Annual Report 2010 - KLW · This annual report has been reviewed by the Company’s sponsor, KW ... Permodalan Felda Malaysia Berhad has agreed to take up a 30% stake of our door

KLW HOLDINGS LIMITED

KLW

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2010

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KLW HOLDINGS LIMITED19 Senoko Loop Singapore 758169

Tel: (65) 6754 1854 Fax: (65) 6752 9908

www.klw.com.sg

Annual Report 2010

CORPORATE INFORMATION

BOARD OF DIRECTORSLee Boon Teck Executive Chairman

Teo Hin Guan Independent Director

Ho Pong Chong Independent Director

Low Hai Lee Independent Director

AUDIT COMMITTEEHo Pong Chong Chairman

Teo Hin Guan Member

Low Hai Lee Member

NOMINATING COMMITTEEHo Pong Chong Chairman

Lee Boon Teck Member

Teo Hin Guan Member

REMUNERATION COMMITTEETeo Hin Guan Chairman

Ho Pong Chong Member

Low Hai Lee Member

COMPANY SECRETARYJennifer Lee Siew Jee, FCIS

REGISTERED OFFICE19 Senoko Loop

Singapore 758169

Telephone: 6754 1854

Fax: 6752 9908

www.klw.com.sgThis annual report has been reviewed by the Company’s sponsor, KW

Capital Pte. Ltd., for compliance with the relevant rules of the Singapore

Exchange Securities Trading Limited ("SGX-ST"). The Company’s Sponsor

has not independently verifi ed the contents of this annual report.

This annual report has not been examined or approved by the SGX-ST and

the SGX-ST assumes no responsibility for the contents of this annual report,

including the correctness of any of the statements or opinions made or

reports contained in this annual report.

The details of the contact person for the Sponsor is:

Name : Mr Yang Eu Jin

(Registered Professional, KW Capital Pte. Ltd.)

Address : 80 Raffl es Place, #25-01, UOB Plaza 1

Singapore 048624

Tel : 6238 3377

REGISTRAR AND SHARE TRANSFER OFFICEIntertrust Singapore Corporate Services Pte Ltd3 Anson Road #27-01

Springleaf Tower

Singapore 079909

AUDITORSCrowe Horwath First Trust LLP7 Temasek Boulevard

#11-01 Suntec Tower One

Singapore 038987

Partner-in-charge: Alfred Cheong

PRINCIPAL BANKERSOversea-Chinese Banking Corporation Limited63 Chulia Street

OCBC Centre

Singapore 049514

Malayan Banking BerhadCommercial Business Unit

Region Johor / Melaka

Level 8, Offi ce Tower

Johor Bahru City Square

No. 108, Jalan Wong Ah Fook

80000 Johor Bahru

Johor Darul Takzim

Malaysia

GrowthGoals are achieved through successful breakthroughs. Before that can happen, a few vital values and practices must be embraced: effective leadership, a strong strategic plan and recognising new opportunities, pushing the limits through resilience, and building solid teamwork.

Reaching out in motion, with these elements in place, obstacles can be overcome and new breakthroughs gained.

KLW is still active in their ‘Go Green’ mission; hence the colour green is used to indicate their eco-friendly focus.

crafting out astrong strategic

plan

CONTENTS05 CHAIRMAN’S STATEMENT

07 MARKET PRESENCE FOR KLW GROUP OF COMPANIES

09 BUSINESS DIVISIONS

11 BOARD OF DIRECTORS AND KEY MANAGEMENT

13 REPORT ON CORPORATE GOVERNANCE

22 FINANCIAL CONTENTS

manage witheffective leadership

On behalf of the Board, I would like to sincerely thank our shareholders, customers, suppliers and business associates communities for their support.

In FY 2010, KLW Group experienced a tough year. We had to address a rapidly deteriorating issue: the closure of our furniture retail business Barang Barang Group of Companies in Singapore and Malaysia. The overwhelming operating cost made the business unsustainable – and it was a tight ship to run.

It was a painful decision to make but we quickly focused on consolidating the Group’s core strength, which is the door division – while progressing with a new alliance from Malaysia. Koperasi Permodalan Felda Malaysia Berhad has agreed to take up a 30% stake of our door division. Although there is still much to recover from the loss, we enter FY 2011 in a more confident position.

FINANCIAL HIGHLIGHTSKLW registered a turnover of $53

million in FY 2010 and a 5% decline as compared to $56 million of revenue in FY 2009. In FY 2010, we experienced a net loss of $5.9 million.

Facing the closure of Barang Barang, KLW’s turnover was slightly alleviated by a 16% increase from the door division. Over the course of FY2010, KLW’s loss per share stood at $1.08 and a net tangible asset value of $1.48 per share.

On the optimistic aspect, we benefitted a satisfying increase from manufacturing. We also enjoyed an increase of 16% compared to $27 million in FY 2009. Our factory in China, which performed well, has now become our profitable arm. Increasingly, we are steering our focus to China through establishing firm ground by setting up another factory. It will be strategically built near our present factory to keep the muscle of the development taut. The evident demand from our customers continued to grow, signalling a healthy state of growth for our business.

The revenues from trading businesses have made significant progress by 9%, from $18 million in 2009 to a well-performed $19 million this year. The business was able to adjust to the ever changing market conditions and it pulled on the glowing economic facelift.

At the same time, we saw the project and rental income increased by 40% from $1.3 million in 2009 to $1.9 million this year. There is still much to be addressed but we are certainly entering 2011 with a much stronger focus.

Due to liquidation, Barang Barang shifted out from our warehouse space in February 2010, hence experiencing a drop in rental income. It was only in May 2010 when UPS took up the space.

KLW is undeterred despite the recent gloomy circumstances. It showcased a mark of ingenuity by securing three door contracts in FY2010, namely: The Wharf Residence, Waterfront Key and Primo Residences. The unhesitating move was spurred by Singapore’s vibrant property markets and the company’s clear sightedness. With such positive developments already pulsing in the pipeline, the turnover in FY2011 will be sharply averted. All is set to go in remarkable poise and gusto for KLW this year.

STRATEGIES FOR 2011A double-powered strategy from

us, in terms of market expansion, we will be spreading our influence to the European and US markets for exports, that’s one. Two, we will continue to secure project businesses from Singapore and the Middle East. It’s a back-to-back plan for traversing new grounds and strengthening our present links – Singapore and the Middle East. For now, these are plans revived to serve as practical solutions and ultimately stretching KLW to attain new objectives.

In terms of capacity, a new factory in China will be operating in the third quarter of this year, and that is also another cornerstone to put KLW back on a competitive edge where it belongs.

APPRECIATIONI look forward to the continued

support and understanding of all of our shareholders and investors.

Lee Boon TeckChairman and Executive Director

CHAIRMAN’S STATEMENT

KLW Holdings Limited Annual Report 2010 5

KLWUnited States

of America

recognisingnew opportunities

TEENIChina

Hong KongMalaysia

SingaporeTaiwan

KLWFranceIrelandUnited

Kingdom

KLWChina

MalaysiaSingapore

KLWUnited Arab

Emirates


MARKET PRESENCE FOR KLW GROUP OF COMPANIES

pushing thelimits through resilience

BUSINESS DIVISIONS


MANUFACTURINGS$ by Millions

20102009200820072006

31.9

21.9

27.4

23.2

18.7

TRADINGS$ by Millions

20102009200820072006

21.120.4

12.5

17.719.3

RENTAL & PROJECTSS$ by Millions

20102009200820072006

3.5

1.8

1.3

0.8

1.9

Lee Boon TeckExecutive Chairman

Mr Lee Boon Teck, 43, was one of the founders of KLW Singapore in 1989. He was first appointed on 15 June 1995 as Director and was last re-elected on 27 April 2009 as the Group’s Executive Chairman. He was trained in Building Engineering and has more than 20 years of experience and valuable expertise in the door manufacturing business. He led the company’s listing under KLW Holdings Limited on September 1998 and is currently involved in the management of the Group and formulating the Group’s overall strategies.

Ho Pong Chong**Independent Director

Mr Ho Pong Chong, 58, was first appointed as the Group’s Independent Director on 15 July 2002 and was last re-elected on 29 April 2008. He is Chairman of the Board’s Audit and Nominating Committees and a member of its Remuneration Committee. He has been with the KLW Board for the past 8 years. He is currently the Managing Director of Well Global Investments Pte Ltd and Executive Director of Nirvana Memorial Garden Pte Ltd.

** Appointed as Lead Independent Director from 31 March 2010

Teo Hin GuanIndependent Director

Mr Teo Hin Guan, 60, was first appointed as the Group’s Independent Director on 31 March 2004 and was last re-elected on 26 April 2007. He is Chairman of the Board’s Remuneration Committee and a member of its Audit and Nominating Committees. Currently a Director of a manufacturing company in Malaysia, he has more than 30 years experience in the Banking Industry.

Low Hai LeeIndependent Director

Mr Low Hai Lee, 53, was first appointed as the Group’s Independent Director on 16 August 2007 and was last re-elected on 29 April 2008. He is a member of the Company's Audit and Remuneration committees. He has more than 20 years of experience in the Banking Industry. He now provides corporate and financial advisory constancy work for corporations in the region.

building solid teamwork

BOARD OF DIRECTORS

Gaw Kuan Ching, JaslinKLW Holdings LimitedGroup Financial Controller

Ms Jaslin Gaw, 35, is responsible for the full spectrum of financial management for the Group. She has more than 10 years of accounting, corporate finance and internal control experiences with a degree in Accounting and Business from the Staffordshire University in UK. Prior to her appointment as Group Financial Controller, she was the Finance Manager for the Group since year 2007.

Ngo Yu Peng, FeliciaKLW Holdings LimitedGroup Finance & HR Manager

Ms Felicia Ngo, 30, joined KLW Holdings Limited in 2003 and is in charge of the financial accounting aspects of the Group. Prior to joining the Group, she was with Deloitte & Touche LLP as an Accounts officer. She is accredited with Association of Charted Certified Accountants (ACCA) since year 2003 and is also CPA certified with Institute of Certified Public Accountants of Singapore (ICPAS) since year 2010.

Goh Eng KiatKLW Resources Sdn BhdSenior Finance Manager

Mr Goh Eng Kiat, 35, joined the Malaysia Door division in 2005. He is currently in charge of the financial management and reporting of the Door division in Singapore, Malaysia and China. Prior to joining the Group, he was an auditor armed with an Advanced Diploma in Financial Accounting. His more than 10 years of financial accounting experience has contributed greatly to the Door division’s reporting system.


Low Yin SenKLW Wood Products (M) Sdn BhdExecutive Director & CEO

Mr Low Yin Sen, 52, joined the Malaysia factory in 2005 and currently manages the overall operations of KLW Wood Products (M) Sdn Bhd. Prior to joining the Group, he was Senior Manager for a wood manufacturing business in Malaysia. To date, Mr Low has more than 20 years of experience in the wood manufacturing industry in Malaysia with a degree in Mechanical Engineering from the University College of Swansea, Wales in UK.

Mohd Fauzi Bin Mohd NazirKLW Wood Products (M) Sdn BhdExecutive Director

Mr Mohd Fauzi Bin Mohd Nazir, 51, joined the Malaysia factory in 2005. He is responsible for the Business Development, Marketing and Research and Development of the Malaysian business. Prior to joining the Group, he was with a reputable door company managing the Sales and Marketing for its European and UK markets. He has more than 20 years of experience in door sales and marketing armed with a Diploma in Marketing.

Peh Eng Thong, EricKLW Joinery Pte LtdOperation Director

Mr Eric Peh, 40, joined KLW Singapore’s project division in 1996 and is now in charge of the Group’s project business in Singapore. He has been the Project Manager and Factory Manager within the Group during his more than 10 years of service with the Group. Mr Peh holds a Bachelor of Science (Computing with Management) (Hons) degree from the University of Bradford, UK.

Lee Wan Cha, AdelineKLW Joinery Pte LtdGeneral Manager

Ms Adeline Lee, 36, joined the Group in 2004 and is now responsible for the management of Singapore’s project business. Prior to taking over the project business, she was one of the key personnel in growing the Group’s door export business to its current size. Ms Lee holds a degree in Business and Marketing from the University of Portsmouth, UK.

Koh Wee Ann, SamDongguan Lebex Doors LtdGeneral Manager

Mr Sam Koh, 28, joined the Group in 2006 and is now in charge of the Group’s China factory. He started with the Group’s Malaysia factory after graduation from Universiti Putra Malaysia majoring in Forestry degree. Due to outstanding performance, he was seconded to China to set up the factory in 2008 and has been there managing the operation since.

Tay Yong HwaTeeni GroupManaging Director

Mr Tay Yong Hua, 45, is Managing Director of the Teeni Group. In this capacity, he oversees operations of the Group’s Singapore headquarters as well as its subsidiaries in China, Hong Kong, Taiwan and Malaysia. Mr Tay has more than 25 years of experience in the business of beauty implements, cosmetics, hair accessories and skin care products.

FINANCIAL MANAGEMENT

OPERATIONS MANAGEMENT

KEY MANAGEMENT

REPORT ON CORPORATE GOVERNANCE



The Board of Directors (Board) and Management of the Group continue to be committed to maintain a high standard of

corporate governance to protect the interests of shareholders, employees, customers, creditors and to promote investors’

confi dence. The Company has adopted practices based on the Code of Corporate Governance 2005 (“the Code”) issued by

the Ministry of Finance. The Board is pleased to confi rm that the principles and guidelines set out in the Code have substantially

been adhered to. This Report describes the Company’s corporate governance practices with reference to the Code.

THE BOARD’S CONDUCT OF AFFAIRS

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

The Board’s principal roles include promoting long-term shareholder value, ensuring that the business of the Group is effectively

managed and properly conducted by executive management, and ensuring proper observance of corporate governance

practices.

Apart from its statutory duties and responsibilities, the Board’s responsibilities include the following:

Approving the board policies, strategies and fi nancial objectives of the Company and monitoring the performance of

management;

Identifying principal risks and ensuring implementation of internal control procedures to manage these risks;

Approving the Group’s major investments and funding decisions; and

Assuming responsibility for corporate governance.

The Board has established a number of committees to assist in the execution of the Board’s responsibilities. These committees

include the Nominating Committee (the “NC”), Remuneration Committee (the “RC”) and Audit Committee (the “AC”). Each of

the committee functions within clearly defi ned in its terms of reference.

Prior to their respective appointments to the Board, each of the Directors was given an orientation on the Group’s business

operations.

The Board holds meetings on a regular basis to consider and resolve major fi nancial and business matters of the Group. Where

a decision has to be made before a Board meeting is convened, a directors’ resolution in writing is circulated in accordance

with the Articles of Association of the Company and the directors are provided with all relevant information to allow them to

make informed decisions. Informal meetings are held to deliberate on various operational issues when necessary.

The Board has adopted a set of guidelines on matters that require its approval. The matters requiring the approval of the Board

include the following:

Material acquisitions and divestments of assets;

Corporate strategy; and

Dividends and other returns to shareholders.


14 KLW Holdings Limited Annual Report 2010

The attendance of the directors at meeting of the Board and Committees during the fi nancial year are tabulated below:

Directors’ attendance at Board and Committees’ Meetings for the period from 01 January 2010 to 31 December 2010

Board Audit Committee

Board MembersNo of

Meetings HeldNo of

Meetings AttendedNo of

Meetings HeldNo of

Meetings Attended

Lee Boon Teck 4 4 N.A N.A

Ho Pong Chong 4 4 4 4

Teo Hin Guan 4 3 4 3

Low Hai Lee 4 4 4 4

Nominating Committee Remuneration Committee

Board Members

No of Meetings Held/

Resolutions Passed

No ofMeetings Attended/Resolutions Signed

No ofMeetings Held

No ofMeetings Attended

Lee Boon Teck 1 1 N.A N.A

Ho Pong Chong 1 1 1 1

Teo Hin Guan 1 – 1 –

Low Hai Lee N.A N.A 1 1

BOARD COMPOSITION & GUIDANCE

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises the following members:

Lee Boon Teck Executive Chairman

Ho Pong Chong Non-executive & Independent

Teo Hin Guan Non-executive & Independent

Low Hai Lee Non-executive & Independent

The Articles of Association of the Company imposes a maximum of fi fteen directors to the Board and a minimum of two. The

NC is of the view that the current Board size of four directors is appropriate and effective, taking into account the scope and

nature of the Company’s operations. The NC further believes that the current Board comprises persons who as a group provide

core competencies necessary to meet the Company’s objectives.

The NC determines the independence of directors based on the criteria of independence defi ned in the Code. The Committee

is satisfi ed that the Independent Directors, who represent more than one-third of the Board, satisfy the criteria.

The Independent Directors provide, amongst other things, strategic guidance to the Company based on their professional

knowledge, in particular, assisting to constructively challenge and develop proposals on strategy. The Independent Directors

also help review the performance of management in meeting agreed goals and objectives and monitor the reporting of

performance. They may arrange for meetings without the management being present, at least on a yearly basis with the

auditors of the company and at other times when deemed necessary.



