
FIBON BERHAD (Company No: 811010-H)
(Incorporated In Malaysia)
PROXY FORM Number of Ordinary Shares Held
I/We, (FULL NAME AND NRIC/PASSPORT NO)
of (FULL ADDRESS)
being a member of FIBON BERHAD hereby appoint
(FULL NAME AND NRIC/PASSPORT NO)
of (FULL ADDRESS)
or failing him/her, the Chairman of the Meeting as *my/our proxy to attend and vote for *me/us and on *my/ our
behalf at the Second Annual General Meeting of the Company to be held at ORNARESORT BERHAD, Batu 16, Jalan
Gapam, Ladang Gapam, Bemban, 77200 Jasin, Melaka, Malaysia on Friday, 22 October 2010 at 10.00 am or any
adjournment thereof.
Mark either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting as the proxy thinks fit. If you appoint two proxies and wish them to vote differently this should be specified.
My/our proxy/proxies is/are to vote as indicated below
No. ORDINARY BUSINESS FOR AGAINST 1. Adoption of Audited Financial Statement for the financial year ended 31 May 2010 together
with the Reports of the Directors and the Auditors thereon.
2. Declaration of a single tier final dividend of 0.82 sen for the year ended 31 May 2010. 3 (i). Re-election of Mr Pang Fok Seng as Director 3 (ii). Re-election of Ms Lim Wai Kiew as Director 4. Approval of the payment of Directors’ fees of RM246,000.00 for the financial year ended 31
May 2010.
5. Reappointment of Messrs Horwath as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.
No. SPECIAL BUSINESS 6. ORDINARY RESOLUTION – Authority to Issue Shares Pursuant to Section 132D of the Companies act, 1965 “THAT subject to the provisions of Section 132D of the Companies Act, 1965 and approvals
from the Bursa Malaysia Securities Berhad and other relevant governmental/regulatory authorities where such approvals shall be necessary, authority be and is hereby given to the Directors of the Company to allot and issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and such authority shall remain in force until the next Annual General Meeting of the Company.”
7. SPECIAL RESOLUTION – Proposed Amendment to the Articles of Association of the Company Amendment to Article 157 of the Company’s Articles of Association of the company in line
with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to e-Dividend.
* Strike out whichever not applicable (Please indicate with an “x” in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion)
…………………………………………………….…. Signature of Member/Common Seal
Date: ………………………………………………. [Please refer to the next page for the “Notes on Appointment of Proxy]
For appointment of two proxies, percentage of shareholdings to be represented by the proxies:
Percentage Proxy 1 % Proxy 2 _________% Total 100 %
Fold This Flap For Sealing
Notes on Appointment of Proxy:
i. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the
Company.
ii. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.
iii. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each
proxy.
iv. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in
respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
v. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an officer or attorney duly authorized.
vi. The Proxy Form must be deposited at the Registered Office of the Company, located at 31-04, Level 31, Menara Landmark, Mail Box 172, No 12 Jalan Ngee
Heng, 80000 Johor Bahru, not less than forty-eight (48) hours before the time set for the meeting or any adjournment thereof.
Then Fold here
1st Fold here
Notes on Appointment of Proxy(Cont’d)
vii. Explanatory Notes on Special Business:
Ordinary Resolution:
Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965
The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act, 1965 at the Third Annual General
Meeting (“AGM”) of the Company (hereinafter referred to as the “General Mandate”). The Company has been granted a general mandate by its shareholders at
the Second AGM of the Company held on 24 July 2009 (hereinafter referred to as the “Previous Mandate”).The Previous Mandate granted by the shareholders
had not been utilized and hence no proceeds were raised therefrom. The purpose to seek the General Mandate is to enable the Directors of the Company to
issue and allot shares at any time to such persons in their absolute discretion without convening a general meeting as it would be both time and cost-consuming
to organize a general meeting.This authority unless revoked or varied by the Company in the general meeting, will expire at the next Annual General Meeting.
The proceeds raised from the General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further
placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.
All other information remains unchanged.
Special Resolution:
Proposed Amendment to the Articles of Association of the Company
The proposed Special Resolution is to amend the Company’s Articles of Association in line with the amendments to the Listing Requirements of Bursa Malaysia
Securities Berhad in relation to e-Dividend.
Affix Stamp
The Company Secretary
FIBON BERHAD (811011-H) 31-04 Level 31 Menara Landmark,
Mail Box 172, No 12 Jalan Ngee Heng,
80000 Johor Bahru
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