TABLE OF CONTENTS - malaysiastock.biz Rhiza & Richard, Advocates & Associates WEBSITE E-MAIL ADDRESS [email protected]. KPS Consortium Bhd …

� KPS Consortium Bhd (143816-V) • Annual Report 2010

TABLE OF CONTENTS

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79

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Enclosed

Notice of Annual General Meeting

Corporate Information

Profile of the Board of Directors

Corporate Governance Statement

Other Information Required Pursuant to Part A, Appendix 9C of the BMSB Listing Requirements

Audit Committee

Statement on Internal Control

Chairman/ Group Managing Director’s Statement

Financial Statements• Directors’ Report• Statement by Directors• Statutory Declaration• Independent Auditors’ Report• Statements of Financial Position• Statements of Comprehensive Income• Statements of Changes in Equity• Statements of Cash Flows• Notes to the Financial Statements

List of Properties

Shareholdings Structure

Proxy Form

2 KPS Consortium Bhd (143816-V) • Annual Report 2010

NOTICE OF ANNUALGENERAL MEETING

KPS CONSORTIUM BERHAD (Company No. 143816-V)Incorporated in Malaysia

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twenty Fifth Annual General Meeting of the Company will be held at Klang Executive Club, Persiaran Bukit Raja 2, Bandar Baru Klang, 41150 Klang, Selangor Darul Ehsan on Saturday, 25 June 2011 at 11.00 am for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2010 together with the Reports of the Directors and Auditors thereon. (Please refer to Note 1).

2. To re-elect the following Director retiring in accordance with Article 80 of the Company’s Articles of Association:-

Mr Faun Chee Yarn Ordinary Resolution 1

3. To approve the payment of Directors’ fee for the financial year ended 31 December 2010. Ordinary Resolution 2

4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to fix the Auditors’ remuneration. Ordinary Resolution 3

AS SPECIAL BUSINESS

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

5. ORDINARY RESOLUTION - AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approval from other relevant governmental/regulatory authorities, the Directors be and are hereby empowered to 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 capital of the Company at the date of this Annual General Meeting and that such authority shall continue in force until the conclusion of the next annual general meeting of the Company AND THAT the Directors be and are hereby also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation of the additional shares so issued.” Ordinary Resolution 4

6. SPECIAL RESOLUTION - PROPOSED AMENDMENT TO THE COMPANY’S ARTICLES OF ASSOCIATION

“THAT the existing Article 143 of the Articles of Association of the Company be and is hereby deleted in its entirety and be substituted thereof a new Article 143 as follows:

Existing Article 143 Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register of members or to such person and to such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent, and the payment of any such cheque or warrant shall


NOTICE OF ANNUALGENERAL MEETING (cont’d.)

operate as a good discharge to the Company in respect of the dividend represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged. Every such cheque or warrant shall be sent at the risk of the person entitled to the money thereby represented.

New Article 143 Any dividend, interest or other money payable in cash in respect of shares may be paid by direct crediting, cheque or warrant, sent via electronic means or post directed to the registered address of the holder. Every direct crediting or such cheque or warrant shall be made payable to the order of the person to whom it is sent, and the payment of any such cheque or warrant or the payment by direct crediting or such other electronic means to the bank account provided by the holder shall operate as a good discharge of the Company’s obligation in respect of dividend represented thereby, notwithstanding that it may subsequently appear that the cheque has been stolen or that the endorsement thereon or the instruction for the payment by direct crediting or such other electronic means has been forged. Every such cheque or warrant sent or payment by direct crediting or such other electronic means shall be at the risk of the person entitled to the dividend thereby presented.” Special Resolution 1

7. To transact any other business which may properly be transacted at an Annual General Meeting for which due notice shall have been given.

By order of the Board

LIM SECK WAH (MAICSA 0799845)M. CHANDRASEGARAN A/L S.MURUGASU (MAICSA 0781031) Company Secretaries

Selangor Darul Ehsan

Dated this 3rd day of June 2011

NOTES:-

1. The Agenda No. 1 is meant for discussion only as the Company’s Articles of Association provides that the audited financial statements are to be laid in the general meeting only which does not require a formal approval of shareholders. Hence, is not put forward for voting.

2. A member shall be entitled to appoint more than one (1) proxy to attend and vote in his place. A proxy needs not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

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

4. Where a member of the Company 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.

5. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney.

6. The instrument appointing a proxy and the power of attorney, if any, under which it is signed or a certified copy thereof must be deposited at the Company’s Registered Office, Lot 765, Jalan Haji Sirat Off Jalan Meru, 42100 Klang, Selangor Darul Ehsan not less than 48 hours before the time set for holding the Meeting or any adjournment thereof.


NOTICE OF ANNUALGENERAL MEETING (cont’d.)

7. Explanatory notes on the Special Business

7.1 The proposed Ordinary Resolution 4 is primarily to give flexibility to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next annual general meeting of the Company.

The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/ diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issued capital.

In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions.

No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General Meeting held on 26 June 2010.

7.2 The proposed Special Resolution 1, if passed, will align Article 143 with Bursa Malaysia Securities Berhad’s requirement that cash dividend is to be paid to shareholders by direct credit into their bank accounts as provided to Bursa Malaysia Depository Sdn Bhd.


CORPORATEINFORMATION

BOARD OF DIRECTORS Directors Koh Poh Seng Chairman/ Group Managing Director

Lau Fook Meng Executive Director

Faun Chee Yarn Independent and Non-Executive Director

Tan Kong Ang Independent and Non-Executive Director

Lim Choon Liat Independent and Non-Executive Director

COMPANY SECRETARIES Lim Seck Wah (MAICSA 0799845) M. Chandrasegaran a/l S.Murugasu (MAICSA 0781031)

STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad, Main Market Stock code: 9121

AUDIT COMMITTEE Chairman Faun Chee Yarn

Member Tan Kong Ang Lim Choon Liat

NOMINATION COMMITTEE Chairman Faun Chee Yarn

Member Tan Kong Ang Lim Choon Liat

REMUNERATION COMMITTEE Chairman Faun Chee Yarn

Member Koh Poh Seng Tan Kong Ang Lim Choon Liat

REGISTERED OFFICE AND Lot 765, Jalan Haji Sirat Off Jalan Meru, PRINCIPAL PLACE OF BUSINESS 42100 Klang, Selangor Tel: (603) 3291 5566 Fax: (603) 3291 4489


CORPORATEINFORMATION (cont’d.)

REGISTRAR Mega Corporate Services Sdn Bhd Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail 50250 Kuala Lumpur Tel: (603) 2692 4271 Fax: (603) 2732 5388

AUDITORS SJ Grant Thornton (Member of Grant Thornton International Ltd) Level 11, Sheraton Imperial Court Jalan Sultan Ismail 50250 Kuala Lumpur Tel: (603) 2692 4022 Fax: (603) 2732 5119 PRINCIPAL BANKERS Ambank (Malaysia) Berhad Malayan Banking Berhad HSBC Bank (Malaysia) Berhad

SOLICITORS Messrs Soo Thien Ming & Nashrah Rhiza & Richard, Advocates & Associates

WEBSITE http://www.kpscb.com.my

E-MAIL ADDRESS [email protected]


PROFILE OF THEBOARD OF DIRECTORS

The Board of Directors of KPS Consortium Berhad (“KPSCB“ or “the Company”) comprising the Chairman/ Group Managing Director, one (1) Executive Director and three (3) Independent Non-Executive Directors.

The Board meets quarterly and additional Board Meetings are held as and when required. The Board met four (4) times during the financial year ended 31 December 2010.

Particulars of the Directors are as follows:

KOH POH SENG, Malaysian, age 55, is the founder and Managing Director of KPS Plywood Sdn Bhd (“KPSP”) and was appointed as the Chairman and Group Managing Director of KPS Consortium Berhad (“KPSCB”) on 18 September 2002. He has more than twenty years of experience in trading of plywood and wood related products. In 1990, KPSP was set up by Mr Koh to undertake the business of trading in plywood. KPSP ventured into the trading of cement and steel bars since 1998.

Presently, Mr Koh is also a director of various other private companies, whereby their principal activities are that of construction and timber.

He is a member of the Remuneration Committee.

LAU FOOK MENG, Malaysian, age 59, was appointed Executive Director of KPSCB on 19 September 2002. He is a chartered accountant who has obtained his Fellowship from the Institute of Chartered Accountant of England & Wales. Upon graduation, he joined Asiatic Development Bhd in 1981 as an Accountant until 1983. In 1984, he joined Unico Holdings Bhd as the Group Accountant and left in 1992. From 1993 to 2002, he was the General Manager of Nichmurni Sdn Bhd. Currently he is a Director of OCI Berhad.

FAUN CHEE YARN, Malaysian, age 51, was appointed as an Independent and Non-Executive Director of KPSCB on 1 November 2008. He is a Fellow Member of the Malaysian Institute of Accountants and certified member of the Financial Planning Association of Malaysia.

He has many years of experiences in private sector as an Auditor, Accountant, Finance Manager and General Manager in various sectors including software, insurance agency, recycling and vehicle fleet management. He was the Finance Manager of a renowned recycling company in Malaysia before re-designated as Financial Controller since 2009.

He is a Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.


PROFILE OF THEBOARD OF DIRECTORS (cont’d.)

TAN KONG ANG, Malaysian, age 51, was appointed as an Independent and Non-Executive Director of KPSCB on 26 May 2009. He is a Member of Chartered Institute of Marketing UK for more than 20 years.

He is a professional manager with more than 26 years of working experiences in sale, marketing, purchasing, operation, administration and management. He possesses extensive working experiences in the textile industry, electrical and electronic, agencies house, wholesaler, retailer, distributor, oil and gas, hardware, building material, chemical, steel industry, financial products, life and general insurance organizations.

He is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

LIM CHOON LIAT, Malaysian, age 50, was appointed as an Independent and Non-Executive Director of KPSCB on 26 May 2009. He obtained Bachelor of Science (Forestry) from Faculty of Forestry, University Pertanian Malaysia, Serdang, Selangor Darul Ehsan.

Between 1986 and 1991, he worked as a Technical Training Officer at Malaysian Timber Industry Board (MTIB), Ministry of Primary Industries. He organized technical training courses at national level for the Malaysian furniture industries/timber industrialist, in the area of furniture production technology, furniture finishing, furniture design, furniture marketing and technical aspects of timber i.e. preservation of timber, kiln drying of timber, identification of timber and grading of timber.

Between 1991 and 1995, he was appointed as the Executive Director in Furnicom Machinery Sdn Bhd, Camycom Sdn Bhd and Camycom Engineering Sdn Bhd. From 1995 to present, he is the Managing Director for Bonaprimo Resources Sdn Bhd, a Woodworking Machinery business as well as consultancy services for the furniture industries. He is also an Associate Senior Consultant of Sage Forestry & Timber Consultants Sdn Bhd. He is involved in providing consultancy services for Pengurusan Danaharta, in assessing the assets of failed furniture companies with non performing loans and in the Study for MIDA – A study of the Impact of AFTA and AIA on the Wood/Cane/Bamboo-based Industry in Malaysia. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

Note:

All the above-named Directors of the Company have no family relationship with the other directors or substantial shareholders of the Company; and have not been convicted of any criminal offences (other than ordinary traffic offences, if any) and do not have any conflict of interest of the Company.


CORPORATE GOVERNANCESTATEMENT

The Board of Directors fully acknowledges the importance of good corporate governance and is taking steps to evaluate the status of the corporate governance practices adopted by the Group as tabulated below and its compliance with the code of best practices as set out in Part 1 and Part 2 of the Malaysian Code on Corporate Governance pursuant to Paragraph 15.25 of the Listing Requirements of the Bursa Malaysia Securities Berhad (“BMSB”) throughout the financial year from 1 January 2010 to 31 December 2010. The Board will continually evaluate the status of the Group’s corporate governance practices and procedures to ensure conformance and enhance performance in pursuit of its commitment to the highest standards of corporate governance.

1.0 Board of Directors

1.1 Board Composition and Balance

The Board currently has five (5) members, comprising the Chairman/ Group Managing Director, one (1) Executive Director and three (3) Independent Non-Executive Directors. The Company is in compliance with Paragraph 15.02 of the BMSB Listing Requirements whereby one-third of its Board members are independent directors. The profile of each Director is presented separately in the Annual Report.

All Board members participate fully in decisions making on the key issues involving the Group. The Chairman/ Group Managing Director has primary responsibilities for managing the Group’s day-to-day operations and together with the Executive Director and Non-Executive Directors to ensure that the strategies proposed by the management are fully discussed and examined, and take into account the long term interests of the various stakeholders including shareholders, employees, clients, suppliers and the various communities in which the Group conducts its business.

The Board is assured of a balanced and independent view at all Board deliberations largely due to the presence of its Non-Executive Directors who are independent from Management and major shareholders of the Company. The Independent Directors are also free from any business or other relationships that could materially interfere with the exercise of their independent judgment. Together with the Chairman/ Group Managing Director and Executive Director who have intimate knowledge of the Company’s and Group’s business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities.

As part of its commitment, the Board supports the highest standards of corporate governance and the development of the best practices for the Group.

In addition to the role of guidance by the Non-Executive Directors, each Director brings independent judgment to bear on issues of strategy, performance, resources and standard of conduct.

1.2 Duties and Responsibilities of the Board

The Board retains full and effective control of the Company and the Group. This includes responsibility for determining the Group’s overall strategic direction as well as development and control of the Group. The Group Managing Director also undertakes the role of the Chairman. Despite that the roles are combined, there is a strong independent element on the Board as there are adequate number of independent directors who are particularly important as they provide unbiased and independent views, advice and judgment.

�0 KPS Consortium Bhd (143816-V) • Annual Report 2010

CORPORATE GOVERNANCESTATEMENT (cont’d.)

1.3 Board Meetings and Supply of Information

Four (4) Board Meetings were held during the financial year ended 31 December 2010 and the details of attendance of each director are set out below:

The Board Meetings were held at No.3, Jalan BK 1/10, Bandar Kinrara Industrial Centre, 47100 Puchong, Selangor.

The date and time of the meetings held were as follows:

All Directors have complied with the minimum attendance at Board meetings as stipulated in the Listing Requirements of the BMSB during the financial period.

The agenda and Board papers for each item as well as minutes of previous meetings are duly served to all Board members few days before the Board meetings to give Directors time to review and study and thus, to deliberate on the issues to be raised at the Board meetings.

In arriving at any decision on recommendations by the Management, thorough deliberation and discussion by the Board is a pre-requisite. All proceedings of the Board Meetings are minuted and signed by the Chairman of the meeting in accordance with the provision of Section 156 of the Companies Act, 1965.