Key information on each director who collectively have experience in the areas of fi nance, manufacturing and strategic planning

experience is set out on page 11 of the annual report.

CHAIRMAN & MANAGING DIRECTOR

Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

The Executive Chairman, Lee Boon Teck is the only executive director on the Board. He assumes the executive responsibilities

for the overall directions and operational duties of the Group to ensures quality, quantity and timeliness of the fl ow of information

between Management and the Board; The Chairman monitors communication and relations between the company and its

shareholders, between the Board and Management, between executive and non-executive directors as well as independent

and non-independent directors, with a view to encourage constructive relations. The Chairman also promotes high standards

of corporate governance.

The Board is satisfi ed that there are suffi cient checks and balances to ensure decisions at Management level and at Board level

are made with full participation by relevant persons.

BOARD MEMBERSHIP & PERFORMANCE

Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.

Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

The NC comprises of the following members:

Chairman: Ho Pong Chong (Non-executive & Independent)

Members: Lee Boon Teck (Executive Chairman)

Teo Hin Guan (Non-executive & Independent)

The Committee pursuant to its written terms of reference, shall:-

regularly review the structure, size and composition of the Board and make recommendations to the Board with regard

to any adjustments that are deemed necessary;

annually review whether or not a director is independent, in accordance to paragraph 2 of the Code of Corporate

Governance and other salient factors;

be responsible for identifying and nominating for the approval of the Board, candidates to fi ll Board vacancies as and

when they arises;

be responsible for re-nomination having regard to the director’s contribution or performance;

review and decide whether or not a director is able to and has been adequately carrying out his / her duties as director

of the Company;

decide how the Board’s performance may be evaluated and propose objective performance criteria;

decide on the performance evaluation process; and

assess the effectiveness of the Board as a whole and for assessing the contribution by each individual director to the

effectiveness of the Board.



It shall also make recommendations to the Board:-

as regards plans for succession, in particular, of the Chairman and the Chief Executive / Managing Director;

as regards the re-appointment of any non-executive director at the conclusion of his or her specifi ed term of offi ce;

for the continuation (or not) in service of any director who has reached the age of seventy;

concerning the re-election by shareholders of any director under the “retirement by rotation” provisions in the Company’s

Articles of Association, if necessary;

concerning any matters relating to the continuation in offi ce as a director of any director at any time; and

concerning the appointment of any director to executive or other offi cer other than to the positions of Chairman and the

Chief Executive / Managing Director, the recommendation for which would be considered at a meeting of:

(a) all the non-executive directors regarding the position of the Chief Executive / Managing Director; and

(b) all the directors regarding the position of Chairman.

In assessing the suitability of a candidate to be appointed to the Board, the NC will consider if he is able to make the

appropriate contributions to the Board and the Group. The key factors which the NC will take into consideration are:

qualifi cations, industry knowledge and functional expertise which are relevant and benefi cial to the Group; and

extensive experience and business contacts in the industry in which the Group operates.

The NC also assesses the independence of each director according to the guidance given under the code of Corporate

Governance. In assessing the Directors’ contribution and performance of the Board, the NC takes into consideration the

directors’ attendance, preparedness, participation and candour of the meetings.

Pursuant to the Articles of Association of the Company, one-third of the directors other than the Managing Director will retire

from offi ce at each Annual General Meeting (the “AGM”). The directors submit themselves for re-appointment and re-election

at regular intervals of at least once very three years. The directors who are submitted for re-election are found in the notice of

AGM and proxy form.

ACCESS TO INFORMATION

Principle 6: In order to fulfi l their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

Prior to each Board and AC meetings, the directors are provided with management reports pertaining to the operational and

fi nancial performance of the Group and other relevant information related to the matters on the agenda for the meetings. The

Executive Chairman highlights the business conditions and outlook of the Group when the Board meets.

The AC has separate and independent access to the Management of the Group and the Company Secretary at all times.

The Company Secretary administers, attends and prepares minutes of all Board and Committee meetings for circulation and

approval. Should the directors need independent professional advice on matters affecting the Group, such cost will be borne

by the Company. The appointment and removal of the company secretary is a matter for the Board to decide as a whole.

The Company relies on directors and independent professionals to update themselves on new laws, regulations, and changing

commercial risks.



REMUNERATION COMMITTEE (THE “RC”)

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fi xing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signifi cant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.

Principle 9: Clear disclosure of remuneration policy, level and mix of remuneration and procedure for setting remuneration in the company’s annual report.

The RC comprises of the following members:

Chairman: Teo Hin Guan (Non-executive & Independent)

Members: Ho Pong Chong (Non-executive & Independent)

Low Hai Lee (Non-executive & Independent)

The objective of the RC is to facilitate appropriateness, transparency and accountability to shareholders on issues relating to

remuneration of the directors and key executive management staffs of the Company. Members of the RC do not set their own

remuneration and no director is involved in deciding his own remuneration.

The Committee shall:-

determine and agree with the Board the framework or broad policy for the Remuneration of the Company’s Board and

key executive, and to determine specifi c remuneration packages for each executive director and the Chief Executive

Offi cer and such other members of the executive management as it is designated to consider;

in determining such policy, take into account all factors which it deems necessary. The objective of such policy shall

be to ensure that members of the executive management of the Company are provided with appropriate incentives to

encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions

to the success of the Company;

determine targets for any performance related pay schemes operated by the Company, taking into account pay and

employment conditions within the industry and in comparable companies;

within the terms of the agreed policy, determine the total individual remuneration package of each executive director

including, where appropriate, allowances, bonuses, benefi ts in kind, incentive payments and share options;

determine the policy for and scope of service agreements for the executive directors in the event of early termination

including compensation commitments, including fi xing appointment period for the directors;

determine the remuneration of non-executive directors, taking into factors such as efforts, time spent and the

responsibilities;

determine whether directors should be eligible for benefi ts under the long-term incentive scheme;

The Group’s policy is to set a level of remuneration that is appropriate to attract, retain and motivate all staff and directors. In

discharging its functions, the RC may obtain independent external legal and other professional advice as it deems necessary.

The expenses of such advice shall be borne by the Group.

The Executive Director has a service contract with a fi xed appointment period and the RC reviews in particular termination

provisions. Such service contracts are not excessively long and they do not contain onerous removal clauses. In the event of

early termination, the Executive Director or the Company may, inter alia, terminate the service agreement by giving to the other

party, inter alia, not more than six months’ notice in writing, or in lieu of notice in writing.



The non-executive and independent directors do not have a service agreement with the Company. Except for directors’

fees, which need to be approved by shareholders at every AGM, the independent directors do not receive any other forms of

remuneration from the Company. Hence, the board is of the view that it is not necessary to present its remuneration policy

before shareholders for approval at the AGM.

Details of the directors and key management executives’ remuneration are set out below. Disclosure of the directors’

remuneration and key management executives’ remuneration is also set out in Note 27 of the Financial Statements.

portion attributable to:

Salary Directors’ fee BonusRemuneration band and name of directors % % %

2010

Executive Director Above $250,000

Lee Boon Teck 100 – –

Non-executive Directors Below $250,000

Ho Pong Chong – 100 –

Teo Hin Guan – 100 –

Low Hai Lee – 100 –

Remuneration of key executives who are not director

Below $250,000

Gaw Kuan Ching, Jaslin 100 – –

Low Yin Sen 100 – –

Mohd Fauzi Bin Mohd Nazir 100 – –

Peh Eng Thong 100 – –

Tay Yong Hua 100 – –

2009

Executive Director Above $250,000

Lee Boon Teck 100 – –

Executive Director Below $250,000

Lim Kok Hui 100 – –

Non-executive Directors Below $250,000

Ho Pong Chong – 100 –

Teo Hin Guan – 100 –

Low Hai Lee – 100 –

Remuneration of key executives who are not director

Below $250,000

Gaw Kuan Ching, Jaslin 100 – –

Low Yin Sen 100 – –

Peh Eng Thong 100 – –

Tay Yong Hua 100 – –



REMUNERATION OF EMPLOYEES WHO ARE IMMEDIATE FAMILY MEMBERS OF A DIRECTOR

Two employees of the Group are immediate family members of the Chairman. The remuneration of each of these employees

did not exceed $150,000 during the fi nancial year ended 31 December 2010.

ACCOUNTABILITY & AUDIT

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Board provides shareholders with annual fi nancial reports and announces promptly half yearly and yearly fi nancial results. In

presenting the fi nancial statements through reports and announcements, it is the aim of the Board to provide the shareholders

with detailed analysis and a balanced and understandable assessment of the company’s performance, position and prospects.

The Management provides the Board with a continual fl ow of relevant information on a quarterly basis in order that it may

effectively discharge its duties and the Board is of the view that the information provided on a quarterly basis is suffi ciently

effective for it to discharge its duties.

AUDIT COMMITTEE

Principle 11: The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out its authority and duties.

The AC comprises of the following members:

Chairman: Ho Pong Chong (Non-executive & Independent)

Members: Teo Hin Guan (Non-executive & Independent)

Low Hai Lee (Non-executive & Independent)

The AC’s primary function is to provide assistance to the Board of Directors in fulfi lling its responsibility relating to corporate

accounting and auditing, reporting practices of the Company, the quality and integrity of the fi nancial reports of the Company,

and the Company’s system of internal controls regarding fi nance, accounting, legal compliance and ethnics established by the

Management and the Board.

The Committee’s statutory functions are:-

to review with the internal and external auditors, their audit plans;

to review with the internal and external auditors, their evaluation of the Group’s system of internal controls;

to review with the internal and external auditors, their audit reports;

to review the cooperation / assistance given by the Company’s offi cers to the internal and external auditors;

to review the scope and results of the internal audit procedures;

to review the balance sheet and profi t and loss account of the Company and the consolidated balance sheet and profi t

and loss account and to submit them to the Board;

to nominate and review the appointment or re-appointment of external auditors.

The Company has put in place a whistle-blowing policy and procedures which provide employees with accessible channels

to the AC for reporting suspected fraud, corruption, dishonest practices or other similar matters. The aim of this policy is to

encourage the reporting of such matters in good faith, with the confi dence that employees making such reports will be treated

fairly and, to the extent possible, be protected from reprisal.



INTERNAL CONTROL

Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective

internal control system will preclude all errors and irregularities, as a system is designed to manage rather than eliminate the

risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material

misstatement or loss.

The AC has been given full access to and is provided with the co-operation of the Group’s management. In addition, the AC

has independent access to the external auditors. The AC meets with the external auditors without the presence of management

and reviews the effectiveness of the internal controls established by management, at least once a year. The AC has reasonable

resources to enable it to discharge its functions properly.

The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by the

Group’s management that was in place throughout the year and up to the date of this report, is adequate to meet the needs of

the Group in its current business environment.

The Board acknowledges that risk is inherent in business and there are commercial risks to be taken in the course of generating

a return on business activities. The Board’s policy is that risks should be managed within the Group’s overall risk tolerance.

The fi nancial risks and management policies of the Group are laid out on pages 74 to 82 of the Annual Report.

INTERNAL AUDIT

Principle 13: The Company should establish an internal audit function that is independent of the activities it audits.

The Group has an internal auditor who reports directly to the Audit Committee and administratively to the Executive Chairman.

The internal auditor did not have any qualifi cations from any bodies of Internal Auditors. He is from Philippines and has a

degree in Accounting from Philippines University and has work experience as Internal Auditor with a bank in Philippines prior to

joining us. The AC is of the view that given the current size and fairly simple organization of the Company, the internal auditor is

competent to fufi l the requirements of the internal control checks.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Companies should engage in regular, effective and fair communication with shareholders.

Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

In line with continuous disclosure obligations of the company pursuant to the SGX-ST’s Listing Rules and the Singapore

Companies Act, the Company endeavors to maintain constant and effective communications with shareholders through timely

and comprehensive announcements. Material information helpful to shareholders is released on a timely basis. We disseminate

our latest corporate news, strategies and announcement promptly through SGXNET and press releases.

The Company welcomes active participation from shareholders at AGMs. To facilitate voting by shareholders, the Company’s

articles allow shareholders to vote by proxies. Proxy forms can be sent to the Company by mail. Each distinct issue is voted via

separate resolutions at AGMs. The Board will address any queries raised by shareholders and call upon its professional service

providers where it deem appropriate. All minutes of general meetings and a summary of the questions and answers raised at

general meetings are available to shareholders upon their request.



DEALINGS IN THE COMPANY’S SECURITIES

The Group has adopted an internal code to provide guidance to its offi cers with regards to dealings in the Company’s

securities. Its offi cers are not allowed to deal in the Company’s shares during the period commencing one month before the

announcement of the Company’s full year and half year results and ending in the date of the announcement of the results or if

they are in possession of unpublished price-sensitive information of the Group. They are also discouraged from dealing in the

Company’s shares on short-term considerations.

EMPLOYEES’ SHARE OPTION SCHEME (THE “ESOS”)

The ESOS approved at the Extraordinary General Meeting on 21 October 1999, had expired on 20 October 2009. The share

options granted in 2001 under the ESOS will be expiring on 3 May 2011. Please refer to page 24 (Share Options) of the

Directors’ Report for further details on the ESOS. There has not been any other share option granted after 2001.

MATERIAL CONTRACTS

No material contracts have been entered into by the Company and its subsidiaries involving the interests of Chief Executive

Offi cer, each Director or controlling shareholder subsisted at the end of the fi nancial year or have been entered into since the

end of the previous fi nancial year.

USE OF PROCEEDS ARISING FROM ADDITIONAL NEW SHARES

509,719,806 Rights Shares of S$0.01 each

The total net proceeds of approximately S$3.4 million after offsetting S$1.7 million loan to the Company by the undertaking

shareholders had been fully utilised by the Company and its subsidiaries (the “Group”) as follows:

(a) Approximately S$0.3 million for expenses incurred in relations to the issuance of shares;

(b) Approximately S$2.4 million for repayment of bank borrowings; and

(c) Approximately S$0.7 million for the Group’s working capital.

356,000,000 Placement Shares of S$0.009 each

The total net proceeds of approximately S$3.2 million had been fully utilised as follows:

(a) Approximately S$0.05 million for expenses incurred in relations to the issuance of shares;

(b) Approximately S$2.0 million for repayment of bank borrowings; and

(c) Approximately S$1.15 million for the Group’s working capital.

NON-AUDIT FEES

There was no non-audit fee paid to the External Auditors, Crowe Horwath First Trust LLP during the fi nancial year ended 31

December 2010.

NON-SPONSOR FEES

There was no non-sponsor fee paid to the Sponsor during the fi nancial year ended 31 December 2010.

FINANCIAL CONTENTS

23 DIRECTORS’ REPORT

26 STATEMENT BY DIRECTORS

27 INDEPENDENT AUDITORS’ REPORT

30 BALANCE SHEETS

31 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

32 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

33 CONSOLIDATED STATEMENT OF CASH FLOWS

34 NOTES TO THE FINANCIAL STATEMENTS

DIRECTORS’ REPORT


The directors present their report to the members together with the audited fi nancial statements of KLW Holdings Limited (the

“Company”) and its subsidiaries (the “Group”) for the fi nancial year ended 31 December 2010 and the balance sheet of the

Company as at 31 December 2010.

DIRECTORS

The directors of the Company in offi ce at the date of this report are as follows:

Lee Boon Teck

Ho Pong Chong

Teo Hin Guan

Low Hai Lee

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of nor at any time during the fi nancial year was the Company a party to any arrangement whose object

was to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares in, or debentures of, the

Company or any other body corporate.

DIRECTORS' INTERESTS IN SHARES OR DEBENTURES

According to the register kept by the Company for the purposes of section 164 of the Singapore Companies Act, Cap 50,

none of the directors holding offi ce at the end of the fi nancial year had any interest in the shares or debentures of the Company

or its related corporations, except as follows:

Shareholdings registeredin name of director

Shareholdings in which a directoris deemed to have an interest

At1 January

2010

At 31 December

2010

At21 January

2011

At1 January

2010

At31 December

2010

At21 January

2011

Company

Ordinary shares

Lee Boon Teck 21,417,500 22,386,000 22,386,000 – 277,215,500 277,215,500

Teo Hin Guan 520,000 1,560,000 1,560,000 – – –

DIRECTORS' CONTRACTUAL BENEFITS

Since the end of the previous fi nancial year, no director has received or become entitled to receive a benefi t by reason of a

contract made by the Company or a related corporation with the director or with a fi rm of which the director is a member or

with a company in which the director has a substantial fi nancial interest, except for salaries, bonuses and other benefi ts as

disclosed in the fi nancial statements. A director received remuneration from related corporations in his capacity as director.

DIRECTORS’ REPORT


SHARE OPTIONS

KLW Employees’ Share Option Scheme

The KLW Employees’ Share Option Scheme (the”Scheme”) was approved by members of the Company at an Extraordinary

General Meeting on 21 October 1999.

Particulars of the options granted in 2000 and 2001 under the Scheme (known as the “2000 Options” and “2001 Options”)

were set out in the Directors’ Reports for the respective fi nancial years.