The Board is kept updated on the Company and Group’s activities and its operations on a regular basis. The directors also have access to reports on the Group’s activities, both financial and operational.

All directors have access to the advice and services of the Company Secretary who is responsible for ensuring that board procedures are followed and the Board may also take independence advice, at the Company’s expense, in the furtherance of their duties if so required. The Board also has unlimited access to all information with regard to the activities of the Company.

Mr Koh Poh SengMr Lau Fook MengMr Faun Chee Yarn Mr Tan Kong Ang Mr Lim Choon Liat

4/44/44/44/44/4

Name ofDirectors

Total Number ofMeetings Attended

20 February 201022 May 201028 August 201027 November 2010

11.00 am11.30 am11.30 am11.30 am

Date Time

Mr Koh Poh SengMr Lau Fook MengMr Faun Chee Yarn Mr Tan Kong Ang Mr Lim Choon Liat

4/44/44/44/44/4

Name ofDirectors

Total Number ofMeetings Attended

20 February 201022 May 201028 August 201027 November 2010

11.00 am11.30 am11.30 am11.30 am

Date Time

�� KPS Consortium Bhd (143816-V) • Annual Report 2010


1.4 Directors’ Training The Board as a whole ensures that it appoints only individuals of sufficient caliber, knowledge and experience to fulfill the duties of a Director appropriately. The Board of Directors is aware of the importance of continuously pursuing for the relevant seminars/ training programmes to equip themselves to discharge their duties diligently.

The Board members have attended the continuous education programme for the financial year 2010. Training programmes and seminars attended by the Directors are as follows:

MrKohPohSeng

• Board Effectiveness: Redefining The Roles and Functions of an Independent Director

MrLauFookMeng

• The All New 2010 Edition of the Quarterly Interim Financial Reporting • FRSs for Financial Instruments Seminar • Budget 2011 Proposals

MrFaunCheeYarn

• Challenges of Implementing FRS 139 • Board Effectiveness: Understanding the Roles and Responsibilities of the Nominating and Remuneration Committees • FRSs for Financial Instruments Seminar • Budget 2011 Proposals & Recent Developments

MrTanKongAng • Towards Corporate Governance Excellence for Sustainable Success

MrLimChoonLiat • Board Effectiveness: Redefining the Roles and Functions of an Independent Director

1.5 Appointments to the Board The appointment of any additional Director is made as and when it is deemed necessary by the existing Board with due consideration given to the mix of expertise and experience required for an effective Board.

The Nomination Committee is empowered by the Board and its terms of reference to consider and evaluate the appointment of new Directors and Directors to Board Committees of the Company. The Nomination Committee will recommend the candidates to the Board for the appointment. The Nomination Committee also keeps under review the Board structure, size and composition and the mix of skills and core competencies required for the Board to discharge its duties effectively. In addition, the Nomination Committee will deliberate on Board succession plan as and when appropriate. The Nomination Committee will also assess the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director on at least an annual basis.

The Nomination Committee comprises the following:-

a. Mr Faun Chee Yarn (Chairman) b. Mr Tan Kong Ang c. Mr Lim Choon Liat



1.6 Retirement and Re-election In accordance with the Articles of Association of the Company, at least one-third of the Directors shall retire by rotation at each Annual General Meeting and can offer themselves for re-election at the Annual General Meeting (“AGM”). Directors who are appointed by the Board to fill casual vacancies or as additional directors during the financial year are subject to re-election by shareholders at the next AGM following their appointment. All Directors shall retire from office at least once in every three years, but shall be eligible for re-election.

1.7 Relationship of the Board to Management • Quality of Information Information plays a key role in the Board’s decision-making and in setting up the policies and strategies of the Company. The Board has unrestricted access to timely and accurate information, which is not only confined to qualitative and quantitative information, but also to other information deemed suitable such as customer satisfaction, products and services quality, market share and market reaction and macro economic performance.

• Access to information Prior to the board meetings, all Directors receive an agenda and Board Papers containing information relevant to the business of the meeting including information on major financial, operational and corporate matters relating to the activities and performance of the Group. This is issued in sufficient time to enable Directors to obtain further explanation, where necessary, in order to be properly informed before the meeting.

All Board members have unlimited access to the financial information. They get the advice from the Company Secretary, Auditors, legal advisor or any other resources, be it from the organization or externally.

• Use of Board Committees As appropriate, the Board has delegated certain responsibilities to Board Committees that operate within clearly defined terms of reference. The Committees are as follows:

a. Audit Committee b. Remuneration Committee c. Nomination Committee

All the above Committees have written terms of reference and operating procedures. Each of the committees has the authority to examine particular issues and report to the Board with their recommendations. The ultimate decision on all matters lies with the Board.

1.8 The relationship between the Board and the shareholders The principal forum for dialogue with shareholders is the AGM, during which shareholders are encouraged to participate and pose questions to the Board regarding operational and financial information. The AGM also allows shareholders an opportunity to interact directly with the Board and seek first-hand information on the above matters. Extraordinary General Meetings are held as and when shareholders’ approvals are required on specific matters and shareholders are notified of such meetings requirements.



2.0 Directors’ Remuneration

2.1 The Level and Make-Up of Remuneration The remuneration of the Directors of the Company and for the financial year ended 31 December 2010 is set out below:

(i) Aggregate remuneration of Directors with categorisation into appropriate components:

(ii) Number of Directors whose remuneration falls into the following bands:

There is no contract of service between any Directors and the Company or its subsidiary Companies.

2.2 Procedure In compliance with the Listing Requirements of the BMSB, the Board has established a Remuneration Committee comprising Independent Non-Executive Directors and the Chairman/ Group Managing Director. The Committee’s primary responsibility is to recommend to the Board, the remuneration of Directors. In the case of Executive Directors, the component parts of remuneration are structured to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the particular non-executive concerned.

However, the final decision on remuneration for Directors is a matter for the Board as a whole and individual directors are required to abstain from discussion of their own remuneration. The members of the Remuneration Committee are as follows: a. Mr Faun Chee Yarn (Chairman) b. Mr Koh Poh Seng c. Mr Tan Kong Ang d. Mr Lim Choon Liat

FeesSalary & other emolumentsTotal

76,00073,336

149,336

16,00073,33689,336

60,000-

60,000

Total(RM)

ExecutiveDirector

(RM)

Non-ExecutiveDirector

(RM)

Below RM50,000RM50,001 to RM100,000RM100,001 to RM150,000

5--

Total

2--

3--

ExecutiveDirector

Range ofRemuneration


FeesSalary & other emolumentsTotal

76,00073,336

149,336

16,00073,33689,336

60,000-

60,000

Total(RM)

ExecutiveDirector

(RM)


(RM)

Below RM50,000RM50,001 to RM100,000RM100,001 to RM150,000

5--

Total

2--

3--

ExecutiveDirector

Range ofRemuneration




3.0 Shareholders

3.1 Dialogue between the Company and Investors The Group values dialogue with investors as a mean of effective communication that enables the Board to convey information about the Group’s performance, corporate strategy and other matters affecting shareholders’ interests.

The AGM is the principal forum for dialogue with individual shareholders. It is a crucial mechanism in shareholder communication for the Company. At the Company’s AGM, shareholders have direct access to the Board and are given the opportunity to ask questions during the open questions and answers session prior to moving for approval of the Company’s Audited Financial Statements and Directors’ Report for the financial year and other businesses (if applicable). The shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general.

The Chairman/ Group Managing Director also addresses the shareholders on the review of the Group’s operations for the financial year and outlines the prospects of the Group for the new financial year.

The Board is also committed to ensure that shareholders are well informed of major developments of the Company and the Group and the information is also communicated to them through the following channels:-

a. the Annual Report;

b. various disclosures and announcements made to the BMSB including the quarterly results and annual results; and

c. the Company’s website www.kpscb.com.my through which shareholders and the public in general can gain access to the latest corporate and product information of the Group.

3.2 Annual General Meeting (“AGM”) Notice of AGM and annual reports are sent out to shareholders at least 21 days before the date of the meeting.

At the AGM, the Board also provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. Directors and senior management staff are available to provide responses to shareholders’ questions during these meetings.

For the re-election of Directors, the Board will ensure that full information is disclosed through the notice of meeting regarding Directors who are retiring and who are willing to serve if re-elected.

Each item of special business included in the notice of meeting will be accompanied by an explanatory statement for the proposed resolution to facilitate full understanding and evaluation of issues involved.


4.0 Accountability And Audit

4.1 Financial Reporting The Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group’s financial position, by means of the annual and quarterly reports and other published information. In this regard, the Board is primarily responsible for the preparation of a financial statement to present a fair and balanced report of the financial state of affairs of the Group.

Before releasing to the Bursa Malaysia Securities Berhad, the quarterly financial results are reviewed by the Audit Committee and approved by the Board of Directors. The details of the Company and the Group’s financial positions are included in the Financial Statements section of the Annual Report.

4.2 Internal Control The Directors acknowledge their responsibilities for the internal control system in the Company and the Group, covering not only financial controls but also controls relating to operational, compliance and risk management. The system of internal controls involves each key business unit and its management, including the Board, and is designed to meet the business units’ particular needs, and to manage the risks to which they are exposed. The system, by its nature, can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. The concept of reasonable assurance recognises the costing aspect, whereby the cost of control procedures is not to exceed the expected benefits.

The Board recognises that risks cannot be fully eliminated. As such, the systems, processes and procedures being put in place are aimed at minimizing and managing them. Ongoing reviews are continuously being carried out to ensure that the effectiveness, adequacy and integrity of the system of internal controls in safeguarding the Company’s assets.

4.3 Audit Committee The Audit Committee meets periodically with senior financial management staff and the external auditors to review the Company’s and the Group’s financial reporting, the nature and scope of audit reviews, and the effectiveness of the systems of internal control and compliance.

The terms of reference of the Audit Committee have recently been revised to conform to the Listing Requirements of the BMSB. The terms of reference and activities of the Audit Committee during the financial year ended 31 December 2010 are provided separately in this Annual Report.

4.4 Relationship with Auditors The Company’s external auditors, SJ Grant Thornton report to members of the Company on their findings which are included as part of the Company’s financial reports with respect to each year’s audit on the statutory financial statements. In doing so, the Company has established a transparent arrangement with the auditors to meet their professional requirements. From time to time, the auditors highlight to the Audit Committee and Board of Directors on matters that require the Board’s attention.




5.0 Directors’ Responsibility Statement On Annual Audited Accounts

The Board of Directors is required under Paragraph 15.26(a) of the Listing Requirements of the BMSB to issue a statement explaining their responsibility in the preparation of the annual financial statements.

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group as at the end of the financial year and of the profit and loss of the Company and of the Group for the financial year.

In preparing those financial statements, the Directors are required to:-

a. use appropriate accounting policies and consistently apply them; b. make judgements and estimates that are reasonable and prudent; and c. state whether applicable accounting standards have been followed, subject to any material departures being disclosed and explained in the financial statements.

The Directors are responsible for keeping proper accounting records, which disclose, with reasonable accuracy at any time, the financial position of the Company and of the Group and to enable them to ensure that the accounts comply with the Companies Act, 1965. The Directors had also ensured that proper internal controls had been implemented.

The Directors are satisfied that in preparing the financial statements of the Group for the financial year ended 31 December 2010, the Group has used the appropriate accounting policies and applied them consistently and prudently. The Directors are of the opinion that all relevant approved accounting standards have been followed and confirm that the financial statements have been prepared on a going concern basis.


OTHER INFORMATION REQUIRED PURSUANT TO PART A, APPENDIX 9C OF THE BMSB LISTING REQUIREMENTSIn conformance with the Bursa Malaysia Securities Berhad Listing Requirements, the following information is provided:

• Utilisation of Proceeds No proceeds were raised from any corporate proposal during the financial year.

• Share buybacks During the financial year, there were no share buybacks by the Company.

• Option, Warrants and Convertible Securities The Company has not issued any options, warrants or convertible securities during the financial year.

• American Depository Receipt (“ADR”) / Global Depository Receipt (“GDR”) During the financial year, the Company did not sponsor any ADR or GDR programme.

• Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management staff by the relevant regulatory bodies during the financial year.

• Non-Audit Fee There was no non-audit fee payable to the external auditors by the Company and its subsidiaries for the financial year ended 31 December 2010.

• Variance from Profit Forecast or Unaudited Results Previously Made There were no variances exceeding 10% from the unaudited results previously released by the Company.

• Profit Guarantee During the financial year, there were no profit guarantees given by the Company.

• Material Contracts There were no material contracts (not being contracts entered into in the ordinary course of business) subsisting as at or entered into since the end of the previous financial year, by the Company or its subsidiaries, which involved the interests of the Directors and major shareholders. • Revaluation of landed properties The Group does not have a revaluation policy for its landed properties.

• Recurrent related party transactions of a revenue nature There were no recurrent related party transactions of a revenue nature during the year.

• Corporate Social Responsibility The Group looks after the welfare of the employees such as providing lodging and food for the employees. The Group heeds the save the environment by involving in recycling of papers for the production of jumbo toilet rolls and serviette. The factories preserve environment and nature by make good use of waste wood, oil palm waste (bio-slab) and sawdust.

The Group emphasizes on Environment, Health and Safety and provides safety measurements to the factory members.


AUDITCOMMITTEE

1. Members

The current members of the Committee and their respective designations are as follows:

• Mr Faun Chee Yarn Chairman / Independent and Non-Executive Director

• Mr Tan Kong Ang Member / Independent and Non-Executive Director

• Mr Lim Choon Liat Member / Independent and Non-Executive Director The Audit Committee consists of three (3) members all of whom are Independent Non-Executive Directors. The Company has complied with Paragraph 15.09(1)(b) of Bursa Malaysia Securities Berhad’s Listing Requirements, which requires the Audit Committee members must be non-executive directors, with a majority of them being independent directors.

2. Terms of Reference

The terms of reference of the Audit Committee had been revised to conform to the Listing Requirements of the BMSB.

Composition

The Audit Committee shall be appointed from among their members and should consist of no fewer than three (3) members and must be all Non-Executive Directors of whom the majority must be Independent Directors.

At least one (1) member of the Committee:-

(i) must be a member of the Malaysian Institute of Accountants (“MIA”); or

(ii) if he is not a member of the MIA, he must have at least 3 years’ working experience and:-

• he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1968; or

• he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967

• fulfils such other requirements as prescribed or approved by the Exchange.

No alternate director shall be appointed as a member of the Committee.

The Chairman of the Committee shall be an Independent Non-Executive Director appointed by the Board.

In the event of any vacancy in the Audit Committee resulting in the number of members being reduced to below three, the Company must fill the vacancy within three (3) months. The terms of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years.


AUDIT COMMITTEE(cont’d.)

3. Audit Committee Meetings Attendance

The Audit Committee had conducted four (4) meetings for the financial year ended 31 December 2010. Details of attendance of the Audit Committee members during this financial period are set out as below:

4. Activities Of The Audit Committee

The principal activities undertaken by the Audit Committee during the financial period were summarized as follows:

(a) Reviewed the quarterly financial results and announcements for the financial quarters prior to the Board of Directors for consideration and approval;

(b) Reviewed the audited financial statements for the financial year ended 31 December 2010;

(c) Reviewed the external auditors’ reports for the financial year ended 31 December 2010 in relation to audit and accounting issues arising from the audit;

(d) Reviewed the external auditors’ audit plan for the year ended 31 December 2010;

(e) Considered the nomination of external auditors for recommendation to the Board for reappointment;

(f ) Reviewed the internal audit plan, findings, reports and management implementation of audit recommendations;

(g) Reviewed the disclosure statements on Corporate Governance, Audit Committee Report and the Statement on Internal Control and recommended to the Board for adoption;

(h) Deliberated the disclosure requirements for corporate social responsibility and identified the management action plan.

5. Internal Audit Function

The internal audit function is essential in assisting the Audit Committee in reviewing the state of the system of internal control maintained by the management.

The Company outsourced its internal audit function to an internal audit consulting company. The audit team members are independent of the activities audited by them. The internal auditors review and assess the Group’s system of internal control and report to the Committee functionally.

The Committee approves the annual internal audit plan before the commencement of the internal audit reviews for each financial year. During the financial year, the internal auditors conducted reviews on the operations of the Group and presented their reports to the Audit Committee. Areas of improvement identified were communicated to the management for further action.

6. Authority

The Committee is authorised by the Board:-

(i) To investigate any matter within its terms of reference;

(ii) To have the resources which are required to perform its duties;

Mr Faun Chee Yarn Mr Tan Kong Ang Mr Lim Choon Liat

4/44/44/4

Name ofCommittee Member

No. of meetings attended/ held during member’s tenure



(iii) To have full and unrestricted access to any information pertaining to the Company;

(iv) To have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any);

(v) To obtain independent professional or other advice; and

(vi) To convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees, whenever deemed necessary.

7. Functions

The functions of the Committee are as follows:-

(a) The Committee shall review, appraise and report to the Board on:

• the discussion with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of the audit and to ensure co-ordination of audit where more than one audit firm is involved;

• the review with the external auditors, his evaluation of the system of internal controls, his management letter and management’s response;

• the discussion of problems and reservations arising from the external audits, the audit report and any matters the external auditors may wish to discuss;

• the assistance given by the employees of the Group to the external and internal auditors;

• any related party transaction and conflict of interest situation that may arise within the Group or Company, including any transaction, procedure or course of conduct that raises questions of management integrity.

(b) To review where appropriate whether there is a reason to believe that the Group’s external auditors is not suitable for re-appointment;

(c) To consider any question of resignation or dismissal of the external auditors;

(d) To review quarterly reporting and year end financial statements of the Group before submission to the Board, focusing particularly on:-

• changes in or implementation of major accounting policy;

• significant adjustments arising from the audit;

• the going concern assumption; and

• compliance with accounting standards and other legal requirements.

(e) To review the following in respect of internal audit function:-

• Adequacy of the scope, functions, competency and resources of the Internal Audit Department and that it has the necessary authority to carry out its work;

• Internal audit programmes;

• The major findings of internal audit investigations and management’s responses, and ensure that appropriate actions are taken on the recommendations of the Internal Audit Department;

• Appraisal or assessments of the performance of the senior staff of the Internal Audit Department;

2� KPS Consortium Bhd (143816-V) • Annual Report 2010


• Approval of any appointment or termination of senior staff member of the Internal Audit Department;

• Resignations of senior internal audit staff members and providing the resigning staff member an opportunity to submit his/her reason for resignation;

(f ) To consider the major findings of internal audit investigations and management’s response;

(g) To recommend the nomination and appointment of external auditors as well as the audit fee;

(h) To promptly report any matters resulting in breach of the Bursa Securities Listing Requirements to the Board. Where the Committee is of the opinion that such matter reported by it to the Board has not been satisfactorily resolved, the Committee shall promptly report such matter to Bursa Securities; and

(i) Any other function that may be mutually agreed upon by the Committee and the Board, which would be beneficial to the Company and ensure the effective discharge of the Committee’s duties and responsibilities.

AttendanceAtMeetings

The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee member, any Executive Director, or the external auditors.

In order to form a quorum, the majority of members present must be independent directors.

FrequencyOfMeetings

Meetings shall be held not less than four (4) times a year to review the quarterly results and year-end financial statements. Other meetings may be held as and when required.


It is a requirement of the Malaysian Code of Corporate Governance that the Board of Directors should maintain a sound system of internal controls to safeguard shareholders’ investments and the Group’s assets.

Pursuant to paragraph 15.26(b) of the Main Market Listing Requirements and Statement on Internal Control: Guidance for Directors of Public-Listed Companies, the Board of Directors are pleased to present the Statement on Internal Control of the Group comprising KPS Consortium Berhad and its subsidiaries for the financial year ended 31 December 2010.

BOARD RESPONSIBILITYThe Board of Directors affirms its responsibility in maintaining a sound system of internal control and risk management procedures within the Group and for reviewing its adequacy and integrity. However, the Board recognises that reviewing of the Group’s system of internal controls is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. Hence, all internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. In striving for continuous improvement, the Board will put in place appropriate action plans, when necessary, to further enhance the Group’s systems of internal control.

INTERNAL CONTROLThe internal controls system is established after considering the overall control environment of the Group. The system is designed to achieve proper balance between risks undertaken and the potential returns to shareholders. The key elements of the Group’s system of internal controls are as described below:

• Key responsibilities and lines of accountability within the Group are defined, with clear reporting lines up to the Senior Management of the Group and to the Board of Directors. The Group’s delegation of authority sets out the decisions that need to be taken and the appropriate authority levels of Management including matters that required Board approval.

• The Group’s management monitors and reviews the financial results and forecasts for all businesses within the Group and formulates action plans for operational and financial performance improvement.

• Key policies and procedures are outlined in the Group. These policies are communicated to lien management to ensure that the control procedures, including those relating to authorisation, monitoring and reconciliation processes are followed.

• At the Board level, key financial and operating performances of the Group are reviewed. Quarterly, discussions with the management on the progress of business operations and significant issues are held by the Board and internal audit findings and reports are reviewed by the Audit Committee before presenting to the Board.

INTERNAL AUDITThe Group had engaged an independent professional services firm to carry out the Internal Audit function. The objective of the internal audit function is to review the adequacy and integrity of the internal control systems of key business units.

The Audit Committee reviews and approves the annual internal audit plan before the Internal Auditors carry out their functions. All audit findings are reported to the Committee and areas of improvement and audit recommendations identified are communicated to the management for further action.

The cost incurred for the internal audit function in respect of the financial year ended 31 December 2010 was RM40,000.

RISK MANAGEMENTRisk management practice ensures that significant risks are continuously identified and managed effectively. Currently, the Group relies on the management to assess the key business risks of the Group and to implement measures to assist the Board in discharging its risk management responsibilities.

CONCLUSIONThere is no significant breakdown or weaknesses in the system of internal control of the Group that have resulted material losses incurred by the Group for the financial year ended 31 December 2010. The Board believes that the current review framework and the systems of internal control that has been in place for the year under review are reasonable for the present level of operations. Nonetheless, the Group will continue to take the necessary measures to ensure that the system of internal control is functioning effectively.

The Board of Directors has approved this statement for issuance.

STATEMENT ONINTERNAL CONTROL


CHAIRMAN/ GROUP MANAGINGDIRECTOR’S STATEMENT

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Accounts of the Group and of the Company for the financial year ended 31 December 2010.

Overview of Group Results

Operating Results

For the financial year ended 31 December 2010, Group’s turnover was RM375.0 million (2009:RM311.5 million). We recorded a pre-tax profit of RM11.8 million as compared to RM9.4 million in the previous year.

At Company level, no turnover in term of dividend income from subsidiaries was recorded.

Review of Operations

The Groups performances are explained under the various activity reports below:

PaperMilling

The Group’s operations registered external revenue of RM11.0 million compared with previous year of RM12.7 million. This division registered lower operating profit before tax of RM1.2 million as compared to profit of RM2.5 million in year 2009. Prices of raw materials were generally higher compared with previous year.

PaperConvertingandTradingofWoodfreePaper

This division recorded turnover of RM69.2 million as compared to RM41.2 million previously. This division showed a profit before tax of RM3.2 million as compared to a profit of RM0.5 million in the previous year 2009.

PlywoodandBuildingMaterialsTradingandTimberManufacturing

The Plywood and Building Materials Division registered higher turnover of RM275.4 million (2009:RM234.0 million) and operating profit before tax of RM7.3 million compared with operating profit of RM5.7 million. Operating profit margin slightly improved for current year compared with year 2009.

Others–tradingofpaperproductsandgeneralhouseholdproducts

Turnover for this division was RM18.7 million in year 2010 compared with RM23.7 million for the previous year. This division made a profit before taxation of RM0.4 million compared with RM0.8 million in 2009.


CHAIRMAN/ GROUP MANAGINGDIRECTOR’S STATEMENT (cont’d.)

Dividend

The Board is unable to propose any dividend.

Outlook and Prospects

The future outlook for most of the divisions is expected to register slightly higher revenue due to the continuing world economic recovery and by efforts of the Malaysian Government to boost domestic economy through Economic Transformation Programme. Profit margins could be affected if prices of raw materials increased due to demands from Asian countries e.g. China and Japan and the company is not able to fully pass the increases to our customers

Acknowledgement

The last few years have proven the resilience of the Company and I would like to thank the shareholders for their unwavering support so far.

We owe a similar gratitude to our customers and business associates for their unwavered support throughout the difficult times of the last few years. I would also like to express our appreciation to all Government agencies and regulatory authorities for their assistance and guidance.

Finally and above all, on behalf of the Board, I wish to offer our heartfelt thanks to all our staff for their dedication and loyalty over the past year and their steadfastness and resilience in facing the new challenges.

Koh Poh SengChairman/ Group Managing Director


REPORTS AND FINANCIAL STATEMENTS31 DECEMBER 2010

26

29

29

30

32

33

34

35

38

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Financial Position

Statements of Comprehensive Income

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements


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

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding.

The principal activities of the subsidiary companies are disclosed in Note 7 to the financial statements.

There were no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.

FINANCIAL RESULTS

DIVIDENDS

There were no dividends paid or declared by the Company since the end of the previous financial year.

The Directors do not recommend the payment of any dividend for the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.

DIRECTORS

The Directors in office since the date of the last report are as follows:-

Koh Poh Seng Lau Fook Meng Faun Chee Yarn Tan Kong Ang Lim Choon Liat

In accordance with Article 80 of the Company’s Articles of Association, Mr. Faun Chee Yarn will retire from the Board of Directors at the forthcoming Annual General Meeting and being eligible offer himself for re-election.

DIRECTORS’REPORT

Pro�t for the �nancial year

Attributable to:- Owners of the parent Non-controlling interests

55,761

55,761-

55,761

CompanyRM

14,088,268

14,087,804464

14,088,268

GroupRM


DIRECTORS’ REPORT(cont’d.)

DIRECTORS’ INTEREST

According to the Register of Directors’ Shareholdings, the beneficial interests of those who were Directors at the end of the financial year in shares of the Company were as follows:-

By virtue of the interest in shares of the Company, Mr. Koh Poh Seng is also deemed to have interest in the shares of all the subsidiary companies to the extent that the Company has an interest under Section 6A of the Companies Act, 1965.

Other than those disclosed above, no other Directors at the end of the financial year held any interest in shares of the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

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

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Note 20 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

ISSUE OF SHARES AND DEBENTURES

There were no shares or debentures issued during the financial year.

OTHER STATUTORY INFORMATION

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

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

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.

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

(a) which would render the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or

Direct interestKoh Poh SengLim Choon Liat

60,500,52550,000

At31.12.2010

60,590,52550,000

At1.1.2010

(330,000)-

Sold

240,000-

Bought

------------- Ordinary shares of RM1 each ------------


DIRECTORS’ REPORT(cont’d.)

(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

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

(a) any charge on the assets of the Group and of the Company which have arisen since the end of the financial year which secure the liability of any other person; or

(b) any contingent liability of the Group and of the Company which have arisen since the end of the financial year.

In the opinion of the Directors:-

(a) no contingent or other liability 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 affect the ability of the Group and of the Company to meet its obligations as and when they fall due; and

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(c) 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 to affect substantially the results of operations of the Group and of the Company for the current financial year in which this report is made.

AUDITORS

The Auditors, Messrs SJ Grant Thornton have expressed their willingness to continue in office.

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

................................................................. )KOH POH SENG ) ) ) ) ) ) ) DIRECTORS ) ) )................................................................ )LAU FOOK MENG ) Kuala Lumpur27 April 2011


STATEMENT BY DIRECTORS

In the opinion of the Directors, the financial statements set out on pages 32 to 77 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 financial position of the Group and of the Company as at 31 December 2010 and of their financial performance and cash flows for the financial year then ended.

The supplementary information as set out in Note 31, page 78 is prepared in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirement, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

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

............................................................... ..................................................…............ KOH POH SENG LAU FOOK MENG Kuala Lumpur27 April 2011

STATUTORY DECLARATION

I, Lau Fook Meng, being the Director primarily responsible for the financial management of KPS Consortium Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 32 to 78 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of )27 April 2011 ) ..................................................…............ LAU FOOK MENG

Before me:

Commissioner for Oaths

PESU

RUHJAYA SUMPAH

MA L A Y S I A

W.490S. ARULSAMY

16 - Tingkat Bawah Jalan Pudu, 55100 Kuala Lumpur.

STATEMENT BY DIRECTORS and STATUTORY DECLARATION


INDEPENDENTAUDITORS’ REPORT

Report on the Financial Statements

We have audited the financial statements of KPS Consortium Berhad, which comprise the statements of financial position of the Group and of the Company as of 31 December 2010, the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 32 to 77.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the financial year then ended.


INDEPENDENTAUDITORS’ REPORT (cont’d.)