The Employee Share Option Scheme Committee comprising the following directors administer the Scheme:

Lee Boon Teck (Chairman)

Ho Pong Chong

The option granted under the Scheme were not valued as they were granted before 22 November 2002 and were therefore not

required to be valued under the Singapore Financial Reporting Standards.

Details of the options granted to employee of the Company are as follows:

Number of unissued ordinary sharesof the Company under option

Scheme Exercise period

Balance of1 January

2010Total

grantedTotal

exercisedTotal

lapsed

Balance at 31 December

2010Exercise

price

2000 Options 15.2.2000 to 14.2.2010 239,000 – – (239,000) – $0.710

2001 Options 4.5.2001 to 3.5.2011 330,000 – – – 330,000 $0.135

569,000 – – (239,000) 330,000

Except as disclosed above, during the fi nancial year, there were:

– no share options granted during the fi nancial year to subscribe for unissued shares of the Company or any of its

subsidiaries; and

– no shares of the Company were allotted and issued by virtue of the exercise of options to take up unissued shares of

the Company or any of its subsidiaries.

AUDIT COMMITTEE

The members of the Audit Committee at the end of the fi nancial year are as follows:

Ho Pong Chong (Chairman)

Teo Hin Guan

Low Hai Lee

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50,

the Listing Manual of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance. In performing

those functions, the Audit Committee reviewed:

– the scope and the results of internal audit procedures with the internal auditor;

– the audit plan of the Company’s independent auditors and any recommendations on internal accounting controls arising

from the statutory audit;

DIRECTORS’ REPORT


AUDIT COMMITTEE (Continued)

– the assistance given by the Company’s management to the independent auditors;

– the periodic results announcements prior to their submission to the Board for approval;

– the balance sheet of the Company and the consolidated fi nancial statements of the Group for the fi nancial year ended

31 December 2010 prior to their submission to the Board of Directors, as well as the independent auditors’ report on

the balance sheet of the Company and the consolidated fi nancial statements of the Group; and

– interested person transactions (as defi ned in Chapter 9 of the Listing Manual of the Singapore Exchange Securities

Trading Limited).

The Audit Committee has recommended to the Board of Directors that the independent auditors, Crowe Horwath First Trust

LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. The Audit Committee has

conducted an annual review of non-audit services to satisfy itself that the nature and extent of such services will not prejudice

the independence and objectivity of the external auditors before confi rming their re-nomination.

Further details regarding the Audit Committee are disclosed in the Report on Corporate Governance.

INDEPENDENT AUDITORS

The independent auditors, Crowe Horwath First Trust LLP, have expressed their willingness to accept re-appointment as

auditors of the Company.

On behalf of the Board of Directors

LEE BOON TECK HO PONG CHONGDirector Director

7 April 2011

STATEMENT BY DIRECTORS


In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated fi nancial statements of the Group as set out on pages 30 to

84 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31

December 2010 and of the results, changes in equity and cash fl ows of the Group for the fi nancial year then ended;

and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as

and when they fall due.

On behalf of the Board of Directors

LEE BOON TECK HO PONG CHONGDirector Director

7 April 2011

INDEPENDENT AUDITORS’ REPORTto the members of KLW Holdings Limited


Report on the Financial Statements

We have audited the accompanying fi nancial statements of KLW Holdings Limited (the “Company”) and its subsidiaries (the

“Group”) set out on pages 30 to 84, which comprise the consolidated balance sheet and the balance sheet of the Company

as at 31 December 2010, and the consolidated statement of comprehensive income, the consolidated statement of changes

in equity and the consolidated statement of cash fl ows of the Group for the fi nancial year then ended, and a summary of

signifi cant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the

provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards, and for devising and

maintaining a system of internal accounting controls suffi cient to provide a reasonable assurance that assets are safeguarded

against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as

necessary to permit the preparation of true and fair profi t and loss accounts and balance sheets and to maintain accountability

of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. Except as discussed below, we

conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements.

The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of

the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the entity’s preparation of the fi nancial 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 management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our qualifi ed audit

opinion.

Basis for Qualifi ed Opinion

The fi nancial statements for the fi nancial year ended 31 December 2009 (“FY2009”) were audited by another fi rm of certifi ed

public accountants (the “Preceding Auditors”), whose report dated 15 April 2010 expressed a “disclaimer of opinion” on those

fi nancial statements due to the following:

(i) As at the date of their report, the Preceding Auditors were unable to complete the audit of Barang Barang Pte Ltd

(“BBPL”) all its accounting staff were laid off and the accounting records were handed over to the liquidator.

The management accounts for the fi nancial year ended 31 December 2009, which were prepared by the directors

on a going concern basis, were used for consolidation purposes. Based on existing circumstances as at the date

of their report, the Preceding Auditors was of the view that management’s use of the going concern assumption in

the preparation of the fi nancial statement was not appropriate. Owing to the limitation of scope where no audit was

performed, the Preceding Auditors were unable to determine the extent of the adjustments that should be effected

on the impact of BBPL being placed on liquidation if the appropriate basis of preparing and presenting the fi nancial

statements were adopted.

As at 31 December 2009, BBPL’s total assets and liabilities included in the Group’s balance sheet amounted to

S$4,014,715 and S$6,376,211, respectively. Its revenue and loss for the fi nancial year included in the consolidated

statement of comprehensive income amounted to S$7,813,658 and S$8,918,935 respectively.



(ii) The Preceding Auditors were also unable to satisfy themselves on the appropriateness of the going concern assumption

used to prepare the audited fi nancial statement of Barang Barang Lifestyle Sdn Bhd (“BBLSB”) included in the Group

fi nancial statements. Based on their post balance sheet review of the fi nancial statement of the BBLSB, the Preceding

Auditors was of the view that management’s use of the going concern assumption in the preparation of the fi nancial

statements may not be appropriate.

As at 31 December 2009, BBLSB’s total assets and liabilities included in the Group’s balance sheet amounted to

RM2,128,329 (equivalent to S$868,358) and RM675,410 (equivalent to S$275,567) respectively. Its revenue and loss

for the fi nancial year included in the consolidated statement of comprehensive income amounted to RM3,144,853

(equivalent to S$1,297,755) and RM3,522,388 (equivalent to S$1,453,572).

We discuss below the extent to which the matters that gave rise to the disclaimer of opinion in respect of the FY2009 Financial

Statements that remained unresolved, insofar as they impact both the corresponding and current year’s fi gures provided in the

current fi nancial statements as well as other additional matters that relate to the current year’s fi nancial statements.

(i) During the fi nancial year, two subsidiaries, namely Barang Barang Pte Ltd (“BBPL”) and Barang Barang Lifestyle

Sdn Bhd (“BBLSB”), were placed under creditors’ voluntary liquidation on 10 February 2010 and 31 March 2010,

respectively.

On 24 December 2010, the appointed liquidator of BBPL offi cially lodged the liquidators’ report to Accounting and

Corporate Regulatory Authority (“ACRA”) and the Insolvency and Public Trustee’s Offi ce (“IPTO”). On 24 March 2011, 3

months after the date of lodgment, BBPL was formally dissolved.

In view of the above and of those matters mentioned by the Preceding Auditors, we were unable to perform the audit

procedures necessary to obtain suffi cient and appropriate audit evidence regarding the fi nancial position of BBPL as at

1 January 2010.

(ii) As at the date of this report, BBLSB is still in the process of liquidation. We were similarly unable to obtain suffi cient and

appropriate audit evidence regarding the fi nancial position of BBLSB as at 1 January 2010.

(iii) As disclosed in Note 9 to the consolidated fi nancial statements, the Group recorded a net loss of $3,433,660 on the

liquidation of the two subsidiaries, BBPL and BBLSB for the current fi nancial year ended 31 December 2010. As we

were unable to audit the fi nancial positions of the abovementioned subsidiaries that was liquidated / being liquidated

as detailed above, we were also unable to determine if the resultant net loss on liquidation was properly and accurately

recorded in the consolidated statement of comprehensive income.

Qualifi ed Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualifi ed Opinion paragraph, the balance

sheet of the Company and the consolidated fi nancial statements of the Group are properly drawn up in accordance with the

provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the

Company and of the Group as at 31 December 2010, and of the results, changes in equity and cash fl ows of the Group for the

fi nancial year then ended on that date.

Emphasis of matter

Without qualifying our opinion, we draw attention to Note 2 to the fi nancial statements. As at 31 December 2010, the Company

and the Group’s current liabilities have exceeded its current assets by $5,508,155 and $878,363 respectively. The fi nancial

statements of the Company and Group have been prepared on a going concern basis as the Company has embarked on

a fund raising exercise via share placements and the Group is also exploring various options to restructure or reorganise its

businesses (Note 26).

The fi nancial statements do not include any adjustments relating to the recoverability and classifi cation of recorded asset

amounts and do not include any classifi cation of liabilities that may be necessary if the Company and the Group were unable to

continue as a going concern.



Report on Other Legal Regulatory Requirements

In our opinion, except as mentioned above, the accounting and other records required by the Act to be kept by the Company

and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with

the provisions of the Act.

Crowe Horwath First Trust LLPPublic Accountants and

Certifi ed Public Accountants

Singapore

7 April 2011

BALANCE SHEETSas at 31 December 2010

(Amounts in Singapore dollars)


The accompanying notes are an integral part of the fi nancial statements.

Group Company

Note31 December

201031 December

20091 January

200931 December

201031 December

20091 January

2009

$ $ $ $ $ $Restated Restated Restated Restated(Note 30) (Note 30) (Note 30) (Note 30)

ASSETSNon-current assets

Property, plant and equipment 4 9,218,893 9,647,309 10,537,367 – – –

Subsidiaries 5 – – – 19,145,698 1,219,852 6,620,209

Available-for-sale fi nancial assets 6 202,767 202,767 2,767 – – –

9,421,660 9,850,076 10,540,134 19,145,698 1,219,852 6,620,209

Current assets

Inventories 7 9,865,210 15,749,154 23,556,978 – – –

Trade and other receivables 8 12,561,407 12,757,247 11,985,216 7,173,296 6,114,300 15,280,477

Cash and bank balances 9 1,169,639 716,231 1,238,654 636,663 59,259 25,237

23,596,256 29,222,632 36,780,848 7,809,959 6,173,559 15,305,714

TOTAL ASSETS 33,017,916 39,072,708 47,320,982 26,955,657 7,393,411 21,925,923

LIABILITIESCurrent liabilities

Trade and other payables 10 14,815,445 13,307,291 11,537,907 10,497,661 6,455,542 10,071,657

Borrowings, secured 11 7,502,243 15,972,353 21,957,636 2,820,453 7,841,639 10,436,384

Income tax payable 2,156,931 2,160,456 1,113,915 – – –

24,474,619 31,440,100 34,609,458 13,318,114 14,297,181 20,508,041

Non-current liabilities

Borrowings, secured 11 165,942 327,156 435,036 – – –

Deferred tax liabilities 12 13,471 1,064,168 1,242,638 – – –

179,413 1,391,324 1,677,674 – – –

TOTAL LIABILITIES 24,654,032 32,831,424 36,287,132 13,318,114 14,297,181 20,508,041

NET ASSETS / (LIABILITIES) 8,363,884 6,241,284 11,033,850 13,637,543 (6,903,770) 1,417,882

EQUITYCapital and reserves attributable to equity holders of the CompanyShare capital 13 32,607,414 27,510,216 26,035,216 32,607,414 27,510,216 26,035,216

Revaluation and other reserves 14 1,614,520 1,204,010 1,137,104 – – –

Accumulated losses (26,888,210) (20,756,976) (17,584,731) (18,969,871) (34,413,986) (24,617,334)

7,333,724 7,957,250 9,587,589 13,637,543 (6,903,770) 1,417,882

Non-controlling interests 1,030,160 (1,715,966) 1,446,261 – – –

TOTAL EQUITY / (DEFICIT) 8,363,884 6,241,284 11,033,850 13,637,543 (6,903,770) 1,417,882

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the fi nancial year ended 31 December 2010




Note 2010 2009

$ $

Revenue 15 53,006,912 55,567,570

Cost of sales (45,010,280) (41,944,727)

Gross profi t 7,996,632 13,622,843

Other operating income 16 518,852 194,252

Selling and distribution expenses (3,106,845) (7,724,199)

Administrative expenses (7,918,355) (9,925,290)

Other expense – Loss on liquidation of subsidiaries 9(a) (3,433,660) –

Finance costs 17 (886,860) (1,414,176)

Loss before tax 19 (6,830,236) (5,246,570)

Income tax 20 936,325 (911,734)

Loss for the fi nancial year (5,893,911) (6,158,304)

Other comprehensive income:

Currency translation differences arising from consolidation 371,181 (297,027)

Revaluation gains on property, plant and equipment – 485,244

Reclassifi cation of currency translation reserves on liquidation

of subsidiaries 9(a) 39,329 –

Deferred tax liabilities on revaluation surplus – (121,311)

Other comprehensive income, net of tax 410,510 66,906

Total comprehensive loss for the fi nancial year (5,483,401) (6,091,398)

Loss attributable to:

Equity holders of the Company (6,131,234) (3,172,245)

Non-controlling interests 237,323 (2,986,059)

(5,893,911) (6,158,304)

Total comprehensive loss attributable to:

Equity holders of the Company (5,720,724) (3,105,339)

Non-controlling interests 237,323 (2,986,059)

(5,483,401) (6,091,398)

Loss per share (cents)

Basic 21 (1.08) (1.02)

Diluted 21 (1.08) (1.02)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the fi nancial year ended 31 December 2010




Attributable to equity holders of the Company

Share capital

Asset revaluation and other reserves

Accumulated losses

Non-controlling interests Total equity

$ $ $ $ $(Note 14)

Balance at 1.1.2009 26,035,216 1,137,104 (17,584,731) 1,446,261 11,033,850

Issuance of shares, net 1,475,000 – – – 1,475,000

Disposal of subsidiaries – – – (176,168) (176,168)

Total comprehensive loss

for the fi nancial year – 66,906 (3,172,245) (2,986,059) (6,091,398)

Balance at 31.12.2009 27,510,216 1,204,010 (20,756,976) (1,715,966) 6,241,284

Balance at 1.1.2010 27,510,216 1,204,010 (20,756,976) (1,715,966) 6,241,284

Issuance of shares, net 5,097,198 – – – 5,097,198

Liquidation of subsidiaries – – – 2,508,803 2,508,803

Total comprehensive loss

for the fi nancial year – 410,510 (6,131,234) 237,323 (5,483,401)

Balance at 31.12.2010 32,607,414 1,614,520 (26,888,210) 1,030,160 8,363,884

CONSOLIDATED STATEMENT OF CASH FLOWSfor the fi nancial year ended 31 December 2010




Note 2010 2009

$ $

Cash fl ows from operating activities

Loss before tax (6,830,236) (5,246,570)

Adjustments:

Depreciation of property, plant and equipment 548,477 1,320,692

(Gain) / Loss on disposal of property, plant and equipment (23,382) 20,039

Interest expense 886,860 1,414,176

Interest income (2,580) (1,578)

Gain on disposal of subsidiaries – (429,541)

Loss on liquidation of subsidiaries 9(a) 3,433,660 –

Reversal of impairment loss of trade receivables (101,271) –

Exchange differences (200,973) (89,717)

Operating loss before working capital changes (2,289,445) (3,012,499)

Inventories 4,324,631 7,766,812

Trade and other receivables (1,096,908) (1,388,258)

Trade and other payables 5,039,583 2,777,885

Cash generated from operations 6,003,861 6,143,940

Interest paid (886,860) (1,414,176)

Interest income received 2,580 1,578

Income taxes paid (115,901) (164,974)

Net cash from operating activities 5,003,682 4,566,368

Cash fl ows from investing activities

Disposal of subsidiaries, net cash infl ow – 2,317

Liquidation of subsidiaries, net cash outfl ow 9(a) (3,488,593) –

Proceeds from disposal of property, plant and equipment 510,968 78,851

Placement of structured deposit – (200,000)

Purchase of property, plant and equipment (732,835) (351,796)

Net cash used in investing activities (3,710,460) (470,628)

Cash fl ows from fi nancing activities

Proceeds from issue of new shares 5,097,198 1,475,000

Repayment of borrowings, secured (5,937,012) (6,093,163)

Withdrawal of pledged fi xed deposits 74,699 186,816

Net cash used in fi nancing activities (765,115) (4,431,347)

Net increase / (decrease) in cash and cash equivalents 528,107 (335,607)

Cash and cash equivalents at beginning of year 383,319 718,926

Cash and cash equivalents at end of year 9 911,426 383,319

NOTES TO THE FINANCIAL STATEMENTSfor the fi nancial year ended 31 December 2010

(Amounts in Singapore dollars unless otherwise stated)


These notes form an integral part of and should be read in conjunction with the accompanying fi nancial statements.

1. GENERAL INFORMATION

KLW Holdings Limited (the “Company”) is a limited liability company domiciled and incorporated in Singapore and is

listed on the Singapore Exchange Securities Trading Limited. The address of the Company's registered offi ce and its

principal place of business is 19 Senoko Loop, Singapore 758169.

The principal activity of the Company is investment holding. Pursuant to the liquidation of a group of subsidiaries, the

Group is no longer engaged in retail operations. The principal activities of its subsidiaries are as shown in Note 5.

The fi nancial statements for the year ended 31 December 2010 were authorised for issue in accordance with a

resolution of the Board of Directors on 31 March 2011.

2. FUNDAMENTAL ACCOUNTING CONCEPT

As at 31 December 2010, the Company and the Group’s current liabilities have exceeded its current assets by

$5,508,155 and $878,363 respectively. The fi nancial statements of the Company and Group have been prepared on a

going concern basis as the Company has embarked on a fund raising exercise via share placements and the Group is

also exploring various options to restructure or reorganise its businesses (Note 26).

The fi nancial statements do not include any adjustments relating to the recoverability and classifi cation of recorded asset

amounts and do not include any classifi cation of liabilities that may be necessary if the Company and the Group were

unable to continue as a going concern.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The fi nancial statements are prepared in accordance with the historical cost convention, except as disclosed in the

accounting policies below and are drawn up in accordance with the provisions of the Singapore Companies Act, Cap.

50 and the Singapore Financial Reporting Standards (“FRS”).

The preparation of the fi nancial statements in conformity with FRS requires management to exercise its judgements, in

the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the fi nancial statements, and

the reported amounts of revenues and expenses during the fi nancial year. Although these estimates are based on

management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Critical accounting estimates and assumptions used that are signifi cant to the fi nancial statements and areas involving a

higher degree of judgement or complexity, are disclosed in this Note.

Adoption of new and revised standards

On 1 January 2010, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are

mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in

accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended

FRS and INT FRS did not result in substantial changes to the Group’s and Company’s accounting policies and had no

material effect on the amounts reported for the current or prior fi nancial years, except as disclosed below:




3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Adoption of new and revised standards (Continued)

(a) FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009)

The revised FRS 103 introduces a number of changes to the accounting for business combinations that will

impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and

future reported results. Changes in signifi cant accounting policies resulting from the adoption of the revised FRS

103 include:

– Transaction costs would no longer be capitalised as part of the cost of acquisition but will be expensed

immediately;

– Consideration contingent on future events are recognised at fair value on the acquisition date and any

changes in the amount of consideration to be paid will no longer be adjusted against goodwill but

recognised in profi t or loss;

– The Group elects for each acquisition of a business, to measure non-controlling interest at fair value, or at

the non-controlling interest’s proportionate share of the acquiree’s identifi able net assets, and this impacts

the amount of goodwill;

– When a business is acquired in stages, the previously held equity interests in the acquiree is remeasured

to fair value at the acquisition date with any corresponding gain or loss recognised in profi t or loss, and

this impacts the amount of goodwill recognised.

(b) FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or

after 1 July 2009)

Changes in signifi cant accounting policies resulting from the adoption of the revised FRS 27 include:

– A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted

for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise

to a gain or loss recognised in profi t or loss;

– Losses incurred by a subsidiary are allocated to the non-controlling interest even if the losses exceed the

non-controlling interest in the subsidiary’s equity; and

– When control over a subsidiary is lost, any interest retained is measured at fair value with the

corresponding gain or loss recognised in profi t or loss.

According to its transitional provisions, the revised FRS 27 has been applied prospectively, and does not impact

the Group’s consolidated fi nancial statements in respect of transactions with non-controlling interests, attribution

of losses to non-controlling interests and disposal of subsidiaries before 1 January 2010. The changes will affect

future transactions with non-controlling interests.

(c) Amendment to FRS 7 Cash Flow Statements (effective for annual periods beginning on or after 1 January 2010)

Under the amendment, only expenditures that result in a recognised asset in the balance sheet can be classifi ed

as investing activities in the statement of cash fl ows. Previously, such expenditure could be classifi ed as investing

activities in the statement of cash fl ows.

This change has been applied retrospectively. It had no material effect on the amounts presented in the

statement of cash fl ows for the current or prior year.





Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

DescriptionEffective for annual periods

beginning on or after

Amendment to FRS 32 Financial Instruments: Presentation – Classifi cation of

Rights Issues

1 February 2010

INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010

Revised FRS 24 Related Party Disclosures 1 January 2011

Amendments to INT FRS 114 Prepayments of a Minimum Funding Requirement 1 January 2011

INT FRS 115 Agreements for the Construction of Real Estate 1 January 2011

Except for the revised FRS 24, the directors expect that the adoption of the other standards and interpretations above

will have no material impact on the fi nancial statements in the period of initial application. The nature of the impending

change in accounting policy on adoption of the revised FRS 24 is described below.

Revised FRS 24 Related Party Disclosures

The revised FRS 24 clarifi es the defi nition of a related party to simplify the identifi cation of such relationships and to

eliminate inconsistencies in its application. The revised FRS 24 expands the defi nition of a related party and would treat

two entities as related to each other whenever a person (or a close member of that person’s family) or a third party has

control or joint control over the entity, or has signifi cant infl uence over the entity. The revised standard also introduces

a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the

impact of the changes to the defi nition of a related party has on the disclosure of related party transaction. As this

is a disclosure standard, it will have no impact on the fi nancial position or fi nancial performance of the Group when

implemented in 2011.

Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has power to govern

the fi nancial and operating policies so as to obtain benefi ts from its activities, generally accompanied by

a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting

rights that are currently exercisable or convertible are considered when assessing whether the Group

controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the

Group. They are de-consolidated from the date on which control ceases.

In preparing the consolidated fi nancial statements, transactions, balances and unrealised gains on

transactions between group entities are eliminated. Unrealised losses are also eliminated but are

considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been

changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests are that part of the net results of operations and of net assets of a subsidiary

attributable to the interests which are not owned directly or indirectly by the equity holders of the

Company. They are shown separately in the consolidated statement of comprehensive income, statement

of changes in equity and balance sheet. Total comprehensive income is attributed to the non-controlling

interests based on their respective interests in a subsidiary, even if this results in the non-controlling

interests having a defi cit balance.





Group accounting (Continued)

(a) Subsidiaries (Continued)

(ii) Acquisition of businesses

The acquisition method of accounting is used to account for business combinations by the Group.

The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets

transferred, the liabilities incurred and the equity interests issued by the Group. The consideration

transferred also includes the fair value of any contingent consideration arrangement and the fair value of

any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.

Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are,

with limited exceptions, measured initially at their fair values at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree

at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the

acquiree’s net identifi able assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree,

and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the

net identifi able assets acquired is recorded as goodwill. If those amounts are less than the fair value of the

net identifi able assets of the subsidiary acquired and the measurement of all amounts has been reviewed,

the difference is recognised directly in profi t or loss as a bargain purchase.

(iii) Disposals of subsidiaries or businesses

The assets and liabilities of the subsidiary, including any goodwill, are derecognised when a change in

the Company’s ownership interest in a subsidiary results in a loss of control over the subsidiary. Amounts

recognised in other comprehensive income in respect of that entity are also reclassifi ed to profi t or loss or

transferred directly to retained earnings if required by a specifi c Standard.

Any retained interest in the entity is remeasured at fair value. The difference between the carrying amount

of the retained investment at the date when control is lost and its fair value is recognised in profi t or loss.

Currency translation

Functional and presentation currency

The individual fi nancial statements of each entity are measured using the currency of the primary economic environment

in which the entity operates (“functional currency”). The consolidated fi nancial statements are presented in Singapore

dollars, which is the functional currency of the Company.

Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its

subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those

ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate

of exchange ruling the end of the reporting period. Non-monetary items that are measured in terms of historical cost in

a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items

measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was

determined.





Currency translation (Continued)

Transactions and balances (Continued)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance

sheet date are recognised in profi t or loss except for exchange differences arising on monetary items that form part

of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and

accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassifi ed

from equity to profi t or loss of the Group on disposal of the foreign operation.

Translation of the Group’s fi nancial statements

The assets and liabilities of foreign operations are translated into Singapore dollars at the rate of exchange ruling at

the end of the reporting period and their profi t or loss are translated at the exchange rates prevailing at the date of the

transactions. The exchange differences arising on the translation are taken directly to other comprehensive income.

On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign

operation is recognised in the profi t or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate

share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not

recognised in profi t or loss. For partial disposals of associates or jointly controlled entities that are foreign operations,

the proportionate share of the accumulated exchange differences is reclassifi ed to profi t or loss.

The Group has elected to recycle the accumulated exchange differences in the separate component of other

comprehensive income that arises from the direct method of consolidation, which is the method the Group uses to

complete its consolidation.

Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part

of the property, plant and equipment and borrowing costs that directly attributable to the acquisition, construction or

production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in this

Note. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that

future economic benefi ts associated with the item will fl ow to the Group and the cost of the item can be measured

reliably.

After initial recognition, property, plant and equipment except for leasehold land and buildings are stated at cost less

accumulated depreciation and any accumulated impairment loss.

Leasehold land and buildings are revalued by the directors every fi ve years or at shorter intervals, if appropriate and

whenever their carrying amounts are likely to differ materially from their fair values. Their fair values are determined by an

independent professional valuer.

Any revaluation increase arising on the revaluation of such leasehold land and buildings is recognised in other

comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it

reverses a revaluation decrease for the same asset previously recognised in profi t or loss, in which case the increase

is recognised in profi t or loss. A revaluation defi cit arising on the revaluation of such leasehold land and buildings is

charged to profi t or loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to

a previous revaluation of that asset.





Property, plant and equipment (Continued)

All other items of property, plant and equipment are depreciated using the straight-line method to write-off the cost of

the assets over their estimated useful lives. The estimated useful lives have been taken as follows:-

Useful lives (Years)

Leasehold land and buildings 25 years to 60 years (lease term)

Renovations 5 years period or the lease term, whichever is shorter

Plant and equipment 5 – 10

Motor vehicles 4 – 10

Fully depreciated assets are retained in the fi nancial statements until they are no longer in use. The estimated useful

life and depreciation method are reviewed, and adjusted as appropriate, at each balance sheet date to ensure that the

amount, method and period of depreciation are consistent with the expected pattern of economic benefi ts from items of

property, plant and equipment.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the

difference between the sales proceeds and the carrying amounts of the asset and is recognised in the profi t or loss

within “Other operating income (expenses)” and the revaluation reserve related to those asset, if any, is transferred

directly to retained earnings.

Subsidiaries

Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet.

On disposal of investments in subsidiaries the difference between disposal proceeds and the carrying amounts of the

investments are recognised in profi t or loss.

Impairment of non-fi nancial assets

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

indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of

the asset’s recoverable amount.

An asset’s recoverable amount is calculated as the higher of the asset’s value in use and the asset’s or cash-generating

unit’s fair value less costs to sell and is determined for an individual asset, unless the asset does not generate cash

infl ows that are largely dependent on those from other assets. Where the carrying amount of an asset or cash-

generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable

amount. In assessing value in use, the estimated future cash fl ows expected to be generated by the asset are

discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time

value of money and the risks specifi c to the asset. In determining fair value less costs to sell, an appropriate valuation

model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded

subsidiaries or other available fair value indicators.

Impairment losses of continuing operations are recognised in profi t or loss in those expense categories consistent with

the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to

other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the

amount of any previous revaluation.





Impairment of non-fi nancial assets (Continued)

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication

that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists,

the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment

loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an

asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased

to its recoverable amount. This increase cannot exceed the carrying amount that would have been determined, net

of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profi t and loss

unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

Inventories

Inventories are stated at the lower of cost and net realisable value. Raw materials comprise purchase costs accounted

for on a fi rst-in fi rst-out basis. Work-in-progress and fi nished goods comprise cost of direct materials, direct labour and

an attributable proportion of manufacturing overheads based on normal operating capacity. These costs are assigned

on a fi rst-in fi rst-out basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion

and estimated costs necessary to be incurred for selling and distribution.

Construction contract work-in-progress

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs associated

with the construction contract should be recognised as revenue and expenses respectively by reference to the stage of

completion of the contract activity at the balance sheet date.

When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs

incurred that is probable to be recoverable and contract costs are recognised as an expense in the period in which they

are incurred. An expected loss on the construction contract should be recognised as an expense immediately when it is

probable that total contract costs will exceed total contract revenue.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract work,

claims and incentive payments to the extent that it is probable that they will result in revenue and they can be measured

reliably. A variation or a claim is recognised as contract revenue when is probable that the customer will approve the

variation or negotiations have reached an advanced stage such that it is probable that the customer will accept the

claim.

The stage of completion is measured by reference to the contract costs incurred to date to the estimated total costs

for the contract. Costs incurred during the fi nancial year in connection with future activity on a contract are excluded

from the costs incurred to date when determining the stage of completion of a contract. Such costs are shown as

construction contract work-in-progress on the balance sheet unless it is not probable that such contract costs are

recoverable from the customers, in which case, such costs are recognised as an expense immediately.

The aggregate of costs incurred and the profi t/loss recognised on each contract is compared against the progress

billings up to the fi nancial year end. Where costs incurred and recognised profi t (less recognised losses) exceed

progress billings, the balance is shown as amount due from customers for contract work. Where progress billings

exceeds costs incurred and recognised profi t (less recognised losses), the excess is shown as amount due to customers

for contract work.





Financial assets

Initial recognition and measurement

Financial assets are recognised on the balance sheet when the Group becomes a party to the contractual provisions

of the fi nancial instrument. The Group determines the classifi cation of its fi nancial assets at initial recognition. Financial

assets are initially recognised at fair value plus, in the case of fi nancial assets not at fair value through profi t or loss,

directly attributable transaction costs.

Subsequent measurement

The Group classifi es its investments in fi nancial assets in the following categories: fi nancial assets at fair value

through profi t or loss, loans and receivables, held-to-maturity investments, and available-for-sale fi nancial assets. The

classifi cation depends on the purpose for which the assets were acquired. Management determines the classifi cation

of its fi nancial assets at initial recognition and re-evaluates this designation at every reporting date, with the exception

that the designation of fi nancial assets at fair value through profi t or loss is not revocable. As at 31 December 2010, the

Group held fi nancial assets in the categories of available-for-sale fi nancial assets and loans and receivables.

(i) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets include equity and debt securities. Equity investments classifi ed as available-for-

sale are those, which are neither classifi ed as held for trading nor designated at fair value through profi t or loss.

Debt securities in this category are those which are intended to be held for an indefi nite period of time and which

may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial recognition, available-for-sale fi nancial assets are subsequently measured at fair value. Any gains or

losses arising from changes in fair value of the fi nancial assets are recognised directly in other comprehensive

income, except that impairment losses, foreign exchange gains and losses on monetary instruments and

interest calculated using the effective interest method are recognised in profi t or loss. The cumulative gain

or loss previously recognised in other comprehensive income is reclassifi ed from equity to profi t or loss as a

reclassifi cation adjustment when the fi nancial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are stated at cost less

impairment loss.

(ii) Loans and receivables

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not

quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor

with no intention of trading the receivable. They are included in current assets, except those maturing more than

12 months after the balance sheet date which are classifi ed as non-current assets. Loans and receivables are

presented as trade and other receivables on the balance sheet.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective

interest rate method, less impairment. Gains and losses are recognised in profi t or loss when the loans and

receivables are derecognised or impaired, and through the amortisation process.

Derecognition

Financial assets are derecognised when the contractual rights to the cash fl ows from the fi nancial assets have expired

or have been transferred. On derecognition of a fi nancial asset in its entirety, the difference between the carrying

amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other

comprehensive income is recognised in profi t or loss.





Financial assets (Continued)

Derecognition (Continued)

All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date basis where

the purchase or sale of fi nancial assets are under a contract whose terms require delivery of the assets within the

timeframe established by the market concerned.

Impairment of fi nancial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial asset or group

of fi nancial assets is impaired and recognised the impairment loss when such evidence exists.

(i) Financial assets carried at amortised cost

An impairment loss is recognised in profi t or loss when there is objective evidence that the asset is impaired, and

is measured as the difference between the asset’s carrying amount and the present value of estimated future

cash fl ows discounted at the fi nancial asset’s original effective interest rate. The carrying amount of the asset is

reduced through the use of an allowance account. The impairment loss is recognised in the profi t or loss.

When the asset becomes uncollectible, the carrying amount of impaired fi nancial assets is reduced directly or if

an amount was charged to the allowance account, the amounts charged to the allowance account are written

off against the carrying value of the fi nancial asset.

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred,

the Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor

and default or signifi cant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss

is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal

date. The amount of reversal is recognised in profi t or loss.

(ii) Assets carried at cost

If there is objective evidence (such as signifi cant adverse changes in the business environment where the

issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that an impairment loss

on fi nancial assets carried at cost has been incurred, the amount of the loss is measured as the difference

between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the

current market rate of return for a similar fi nancial asset. Such impairment losses are not reversed in subsequent

periods.