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 subsidiary companies have been properly kept in accordance with the provisions of the Act.

b) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

c) The auditors’ reports on the financial statements of the subsidiary companies did not contain any qualification or any comment made under Section 174 (3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 31 on page 78 to the Financial Statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

SJ GRANT THORNTON TAN CHEE BENG (NO. AF: 0737) CHARTERED ACCOUNTANTCHARTERED ACCOUNTANTS (NO: 2664/02/13(J)) Kuala Lumpur27 April 2011


STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2010

ASSETSNon-current assetsProperty, plant and equipmentPrepaid land lease paymentsInvestment propertiesInvestment in subsidiary companiesGoodwill on consolidationDeferred tax assetsTotal non-current assets

Current assetsInventoriesTrade receivablesOther receivablesAmount due from subsidiary companiesTax recoverableFixed deposits with licensed banksCash and bank balancesTotal current assets

TOTAL ASSETS

EQUITY AND LIABILITIESEQUITYEquity attributable to owners of the Company:Share capitalShare premiumRetained earning/Accumulated losses

Non-controlling interestsTotal equity

LIABILITIESNon-current liabilitiesFinance lease creditorsDeferred tax liabilitiesTotal non-current liabilities

Current liabilitiesTrade payablesOther payablesAmount due to subsidiary companiesBorrowingsTax payableTotal current liabilitiesTotal liabilities

TOTAL EQUITY AND LIABILITIES

- - -

119,646,201 - -

119,646,201

- -

21,042 13,574,513

- -

74,365 13,669,920

133,316,121

147,827,158 5,400,842

(29,730,849) 123,497,151

- 123,497,151

- - -

- 104,430

9,714,540 - -

9,818,970 9,818,970

133,316,121

- - -

119,646,200 - -

119,646,200

- -

21,341 13,104,448

- -

79,121 13,204,910

132,851,110

147,827,158 5,400,842

(29,675,088) 123,552,912

- 123,552,912

- - -

- 115,059

9,154,672 -

28,467 9,298,198 9,298,198

132,851,110

2009RM

Company2010

RM

38,039,605 2,341,414 4,461,684

- 43,151,039

- 87,993,742

32,866,280 67,388,105

6,684,168 -

25,561 11,846,256

9,832,245 128,642,615

216,636,357

147,827,158 5,400,842

(3,148,611) 150,079,389

25,126 150,104,515

302,717 81,000

383,717

14,163,756 3,255,887

- 48,025,720

702,762 66,148,125 66,531,842

216,636,357

39,735,7902,269,1844,167,528

- 43,151,039

3,237,000 92,560,541

42,732,939 88,870,312

6,688,342 -

460,168 1,631,645 8,451,692

148,835,098

241,395,639

147,827,158 5,400,842

10,939,193 164,167,193

25,590 164,192,783

465,043 116,000 581,043

16,723,533 5,088,286

- 54,590,518

219,476 76,621,813 77,202,856

241,395,639

2009RM

Group2010

RM

456789

101112

7

13

14

159

1617

18

Note

The accompanying notes form an integral part of the financial statements.


STATEMENTS OF COMPREHENSIVE INCOMEFor the Financial Year Ended 31 December 2010

Revenue

Cost of sales

Gross pro�t

Other income

Selling and distribution expenses

Administrative expenses

Finance costs

Other expenses

Pro�t before taxation

Taxation

Pro�t for the �nancial year

Other comprehensive income, net of tax

Total comprehensive income for the �nancial year

Pro�t for the �nancial year attributable to:-Owners of the CompanyNon-controlling interests

Total comprehensive income attributable to:-Owners of the CompanyNon-controlling interests

Earnings per share attributable to owners of the Company (sen)

-

-

-

4,552,264

-

(204,471)

-

(1,992,987)

2,354,806

-

2,354,806

-

2,354,806

2,354,806 -

2,354,806

2,354,806 -

2,354,806

216,000

-

216,000

77,689

-

(174,007)

-

(35,454)

84,228

(28,467)

55,761

-

55,761

55,761 -

55,761

55,761 -

55,761

2009RM

Company2010

RM

311,541,921

(282,334,693)

29,207,228

3,655,411

(7,237,149)

(6,285,886)

(1,620,714)

(8,302,247)

9,416,643

(1,993,798)

7,422,845

-

7,422,845

7,450,477 (27,632)

7,422,845

7,450,477 (27,632)

7,422,845

5.04

375,041,326

(350,402,015)

24,639,311

5,210,143

(9,155,242)

(5,394,277)

(2,053,287)

(1,477,258)

11,769,390

2,318,878

14,088,268

-

14,088,268

14,087,804 464

14,088,268

14,087,804 464

14,088,268

9.53

2009RM

Group2010

RM

19

20

21

23

Note



STATEMENTS OF CHANGES IN EQUITYFor the Financial Year Ended 31 December 2010

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2009

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Tota

leq

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142,

681,

670

7,42

2,84

5

150,

104,

515

14,0

88,2

68

164

,192

,783

121

,142

,345

2,3

54,8

06

123

,497

,151

55,

761

123

,552

,912

Non

-con

trol

ling

inte

rest

sRM

52,7

58

(27,

632)

25,1

26 464

25,

590 - - - - -

Tota

lRM

142,

628,

912

7,4

50,4

77

150

,079

,389

14,0

87,8

04

164

,167

,193

121

,142

,345

2,3

54,8

06

123

,497

,151

55,

761

123

,552

,912

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(10,

599,

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7,4

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77

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48,6

11)

14,

087,

804

10,

939,

193

(32,

085,

655)

2,3

54,8

06

(29,

730,

849)

55,

761

(29,

675,

088)

5,4

00,8

42 -

5,4

00,8

42

-

5,4

00,8

42

5,4

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Shar

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lRM

147

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,158 -

147

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147

,827

,158

147

,827

,158 -

147

,827

,158

-

147

,827

,158


STATEMENTS OF CASH FLOWSFor the Financial Year Ended 31 December 2010

CASH FLOWS FROM OPERATING ACTIVITIES

Pro�t before taxation

Adjustments for:- Amortisation of prepaid land lease paymentAllowance for slow moving inventoriesBad debts written o�Depreciation of - property, plant and equipment - Investment propertiesLoss on disposal of - property, plant and equipment - Investments propertiesInterest expense Inventories written o�Investment in subsidiary company written o�Impairment loss on investment in subsidiary companyProperty, plant and equipment written o�Impairment on receivables - current year - reversedAllowance for slow moving inventories no longer required Gain on disposal of property, plant and equipment Interest incomeImpairment loss on investment in subsidiary companies no longer required

Operating pro�t/(loss) before working capital changes

Changes in working capital:- Inventories Receivables Payables Subsidiary companies Bankers' acceptances Directors

Cash (used in)/generated from operations

2,354,806

- - -

- -

- - - - -

1,982,510 -

10,476 (128,045)

- - -

(4,424,219)

(204,472)

- 15,871 (1,177)

244,190 - -

54,412

84,228

- -

28,769

- -

- - - - 1 - -

6,684 (77,689)

- - -

-

41,993

- (299)

10,629 (47,567)

- -

4,756

2009RM

Company2010

RM

9,416,643

72,230 45,126

2,988,934

2,709,949 100,650

29,815 -

1,252,221 1,077,945

- -

390

2,946,898 (1,525,541) (1,110,566)

(1,672) (160,871)

-

17,842,151

(3,459,700) (17,951,635)

1,993,213 -

8,752,451 (26,198)

7,150,282

11,769,390

72,230 136,990 661,694

2,773,919 100,283

- 57,476

1,550,316 41,013

- -

437

604,314 (1,587,597)

(47,595) (2,619,062)

(64,492)

-

13,449,316

(9,997,067) (21,164,792)

4,012,770 -

6,189,426 -

(7,510,347)

2009RM

Group2010

RM


STATEMENTS OF CASH FLOWSFor the Financial Year Ended 31 December 2010 (cont’d.)

Cash (used in)/generated from operations

Interest paid Interest receivedTax paid

Net cash (used in)/from operating activities

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment Proceeds from disposal of property, plant and equipmentProceeds from disposal of investment properties

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIESDrawndown of term loanRepayment of term loansPayment of �nance lease creditors

Net cash used in �nancing activities

CASH AND CASH EQUIVALENTSNet (decrease)/increaseBrought forward

Carried forward

54,412

- - -

54,412

-

- -

-

- - -

-

54,412 19,953

74,365

4,756

- - -

4,756

-

- -

-

- - -

-

4,756 74,365

79,121

2009RM

Company2010

RM

7,150,282

(1,252,221) 160,871

(1,511,798)

4,547,134

(1,110,375)

96,467 -

(1,013,908)

- (766,436) (323,850)

(1,090,286)

2,442,940 19,235,561

21,678,501

(7,510,347)

(1,550,316) 64,492

(1,801,015)

(10,797,186)

(5,835,409)

4,824,243 136,397

(874,769)

1,000,000 (850,499) (298,581)

(149,080)

(11,821,035) 21,678,501

9,857,466

2009RM

Group2010

RM

A

B

Note


STATEMENTS OF CASH FLOWS For the Financial Year Ended 31 December 2010 (cont’d.)

NOTES TO THE STATEMENTS OF CASH FLOWS

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

B. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the statements of cash flows comprise the following items:-

As disclosed in Note 13 to the financial statements, the fixed deposits have been pledged to licensed banks for banking facilities granted to certain subsidiary companies and hence, are not available for general use.

Total purchase Purchase through �nance lease arrangementCash payment

---

---

2009RM

Company2010

RM

1,583,406(473,031)

1,110,375

6,675,722(840,313)5,835,409

2009RM

Group2010

RM

Cash and bank balancesFixed deposits with licensed banksBank overdraft

74,365--

74,365

79,121 - -

79,121

2009RM

Company2010

RM

9,832,245 11,846,256

- 21,678,501

8,451,692 1,631,645 (225,871)9,857,466

2009RM

Group2010

RM



NOTES TO THEFINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and the principal place of business of the Company is located at Lot 765, Jalan Haji Sirat, Off Jalan Meru, 42100 Klang, Selangor Darul Ehsan.

The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are disclosed in Note 7 to the financial statements.

There were no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 27 April 2011. 2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 in Malaysia and Financial Reporting Standards issued by Malaysian Accounting Standards Board (“MASB”). At the beginning of the current financial year, the Group and the Company adopted new and revised FRSs as described fully in Note 2.4 to the financial statements.

2.2 Basis of Measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies.

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency and all values are rounded to the nearest RM except when otherwise stated.

2.4 Adoption of New and Revised Financial Reporting Standards (“FRSs”)

2.4.1 On 1 January 2010, the Group and the Company adopted the followings new and amended FRSs and IC Interpretations which are mandatory for annual financial period beginning on or after 1 January 2010 :-

Applicable to the Group’s and the Company’s operations

1) FRS 7 - Financial Instruments: Disclosures 2) Amendments to FRS 7 - Financial Instruments: Disclosures 3) FRS 8 - Operating Segments 4) Amendment to FRS 8 - Operating Segments 5) FRS 101 - Presentation of Financial Statements (Revised) 6) Amendment to FRS 107 - Statement of Cash Flows 7) Amendment to FRS 108 - Accounting Policies, Changes in Accounting Estimates and Errors 8) Amendment to FRS 110 - Events After the Reporting Period 9) Amendment to FRS 116 - Property, Plant and Equipment 10) Amendment to FRS 117 - Leases 11) Amendment to FRS 118 - Revenue 12) Amendment to FRS 119 - Employee Benefits 13) FRS 123 - Borrowing Costs (Revised) 14) Amendment to FRS 123 - Borrowing Costs 15) Amendments to FRS 127 - Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate


NOTES TO THE FINANCIALSTATEMENTS (cont’d.)


2. BASIS OF PREPARATION (cont’d.)

2.4 Adoption of New and Revised Financial Reporting Standards (“FRSs”) (cont’d.)

2.4.1 On 1 January 2010, the Group and the Company adopted the followings new and amended FRSs and IC Interpretations which are mandatory for annual financial period beginning on or after 1 January 2010 (cont’d.) :-

Applicable to the Group’s and the Company’s operations (cont’d.)

16) Amendments to FRS 132 - Financial Instruments: Presentation 17) Amendment to FRS 134 - Interim Financial Reporting 18) Amendment to FRS 136 - Impairment of Assets 19) Amendment to FRS 138 - Intangible Assets 20) FRS 139 - Financial Instruments: Recognition and Measurement 21) Amendments to FRS 139 - Financial Instruments: Recognition and Measurement 22) Amendment to FRS 140 - Investment Property 23) IC Interpretation 10 - Interim Financial Reporting and Impairment

Not applicable to the Group’s and the Company’s operations

1) Amendments to FRS 1 - First-time Adoption of Financial Reporting Standards 2) Amendments to FRS 2 - Share-based Payment - Vesting Conditions and Cancellations 3) FRS 4 - Insurance Contracts 4) Amendment to FRS 5 - Non-current Assets Held for Sale and Discontinued Operations 5) Amendment to FRS 120 - Accounting for Government Grants and Disclosure of Government Assistance 6) Amendment to FRS 128 - Investments in Associates 7) Amendment to FRS 129 - Financial Reporting in Hyperinflationary Economies 8) Amendment to FRS 131 - Interests in Joint Ventures 9) IC Interpretation 9 - Reassessment of Embedded Derivatives 10) IC Interpretation 11 - FRS 2 – Group and Treasury Share Transactions 11) IC Interpretation 13 - Customer Loyalty Programmes 12) IC Interpretation 14 - FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction

Adoption of the relevant FRSs and IC Interpretations effective from 1 January 2010 has no significant impact on the financial performance or position of the Group and the Company except for those discussed below:-

FRS 7 Financial Instruments: Disclosures

FRS 7 and the consequential Amendment to FRS 101 - Presentation of Financial Statements require disclosure of information about the significance of financial instruments for the Group’s and the Company’s financial position and performance, nature and extent of risks arising from financial instruments and the objectives, policies and processes for managing capital.

The Group and the Company applied FRS 7 prospectively in accordance with the transitional provisions. Disclosures required were included throughout the Company’s financial statements for the financial year ended 31 December 2010. However, such disclosures were not applied to the comparatives.






Adoption of the relevant FRSs and IC Interpretations effective from 1 January 2010 has no significant impact on the financial performance or position of the Group and the Company except for those discussed below (cont’d.) :-

FRS 8 Operating Segments

FRS 8, which replaces FRS 1142004 Segment Reporting, requires the identification of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segments and to assess their performance. The Standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers.

Prior to 1 January 2010, the Group identifies the business segment using a risks and rewards approach, with the Group’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segment. Following the adoption of FRS 8, the Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously indentified under FRS 1142004.