(iii) Available-for-sale fi nancial assets

Signifi cant or prolonged decline in fair value below cost, signifi cant fi nancial diffi culties of the issuer or obligor,

and the disappearance of an active trading market are considerations to determine whether there is objective

evidence that investment securities classifi ed as available-for-sale fi nancial assets are impaired.

When the asset is impaired, the cumulative loss is the difference between the acquisition cost (net of any

principal repayment and amortisation) and current fair value, less any impairment loss previously recognised in

the profi t or loss, is transferred from equity to profi t or loss.

The impairment losses recognised as an expense for equity instruments are not reversed through profi t or loss.

The impairment losses recognised as an expense for debt instruments are subsequently reversed if an increase

in the fair value of the instruments can be objectively related to event occurring after the recognition of the

impairment loss.





Financial liabilities

Financial liabilities within the scope of FRS 39 are recognised on the balance sheet when, and only when, the Group

becomes a party to the contractual provisions of the fi nancial instrument. The Group determines the classifi cation of its

fi nancial liabilities at initial recognition.

Financial liabilities are recognised initially at fair value, plus, in the case of fi nancial liabilities other than derivatives, directly

attributable transaction costs. Subsequent to initial recognition, derivatives are measured at fair value. Other fi nancial

liabilities (except for fi nancial guarantee) are measured at amortised cost using the effective interest method.

For fi nancial liabilities other than derivatives, gains and losses are recognised in profi t or loss when the liabilities are

derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives

are recognised in profi t or loss. Net gains or losses on derivatives include exchange differences.

A fi nancial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled

or expired. When an existing fi nancial liability is replaced by another from the same lender on substantially different

terms, or the terms of an existing liability are substantially modifi ed, such an exchange or modifi cation is treated as a

derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying

amounts is recognised in the profi t or loss.

Provisions

A provision is recognised when there is a present obligation, legal or constructive, as a result of a past event and it

is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation, and a

reliable estimate can be made of the amount of the obligation. Provisions are reviewed regularly at each balance sheet

date and adjusted to refl ect the current best estimate. If it is no longer probable that an outfl ow of economic resources

will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material,

the provision is discounted using a current pre tax rate that refl ects, where appropriate, the risks specifi c to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a fi nance cost.

Borrowings

Borrowings are initially recorded at fair value, net of transaction costs incurred and subsequently accounted for at

amortised costs using the effective interest method. Borrowings which are due to be settled within twelve months after

the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a

period longer than twelve months and an agreement to refi nance, or to reschedule payments, on a long-term basis is

completed after the balance sheet date and before the fi nancial statements are authorised for issue. Other borrowings

due to be settled more than twelve months after the balance sheet date are also included in current borrowings in the

balance sheet unless the Group has an unconditional rights to defer settlement for at least twelve months after the

balance sheet date.

Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement

at inception date: whether fulfi llment of the arrangement is dependent on the use of a specifi c asset or assets or the

arrangement conveys a right to use the asset. For arrangements entered into prior to 1 January 2005, the date of

inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

(i) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classifi ed as

operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount

of the leased asset and recognised over the lease term on the same bases as rental income. The accounting

policy for rental income is set out in this Note. Contingent rents are recognised as revenue in the period in which

they are earned.





Leases (Continued)

(ii) As lessee

Finance leases, which effectively transfer to the Group substantially all the risks and rewards incidental to

ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased item

or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between

the fi nance charges and reduction of the lease liability so as to achieve a constant periodic rate of interest on

the remaining balance of the liability for each period. Finance charges are charged directly to profi t or loss.

Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised lease

assets are depreciated over the shorter of the estimated useful life of the asset or the lease term, if there is no

reasonable certainty that the Group will obtain ownership by the end of the lease term.

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased

item are classifi ed as operating leases. Operating lease payments are recognised as an expense in the profi t or

loss on a straight-line basis over the lease term. The aggregate benefi t of incentives provided by the lessor is

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

Financial guarantees

The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These guarantees

are fi nancial guarantee contracts as they require the Company to reimburse the banks if the subsidiaries fail to make

principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantee contracts are initially recognised as a liability at their fair values, plus transaction costs directly

attributable to the issuance of the guarantees in the Company’s balance sheet. Subsequent to initial recognition,

fi nancial guarantee contracts are recognised as income in profi t or loss over the period of the guarantee. If it is probable

that the liabilities will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher

amount with the difference charged to profi t or loss.

Share capital

Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issuance of new ordinary shares

are deducted against share capital.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue

can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding

discounts, rebates and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting

as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The

following specifi c recognition criteria must also be met before revenue is recognised:

(i) Revenue from sale of goods is recognised upon the transfer of signifi cant risks and rewards of ownership, which

generally coincides with the time when the goods are delivered to customers and title has passed. Revenue is

not recognised to the extent where there are signifi cant uncertainties regarding recovery of the consideration

due, associated costs or the possible return of goods.

(ii) Revenue from the rendering of service is recognised during the fi nancial year in which the services are rendered,

by reference to completion of the specifi c transaction assessed on the basis of the actual service provided as a

proportion of the total services to be performed.

(iii) Revenue from projects is recognised using the percentage-of-completion method. The percentage of completion

for a given project is determined after considering the relationship of the cost of work done to-date to total

contract cost for the project. Where the contract outcome cannot be measured reliably, revenue is recognised to

the extent of the expenses recognised that are recoverable.





Revenue recognition (Continued)

(iv) Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding

and the effective interest rates applicable.

(v) Rental income arising from operating leases is recognised on a straight-line basis over the lease terms.

Employees’ benefi ts

(i) Retirement benefi ts

The Group and the Company participates in the national schemes as defi ned by the laws of the countries in

which it has operations.

The Company makes contribution to the Central Provident Fund (CPF) Scheme in Singapore, a defi ned

contribution pension schemes.

Obligations for contributions to defi ned contribution retirement plans are recognised as an expense in the period

in which the related service is performed.

(ii) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for

the estimated liability as a result of services rendered by employees up to the balance sheet date.

(iii) Employee Share Option Scheme

The KLW Holdings Employee Share Option Scheme allows the Group employees to acquire shares of the

Company. In respect of share options granted after 22 November 2002 but not vested after 1 January 2005,

the fair value of options granted is recognised as an employee expense with a corresponding increase in equity.

The fair value is measured at grant date and spread over the period during which the employees become

unconditionally entitled to the options. At each balance sheet date, the Company revises its estimates of the

number of options that are expected to become exercisable. It recognises the impact of the revision of original

estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period.

When the options are exercised, equity is increased by the amount of the proceeds received.

Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition,

construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare

the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing

cost are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs

are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs

in connection with the borrowing of funds.

Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from

the tax authorities, using tax rates and tax laws that have been substantially enacted by the balance sheet date in the

countries where the Group operates and generates taxable income. Current income taxes are recognised in profi t or

loss except to the extent that the tax relates to items recognised outside profi t or loss, either in other comprehensive

income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to

situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.





Income tax (Continued)

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the fi nancial

statements and the corresponding tax bases used in the computation of taxable profi t, is accounted for using the

balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences

and deferred tax assets are recognised to the extent that it is probable that taxable profi ts will be available against

which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary

difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and

liabilities in a transaction that affects neither the taxable profi t nor the accounting profi t.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except

where the Group is able to control the reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is

no longer probable that suffi cient taxable profi ts will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the

asset realised, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet

date. Deferred tax is charged or credited to profi t or loss, except when it relates to items charged or credited directly to

other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income

or equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against

current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends

to settle its current tax assets and liabilities on a net basis.

Related parties

A party is considered to be related to the Group if:

(a) the party, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common

control with the Group; or has an interest in the Group that gives it signifi cant infl uence over the Group; or has

joint control over the Group;

(b) the party is an associate; a jointly-controlled entity;

(c) the party is a member of the key management personnel of the Group or its parent;

(d) the party is a close member of the family of any individual referred to in (a) and (c);

(e) the party is an entity that is controlled, jointly controlled or signifi cantly infl uenced by or for which signifi cant

voting power in such entity resides with, directly or indirectly, any individual referred to (c) or (d); or

(f) the party is a post-employment benefi t plan for the benefi t of the employees of the Group, or of any entity that is

a related party of the Group.

Cash and cash equivalents

For the purpose of the consolidated statement of cash fl ows, cash and cash equivalent comprises cash on hand,

deposits with fi nancial institutions, and short term, highly liquid investments readily convertible to known amounts of

cash and subjected to an insignifi cant risk of changes in value. These also include bank overdrafts that form an integral

part of the Group’s cash management.





Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee

whose members are responsible for allocating resources and assessing performance of the operating segments.

Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the circumstances.

i. Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

defi nition, seldom equal the related actual results. The estimates and assumptions that have a signifi cant risk of

causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are

discussed below.

(a) Impairment of property, plant and equipment

The Group assesses annually whether property, plant and equipment have any indication of impairment in

accordance with the accounting policy. The recoverable amounts of property, plant and equipment have

been determined based on value-in-use calculations. These calculations require the use of judgement

and estimates.

(b) Depreciation of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over the estimated

economic useful lives. Management estimates the useful lives of these property, plant and equipment to

be within 4 to 60 years. Changes in the expected level of usage and technological developments could

impact the economic useful lives of these assets, therefore, future depreciation charges could be revised.

The carrying amount of the Group’s property, plant and equipment at the balance sheet date is disclosed

in Note 4 to the fi nancial statements.

(c) Impairment of loans and receivables

An impairment loss is recognised when there is objective evidence that a fi nancial asset is impaired. If

the fi nancial conditions of the customers were to deteriorate, resulting in an impairment of their ability

to make payments, additional allowances may be required in future periods. Management specifi cally

reviews its loan and receivables and analyse historical bad debt, customer concentrations, customer

creditworthiness, current economic trends and changes in our customer payment terms when making a

judgement to evaluate the adequacy of the allowance for impairment loss. At the balance sheet date, the

receivables are measured at fair value and their fair values might change materially within the next fi nancial

year but these changes would not arise from assumptions or other sources of estimation uncertainty at

the balance sheet date. The carrying amounts of the Group's trade and other receivables at the balance

sheet date are disclosed in Note 8 to the fi nancial statements.





Critical accounting estimates, assumptions and judgements (Continued)

i. Critical accounting estimates and assumptions (Continued)

(d) Impairment of subsidiaries

Investments in subsidiaries are stated at cost less accumulated impairment loss in the Company’s balance

sheet. This investment is reviewed for impairment whenever there is any indication that the assets may be

impaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to

sell and value in use) of the asset is estimated to determine the amount of impairment loss.

For the purpose of impairment assessment of the investment, recoverable amount is determined for

the cash generating units (“CGU”) to which the investment belongs. In estimating the value in use, the

Company makes an estimate of the expected future cash fl ows from the CGU and also to choose a

suitable discount rate in order to calculate the present value of those cash fl ows. These estimates are

subjective by nature subjective. Actual results could differ signifi cantly from these estimates.

(e) Income tax

The Group has exposure to income taxes in numerous jurisdictions. Signifi cant judgement is involved in

determining the group-wide provision for income taxes. There are certain transactions and computations

for which the ultimate tax determination is uncertain during the ordinary course of business. The Group

recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due.

Where the fi nal tax outcome of these matters is different from the amounts that were initially recognised,

such differences will impact the income tax and deferred tax provisions in the period in which such

determination is made. The carrying amount of the Group’s deferred tax liabilities and income tax as at 31

December 2010 are disclosed in Note 12 and 20 respectively.

(f) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less

estimated costs of computation and selling expenses. These estimates are based on the current market

condition and the historical experience of selling products of similar nature. It could change signifi cant

as a result of competitor actions in response to secure industry cycles. Management will reassess the

estimations at the balance sheet date. The carrying amounts of the Group's inventories are at the balance

sheet date are disclosed in Note 7 to the fi nancial statements.




4. PROPERTY, PLANT AND EQUIPMENT

At valuation Cost

Group

Leasehold land and buildings

Plant and

equipmentMotor

vehicles Renovations Total

$ $ $ $ $

Cost or valuationAs at 1.1.2009 8,872,701 10,412,213 782,150 3,062,359 23,129,423

Additions – 265,530 16,024 70,242 351,796

Disposals – (241,254) (32,695) (154,072) (428,021)

Revaluation adjustment (970,474) – – – (970,474)

Currency translation differences (170,629) (199,597) (4,565) (169) (374,960)

As at 31.12.2009 7,731,598 10,236,892 760,914 2,978,360 21,707,764

As at 1.1.2010 7,731,598 10,236,892 760,914 2,978,360 21,707,764Additions – 476,813 130,402 125,620 732,835Disposals/liquidated – (2,551,414) (33,507) (2,942,923) (5,527,844)Currency translation differences 189,500 717,667 14,847 189 922,203

As at 31.12.2010 7,921,098 8,879,958 872,656 161,246 17,834,958

Accumulated depreciationAs at 1.1.2009 1,330,631 8,415,728 675,470 2,170,227 12,592,056

Charge for the year 152,399 783,281 63,575 321,437 1,320,692

Disposals – (106,303) (29,198) (93,424) (228,925)

Revaluation adjustment (1,455,718) – – – (1,455,718)

Currency translation differences (27,312) (131,896) (2,791) (5,651) (167,650)

As at 31.12.2009 – 8,960,810 707,056 2,392,589 12,060,455

As at 1.1.2010 – 8,960,810 707,056 2,392,589 12,060,455Charge for the year 167,428 324,903 41,154 14,992 548,477Disposals/liquidated – (1,829,346) (23,667) (2,390,630) (4,243,643)Currency translation differences (1,978) 248,373 4,381 – 250,776

As at 31.12.2010 165,450 7,704,740 728,924 16,951 8,616,065

Net carrying amountAs at 31.12.2010 7,755,648 1,175,218 143,732 144,295 9,218,893

As at 31.12.2009 7,731,598 1,276,082 53,858 585,771 9,647,309

As at 1.1.2009 7,542,070 1,996,485 106,680 892,132 10,537,367




4. PROPERTY, PLANT AND EQUIPMENT (Continued)

Assets pledged as security

The Group’s leasehold land and buildings and certain part of plant and equipments with a carrying amount of

$8,215,452 (2009: $7,809,456) are mortgaged to secure the bank borrowings (Note 11).

Revaluation of leasehold land and buildings

Leasehold land and buildings had been revalued at 31 December 2009 based on valuations performed by accredited

independent valuer. The valuations are based on valuation at open market value on an existing use basis.

If the leasehold land and buildings were measured using the cost model, their net carrying amounts would be as

follows:

Group

2010 2009

$ $

Leasehold land and buildings

At Cost 5,793,368 5,654,770

Less: Accumulated depreciation (1,231,542) (1,084,165)

Net carrying amount 4,561,826 4,750,605

5. SUBSIDIARIES

Company

2010 2009

$ $

Unquoted equity shares at costBalance at beginning of fi nancial year 20,127,981 19,977,002

Add: Addition of equity interest 18,135,700 151,050

Less: Disposal of equity interest held (1,846,761) (71)

Less: Liquidation of equity interest held (5,304,500) –

Balance at end of fi nancial year 31,112,420 20,127,981

Less: Impairment lossBalance at beginning of fi nancial year 18,908,129 13,356,793

Add: Impairment during the fi nancial year – 5,551,336

Less: Disposal of equity interest held (1,636,907) –

Less: Liquidation of equity interest held (5,304,500) –

Balance at end of fi nancial year 11,966,722 18,908,129

Net carrying amount 19,145,698 1,219,852




5. SUBSIDIARIES (Continued)

Name of companies Principal activities

Country of incorporation and place of

businessEffective equity

held by the Group Cost of investment

2010 2009 2010 2009% % $ $

KLW Wood Products

Pte Ltd (1)

Rental of premises and

supply and installation of

doors, mouldings and wood

fl oorings

Singapore 100 100 10,456,720 10,456,720

KLW Wood Products

(M) Sdn Bhd (2)

Manufacture and supply of


fl oorings

Malaysia 100 100 –

(Note A)

8

Dongguan Lebex

Doors Co Ltd (3) (8)



fl oorings

People’s

Republic

of China

100 100 –

(Note A)

1,846,753

Barang Barang Pte

Ltd

Retail of home furnishing and

lifestyle products

Singapore – 71 –

(Note B)

5,304,500

Teeni Universal Pte

Ltd (4)

Investment holding Singapore 60 60 2,520,000 2,520,000

KLW Resources Sdn

Bhd (2)

Investment holding Malaysia 100

(Note C)

– 18,135,700 –

31,112,420 20,127,981

Subsidiaries of KLW Resources Sdn Bhd

KLW Wood Products

(M) Sdn Bhd (2) (9)



fl oorings

Malaysia 100 100

Dongguan Lebex

Doors Co Ltd (3) (8)



fl oorings

People’s

Republic

of China

100 100

KLW Joinery Pte.