The Group has adopted FRS 8 retrospectively. The revised disclosures, including the related revised comparative information, are shown in Note 30 to the financial statements.

FRS 101 Presentations of Financial Statements (Revised)

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

In addition, the revised FRS 101 required a statement of financial position at the beginning of the earliest comparative period following a change in accounting policy, correction of an error or the classification of items in the financial statements.

The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the financial statements to evaluate the Group’s and the Company’s objectives, policies and processes for managing capital as disclosed in Note 29.

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

FRS 139 Financial Instruments: Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company has adopted FRS 139 prospectively on 1 January 2010 in accordance with the transitional provisions. The effects arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 January 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS 139 are discussed below:-






Adoption of the relevant FRSs and IC Interpretations effective from 1 January 2010 has no significant impact on the financial performance or position of the Group and the Company except for those discussed below (cont’d.) :-

FRS 139 Financial Instruments: Recognition and Measurement (cont’d.)

Impairment of trade receivables

Prior to 1 January 2010, allowance for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate. As at 1 January 2010, there is no difference after remeasured on the allowance for impairment losses as at that date in accordance with FRS 139 due to the short term nature and insignificant impact of discounting. Thus, no adjustment is required to the opening balance of retained earnings as at that date.

Financial/Corporate guarantee contracts

During the current and prior years, the Company provided financial guarantees to banks in connection with bank loans and other banking facilities granted to its subsidiary companies. Prior to 1 January 2010, the Company did not provide for such guarantees unless it was more likely than not that the guarantees would be called upon. The guarantees were disclosed as contingent liabilities. Following the adoption of FRS 139, the Company did not recognised the unexpired financial guarantees issued by the Company as financial liabilities as the financial guarantee granted is the pre-condition for getting credit facilities by the subsidiary companies rather than in exchange for reducing interest rate.

Inter-company loans

During the current and prior years, the Company granted interest-free advances to its subsidiaries. Prior to 1 January 2010, these advances were recorded at cost in the Company’s financial statements. Upon the adoption of FRS 139, the interest-free advances are recorded initially at a fair value. The difference between the fair value and cost of the loan or advance is recognised as an additional investment in the subsidiary company. Subsequent to initial recognition, the advances are measured at amortised cost. As at 1 January 2010, the Company has remeasured such advances at their amortised cost of RM13,574,513 and has determined that no adjustments is required to their previous carrying amounts as their nature of repayment is on demand.

Amendments to FRS 117 Leases

The amendments to FRS 117 Leases require that leases of land are reclassified as finance or operating by applying the general principles of FRS 117. Prior to these amendments, FRS 117 generally required a lease of land to be classified as an operating lease. The Company has reassessed the classification of the land elements of its unexpired leases as at 1 January 2010 on the basis of information existing at the inception of those leases and has determined that none of its leases require reclassification.





2.4.2 The following standards and IC Interpretations are not yet effective and have not been early adopted by the Group and the Company:-

1) FRS 1

2) Amendments to FRS 1

3) Amendments to FRS 2 4) Amendments to FRS 2

5) FRS 36) Amendments to FRS 37) Amendments to FRS 5

8) Amendments to FRS 79) Amendments to FRS 10110) Amendments to FRS 12111) FRS 12412) FRS 127

13) Amendments to FRS 12814) Amendments to FRS 13115) Amendments to FRS 13216) Amendments to FRS 13217) Amendments to FRS 13418) Amendments to FRS 13819) Amendments to FRS 139

20) IC Interpretation 4

21) Amendments to IC Interpretation 922) IC Interpretation 1223) Amendments to IC Interpretation 1324) Amendment to IC Interpretation 1425) Amendment to IC Interpretation 1526) IC Interpretation 1627) IC Interpretation 1728) IC Interpretation 1829) IC Interpretation 19

- First-time Adoption of Financial Reporting Standards (Revised)- First-time Adoption of Financial Reporting Standards- Share-Based Payment- Share-Based Payment. Group Cash-settled Share-based Payment Transactions- Business Combinations (Revised)- Business Combinations- Non-Current Assets Held for Sale and Discontinued Operations- Financial Instruments: Disclosures- Presentation of Financial Statements- The E�ects of Changes in Foreign Exchange Rates- Related Party Disclosures (Revised)- Consolidated and Separate Financial Statements (Revised)- Investment in Associates- Interests in Joint Ventures- Financial Instruments: Presentation- Financial Instruments- Interim Financial Reporting- Intangible Assets- Financial Instruments: Recognition and Measurement- Determining Whether an Arrangement contains a Lease- Reassessment of Embedded Derivatives

- Service Concession Arrangements- Customer Loyalty Programmes

- Prepayments of a Minimum Funding Requirement

- Agreements for the Construction of Real Estate

- Hedges of Net Investment in a Foreign Operation- Distributions of Non-Cash Assets to Owners- Transfers of Assets from Customers- Extinguishing Financial Liabilities with Equity Instruments

1 July 2010

1 January 2011

1 July 20101 January 2011


1 July 2010

1 January 20111 January 20111 January 20111 January 2012

1 July 2010

1 January 20111 January 2011

1 March 20101 January 20111 January 2011


1 January 2011

1 July 2010


1 July 2011

1 January 2012

1 July 20101 July 2010

1 January 20111 July 2011

E�ectiveDate





2.4.2 The following standards and IC Interpretations are not yet effective and have not been early adopted by the Group and the Company(cont’d.) :-

The existing FRS 1, 3, 124 and 127 will be withdrawn upon the adoption of the new requirements. IC Interpretation 15 will replace FRS 2012004. IC Interpretation 8 and IC Interpretation 11 will be withdrawn upon the application of Amendments to FRS 2 – Group Cash-settled share-based Payment Transactions.

Other than FRS 3, 7, 101, 121, 124, 127, 132, 134, 138, 139 and IC Interpretation 17, all the above IC Interpretations and FRSs are not applicable to the Group’s and the Company’s operations. The adoption of FRSs and IC Interpretation do not have material impact on the financial statements of the Group and of the Company in the period of initial application.

2.5 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by management. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.

Key sources of estimation uncertainty

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

Impairment of goodwill

The Group determines whether goodwill is impaired at least once annually. This requires the estimation of the value in use of the case-generating units to which goodwill are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Useful lives of depreciable assets

Property, plant and equipment and investment properties are depreciated in a straight-line basis over their useful life. The management estimated the useful life of these assets to be within 3 to 67 years. Changes in the expected level of usage and technological developments could impact the economic useful life and the residual values of these assets, therefore future depreciation charges could be revised.

Impairment of property, plant and equipment and investment properties

The Group carried out the impairment test based on a variety of estimation including the value-in-use of the cash-generating unit to which the property, plant and equipment and investment properties are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from cash-generated unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.




2.5 Significant Accounting Estimates and Judgements (cont’d.)

Key sources of estimation uncertainty (cont’d.)

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, the management takes into account the most reliable evidence available at the times the estimates are made. The Group’s core business is subject to economical and technology changes which may cause selling prices to change rapidly, and the Group’s profit to change.

Impairment of receivables

The Group assesses at each report date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unabsorbed reinvestment allowances to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unabsorbed reinvestment allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The recognised and unrecognised deferred tax assets during the financial year of the Group have been fully described in Note 9 to the financial statements.

Significant management judgement

The significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements are as follow:-

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.




2.5 Significant Accounting Estimates and Judgements (cont’d.)

Significant management judgement (cont’d.)

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Consolidation The Group financial statements consolidate the audited financial statements of the Company and all of its subsidiary companies, which have been prepared in accordance with the Group’s accounting policies.

All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated on consolidation unless cost cannot be recovered.

The financial statements of the Company and its subsidiary companies are all drawn up to the same reporting date.

Acquisition of subsidiary companies is accounted for using the acquisition method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

Any excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 3.3.

Non-controlling interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. They are presented separately disclosed in profit or loss of the Group, and within the equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Transactions with minority interests are accounted for using the entity concept method, whereby, transactions with minority interests are accounted for as transactions with owners. On acquisition of minority interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to minority interests is recognised directly in equity.

Any excess of the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition.

Subsidiary companies are consolidated using the acquisition method of accounting from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.



3. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)

3.1 Basis of Consolidation (cont’d.) The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised or unimpaired balance of goodwill on acquisition and exchange differences.

3.2 Subsidiary Companies

A subsidiary company is a company in which the Company or the Group either directly or indirectly owns the power to govern its financial and operating policies so as to obtain benefits from its activities.

Investment in subsidiary companies is stated at cost in the Company’s statement of financial position. Where an indication of impairment exists, the carrying amount of the subsidiary companies is assessed and written down immediately to their recoverable amount.

3.3 Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary company at the date of acquisition.

Goodwill arising on the acquisition of subsidiary companies is presented separately in the statement of financial position.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying values may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually and, whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including goodwill, with the recoverable amount of the unit. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised.

An impairment loss recognised for goodwill shall not be reversed in subsequent period.

Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operations within that unit is disposed off, the goodwill associated with the operations disposed off is included in the carrying amount of the operations when determining the gain or loss on disposal of the operations. Goodwill disposed off in these circumstances is measured based on the relative values of the operations disposed off and portion of the cash-generating unit retained.

3.4 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost or valuation less accumulated depreciation and any impairment losses. Depreciation of plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life of the property, plant and equipment concerned. Freehold land is not depreciated.




3.4 Property, Plant and Equipment (cont’d.)

The principal annual depreciation rates used are as follows:-

Buildings 2% - 5% Plant and machineries 6% - 10% Motor vehicles 10% - 20% Furniture, fittings and office equipment 10% - 33.3%

Restoration cost relating to an item of the property, plant and equipment is capitalised only if such expenditure is expected to increase the future benefits from the existing property, plant and equipment beyond its previous assessed standard of performance.

Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the financial year the asset is derecognised.

3.5 Assets Acquired under Lease Agreements

Finance leases

Lease of property, plant and equipment acquired under finance lease arrangements which transfer substantially all the risks and rewards of ownership to the Group are capitalised. The depreciation policy on these assets is similar to that of the Group’s property, plant and equipment depreciation policy.

Outstanding obligation due under finance lease arrangements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on finance lease arrangements are allocated to profit or loss over the period of the respective agreements.

Prepaid lease payments

Leasehold land that normally has an indefinite economic life and where the lease does not transfer substantially all the risk and rewards incidental to ownership is treated as an operating lease. The payment made on entering into or acquiring the leasehold land is accounted as prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided except for leasehold land that would otherwise meet the definition of an investment property.

The Group had previously revalued its leasehold land and has retained the unamortised revalued amount as the surrogate carrying amount of prepaid lease payments in accordance with the transitional provisions in FRS 117. Such prepaid lease payments is amortised over the lease term from 21 years to 46 years.

Operating leases

All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.




3.6 Investment Properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and not occupied or only an insignificant portion is occupied for use or in the operations of the Group.

Investment properties are treated as long-term investment and are measured initially at cost, including transaction costs less any accumulated depreciation and impairment losses. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Investment properties are derecognised when they are disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from the disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the financial year of retirement or disposal.

Depreciation is provided on the straight line basis to write off the cost of the asset over its estimated useful life of the investment properties concerned at the following annual rates:-

Building on freehold land 2% Buildings on leasehold land remaining period of 67 years

Freehold land is not depreciated.

3.7 Inventories

Inventories comprising raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value after adequate specific allowance has been made by the Directors for deteriorated, obsolete and slow-moving inventories.

Cost of raw material is determined by using the weighted average method. The costs of raw materials comprise costs of purchase plus the cost of bringing the inventories to their present condition and location. The cost of work-in-progress and finished goods comprise direct materials, direct labour, other direct costs and appropriate proportions of production overheads based on normal operating capacity.

Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale.

3.8 Financial Instruments

Financial assets and financial liabilities are recognised when the Group and the Company become a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

3.8.1 Financial assets

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:-

a) loans and receivables; b) financial assets at fair value through profit or loss; c) held to maturity investments; and d) available-for-sale financial assets.




3.8 Financial Instruments (cont’d.)

3.8.1 Financial assets (cont’d.)

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least once at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired or when the financial assets and all substantial risks and rewards are transferred.

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

At the reporting date, the Group and the Company have not designated any financial assets as at the fair value through profit or loss, held to maturity investments and available-for-sale financial assets. The Group and the Company carry only loans and receivables on its statement of financial position.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s and the Company’s cash and cash equivalents, trade and most of other receivables and amount due from subsidiary companies fall into this category of financial instruments.

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

3.8.2 Financial liabilities

After the initial recognition, financial liability is classified as financial liability at fair value through profit or loss or other financial liabilities measure at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled or expired, or through amortisation process. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in profit or loss.

At the reporting date, the Group and the Company have not designated any financial liabilities at fair value through profit or loss. The Group and the Company carry only other financial liabilities on its statement of financial position.

Other financial liabilities

The Group’s and the Company’s financial liabilities include trade and other payables and amount due to subsidiary company.




3.8 Financial Instruments (cont’d.)

3.8.2 Financial liabilities (cont’d.)

Other financial liabilities (cont’d.)

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

3.9 Impairment of Non-financial Assets

At each reporting date, the Group and the Company review carrying amounts of its non-financial assets to determine whether there is any indication of impairment. Non-financial assets is tested for impairment at least once annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level.

If any such indication exists, or when annual impairment testing for an asset is required, the recoverable amount is estimated and an impairment loss is recognised whenever the recoverable amount of the asset or a cash-generating unit is less than its carrying amount. Recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use.

In assessing value in use, estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset. An impairment loss is recognised as an expense in profit or loss immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset other than goodwill may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

All reversals of impairment losses are recognised as income immediately in profit or loss unless the asset is carried at revalued amount, in which case the reversal in excess of impairment loss previously recognised through profit or loss is treated as revaluation increase. After such a reversal, depreciation charge is adjusted in future periods to allocate the revised carrying amount of the asset, less any residual value, on a systematic basis over its remaining useful life.

An impairment loss recognised for goodwill shall not be reversed in a subsequent period.

3.10 Impairment of Financial Assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics.




3.10 Impairment of Financial Assets (cont’d.)

Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

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

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

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

3.11 Interest-bearing Borrowings

Interest-bearing bank borrowings are recorded at the amount of proceeds received net of transaction costs.

All borrowings are recognised as an expense in profit or loss in the year it is incurred.

3.12 Revenue Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.

Sale of goods

Revenue from sale of goods is recognised net of sales taxes and discounts upon the transfer of risks and rewards.

Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

Rental income

Rental income from investment property is recognised on an accrual basis.

Interest income

Interest income is recognised on time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group.

Management fee

Management fee is recognised when services are rendered.

All significant intercompany revenues are eliminated on consolidation.




3.13 Income Tax Current tax

Current tax expense is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised in statement of financial position as liability (or asset) to the extent that it is unpaid (or refundable). Current tax is recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

Deferred tax

Deferred tax liabilities and assets are provided for under the liability method in respect of all temporary differences at the reporting date between the carrying amount of an asset or liability in the statement of financial position and its tax base including unused tax losses, capital allowances and other temporarily differences.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investment in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.




3.13 Income Tax (cont’d)

Deferred tax (cont’d)

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

3.14 Employee Benefits

Short term benefits

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

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, the Group make such contributions to the Employees Provident Fund (“EPF”).

3.15 Foreign Currency Translation and Balances

Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at reporting date.

Gains and losses resulting from settlement of such transactions and conversion of monetary assets and liabilities, whether realised or unrealised, are included in profit or loss as they arise.

3.16 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified to make strategic decisions. Additional disclosures on each of these segments are show in Note 30.

3.17 Equity, reserves and dividend payments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Ordinary shares are equity instruments.

Share capital represents the nominal value of shares that have been issued.




3.17 Equity, reserves and dividend payments (cont’d.)

The revaluation reserve within equity comprises gains and losses due to the revaluation of property, plant and equipment.

Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Retained earnings include all current and prior period retained profits.

Dividends are accounted for in shareholder’s equity as an appropriation of retained earnings and recognised as a liability in the period in which they are declared.

All transactions with owners of the Company are recorded separately within equity.

3.18 Financial guarantee contracts

A financial guarantee contracts is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contact when it is due and the Group and the Company, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

3.19 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time of money is material, provision are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

3.20 Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-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 liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs such that outflow is probable and can be measured reliably, they will then be recognised as a provision.



4. PROPERTY, PLANT AND EQUIPMENT

Group

Cost or valuationAt 1.1.2009- cost- valuation

AdditionsDisposalsWritten o�

At 31.12.2009

Representing:-- cost- valuation

At 31.12.2009AdditionsDisposalsWritten o�

At 31.12.2010


At 31.12.2010

Accumulated depreciationAt 1.1.2009Charge for the �nancial yearDisposals

At 31.12.2009

Charge for the �nancial yearDisposalsWritten o�

At 31.12.2010

Net carrying amount31.12.2010

31.12.2009

55,746,75312,218,235

67,964,9881,583,406(130,976)

(390)

69,417,028

57,198,79312,218,235

69,417,0286,675,722

(2,530,815)(85,528)

73,476,407

61,258,17212,218,235

73,476,407

28,673,8402,709,949

(6,366)

31,377,423

2,773,919(325,634)

(85,091)

33,740,617

39,735,790

38,039,605

2,781,757-

2,781,75762,335

(10,976)(390)

2,832,726

2,832,726-

2,832,72674,088

-(35,588)

2,871,226

2,871,226-

2,871,226

2,044,741130,771

(5,366)

2,170,146

126,740-

(35,155)

2,261,731

609,495

662,580

3,864,448-

3,864,448162,110

--

4,026,558

4,026,558-

4,026,558562,265(64,115)

-

4,524,708

4,524,708-

4,524,708

2,927,507350,965

-

3,278,472

320,463(64,114)

-

3,534,821

989,887

748,086

27,877,482-

27,877,482817,362

(120,000)-

28,574,844

28,574,844-

28,574,8443,125,010

(2,466,700)(49,940)

29,183,214

29,183,214-

29,183,214

15,665,4191,588,500

(1,000)

17,252,919

1,685,903(261,520)

(49,936)

18,627,366

10,555,848

11,321,925

21,223,06612,218,235

33,441,301541,599

--

33,982,900

21,764,66512,218,235

33,982,9002,914,359

--

36,897,259

24,679,02412,218,235

36,897,259

8,036,173639,713

-

8,675,886

640,813--

9,316,699

27,580,560

25,307,014

TotalRM

Plant andmachineries

RM

Land andbuildings

RM

Furniture,�ttings

and o�ceequipment

RM

Motorvehicles

RM



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

Analysis of land and buildings:-

Group

Cost of valuationAt 1.1.2009- cost- valuation

Additions

At 31.12.2009


At 31.12.2009Additions

At 31.12.2010


At 31.12.2010

Accumulated depreciationAt 1.1.2009Charge for the �nancial year

At 31.12.2009Charge for the �nancial year

At 31.12.2010


31.12.2009

21,223,06612,218,235

33,441,301541,599

33,982,900

21,764,66512,218,235

33,982,9002,914,359

36,897,259

24,679,02412,218,235

36,897,259

8,036,173639,713

8,675,886640,813

9,316,699

27,580,560

25,307,014

17,519,1419,859,330

27,378,471541,599

27,920,070

18,060,7409,859,330

27,920,0702,914,359

30,834,429

20,975,0999,859,330

30,834,429

8,036,173639,713

8,675,886640,813

9,316,699

21,517,730

19,244,184

3,703,9252,358,905

6,062,830-

6,062,830

3,703,9252,358,905

6,062,830-

6,062,830

3,703,9252,358,905

6,062,830

--

--

-

6,062,830

6,062,830

TotalRM

BuildingsRM

Freeholdland

RM



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

(a) Had the land and buildings of the Group not been revalued in year 1992 and 1993 under the cost model, the net carrying amount would have been RM10,376,227 (2009: RM10,733,193).

Land and buildings of the Group were revalued in 1993 by the Directors based on valuation done by an independent professional valuer namely VPC Alliance (Sarawak) Sdn. Bhd. on an open market value basis. These land and buildings are continued to be stated at 1993 valuation pursuant to the transitional provisions of International Accounting Standards No. 16 (Revised), Property, Plant and Equipment, as allowed by MASB.

(b) Land and buildings of the Group with net carrying amount of RM19,901,854 (2009: RM17,121,357) have been pledged to licensed banks for banking facilities granted to certain subsidiary companies.

(c) The net carrying amount of motor vehicles which is under finance lease arrangement amounted to RM850,637 (2009: RM473,031).

5. PREPAID LAND LEASE PAYMENTS

Short term leasehold land were revalued in 1993 by Directors based on valuation done by an independent professional valuer namely CH Williams, Talhar & Wong (Sabah) Sdn. Bhd. on an open market value basis and short leasehold land of the Group have not been revalued ever since. The Company retained the unamortised revalued amount as the surrogate carrying amount of prepaid land lease payments in accordance with the transitional provision of FRS 117.

Short term leasehold land has been pledged to licensed banks for banking facilities granted to the subsidiary companies.

Short term leasehold land

Cost or Valuation- At cost- At valuation

At 1 January / At 31 December

Accumulated amortisationAt 1 JanuaryAmortisation for the �nancial year

At 31 December

Net carrying amount

2,007,0681,549,000

3,556,068

1,142,42472,230

1,214,654

2,341,414

2,007,0681,549,000

3,556,068

1,214,65472,230

1,286,884

2,269,184

2009RM

Group2010

RM



6. INVESTMENT PROPERTIES

The net carrying amount of freehold land and buildings which are pledged to licensed banks for banking facilities granted to a third party and subsidiary companies amounted to RM231,388 (2009: RM231,388) and RM2,475,601 (2009: RM2,787,972) respectively.

Fair value is defined as the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Fair value is estimated by reference made to the published selling price for properties in vicinity locations.

Group

CostAt 1.1.2009/At 31.12.2009Disposals

31.12.2010

Accumulated depreciationAt 1.1.2009Depreciation for the �nancial yearAt 31.12.2009Depreciation for the �nancial yearDisposals

At 31.12.2010

Accumulated impairment lossesAt 1.1.2009/At 31.12.2009/At 31.12.2010


31.12.2009

Fair value at 31 December 201031.12.2010

31.12.2009

Rental generated for investment properties31.12.201031.12.2009

Direct operating expenses for investment properties31.12.201031.12.2009

5,754,850(352,497)

5,402,353

354,502100,650455,152100,283

(158,624)

396,811

838,014

4,167,528

4,461,684

7,701,370

7,508,387

484,396337,070

22,1966,178

5,273,461(352,497)

4,920,964

354,502100,650455,152100,283

(158,624)

396,811

838,014

3,686,139

3,980,295

5,643,840

5,488,085

484,396337,070

22,1966,178

481,389-

481,389

-----

-

-

481,389

481,389

2,057,530

2,020,302

--

--

TotalRM

BuildingsRM

Freeholdland

RM



7. INVESTMENT IN SUBSIDIARY COMPANIES

The details of the subsidiary companies are as follows:-

Investment in subsidiary company, at costLess: Impairment losses

133,126,793(13,480,592)119,646,201

133,126,791(13,480,591)119,646,200

2009RM

Company2010

RM

Hai Ming Capital Sdn. Bhd.

Hai Ming Development Sdn. Bhd.

Hai Ming Enterprise Sdn. Bhd.

Hai Ming Industries Sdn. Bhd.

Hai Ming Management Sdn. Bhd.

Hai Ming Paper Products Sdn. Bhd.

Hai Ming Paper Mills Sdn. Bhd.

Hai Ming Trading Co. Sdn. Bhd.

KPS Food Industries Sdn. Bhd.

Paragon Paper Mill Sdn. Bhd.

KPS Plywood Sdn. Bhd

Paragon Marketing Sdn. Bhd.

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Malaysia

Dormant

Involving in general, reinsurance agencyand brokerage business

Trading of plywood

Converting of paper into related products, trading in cements and other relatedproducts

Providing management services

Dormant

Manufacturing of tissue paper and tissue related products

Trading in paperproducts, stationery and generalhousehold products

Dormant and strike o� during the �nancial year

Manufacturing of tissue paper and tissue related products

Trading of plywood and investment holding

Trading in tissue related products

100

100

100

100

100

100

100

100

100

99.9

100

100

100

100

100

100

100

100

100

100

-

99.9

100

100

2009%

Equity interest2010

%Place ofincorporation Principal activitiesName of Company

Subsidiary company of Paragon Paper Mill Sdn. Bhd.:-



7. INVESTMENT IN SUBSIDIARY COMPANIES (cont’d.)

The details of the subsidiary companies are as follows (cont’d):-

During the financial year, the Company has written off a wholly-owned subsidiary company, namely KPS Foods Industries Sdn. Bhd., which is a dormant company and the impact to the financial performance is insignificant.

Amount due from/to subsidiary companies

The amount due from/to subsidiary companies is unsecured, bears no interest and repayable on demand.

8. GOODWILL ON CONSOLIDATION

Impairment test for goodwill

Goodwill has been allocated to the Group’s CGU, being Akateak Sdn. Bhd. and KPS Plywood Sdn. Bhd., both of which are in the plywood business segment. No impairment loss was required for the goodwill on consolidation as its recoverable values was in excess of their carrying values.

Akateak Sdn. Bhd.

I’Kranji Industries Sdn. Bhd.

Vector Marketing Sdn. Bhd.

Hai Ming Marketing Sdn. Bhd.

Malaysia

Malaysia

Malaysia

Malaysia

Distributor and retailer of wooden doors, plywood and related building material

Manufacturing and trading in printed laminated plywood

Trading in plywood and related products

Trading in paper products

100

100

60

100

100

100

60

100

2009%

Equity interest2010

%Place ofincorporation Principal activitiesName of Company

Subsidiary companies of KPS Plywood Sdn. Bhd.:-

Amount due from subsidiary companiesLess: Allowance for impairment Brought forward Recognised Reversed Carried forward

37,864,616

(24,407,672)(10,476)128,045

(24,290,103)13,574,513

37,323,545

(24,290,102)(6,684)77,689

(24,219,097)13,104,448

2009RM

Company2010

RM

Goodwill arising from acquisitionBrought/Carried forward 43,151,03943,151,039

2009RM

Group2010

RM



8. GOODWILL ON CONSOLIDATION (cont’d.)

Key assumptions used in value-in-use calculations

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a five-year period. The values assigned to key assumptions is in respect of management’s assessment of future trends in the industry. The values assigned cash flows beyond the five-year period are extrapolated using the growth rates stated below. The key assumptions used for value-in-use calculations are as follows:-

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for expected efficiency improvements. The average gross margin applied was 6%.

(ii) Growth rate

The weighted average growth rates used are consistent with the long-term average growth rate anticipated for the entities based on its past performance and industry demand. The average growth rate applied was 2.5% per annum.

(iii) Discount rate

The discount rates used are pre-tax and reflect specific risks relating to the plywood segment. The discount rate applied was 9% per annum.

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the CGU relating to trading in plywood products, management believes there are possible changes in key assumptions which could cause the carrying value of the CGU to exceed its recoverable amount. The estimated CGU relating to recoverable amount for the unit exceeds its carrying amount by approximately RM54 million.

9. DEFERRED TAX ASSETS/LIABILITIES

(i) Deferred tax assets

Transfer to pro�t or loss/ Carried forward -3,237,000

2009RM

Group2010

RM



9. DEFERRED TAX ASSETS/LIABILITIES (cont’d.)

(i) Deferred tax assets (cont’d.)

The component of recognised deferred tax assets are made up of temporary difference arising from:-

Deferred tax assets have not been recognised in respect of the following items:-

The potential deferred tax assets of the certain subsidiary companies are not recognised in the financial statements as it is anticipated that the tax effects of such benefits will not be realised in the foreseeable future.