Ltd. (1) (8)

Supply and installation of


fl oorings

Singapore 100

(Note C)

–





Name of companies Principal activities

Country of incorporation and place of

businessEffective equity

held by the Group

2010 2009

% %

Subsidiaries of Teeni Universal Pte Ltd

Teeni Enterprise Pte Ltd (1) Distribution of fashion and hair

accessories, body care products

and cosmetics

Singapore 60 60

Teeni Enterprise Sdn Bhd (5) (8) Distribution of fashion and hair


and cosmetics

Singapore 60 60

Teeni Enterprise Hong Kong Ltd (6) (8) Distribution of fashion and hair


and cosmetics

Singapore 60 60

Teeni Universal Enterprise Ltd (7) (8) Distribution of fashion and hair


and cosmetics

Taiwan 60 60

Teeni Dongguan (3) Distribution of fashion and hair


and cosmetics

People’s

Republic

of China

60 60

Subsidiary of Barang Barang

Barang Barang Lifestyle Sdn Bhd Retail of home furnishing and

lifestyle products

Malaysia –(Note D)

71

(1) Audited by Crowe Horwath First Trust LLP, Certifi ed Public Accountants, Singapore.

(2) Audited by Crowe Horwath, Johor Bahru, Malaysia.

(3) Audited by Dongguan City YongSheng Certifi ed Public Accountants, People Republic of China.

(4) Audited by Mubarak Salim & Co., Singapore.

(5) Audited by NK.Khoo & Co., Malaysia.

(6) Audited by Cheng Woon Kam., Hong Kong.

(7) Audited by Jingwoei & Co., Certifi ed Public Accountants, Taiwan.

(8) Individual and total Net Tangible Assets (“NTA”) are below 5% of the Group’s NTA.

(9) In accordance to Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and

Board of Directors of the Company confi rmed that they are satisfi ed that the appointment of different auditors for its subsidiaries

would not compromise the standard and effectiveness of the audit of the Company.

Note A

Pursuant to a corporate restructuring exercise, the Company’s interests in these subsidiaries namely KLW Wood Products (M) Sdn Bhd

and Dongguan Lebex Doors Co Ltd were disposed to KLW Resources Sdn Bhd, a newly incorporated entity during the fi nancial year.

On 20 August 2010, the Group has entered into a sales and purchase agreement with Koperasi Permodalan Felda Berhad (“KPFB”)

inviting KPFB to acquire a 30% of the issued and paid up share capital of KLW Resources Sdn Bhd. Subsequently on 7 February 2011

KPFB has accepted the invitation (Note 26).





Note B

On 10 February 2010, the subsidiary was placed under creditor’s voluntary liquidation.

On 24 December 2010, the liquidator of Barang Barang Pte Ltd (“BBPL”) has offi cially lodged the liquidator report to the Accounting

and Corporate Regulatory Authority (“ACRA”) and the Insolvency and Public Trustee’s offi ce (“IPTO”). On 24 March 2011, 3 month after

the date of lodgment, BBPL was formally dissolved.

Note C

Newly incorporated during the fi nancial year.

Note D

On 31 March 2010, the subsidiary was placed under creditors’ voluntary liquidation and is in the process of being liquidated.

6. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Group

2010 2009

$ $

Balance at beginning of year 202,767 2,767

Additions – 200,000

Balance at end of year 202,767 202,767

Unquoted investmentEquity shares 2,767 2,767

Structured deposit 200,000 200,000

Total 202,767 202,767

Unquoted structured deposit and unquoted equity investments are stated at cost as there is no quoted market price

in an active market. As such, it is not practicable to determine with suffi cient reliability their fair values. However,

the directors do not anticipate that the carrying amounts of the unquoted structured deposit and unquoted equity

investments will be signifi cantly in excess of its fair value.

The structured deposit is pledged for bank borrowings (Note 11).

The effective interest rate of the unquoted structured deposit is at 1% (2009: 1%) per annum.




7. INVENTORIES

Group

2010 2009

$ $

Trading stocks 1,560,840 1,421,661

Finished goods 443,919 2,363,554

Work-in-progress 5,134,867 8,906,903

Raw materials 2,528,544 3,057,036

Goods in transit 197,040 –

9,865,210 15,749,154

The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to $43,799,181

(2009: $39,715,936).

8. TRADE AND OTHER RECEIVABLES

Group Company

2010 2009 2010 2009

$ $ $ $

Trade receivables:

- Third parties (i) 10,483,457 13,260,043 584,859 232,693

- Subsidiaries – – 299,529 299,529

10,483,457 13,260,043 884,388 532,222

Less: Allowance for impairment

of trade receivables (ii) (232,012) (3,597,774) (299,529) (299,529)

Trade receivables, net 10,251,445 9,662,269 584,859 232,693

Other receivables:

- Others 248,644 454,018 11,027 26,389

- Prepayments 352,820 455,336 5,363 3,187

- Deposits 1,708,498 2,185,624 – –

- Due from subsidiaries (non-trade) * – – 11,879,618 16,857,624

2,309,962 3,094,978 11,896,008 16,887,200

Less: Allowance for impairment

of other receivables (iii) – – (5,307,571) (11,005,593)

Other receivables, net 2,309,062 3,094,978 6,588,437 5,881,607

Trade receivables and other

receivables, net 12,561,407 12,757,247 7,173,296 6,114,300

* These amounts are unsecured, interest-free and repayable on demand.




8. TRADE RECEIVABLES AND OTHER RECEIVABLES (Continued)

Included in trade receivables is as follows:

Group

2010 2009

$ $

(i) Gross amount due from customer for contract work Aggregate amount of costs incurred and closed up recognised

profi ts to date 133,345 –

Less: Progress billings (88,200) –

45,145 –

Amount due from customer for contract work 45,145 –

The movements in the related allowance for impairment are as follows:

Group Company

2010 2009 2010 2009

$ $ $ $

(ii) Trade receivables

Balance at beginning 3,597,774 3,340,009 299,529 299,529

Charge for the year 6,718 296,876 – –

Reversal of impairment loss (101,271) (21,281) – –

Bad debts written off

against allowance (3,308,340) – – –

Currency translation

difference 37,131 (17,830) – –

232,012 3,597,774 299,529 299,529

Company

2010 2009

$ $

(iii) Other Receivables

Balance at beginning 11,005,593 7,771,961

Charge for the year – 5,025,069

Bad debts written off against allowance (5,025,069) (1,791,437)

Reversal of impairment loss (672,953) –

5,307,571 11,005,593

The Group has provided fully for all trade and other receivables which are overdue for more than 12 months. Specifi c

allowance may also be written off when the debt is irrecoverable.




9. CASH AND BANK BALANCES

Group Company

2010 2009 2010 2009

$ $ $ $

Cash and bank balances 911,426 383,319 636,663 59,259

Fixed deposits (i) 258,213 332,912 – –

Cash and bank balances as

per balance sheets 1,169,639 716,231 636,663 59,259

Less: Fixed deposits (258,213) (332,912) – –

Cash and cash equivalents as

per consolidated statement of

cash fl ows 911,426 383,319 636,663 59,259

(i) Fixed deposits amounting to S$258,213 (2009: S$332,912) belonging to certain subsidiaries have been pledged in relation to

the security granted for bank borrowings (Note 11).

Liquidation and Disposal of subsidiaries

(a) During the fi nancial year, two subsidiaries, namely Barang Barang Pte Ltd (“BBPL”) and Barang Barang Lifestyle

Sdn Bhd (“BBLSB”), were placed under creditors’ voluntary liquidation on 10 February 2010 and 31 March 2010,

respectively, and ceased operations with effect from those dates.

On 24 December 2010, the liquidator of BBPL has offi cially lodged the liquidator report to the Accounting and

Corporate Regulatory Authority (“ACRA”) and the Insolvency and Public Trustee (“IPTO”). According BBPL will be

dissolved after 3 months from the date of the lodgement on 24 March 2011.

As at the date of the issuance of our report, BBLSB is still in the process of liquidation.




9. CASH AND BANK BALANCES (Continued)

Liquidation and Disposal of subsidiaries (Continued)

(a) The carrying values of identifi able assets and liabilities of the subsidiaries that were liquidated were as follows:

Group

2010$

Trade and other receivables 1,266,748

Inventories 1,559,313

Property, plant and equipment 796,615

Trade and other payables (9,590,888)

Borrowings, secured (2,694,312)

Net identifi able liabilities (8,662,524)

Add: Non-controlling interests 2,508,803

Net identifi able liabilities liquidated discharged on liquidation (6,153,721)

Transfer from shareholders’ equity – currency translation differences 39,329

6,114,392

Add: Net proceeds from liquidation (Note A) –

Less: Debts written off owing by BBPL 6,059,459

Repayment of borrowings, secured, on behalf of BBPL by the group 1,994,490

Related expenses borne on behalf of BBPL by the group 1,494,103

Net loss from the liquidation* 3,433,660

Note A

Proceed from realisation of assets 609,695

Less: Related expenses paid and liabilities discharged (609,695)

–

Less:

Repayment of borrowings, secured on behalf of BBPL by the group (1,994,490)

Related expenses borne on behalf of BBPL by the group (1,494,103)

Net cash outfl ow on liquidation (3,488,593)

* Net loss from the liquidation is recognised in the consolidated statement of comprehensive income as other expense.




9. CASH AND BANK BALANCES (Continued)

Liquidation and Disposal of subsidiaries (Continued)

(b) On 30 June 2009, the Group disposed off its entire interest in Teeni Enterprise (Phils), Inc for a cash consideration

of US$20,000 (equivalent to S$30,980).

On 1 October 2009, Barang Barang Interiors Pte Ltd was disposed off for a consideration of $1. Another

subsidiary, Barang Barang Asia-Pacifi c Pte Ltd, was in the process of being struck off.

The carrying values of identifi able assets and liabilities of the subsidiaries disposed/struck off were as follows:

Group

2009$

Cash and bank balances 28,664

Trade and other receivables 616,227

Inventories 41,012

Property, plant and equipment 100,206

Trade and other payables (1,008,501)

Net identifi able liabilities (222,392)

Less: Non-controlling interests (176,168)

Net identifi able liabilities attributable to disposal (398,560)

Gain on disposal of interest in subsidiaries 429,541

Net proceeds from disposal 30,981

Less: Cash and bank balance of subsidiaries disposed/struck off (28,664)

Net cash infl ow on disposal/struck off 2,317




10. TRADE AND OTHER PAYABLES

Group Company

2010 2009 2010 2009

$ $ $ $

Trade payables:

- Third parties 3,937,287 5,839,577 – 233,957

- Subsidiaries – – 3,547,757 4,966,470

3,937,287 5,839,577 3,547,757 5,200,427

Other payables:

- Third parties 2,069,706 3,342,627 511,424 547,712

- Directors of the Company (1) 2,052,337 1,631,107 2,087,456 553,790

- Director of a subsidiary (2) 657,403 520,487 – –

4,779,446 5,494,221 2,598,880 1,101,502

Security deposits received 477,270 354,600 – –

Accrued operating expenses 5,621,442 1,618,893 4,351,024 153,613

14,815,445 13,307,291 10,497,661 6,455,542

(1) These amounts are unsecured, interest-free and repayable on demand.

(2) This amount is unsecured, interest charged at nil (2009: 5%) and repayable on demand.

11. BORROWINGS, SECURED

Group Company

31 December 2010

31 December

2009

1 January

2009

31 December 2010

31 December

2009

1 January

2009

$ $ $ $ $ $

Restated Restated Restated Restated

(Note 30) (Note 30) (Note 30) (Note 30)

Non-currentObligations under fi nance

leases (1) 165,942 327,156 435,036 – – –

CurrentTerm loans (2) 2,313,423 5,764,709 7,014,133 50,113 1,376,427 451,017

Obligations under fi nance

leases (1) 68,545 140,557 158,725 – – –

Bank overdrafts (3) 1,291,798 4,415,247 4,444,224 2,536 3,538,058 3,879,090

Trust receipts (3) 3,547,582 5,261,792 10,076,810 2,767,804 2,927,154 6,106,277

Bankers’ acceptance (3) 280,895 390,048 263,744 – – –

7,502,243 15,972,353 21,957,636 2,820,453 7,841,639 10,436,384

Total borrowings 7,668,185 16,299,509 22,392,672 2,820,453 7,841,639 10,436,384




11. BORROWINGS, SECURED (Continued)

(1) Obligations under fi nance leases:

GroupMinimum lease

payments InterestPresent value of payments

$ $ $

2010Less than 1 year and not later than 5 years 194,189 30,998 163,191

Later than 5 years 2,932 181 2,751

197,121 31,179 165,942

Not later than 1 year 81,622 13,077 68,545

278,743 44,256 234,487

2009Less than 1 year and not later than 5 years 401,850 79,723 322,127

Later than 5 years 6,391 1,362 5,029

408,241 81,085 327,156

Not later than 1 year 173,337 32,780 140,557

581,578 113,865 467,713

The obligations under fi nance leases are effectively secured as the rights to the leased motor vehicles and plant and equipment

of the Group revert to the lessor in the event of default by the Group. The weighted average effective interest rate of fi nance

leases is at 4.52% (2009: 4.04%).

(2) Term loan of the Group and the Company are secured by the following:-

(a) a corporate guarantee from the Company and certain subsidiaries;

(b) a personal guarantee by a director of the Group and certain directors of its subsidiaries;

(c) a mortgage on the subsidiary’s leasehold land and buildings and certain part of plants and equipments (Note 4); and

(d) over the fi xed deposits (Note 9) and structure deposit (Note 6).

The effective weighted average interest is payable at 7.38% and 7.20% (2009: 6.19 % and 6.96%) per annum.

(3) The bank overdrafts, trust receipts and banker’s acceptance and business receivable fi nancing facility of the Company and

Group is secured by the following:-

(a) corporate guarantee from the Company and certain subsidiaries;

(b) a deed charge creating fi xed and fl oating charge on trade receivables of certain subsidiaries;

(c) a deed of pledge of the shares of certain subsidiaries; and

(d) a personal guarantee by a director of the Group and certain directors of its subsidiaries.




11. BORROWINGS, SECURED (Continued)

The effective weighted average interest of the bank overdrafts and trust receipts of the Group and Company is as

follows:

Group Company

2010 2009 2010 2009

$ $ $ $

Bank overdrafts 5.42 5.86 5.75 5.75

Trust receipts 5.28 6.13 5.25 5.25

The Group’s bank borrowings include covenants that require the maintenance of certain fi nancial ratios. Non-compliance

with these covenants will result in these borrowings being repayable immediately. At year end date, certain fi nancial

ratios of the Group have been breached. As at the date of this report, the Group has not received notice from the

fi nancial institutions for the acceleration of the loans as a result of such breaches nor did the Company receive any

waiver as to the breach of fi nancial covenants. However, the Group has been continuing made payment to the fi nancial

institutions in accordance to the repayment schedule.

As at the date of report, the fi nancial institutions have not demanded immediate repayment. In the opinion of the

directors, the recall of loans is not likely and if any, will not result in liquidity diffi culties.

12. DEFERRED TAX LIABILITIES

Group

2010 2009

$ $

At beginning of year 1,064,168 1,242,638

Recognised in the:

- consolidated statement of comprehensive income (1,089,678) (279,040)

Currency translation differences 38,981 (20,741)

Transfer from revaluation reserves – 121,311

At end of year 13,471 1,064,168

Presented after appropriate offsetting as follows:

Deferred tax assets (987,484) (60,388)

Deferred tax liabilities 1,000,955 1,124,556

13,471 1,064,168




12. DEFERRED TAX LIABILITIES (Continued)

The components and movement of deferred tax liabilities and assets during the fi nancial year prior to offsetting are as

follows:

Deferred tax liabilities of the Group

Tax over book depreciation

Asset revaluation of leasehold land

and buildings Total

$ $ $

2010At beginning of year 298,127 826,429 1,124,556Currency translation differences 7,307 20,256 27,563Recognised in the:

- statement of comprehensive income (151,164) – (151,164)

At end of year 154,270 846,685 1,000,955

2009At beginning of year 534,334 684,406 1,218,740

Recognised in the:

- statement of comprehensive income (236,207) 142,023 (94,184)

At end of year 298,127 826,429 1,124,556

Deferred tax assets of the Group

Tax losses

$

2010At beginning of year (60,388)Currency translation differences (1,481)Recognised in the:

- statement of comprehensive income (925,615)

At end of year (987,484)

2009At beginning of year –

Recognised in the:

- statement of comprehensive income (60,388)

At end of year (60,388)




13. SHARE CAPITAL

Group and Company

2010 2009Number of

ordinary shares $Number of

ordinary shares $

At beginning of year 354,363,773 27,510,216 295,363,773 26,035,216

Placement of ordinary shares (1) – – 59,000,000 1,475,000

Rights issue (2) 509,719,806 5,097,198 – –

At end of year 864,083,579 32,607,414 354,363,773 27,510,216

(i) On 29 September 2009, the Company issued 59,000,000 placement shares at an issue price of $0.025 for each placement

share for cash to provide funds for the expansion of the Group’s operations. The newly issued shares rank pari passu in all

respects with previously issued shares.