(ii) Deferred tax liabilities

The components of deferred tax liabilities are made up of temporary difference arising from:-

Carrying amount of qualifying property, plant and equipment in excess of their tax baseUnabsorbed business lossesUnutilised reinvestment allowancesUnutilised capital allowancesImpairment on receivablesAllowance for slow moving inventories

-------

(1,077,000)3,230,000

758,00080,000

207,00039,000

3,237,000

2009RM

Group2010

RM

Carrying amount of qualifying property, plant and equipment in excess of their tax baseUnabsorbed business lossesUnutilised reinvestment allowancesUnutilised capital allowancesImpairment on receivablesAllowance for slow moving inventories

(6,938,000)27,944,370

4,605,0001,981,9001,412,500

154,000 29,159,770

(696,000)11,370,370

1,100,000889,500186,500

-12,850,370

2009RM

Group2010

RM

Brought forward Transfer from/(to) pro�t or lossCarried forward

88,000(7,000)81,000

81,00035,000

116,000

2009RM

Group2010

RM

Carrying amount of qualifying property, plant and equipment in excess of their tax baseImpairment on receivables

146,000(65,000)81,000

173,000(57,000)116,000

2009RM

Group2010

RM



10. INVENTORIES

11. TRADE RECEIVABLES

The Group’s normal trade credit term ranges from 30 to 90 days (2009 : 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis. The currency exposure profile of trade receivables other than denominated in the Group’s functional currency is as follows (foreign currency balances are unhedged):-

12. OTHER RECEIVABLES

At cost:Raw materialsConsumablesWork-in-progressFinished goods

Less: Allowance for slow moving inventories

5,162,563979,735170,939

26,637,70132,950,938

(84,658)32,866,280

3,003,2261,056,417

107,67438,739,67542,906,992

(174,053)42,732,939

2009RM

Group2010

RM

Trade receivablesLess: Allowance for impairment Brought forward Recognised Reversed Carried forward

75,417,514

(6,608,052)(2,946,898)1,525,541

(8,029,409)67,388,105

96,102,817

(8,029,409)(584,856)

1,381,760(7,232,505)88,870,312

2009RM

Group2010

RM

US DollarSingapore Dollar

79,682647,030

-143,392

2009RM

Group2010

RM

Non-trade receivablesLess: Allowance for impairment Brought forward Recognised Reversed Carried forward

DepositsDeposits to purchase plant and machineriesPrepayments

14,999

----

14,999--

6,04321,042

14,999

----

14,999--

6,34221,341

2009RM

Company2010

RM

3,670,139

(919,566)--

(919,566)2,750,573

683,9872,450,000

799,6086,684,168

5,221,426

(919,566)(19,458)205,837

(733,187)4,488,239

571,018365,359

1,263,7266,688,342

2009RM

Group2010

RM



13. FIXED DEPOSITS WITH LICENSED BANKS

The fixed deposits with licensed banks are pledged for banking facilities granted to the subsidiary companies.

14. SHARE CAPITAL

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company residual assets.

15. FINANCE LEASE CREDITORS

The amounts payable within one year had been included in other payables.

16. TRADE PAYABLES

Group

The normal trade credit term granted by suppliers of the Group ranges from 30 days to 90 days (2009: 30 to 90 days).

Authorised:-Ordinary shares at RM1.00 each 200,000,000 shares brought/carried forward

Issued and fully paid:-Ordinary shares at RM1.00 each 147,827,158 shares brought/carried forward

200,000,000

147,827,158

200,000,000

147,827,158

2009RM

Group and Company2010

RM

Minimum lease premium:-- not later than 1 year- later than 1 year but not later than 5 years

Less: Future �nance charges on �nance lease

319,844345,298665,142(67,283)597,859

724,403501,961

1,226,364(86,773)

1,139,591

2009RM

Group2010

RM

Analysed as:-Present value of �nance lease liabilities- not later than 1 year- later than 1 year but not later than 5 years

295,142302,717597,859

674,548465,043

1,139,591

2009RM

Group2010

RM



17. OTHER PAYABLES

The amount due to a Director is unsecured, bears no interest and repayable on demand.

18. BORROWINGS

(a) The repayment term for secured term loan was arranged for 35 monthly installments and was obtained by way of:-

(i) A lien holder caveat on the freehold land and buildings of a subsidiary company as disclosed in Note 4 to the financial statements; (ii) Corporate guarantee by the Company and a subsidiary company; (iii) Personal guarantee by a Director of the Company; (iv) Negative pledge; and (v) Letter of subordinates

(b) The bankers’ acceptances are secured in the following manner:

(i) Charge and deeds of assignment over the landed properties of certain subsidiary companies as disclosed in Note 4, 5 and 6 to the financial statements; (ii) Pledge of deposits with licensed banks of subsidiary companies; (iii) Jointly and severally guarantee by a Director of the Company and a Director of subsidiary companies; and (v) Corporate guarantee by the Company.

(c) The unsecured term loan is guaranteed by the Company, a Director of the Company and a Director of a subsidiary company. The repayment term for unsecured term loan is arranged for 12 monthly installment.

19. REVENUE

Revenue for the Group represents sales of goods outside the Group net of discounts, returns and sales tax.

Revenue for the Company represents management fee received and receivable upon rendering of services.

Other payables Amount due to a DirectorAccruals of expenses Deposits Finance lease creditors

20,966-

83,464--

104,430

20,458-

94,601--

115,059

2009RM

Company2010

RM

1,780,394-

1,028,645151,706295,142

3,255,887

2,208,410997,673

1,120,10987,546

674,5485,088,286

2009RM

Group2010

RM

CurrentSecured:-Bankers' acceptances Term loanBank overdraft

Unsecured:-Term loan

47,416,667609,053

-48,025,720

-48,025,720

53,606,093-

225,87153,831,964

758,55454,590,518

2009RM

Group2010

RM



20. PROFIT BEFORE TAXATON

Profit before taxation is stated after charging/(crediting) amongst other items the following:-

After charging:-Allowance for slow moving inventoriesAmortisation of prepaid land lease paymentsAuditors' remuneration- statutory audits- underprovision in prior years- othersBad debts written o�Depreciation - property, plant and equipment- investment propertiesInterest expenses- bankers’ acceptance- �nance lease- term loan- overdraftImpairment on receivablesImpairment loss on investment in subsidiary companiesInvestment in subsidiary company written o�Realised loss on foreign exchange Inventories written o� Loss on disposal of- property, plant and equipment- investment propertiesProperty, plant and equipment written o�Rental expenses- warehouse- o�ce

And crediting:-Impairment loss on investment in subsidiary companies no longer requiredAllowance for slow moving inventories no longer requiredBad debts recoveredGain on disposal of property, plant and equipmentHiring incomeInterest income- �xed depositsRealised gain on foreign exchangeRental incomeReversal of impairment on receivables

--

38,000-

2,300-

--

----

10,476

1,982,510---

---

--

(4,424,219)

----

---

(128,045)

--

48,0005,0007,000

28,769

--

----

6,684

-1 - -

---

--

-

----

---

(77,689)

2009RM

Company2010

RM

45,12672,230

192,0005,733

103,9002,988,934

2,709,949100,650

1,119,25970,37162,591

-2,946,898

---

1,077,945

29,815-

390

45,60042,240

-

(1,110,566)(15,800)

(1,672)(13,908)

(160,871)(31,230)

(777,492)(1,525,541)

136,99072,230

232,2005,000

67,000661,694

2,773,919100,283

1,488,51743,47612,695

5,628604,314

--

2,23041,013

-57,476

437

131,780120,600

-

(47,595)(59,727)

(2,619,062)-

(64,492)(26,683)

(747,902)(1,587,597)

2009RM

Group2010

RM



20. PROFIT BEFORE TAXATON (cont’d.)

The details of remuneration received/receivable by Directors of the Group and of the Company during the financial year are as follows:-

21. TAXATION

A reconciliation of income tax expenses applicable to profit before taxation at the statutory income tax rate to income tax expenses at the effective income tax rate of the Group and of the Company is as follows:-

Executive Directors: Salaries and other emoluments Fee

Non-Executive Directors: Fee

---

60,000

---

60,000

2009RM

Company2010

RM

48,00060,000

108,000

60,000

73,33616,00089,336

60,000

2009RM

Group2010

RM

Current tax - current year - under provision in prior years

Deferred tax

---

--

28,467-

28,467

-28,467

2009RM

Company2010

RM

1,974,30426,494

2,000,798

(7,000)1,993,798

1,143,256 (260,134)

883,122

(3,202,000)(2,318,878)

2009RM

Group2010

RM

Pro�t before taxationTaxation at statutory tax rate of 25% Expenses not deductible for tax purposesIncome not subject to taxUtilisation of previously unrecognised unabsorbed tax losses and capital allowancesDeferred tax assets not recognised during the �nancial yearDeferred tax assets not recognised in prior yearLosses of subsidiary companies not allowable for group reliefUnder provision of tax expense in prior yearUnder provision of deferred taxation in prior year

2,354,806588,702549,364

(1,138,066)

-

--

----

84,22821,05719,640

(12,230)

-

--

---

28,467

2009RM

Company2010

RM

9,416,6432,354,161

585,369(9,600)

(910,803)

(79,781)-

27,95826,494

-1,993,798

11,769,3902,942,348

407,487(742,516)

(856,650)

(259,000)(3,479,300)

-(260,134)

(71,113)(2,318,878)

2009RM

Group2010

RM



21. TAXATION (cont’d.)

The Company has no section 108 balance as at 31 December 2010. Therefore, the Company is automatically move to single tier system and has no any restriction to frank the payment of dividend of which subject to there is profits.

The Group has unabsorbed business losses, unutilised capital allowance and unutilised reinvestment allowances which can be carried forward to offset against future taxable profit amounted to approximately RM24,290,370 (2009: RM26,636,000), RM1,209,500 (2009: RM1,882,000) and RM4,132,000 (2009: RM5,348,000) respectively.

The availability of the unabsorbed business losses, unutilised capital allowances and unutilised reinvestment allowances for offsetting against future taxable profits on the respective subsidiary companies are subject to no substantial changes in shareholdings of the respective subsidiary companies under Section 44(5A) & 5B of Income Tax Act, 1967.

However, the above amount is subject to the approval of the Inland Revenue Board of Malaysia.

22. EMPLOYEE BENEFITS EXPENSE

Included in employee benefits expenses of the Group are executive Directors’ remuneration amounting to RM73,336 (2009: RM48,000).

23. EARNINGS PER SHARE

(a) Basic

Basic earnings per share amounts are calculated by dividing profit for the financial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year held by the Company.

(b) Diluted

There was no diluted earnings per share as there is no potential dilutive equity instrument.

Salaries and other emolumentsDe�ned contribution plansOther sta� related expenses

----

----

2009RM

Company2010

RM

5,733,618638,577770,457

7,142,652

6,941,010706,292525,456

8,172,758

2009RM

Group2010

RM

Pro�t attributable to ordinary equity holders of the Company

Weighted average number of ordinary shares in issue

Basic earnings per share (sen)

7,450,477

147,827,158

5.04

14,087,804

147,827,158

9.53

2009RM

2010RM



24. MATERIAL LITIGATION

The following legal suit is still outstanding as at 31 December 2010:-

25. CAPITAL COMMITMENTS

26. CONTINGENT LIABILITIES

Dream-Mate FurnitureManufacturing (M) Sdn. Bhd.

The plainti�’s claim against the defendant is for the sum of RM35,147 and damages of RM252,669 and other damages plus costs. The plainti�’s solicitors, Messrs H.Y. Lee & Co have been discharged to act for the plainti�. The matter was called up for case management on 20th September 2010 and in the absence of the plainti�, the court struck o� the matter with no order as to costs.

Legal StatusPlainti�s

KPS Plywood Sdn. Bhd. (“KPS”)

Defendants

Shah Alam High Court, Civil suitNo. MT3-22-1104-2004

Suit No.

Authorised but not contracted for:-- Purchase of property, plant and equipment

Authorised and contracted for:-- Purchase of property, plant and equipment

4,500,000

-

-

846,120

2009RM

Group2010

RM

(a) Net carrying amount of freehold land of a subsidiary company pledged to a licensed bank for credit facilities granted to a third party, AsiaPrima Resources Sdn. Bhd. 231,388231,388

2009RM

Group2010

RM

(b) Corporate guarantee given to �nancial institutions for credit facilities granted to subsidiary companies 23,455,00031,405,000

2009RM

Company2010

RM



27. RELATED PARTY DISCLOSURES (a) Related party transactions

(b) The remuneration of key management personnel is same with the Directors’ remuneration as disclosed in Note 20 to the financial statements. The Group and the Company have no other members of key management personnel apart from the Board of Directors.

(c) The outstanding balances arising from related party transactions were disclosed in Note 7 to the financial statements.

28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial Risks

The Group is exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

The main areas of financial risks faced by the Group and the policy of the Group in respect of the major areas of treasury activity are set out as follows:

(a) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group does not expect to incur material credit losses of its financial assets or other financial instruments.

Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group of counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure. The Group’s transactions are entered into with diverse creditworthy counterparties, thereby mitigate any significant concentration of credit risk.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group do not offer credit terms without the approval of the head of credit control.

The maximum exposure to credit risk is represented by the carrying amounts of financial assets in the statement of financial position.

The areas where the Group and the Company are exposed to credit risk are as follows:

Receivables

With a credit policy in place to ensure the credit risk is monitored on an ongoing basis, the management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacted with the Group. The Group uses aging analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk, and are monitored individually.

Management fee charged to subsidiary companies -216,000

2009RM

Company2010

RM



28. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d.)

Financial Risks (cont’d.)

The main areas of financial risks faced by the Group and the policy of the Group in respect of the major areas of treasury activity are set out as follows (cont’d.):-

(a) Credit risk (cont’d.)

Receivables (cont’d.)

The ageing analysis for Group’s trade receivables is as follows:-

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

As of 31 December 2010, trade receivables of RM37,572,647 were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.

The net carrying amount of trade receivables is considered a reasonable approximate of fair value. The maximum exposure to credit risk is the carrying value of each class of receivables mentioned above. Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

Financial guarantee/ Corporate guarantee

The maximum exposure to credit risk as disclosed in Note 26 to the financial statements representing the outstanding banking facilities of the subsidiaries company as at end of the reporting period.

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. As at end of the reporting period, there was no indication that any subsidiary would default on repayment. Intercompany balances

The Company provides unsecured loans and advances to subsidiary companies and monitors the results of the subsidiary companies regularly.

As at the end of the reporting period, there was no indication that the carrying amount of loans and advances to the subsidiary companies are not recoverable.

2010Within credit termsPast due 1 to 30 daysPast due 31 to 120 daysPast due more than 120 days

51,297,66516,644,25717,441,768

3,486,62288,870,312

---

(7,232,505)(7,232,505)

NetRM

Individuallyimpaired

RM

51,297,66516,644,25717,441,76810,719,127

96,102,817

GrossRM




Financial Risks (cont’d)

The main areas of financial risks faced by the Group and the policy of the Group in respect of the major areas of treasury activity are set out as follows (cont’d):

(b) Liquidity risks

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due as a result of shortage of funds.

In managing its exposures to liquidity risk, the Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

The Group aims at maintaining a balance of sufficient cash and deposits and flexibility in funding by keeping diverse sources of committed and uncommitted credit facilities from various banks.

The liquidity risks arise principally from its payables, bank borrowings and finance lease creditors. The maturity profile of the Group and the Company’s financial liabilities based on contractual undiscounted cash flows is less than 1 year other than finance lease creditors which is disclosed in Note 15 to the financial statements.

(c) Foreign currency risks

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group incurs foreign currency risk on sales and purchases that are denominated in currency other than Ringgit Malaysia. The currency giving rise to this is primarily the Singapore Dollar and US Dollar. However, the Group does not view the risk to be significant as the sale and puchase transactions denominated in these two currencies are minimal.