(2) During the fi nancial year, a rights issue of 509,719,806 new shares at an issue price of $0.01 for each rights share was made

by the Company in August 2010 to entitle shareholders on the basis of twenty rights shares with three free detachable warrants

for every ten existing ordinary shares held. Each warrant carrying the right to subscribe for one new ordinary share in the capital

of the Company at an exercise price of $0.15 for each new share. The exercise period refers to the period during which the

warrants may be exercised, commencing after the listing and quotation of the warrants on the Singapore Exchange Securities

Trading Limited for a period not exceeding 2 years from the date of issue of the warrants, up to the expiry date of 15 August

2012. As at 31 December 2010, the Company has 76,457,970 outstanding warrants.

(3) As at 31 December 2010, the Company has outstanding warrants of 36,006,016. Each warrant entitles the warrant holder to

subscribe for 1 new ordinary share at an exercise price of $0.10 each during the exercise period expiring on 9 November 2011.

There are no warrants exercised during the fi nancial year.

Share options

Share options are granted to management and key employees under the KLW Holdings Employees’ Share Option

Scheme.

Movements in the number of share options outstanding are as follows:

Group 2010 2009

At beginning of year 569,000 569,000

Lapse during the year (239,000) –

At end of year 330,000 569,000

During the fi nancial year 239,000 shares option have lapsed but no shares of the Company were allotted and issued by

virtue of the exercise of options to take up unissued shares of the Company.

Share options outstanding to subscribe for ordinary shares of $0.02 each at the end of fi nancial year have the following

terms:

Number of share outstandingScheme Period exercisable Exercise price 2010 2009

2000 options 15.2.2000 to 14.2.2010 $0.710 – 239,000

2001 options 4.5.2001 to 3.5.2011 $0.135 330,000 330,000

330,000 569,000




14. REVALUATION AND OTHER RESERVES

Asset revaluation

reserves

Foreign currency

translation reserve Total

$ $ $

Group

Balance at 1 January 2009 2,468,111 (1,331,007) 1,137,104

Revaluation surplus on long term leasehold land

and buildings 485,244 – 485,244

Deferred tax liabilities on revaluation surplus (121,311) – (121,311)

Currency translation differences (2,022) – (2,022)

Net exchange differences on translation of fi nancial

statements of foreign subsidiaries – (295,005) (295,005)

Balance at 31 December 2009 2,830,022 (1,626,012) 1,204,010

Currency translation differences (363,932) – (363,932)

Liquidation of subsidiaries – 39,329 39,329

Net exchange differences on translation of fi nancial

statements of foreign subsidiaries – 735,113 735,113

Balance at 31 December 2010 2,466,090 (851,570) 1,614,520

Asset revaluation reserves include the cumulative net change, net of deferred tax effects, arising from revaluation of

leasehold land and buildings.

Foreign currency translation reserve arises from the translation of foreign subsidiaries assets and liabilities.

Asset revaluation and foreign currency translation reserves are non-distributable.

15. REVENUE

Signifi cant categories of revenue, excluding inter-company transactions and applicable goods and services tax, rebates,

goods returns and discounts, are detailed as follows:

Group

2010 2009

$ $

Sale of goods 51,277,705 54,056,155

Rental income 1,595,862 1,025,498

Revenue from services rendered – 120,656

Revenue from projects 133,345 365,261

53,006,912 55,567,570




16. OTHER OPERATING INCOME

Group

2010 2009

$ $

Interest income 2,580 1,578

Gain on disposal of property, plant and equipment 23,382 –

Reversal of impairment loss of trade receivables 101,271 –

Waiver of debts 341,774 –

Other miscellaneous income 49,845 192,674

518,852 194,252

17. FINANCE COSTS

Group

2010 2009

$ $

Term loans 267,326 618,210

Finance leases 15,577 33,380

Due to a related party – 21,488

Trust receipts 309,808 340,374

Bank overdrafts 188,948 94,703

Others 105,201 306,021

886,860 1,414,176

18. PERSONNEL EXPENSES

Group

2010 2009

$ $

Salaries, wages and bonuses 7,322,619 8,166,981

Pension contribution 274,403 292,951

7,597,022 8,459,932




19. LOSS BEFORE TAX

This is determined after charging/(crediting) the following:

Group

2010 2009

$ $

Depreciation of property, plant and equipment 548,477 1,320,692

Foreign exchange (gain)/loss – net (285,592) 150,652

Impairment loss on trade receivables 6,718 296,876

Inventories

- Cost of inventories recognised as an expense (included in cost of sales) 43,799,181 39,715,936

Operating lease expenses 2,626,890 7,415,720

Directors’ remuneration

- Directors of holding company 372,883 533,140

- Directors of subsidiaries 309,211 347,216

Directors’ fee

- Directors of holding company 75,000 75,000

Other than directors and key management personnel

- Salaries, wages and bonuses 6,742,244 7,245,974

- Pension contribution 247,683 249,294

(Gain)/loss on disposal of property, plant and equipment (23,382) 20,039

Loss on liquidation of subsidiaries 3,433,660 –

Reversal of impairment loss of trade receivables (101,271) (21,281)

Gain on disposal of interest in subsidiaries – (429,541)

Personnel expenses * 7,597,022 8,459,932

* This includes the amount shown as directors' remuneration.

20. INCOME TAX

Major components of income tax expense for the year ended 31 December were:

Group

2010 2009

$ $

Current tax

- Current year 105,273 1,185,324

- Under provision in prior years 48,080 5,450

153,353 1,190,774

Deferred tax

- Current year (845,246) (279,040)

- Under provision in prior years (244,432) –

(1,089,678) (279,040)

(936,325) 911,734




20. INCOME TAX (Continued)

The tax expense on the results of the fi nancial year varies from the amount of income tax determined by applying the

Singapore statutory rate of income tax on loss as a result of the following:

Group

2010 2009

$ $

Loss before tax (6,830,236) (5,246,570)

Tax at statutory rate of 17% (2009: 17%) (1,161,140) (891,917)

Effect of different tax rate in different countries (326,909) 216,402

Tax effect on non-deductible expenses 203,094 163,333

Tax effect on non-taxable income (215,646) (44,512)

Tax incentives 264,519 (25,925)

Deferred tax assets on temporary differences not recognised 449,001 1,681,220

Under provision of current taxation in prior years (21,521) 5,450

Over provision of deferred taxation in prior years (244,432) –

Utilisation of deferred tax assets on temporary differences not recognised 116,709 (192,317)

(936,325) 911,734

The Singapore corporate tax rate applicable to Singapore companies of the Group was reduced from 18% to 17% for

the year of assessment 2010 and onwards.

The Company and certain subsidiaries have unrecognised tax losses of approximately S$39,164,000 (2009:

$35,745,000) respectively which can be carried forward and used to offset against future taxable income subject to

meeting certain statutory requirements by those companies in their respective countries of incorporation.

Unutilised tax benefi ts at 31 December 2010 approximately totaling S$6,658,000 (2009: $6,076,000) arising from

unabsorbed tax losses and capital allowance have not been recognised as it is not probable that future taxable profi t

will be available against when these unabsorbed tax losses and unabsorbed capital allowances can be utilised.

21. LOSS PER SHARE

Group

2010 2009

$ $

The calculation of loss per share is based on the following:

Basic and diluted loss per shareNet loss attributable to equity holders of the Company (6,131,234) (3,172,245)

Number of sharesWeighted average number of ordinary shares for the purposes

of basic and diluted loss per share 566,747,032 310,113,773

Basic and diluted loss per share is calculated by dividing the loss after tax attributable to members by the weighted

average number of fully paid ordinary shares in issue during the fi nancial year.

For the purpose of calculating diluted earnings per share, net loss attributable to equity holders of the Company and

the weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary

shares. The Company had two dilutive potential ordinary shares: warrants and share options.




21. LOSS PER SHARE (Continued)

For warrants and share options, the weighted average number of shares on issue has been adjusted as if all of the

warrants and share options were exercised. The number of shares that could have been issued upon the exercise of all

of the warrants and share options less the number of shares that could have been issued at fair value (determined as

the Company’s average market price for the fi nancial year) for all the same total proceeds is added to the denominator

as the number of shares issued for no consideration. No adjustment is made to net loss.

Share options and warrants have not been included in the calculation of diluted earnings per share because they are

anti-dilutive for current and previous fi nancial years. There is no dilutive effect arising from share options and warrants as

the exercise prices of the share options and warrants were higher than the Company’s coverage share price during the

fi nancial years ended 31 December 2010 and 2009.

22. CONTINGENT LIABILITIES AND COMMITMENTS

Details and estimates of maximum amounts of commitments are as follows:

Group Company

2010 2009 2010 2009

$ $ $ $

Guarantee by the Company in

respect of term loan of a

subsidiary (secured) * – – 2,263,309 8,736,692

Guarantees by the Company in

respect of banking facilities of

subsidiaries (secured) * – – 2,266,331 4,375,826

* These guarantees are secured by a mortgage on a subsidiary’s leasehold land and buildings and debentures over

certain subsidiaries plant and machinery.

The Company, as the holding company, has given undertakings to provide fi nancial support to certain subsidiaries to

enable them to continue their operations in the next 12 months.

23. OPERATING LEASE COMMITMENTS

(a) Where the Group is the lessees

The Group leases certain buildings under non-cancellable operating lease agreements. The future aggregate

minimum leases payments under non-cancellable operating leases contracted for at the reporting date but not

recognised as liabilities are as follows:

2010 2009

$ $

Not later than one year 2,194,604 6,596,731

Later than one year and not later than fi ve years 6,206,671 10,977,829

Later than fi ve years 171,096 –

8,572,371 17,574,560

The leases on the subsidiaries’ offi ce premises, warehouse and retail outlets on which rentals are payable will

expire between 31 August 2011 to 5 December 2014. The current rent payable on the leases ranges from

$1,269 to $169,393 (2009: $268 to $167,005) per month.




23. OPERATING LEASE COMMITMENTS (Continued)

(b) Where the Group is the lessors

The future aggregate minimum leases payments receivable under non-cancellable operating leases contracted

for at the reporting date but not recognised as receivables are as follows:

2010 2009

$ $

Not later than one year 1,232,950 1,763,000

Later than one year and not later than fi ve years 2,648,501 3,696,000

3,881,451 5,459,000

The leases on a subsidiary’s offi ce premise on which rentals are payable will expire between April 2010 to

December 2012. The current rent receivable on the leases ranges from $600 to $110,000 per month.

24. RELATED PARTY TRANSACTIONS

Some of the arrangements with related parties (as defi ned in Note 3 above) and the effects of these bases determined

between the parties are refl ected elsewhere in this report. Transactions between the Company and its subsidiaries,

which are related companies of the Company, have been eliminated on consolidation and are not disclosed in this note.

Details of transactions between the Group and other related companies are disclosed below.

Group Company

2010 2009 2010 2009

$ $ $ $

Key management personnel

compensation

Directors of the Company

- Salary and related cost 363,000 517,468 363,000 517,468

- CPF contributions 9,883 15,672 9,883 15,672

Directors of subsidiaries

- Salary and related cost 292,375 328,844 – –

- CPF contributions 16,836 18,372 – –

Others

- Salary and related cost 99,752 74,695 – –

- CPF contributions 15,052 9,613 – –

Key management personnel are those persons having the authority and responsibility for planning, directing and

controlling the activities of the entity. Directors and certain managers are considered key management personnel.




25. SEGMENT INFORMATION

The Group has three (2009: four) reportable segments, as described below, which are the Group’s strategic business

units. Pursuant to the liquidation of a group of subsidiaries, the Group is no longer engaged in retail operations. The

strategic business units offer different products and services, and are managed separately because they require different

technology and marketing strategies. For each of the strategic business units, the Group’s CEO reviews internal

management reports on a quarterly basis. The following summary describes the operation in each of the Group’s

reportable segments:

Manufacturing – manufacture and distribution of doors, furniture and fi ttings, wood related products.

Retail – retail of home furnishing and lifestyle products.

Trading – import and distribution of lockets, iron mongeries, sourcing and distribution of fashion

and hair accessories, body care products and cosmetics.

Rental and projects – rental of premises, supply and installation of doors and wood based fl ooring.

Other operations of the Group mainly comprise investment holdings, which is not a suffi cient size to be reported

separately.

Information regarding the results of each reportable segment is included below. Performance is measured based on

segment profi t before income tax, as included in the internal management reports that are reviewed by the Group’s

CEO. Segment profi t is used to measure performance as management believes that such information is the most

relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-

segment pricing is determined on an arm’s length basis.

There are no inter-segment transactions. Unallocated costs represent mainly corporate expenses. Segment assets

consist primarily of property, plant and equipment, inventories, receivables and operating cash, and mainly exclude

investments. Segment liabilities comprise operating liabilities and exclude items such as taxation and borrowings. Capital

expenditure comprises additions to property, plant and equipment (Note 4).




25. SEGMENT INFORMATION (Continued)

Business segments

Financial year ended31 December 2010 Manufacturing Trading

Rental and projects Group

$ $ $ $

Sales – external sales 31,865,410 19,274,168 1,867,334 53,006,912

Segment result (7,037,120) 683,574 363,542 (5,990,004)

Unallocated costs (472,224)

Other operating income 518,852

Finance costs (886,860)

Loss before tax (6,830,236)

Tax 936,325

Loss for the year (5,893,911)

Segment assets 23,977,484 8,623,875 416,557 33,017,916

Segment liabilities 11,749,394 2,859,856 206,195 14,815,445

Unallocated liabilities

- Deferred tax liabilities 13,471

- Current tax payable 2,156,931

- Borrowings 7,668,185

9,838,587

Consolidated total liabilities 24,654,032

Other segment itemsCapital expenditure 621,460 52,623 58,748 732,835

Depreciation 487,551 49,246 11,680 548,477

Other non-cash expenses 19,407 – 3,975 23,382





Business segments (Continued)

Financial year ended31 December 2009 Manufacturing Retail Trading

Rental and projects Group

$ $ $ $ $

Sales – external sales 27,426,040 9,111,434 17,693,517 1,336,579 55,567,570

Segment result (5,493,663) (8,760,251) (7,318) (748,785) (15,010,017)

Unallocated costs 10,983,371

Other operating income 194,252

Finance costs (1,414,176)

Loss before tax (5,246,570)

Tax (911,734)

Loss for the year (6,158,304)

Segment assets 26,080,309 3,892,809 8,586,531 513,059 39,072,708

Segment liabilities 4,439,502 4,339,481 4,225,861 302,447 13,307,291

Unallocated liabilities

- Deferred tax liabilities 1,064,168

- Current tax payable 2,160,456

- Borrowings 16,299,509

19,524,133

Consolidated total liabilities 32,831,424

Other segment itemsCapital expenditure 174,832 25,582 147,653 3,729 351,796

Depreciation 721,403 512,675 60,331 26,283 1,320,692

Other non-cash expenses (4,518) – 24,557 – 20,039





Geographical segments

The Group’s three (2009: four) business segments operate in three main geographical areas:

Singapore – the Company is headquartered in Singapore. The areas of operation mainly arise from support and

installation of doors and wood based fl oorings, import and distribution of doors, locksets, iron

mongeries, furniture and fi ttings, wood related products, sourcing and distribution of fashion and hair

accessories, body care products and cosmetics and investment holding.

Malaysia – the main activities are the manufacture and supply of wood based doors, mouldings and fl oorings,

sourcing and distribution of fashion and hair accessories, body care products and cosmetics.

Others – the main activities are supply of lifestyle products.

Sales Total assets Capital expenditure

2010 2009 2010 2009 2010 2009

$ $ $ $ $ $

Singapore 18,438,692 30,070,286 2,058,610 1,681,280 372,508 60,729

Malaysia 24,012,258 21,951,139 22,260,740 29,829,271 39,184 159,442

Others 10,555,962 3,546,145 8,698,566 7,562,157 321,143 131,625

53,006,912 55,567,570 33,017,916 39,072,708 732,835 351,796

26. SUBSEQUENT EVENTS

The following events took place after balance sheet date:

1. On January 2011, the Company has entered into a subscription agreement with the subscribers to subscribe for

a total of 356,000,000 placement shares at $0.009 each. Subsequently on 1 March 2011, total net proceeds of

approximately $3.2 million were received.

2. On 7 February 2011, Koperasi Permodalan Felda Berhad (“KPFB”) accepted the invitation from the Group to

acquire a 30% of the issued and paid up share capital of KLW Resources Sdn Bhd. This transaction is currently

still in the course of completion and shall give rise to a purchase consideration of RM17 million.




27. DISCLOSURE OF DIRECTORS REMUNERATION

As required by the Listing Manual of the Singapore Exchange, the remuneration of directors of the Company is disclosed

in bands as follows:

2010 2009

$500,000 and above – –

$250,000 to $499,999 1 1

Below $250,000 3 4

4 5

28. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

Categories of fi nancial instruments

The following table sets out the fi nancial instruments as at the statement of fi nancial position date:

Group Company

2010 2009 2010 2009

$ $ $ $

Financial Assets 13,933,813 13,676,245 7,809,959 6,173,559

Financial Liabilities 22,483,630 29,606,800 13,318,114 14,297,181

The Group and the Company are exposed to fi nancial risks arising from its operations and the use of fi nancial

instruments. The key fi nancial risks include foreign exchange risk, interest rate risk, liquidity risk and credit risk. The

Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee

provides independent oversight to the effectiveness of the risk management process.