The carrying amount of the Group’s exposure to foreign currency risk as at reporting date is disclosed in Note 11 to the financial statements.

(d) Interest rate risks

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s investments in fixed rate debt securities and its fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The Group’s interest rate management objective is to manage the interest expenses consistent with maintaining an acceptable level of exposure to interest rate fluctuation. In order to achieve this objective, the Group targets a mix of fixed and floating debt based on assessment of its existing exposure and desired interest rate profile.




Financial Risks (cont’d)

The main areas of financial risks faced by the Group and the policy of the Group in respect of the major areas of treasury activity are set out as follows (cont’d):

(d) Interest rate risks (cont’d.)

The interest rate profile of the Group’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting date are as follows:-

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss and do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Fair value of financial instruments

The carrying amounts of short term receivables and payable, cash and cash equivalents and short term borrowings approximate their fair values due to the relatively short term nature of these financial instruments and insignificant impact of discounting.

2010Financial assetFixed deposits with licensed banks

Financial liabilitiesFinance lease creditorsBankers’ acceptancesOverdraftTerm loan

2009Financial assetFixed deposit with licensed banks

Financial liabilitiesFinance lease creditorsBankers’ acceptancesTerm loan

2.30%

2.00% - 3.75%3.88% - 4.44%

8.00%9.00%

1.50% - 3.10%

2.00% - 3.75%2.25% - 4.46%

6.76%

1,631,645

1,139,59153,606,093

225,871758,554

11,846,256

597,85947,416,667

609,053

E�ective interestrate during the

�nancial yearTotalRM

-

465,043--

-

302,717--

2 to 5years

RM

1,631,645

674,54853,606,093

225,871758,554

11,846,256

295,14247,416,667

609,053

Less than1 year

RM



29. CAPITAL MANAGEMENT The Group’s objective when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and determine to maintain an optimal gearing ratio that complies with debt covenants and regulatory requirements.

The Group monitors capital using a gearing ratio, which are the total interest bearing borrowings over owners’ equity. The Group’s policy is to keep the gearing ratio below 1.0. The borrowings include finance lease creditors, term loan and other borrowings while owners’ equity refers to the equity attributable to the owners of the parent company.

There were no changes in the Group’s approach to capital management during the year.

30. OPERATING SEGMENT - GROUP

(i) Business segment

The Group is organised based on six major business segments as follows:-

Business segments Business activities

Paper milling Manufacture of various types of tissue paper and tissue related products. Paper converting Converting of paper into related products and trading in paper related products. Building materials Distributor and retailer of wooden doors, plywood and related building materials. This segment also deals with trading in tissue related products, plywood, printed laminated plywood, cement and steel bars.

Investment and management Providing management services, investment holding and dormant companies. Other trading Trading in paper, paper products, stationery, general household products and other unclassified companies of diversed activities.

Total borrowings:- �nance lease creditors- term loan- bankers’ acceptance- overdraft

Owners’ equity

Debt-to-equity ratio

597,859609,053

47,416,667-

48,623,579

150,104,515

0.32

1,139,591758,554

53,606,093225,871

55,730,109

164,192,783

0.34

2009RM

Group2010

RM



30.

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375,

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946,

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90,7

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5,72

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30. OPERATING SEGMENT - GROUP (cont’d.) Management monitors the operating results to its business units separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.

Transfer prices between operating segments are on negotiated basis.

Notes:

(a) Notes to other non-cash income/(expenses) consist of the following items:-

(b) Additions to non-current assets consist of:-

(ii) Geographical information

Non-current assets information by geographical segment is not presented as the Group’s activities are conducted principally in Malaysia.

The following is an analysis of the Group’s revenue by geographical market, irrespective of the origin of the goods:

Allowance for slow moving inventories Bad debts written o�Impairment loss on receivables Inventories written o�Property, plant and equipment written o�Reversal of allowance for slow moving inventoriesReversal of impairment on receivables

(45,126)(2,988,934)(2,946,898)(1,077,945)

(390)1,110,5661,525,541

(4,423,186)

(136,990)(661,694)(604,314)

(41,013)(437)

47,5951,587,597

190,744

2009RM

2010RM

Property, plant and equipment 1,583,4066,675,722

2009RM

2010RM

MalaysiaOverseas

310,639,638902,283

311,541,921

373,018,6772,022,649

375,041,326

2009RM

2010RM

Revenue bygeographical market



31. DISCLOSURES OF REALISED AND UNREALISED LOSSES With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of retained earnings or accumulated losses into realised and unrealised on group and company basis in the annual audited financial statements.

The breakdown of retained earnings/accumulated losses as at the reporting date prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No.1 – Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants are as follows:

RealisedUnrealised

Consolidated adjustments

Total retained pro�t/(accumulated losses)

(29,675,088)-

(29,675,088)

-

(29,675,088)

19,332,7103,121,000

22,453,710

(11,514,517)

10,939,193

2010RM

Group Company2010

RM


LIST OFPROPERTIES

KPS CONSORTIUM BERHAD & GROUP OF COMPANIESList of Properties as at 31 December 2010

1. Lot 14374, Bandar Kinrara Industrial Centre, Selangor

2. Lot 765, Mukim of Kapar, District of Klang, Selangor

3. Lot PT129942, Kawasan Perusahaan Kanthan, Chemor, Perak

4. Lot 292 & 294, Block 36, Muara Tuang Land District, Sarawak

5. Lot No.6, Jalan Bukit 3, Kawasan MIEL, Bandar Sri Alam, 81750 Masai, Johor

6. Pangsapuri Bunga Raya Bukit Beruang, Daerah Melaka Tengah, Melaka

7. Lot 67, SEDCO Industrial Estate, Phase 2 Kota Kinabalu, Sabah

8. No.49,49-01,49-02, Jln Masai 1, Taman Masai Utama, 81750 Masai, Johor

1995

1993*

1992

1992 & 1993*

Nov 2010

2005

1993*

2008

Location

Year ofAcquisition orRevaluation*

8,407

7,427

5,279

4,376

2,691

2,475

1,118

551

14

18

12

31 & 13

6

7 to 8

24

7

ApproximateAge of

Building(year)

186,590

190,581

572,379

245,252

50,023

837 - 953(total of 27,002)

60,624

1,540

LandArea

(sq ft)

Freehold

Freehold

60-year leaseto

14/03/2055

58-year leaseto

30/01/2030

Freehold

99-year leaseto 2076

60-year leaseto

31/12/2034

99-year leaseto

26/11/2100

Tenure

3-storey o�ce block & 2-storey open warehouse

Factory and o�cebuilding

Factory and o�cebuilding

Factory, o�cebuilding andwarehouse

2-storey o�ce & store

30 unitsapartment

O�ce/residentialbuilding, factoryand warehouse

3-storey shopo�ce

Description

NetCarryingAmount(RM’000)


LIST OFPROPERTIES (cont’d.)

KPS CONSORTIUM BERHAD & GROUP OF COMPANIESList of Properties as at 31 December 2010 (cont’d.)

9. HM93631, PT4110, Daerah Kuala Muda, Sg Petani, Kedah


11. Lot 3144C Agriculture Land, Batu 6½, Puchong, Selangor


13. Lot 2191, Industrial Land Mentakab, Temerloh, Pahang

14. Unit M-101, Vista Tasik Condominium, Bandar Sri Permaisuri, Cheras

15. (Lot 74150) No.9, Jln Selasih 1, Taman Pasir Putih, 81700 Pasir Gudang, Johor

16. (Lot 120670) Unit A03-07B Summer Park Town House, Mukim Plentong, Daerah Johor Bahru, Johor

207

2006

1995

2006

1997

2002

2009

2009

Location

Year ofAcquisition orRevaluation*

302

256

250

230

231

173

150

101

NetCarryingAmount(RM’000)

17

7 to 8

N/A

7 to 8

N/A

8

27

7

ApproximateAge of

Building(year)

8,439

953 (total of 2,859)

15,700

837

105,645

1,225

1,765

96

LandArea

(sq ft)

Freehold


Freehold


Freehold

Freehold

Freehold

Freehold

Tenure

1½ storeySemi-D factory

3 unitsapartment

Vacant Land

1 unit apartment

Vacant Land

Condo

Double Storey

Town House

Description


SHAREHOLDINGS STRUCTUREAs At 6 May 2011

Authorised Share Capital : RM200,000,000Issued And Fully Paid-Up Share Capital : RM147,827,158Class Of Shares : Ordinary Shares of RM1.00 each fully paidVoting Rights : One vote per ordinary shareNo. Of Shareholders : 4,108

Distribution Of Shareholdings As At 6 May 2011

Substantial Shareholder As At 6 May 2011

List Of Thirty (30) Largest Shareholders As At 6 May 2011

Koh Poh Seng 41.04

Shareholder Percentage Holding

-

IndirectNo. Of Shares Held

60,670,525

Direct

Less than 100100 -1,0001,001-10,00010,001-100,000100,001 and below 5% of issued share capitalAbove 5% of issued share capital

TOTAL

0.000.566.90

25.7330.8535.97

100.00

Size of Holdings % Of Paid-Up Capital

531820,683

10,200,61538,032,61745,599,40053,173,312

147,827,158

Total Holdings

14844

2,0141,089

1443

4,108

No. Of Shareholders

Koh Poh SengAmsec Nominees (Tempatan) Sdn Bhd - Koh Poh SengAllianceGroup Nominees (Tempatan) Sdn Bhd - Koh Poh SengCitiGroup Nominees (Tempatan) Sdn Bhd - Koh Poh SengA.A. Anthony Nominees (Tempatan) Sdn Bhd - Angkasa Aman Sdn BhdECML Nominees (Tempatan) Sdn Bhd - Lim Kiam LamPublic Nominees (Tempatan) Sdn Bhd - Koh Poh SengMayban Nominees (Tempatan) Sdn Bhd - Phang Shay NamPM Nominees (Tempatan) Sdn Bhd - Kong Kok ChoyChia Beng TatPaci�c Strike Sdn BhdTan Meng HooiLim Kooi WahChoo Poi KeeChung Shan Kwang

123456789

101112131415

17.1813.53 5.26 4.231.100.870.850.740.710.680.590.560.450.430.42

No Name of Shareholders PercentageHolding

No. OfShares

25,402,42220,000,000 7,770,8906,246,9001,627,2001,285,000

1,250,0001,091,500

1,050,0001,000,000

866,600833,000

660,000 636,000614,000


SHAREHOLDINGSSTRUCTURE (cont’d.)

List Of Thirty (30) Largest Shareholders As At 6 May 2011 (cont’d.)

Directors’ Shareholdings And Interest In Shares As At 6 May 2011

Save as disclosed, none of the other Directors in office have any interests in the shares of related corporations and subsidiary companies of the Company as at 6 May 2011.

* - Held directly and through nominee companies.

Haw Swee Beng Cheong Chai HooMayban Nominees (Tempatan) Sdn Bhd - Chin Hon KongA�n Nominees (Tempatan) Sdn Bhd - Chung Kin ChuanOSK Nominees (Tempatan) Sdn Bhd - Hee Yuen SangTo Seng Hook @ Toh Seng HookChong Yoon FookAng Kee EngLim Siew HongECML Nominees (Tempatan) Sdn Bhd - Lim Yeow KimLaw Kim LeongCh’ng Hun LeongLam Mei FongSJ Sec Nominees (Tempatan) Sdn Bhd - Low Kien KhuanAmsec Nominees (Tempatan) Sdn Bhd - Hee Yuen Sang

TOTAL

161718192021222324252627282930

0.410.400.370.370.360.350.320.290.280.280.270.270.270.260.25

52.34

No Name of Shareholders PercentageHolding

No. OfShares

600,000590,000553,900548,000530,000513,800480,000429,600418,200417,000406,100405,000400,000382,700372,000

77,379,812

Koh Poh SengLau Fook MengFaun Chee YarnLim Choon LiatTan Kong Ang

12345

41.04NilNil

0.03Nil

No Name of Directors PercentageHolding

No. OfShares

60,670,525*NilNil

50,000Nil

PROXY FORM(Before completing this form please refer to the notes below)

I/We……………………………………….….............….…..........NRIC No./Passport No./ Company No…………………………...(Full name in block letters)

CDS. A/C No……………………….....…………….. of ...……….….....……………………………………………………………. (Full address)

being a member/members of KPS CONSORTIUM BERHAD hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares to be represented by proxy

1. ....................................................................................................................................................................................... ............................................

2. ....................................................................................................................................................................................... ............................................

or failing him/her, the Chairman of the Meeting as *my/our proxy/proxies to attend and vote for *me/us on my/our behalf at the Twenty Fifth Annual General Meeting of the Company to be held at Klang Executive Club, Persiaran Bukit Raja 2, Bandar Baru Klang, 41150 Klang, Selangor Darul Ehsan on Saturday, 25th June 2011 at 11:00 a.m. and at any adjournment thereof to vote as indicated below:-

(Please indicate with an “x” in the space provided above on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his/her discretion).

In case of a vote taken by a show of hands, the First-named Proxy shall vote on *my/our behalf.

Dated this………………..day of……………………………2011

…………………………………………………… Signature/Common Seal of shareholder

* Strike out whichever is not desired.

Notes:1. A member shall be entitled to appoint more than one (1) proxy to attend and vote in his place. A proxy needs not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he speci�es the proportions of his holdings to be represented by each proxy.

3. Where a member of the Company is an authorised nominee as de�ned 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.

4. If the appointer is a corporation, the proxy form must be executed under its Common Seal or under the hand of its attorney.

5. The instrument appointing a proxy and the power of attorney, if any, under which it is signed or a certi�ed copy thereof must be deposited at the Company’s Registered O�ce at Lot 765, Jalan Haji Sirat, o� Jalan Meru, 42100 Klang, Selangor Darul Ehsan not less than 48 hours before the time set for holding the Meeting or any adjournment thereof.

KPS CONSORTIUM BERHAD(Company No. 143816-V)Incorporated in Malaysia

No. of ordinary shares held

FOR AGAINST

Ordinary Resolution 1 - Re-election of Director, Mr Faun Chee Yarn

Ordinary Resolution 2 - Approval of Directors’ Fee

Ordinary Resolution 3 - Re-appointment of the retiring auditors, Messrs. SJ Grant Thornton

Ordinary Resolution 4 - Authority to Issue Shares

Special Resolution 1 - Proposed amendment to the Articles of Association

AFFIX STAMP

KPS CONSORTIUM BERHAD (143816-V)

Lot 765, Jalan Haji SiratOff Jalan Meru, 42100 Klang

Selangor Darul Ehsan

Documents

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