It is the Group’s policy not to trade in derivative contracts.

(a) Market risk

(i) Foreign exchange risk

The Group operates and sell its products in several countries other than Singapore and transact in

foreign currencies. As a result, the Group is exposed to movements in foreign currency exchange rates

arising from normal trading transactions, primarily with respect to United States Dollars and Malaysian

Ringgit. The Company has investments in foreign subsidiaries whose net assets are exposed to currency

translation risk. The Group does not have a policy to hedge its exposure to foreign exchange risk.




28. FINANCIAL INSTRUMENTS (Continued)

Financial risk management objectives and policies (Continued)

(a) Market risk (Continued)

(i) Foreign exchange risk (Continued)

Group2010

Singaporedollars

United States dollars

Malaysian Ringgit Others Total

$ $ $ $ $

Financial assetsAvailable-for-sale fi nancial

assets 202,767 – – – 202,767

Trade and other receivables 4,573,538 3,333,360 1,637,615 3,016,894 12,561,407

Cash and bank balances 657,708 348,780 68,585 94,566 1,169,639

5,434,013 3,682,140 1,706,200 3,111,460 13,933,813

Financial liabilitiesTrade and other payables 9,130,769 875,801 3,154,300 1,654,575 14,815,445

Borrowings, secured 3,478,759 2,121,125 2,068,301 – 7,668,185

12,609,528 2,996,926 5,222,601 1,654,575 22,483,630

Net fi nancial (liabilities) /

assets (7,175,515) 685,214 (3,516,401) 1,456,885 (8,549,817)

Less: Net fi nancial liabilities /

assets denominated

in respective entities’

functional currencies 7,175,515 – 3,516,401 (1,456,885) 9,235,031

Foreign currency exposure – 685,214 – – 685,214

* Others are denominated in Euro Dollars, Great British Pounds, Renminbi, Hong Kong Dollars and New Taiwan

Dollars








Group2009

Singaporedollars


Malaysian Ringgit Others Total

$ $ $ $ $

Financial assetsAvailable-for-sale fi nancial

assets 202,767 – – – 202,767

Trade and other receivables 5,501,462 2,796,286 1,420,260 3,039,239 12,757,247

Cash and bank balances 474,399 38,285 110,879 92,668 716,231

6,178,628 2,834,571 1,531,139 3,131,907 13,676,245

Financial liabilitiesTrade and other payables 7,382,477 594,306 2,954,821 2,375,687 13,307,291

Borrowings, secured 10,304,780 2,312,360 3,682,369 – 16,299,509

17,687,257 2,906,666 6,637,190 2,375,687 29,606,800

Net fi nancial (liabilities) /

assets (11,508,629) (72,095) (5,106,051) 756,220 (15,930,555)

Less: Net fi nancial liabilities /

assets denominated

in respective entities’

functional currencies 11,508,629 – 2,452,790 (573,856) 13,387,563

Foreign currency exposure – (72,095) (2,653,261) 182,364 (2,542,992)


Dollars








Company2010

Singaporedollars

United States dollars Others Total

$ $ $ $

Financial assetsTrade and other receivables 6,588,437 584,859 – 7,173,296


6,987,266 793,631 29,062 7,809,959

Financial liabilitiesTrade and other payables 6,949,904 3,547,757 – 10,497,661

Borrowings, secured 1,244,551 1,575,902 – 2,820,453

8,194,455 5,123,659 – 13,318,114

Net fi nancial (liabilities) / assets (1,207,189) (4,330,028) 29,062 (5,508,155)

Less: Net fi nancial liabilities

denominated in the Company’s

functional currency 1,207,189 – – 1,207,189

Foreign currency exposure – (4,330,028) 29,062 (4,300,966)


Dollars








Company2009

Singaporedollars

United States dollars Others Total

$ $ $ $

Financial assetsTrade and other receivables 5,881,607 232,693 – 6,114,300


5,913,563 258,607 1,389 6,173,559

Financial liabilitiesTrade and other payables 471,303 4,329,329 1,654,910 6,455,542

Borrowings, secured 5,529,314 2,312,325 – 7,841,639

6,000,617 6,641,654 1,654,910 14,297,181

Net fi nancial liabilities (87,054) (6,383,047) (1,653,521) (8,123,622)

Less: Net fi nancial liabilities

denominated in the Company’s

functional currency 87,054 – – 87,054

Foreign currency exposure – (6,383,047) (1,653,521) (8,036,568)


Dollars

Foreign exchange risk sensitivity

The following table details the sensitivity to a 10% increase and decrease in the Singapore Dollars

against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency

denominated monetary items and adjusts their translation at the period end for a 10% change in foreign

currency rates.

If the Singapore Dollars strengthens by 10% against the relevant foreign currencies, profi t or loss and

other equity will increase (decrease) by:

United States dollars Others

2010 $ $

GroupProfi t (loss) / other equity (68,521) –

CompanyProfi t (loss) / other equity 433,002 2,906








Foreign exchange risk sensitivity (Continued)


Malaysian Ringgit Others

2009 $ $ $

GroupProfi t (loss) / other equity 7,210 265,326 (18,236)

CompanyProfi t (loss) / other equity 638,305 – 165,352

A 10% weakening of Singapore Dollars against the above currencies at the reporting date would have

had the equal but opposite effect on the above currencies to the amount shown above, on the basis that

all other variables remains constant.

(ii) Interest rate risk

The Group obtains additional fi nancing through bank borrowings and loan from related parties.

The Group’s policy to obtain the most favourable interest rates available without increasing its foreign

currency exposure. The Group constantly monitor its interest rate risk and does not utilise forward

contracts or other arrangements for trading or speculative purposes. As at 31 December 2010, there

were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

The following table sets out the carrying amount, by maturity, of the Group’s and Company’s fi nancial

instruments, that are exposed to interest rate risk:

Group Company

2010 2009 2010 2009

$ $ $ $

Within one year –

fl oating rate

Borrowings 7,433,698 15,831,796 2,820,453 7,841,639

Interest in fi nancial instruments subject to fl oating interest rates is repriced regularly. The other fi nancial

instruments of the Group and Company that are not included in the above table are not subject to interest

rate risks.







(ii) Interest rate risk (Continued)

Interest risk sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for non-

derivative instruments at the balance sheet date and the stipulated change taking place at the beginning

of the fi nancial year and held constant throughout the reporting periods in the case of instruments

that have fl oating rates. A 50 basis point increase or decrease is used when reporting interest rate risk

internally to key management personnel and represents management’s assessment of the possible

change in interest rates.

If the interest rates had been 0.5% higher or lower and all other variables were held constant, the Group’s

loss for the year ended 31 December 2010 would increase / decrease by $37,168 (2009: decrease /

increase by $79,159). This mainly attributable to the Group’s exposure to interest rates on its variable

rates borrowings.

(b) Liquidity risk

The Group and Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed

adequate by management to fi nance the Group’s operations and to mitigate the effects of fl uctuations in cash

fl ows. Typically, the Group ensures that it has suffi cient cash on demand to meet expected operational expenses

including the servicing of fi nancial obligations.

The following tables detail the remaining contractual maturity for non-derivative fi nancial liabilities. The tables have

been drawn up based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on which

the Group and Company can be required to pay.

GroupOn demand or within 1 year

$

2010Trade and other payables 14,815,445

Borrowings, secured 7,502,243

22,317,688



29,279,644






(b) Liquidity risk (Continued)

CompanyOn demand or within 1 year

$



13,318,114



14,297,181

(c) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss

to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate

credit history, and obtaining suffi cient security where appropriate to mitigate credit risk. For other fi nancial assets,

the Group adopts the policy of dealing only with high credit quality counterparties. It is the Group’s policy that all

customers who wish to trade on credit terms are subject to credit verifi cation procedures. Exposure to the credit

risk is monitored on an ongoing basis. The Group does not require collateral in respect of fi nancial assets. The

maximum exposure to credit risk is represented by the carrying amounts of each fi nancial asset in the balance

sheet.

At the balance sheet date, there is signifi cant concentration of credit risk from certain subsidiaries. A total of 16

(2009: 16) customers account for about 36% (2009: 42%) of the total receivables of the Group.

The credit term granted to trade receivables range form 45 to 90 days (2009: 45 to 90 days) term. No interest is

charged on the trade receivables balances.

Cash and bank balances are placed with reputable local fi nancial institutions. Therefore, credit risk arises mainly

from the inability of its customers to make payments when due. The amounts presented in the balance sheets

are net of allowances for impairment of trade receivables, estimated by management based on prior experience

and the current economic environment.






(c) Credit risk (Continued)

The age analysis of trade receivables is as follows:

Group Company

2010 2009 2010 2009

$ $ $ $

Not past due and not

impaired 4,627,117 5,380,134 257,762 119,136

Past due but not impaired

- Past due 0 to 3 months 3,618,430 3,081,570 169,403 108,991

- Past due 3 to 6 months 1,502,995 444,137 157,694 –

- Past due over 6 months 502,903 756,428 – 4,566

5,624,328 4,282,135 327,097 113,557

Post due and impaired

trade receivables 232,012 3,597,774 299,529 299,529

Less: Allowance for

impairment loss (232,012) (3,597,774) (299,529) (299,529)

10,251,445 9,662,269 584,859 232,693

The movement in allowance for impairment loss is show on Note 8.

Trade receivables that are individually determined to be impaired at the balance sheet related to debtors that are

in fi nancial diffi culties and have defaulted on payment as well as by reference to past default experience. Included

in the Group’s and Company’s trade receivables balance are debtors with total carrying amount of $5,624,328

and $327,097 (2009: $4,282,135 and $113,557) respectively, which are past due but not impaired as there has

not been a signifi cant change in credit quality and the amount are still considered recoverable.

Capital risk management policies and objectives

The Group’s policy is to maintain adequate capital based of ensure continuity as a going concern and maintain an

optimal capital structure for expansion plan of the group. The Group funds its operations and growth through a mix of

equity and debts by maintenance of adequate lines of credit and assessing the need to raise additional equity where

required.

Management monitors capital based on gearing ratio to ensure compliance with all borrowing covenants.





Capital risk management policies and objectives (Continued)

The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and

other payable less cash and cash equivalents. Total capital is calculated as equity plus net debt.

Based on the fi nancial information gathered:

Group Company

2010 2009 2010 2009

$ $ $ $

Total borrowings and payables 22,483,630 29,606,800 13,318,114 14,297,181

Cash and cash equivalent (excluding

pledged fi xed deposits) (911,426) (383,319) (636,663) (59,259)

Net debt 21,572,204 29,223,481 12,681,451 14,237,922

Total equity / (defi cit) 8,363,884 6,241,284 13,637,543 (6,903,770)

Total capital 29,936,088 35,464,765 26,318,994 7,334,152

Gearing ratio 0.72 0.82 0.48 1.94

29. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of fi nancial assets and fi nancial liabilities reported on the balance sheet approximate their

respective fair values due to the relatively short-term maturity of these fi nancial instruments.

Fair value information has not been disclosed for the Group’s available-for-sale fi nancial assets that are not carried at

fair value because their fair value cannot be measured reliably. Further details of available-for-sale fi nancial assets are as

disclosed in Note 6. This equity instrument is not quoted on any market and does not have a comparable industry peer

that is listed.




30. PRIOR YEARS ADJUSTMENTS

Certain restatements have been made to the prior years’ fi nancial statements as a result of prior year adjustments.

Reclassifi cation of term loans from non-current to current liability

The term loan agreement includes an overriding repayment on demand clause at the bank’s discretion, irrespective of

whether a default event has occurred. Accordingly, the term loan is being reclassifi ed as a current liability in the fi nancial

statements for the fi nancial year 31 December 2009 and 1 January 2009, respectively.

31 December 2009 1 January 2009previously

stated restatedpreviously

stated restated

$ $ $ $

GroupBalance sheetNon-current liabilities

Borrowings, secured 1,518,099 327,156 3,431,967 435,036

Current liabilities

Borrowings, secured 14,781,410 15,972,353 18,960,705 21,957,636

CompanyBalance sheetNon-current liabilities

Borrowings, secured – – 250,565 –

Current liabilities

Borrowings, secured – – 10,185,819 10,436,384

SIZE OF SHAREHOLDINGSas at 21 March 2011


Size of ShareholdingsNo. of

Shareholders PercentageNo. of

Shares Held Percentage

1 – 999 48 1.86 6,286 0.00

1,000 – 10,000 704 27.27 3,888,608 0.32

10,001 – 1,000,000 1,722 66.69 235,341,282 19.29

1,000,001 and above 108 4.18 980,847,403 80.39

TOTAL 2,582 100.00 1,220,083,579 100.00

Number of shares : 1,220,083,579

Class of shares : ordinary shares

Voting rights : one vote per share

Based on information available to the Company as at 21 March 2011, approximately 75.31% of the issued ordinary shares of

the Company is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities

Trading Limited is complied with.

TOP TWENTY SHAREHOLDERS AS AT 21 MARCH 2011

S/No. Name No. of Shares Percentage

1 HSBC (SINGAPORE) NOMS PTE LTD 311,947,000 25.57

2 MAYBAN NOMINEES (S) PTE LTD 82,844,000 6.79

3 TANG NANCY 58,408,000 4.79

4 CHEN SER SHEE 42,150,000 3.45

5 NG KOK CHENG 38,500,000 3.16

6 TAY YEONG KIANG 22,000,333 1.80

7 PEH OON KEE 22,000,000 1.80

8 LEE BOON TECK 20,679,000 1.69

9 LIM SOON HENG 18,104,000 1.48

10 LOH NGIM CHONG 18,000,000 1.48

11 CHANG JUNG TSAI 16,500,000 1.35

12 NG THIAN HOO 16,000,000 1.31

13 CHUA KOK WAN 15,000,000 1.23

14 UNITED OVERSEAS BANK NOMINEES (PTE) LTD 13,208,910 1.08

15 TAN SOO CHONG 12,000,000 0.98

16 DBS NOMINEES PTE LTD 11,384,660 0.93

17 PHILLIP SECURITIES PTE LTD 11,269,000 0.92

18 TAN WEE HAN 11,010,000 0.90

19 LAU CHEE HOCK 10,000,000 0.82

20 QUEK CHEK LAN 10,000,000 0.82

TOTAL 761,004,903 62.37

SUBSTANTIAL SHAREHOLDERSAs shown in the Register of Substantial Shareholders

No of SharesName of Shareholders Direct Interest Deemed Interest

Lee Boon Teck 22,286,000 277,215,500

ANALYSIS OF WARRANT HOLDINGSas at 21 March 2011


Warrant Issue 1

Size of Warrant HoldingsNo. of

Warrant Holders% of Warrant

HoldersNo. of

Warrants% of TotalWarrants

1 – 999 2 3.28 514 0.00

1,000 – 10,000 41 67.21 137,501 0.38

10,001 – 1,000,000 15 24.59 889,500 2.47

1,000,001 and above 3 4.92 34,978,500 97.15

TOTAL 61 100.00 36,006,015 100.00

TOP TWENTY SHAREHOLDERS AS AT 21 MARCH 2011 – Warrant Issue 1

NO. NAME OF WARRANT HOLDERSNO. OF

WARRANTS %

1 LEE CHOON SIAN 16,637,000 46.21

2 LEE CHOON TAI 11,547,000 32.07

3 LEE BOON TECK 6,794,500 18.87

4 UNITED OVERSEAS BANK NOMINEES PTE LTD 285,500 0.79

5 YEO CHAN TONG ALEX 160,000 0.44

6 ONG KIM MUI 100,000 0.28

7 TAN BOON ENG 70,000 0.19

8 LEE HO FOOK 60,000 0.17

9 TAN KHIM SONG 50,000 0.14

10 LIM SAI HIANG JOANNE 30,000 0.08

11 ANG POH GEK 20,000 0.06

12 ANG MUN LI PRETTY 20,000 0.06

13 TAN WHEE KHENG FIONA 18,000 0.05

14 YEO ENG HOCK FREDDIE 17,000 0.05

15 POH HEE JUAN 15,000 0.04

16 KOH GEOK KHOON 15,000 0.04

17 CHAN SIEW HOCK PAUL 15,000 0.04

18 TOH SWEE HAI 14,000 0.04

19 LIM SWEE SENG 10,000 0.03

20 CHUA TIAN HUAT 10,000 0.03

TOTAL 35,888,000 99.68

SUBSTANTIAL WARRANT HOLDERS – Warrant Issue 1As shown in the Register of Substantial Warrant Holders

No. of SharesName of Warrant Holders Direct Interest Deemed Interest

Lee Choon Sian 16,637,000 –

Lee Choon Tai 11,547,000 –

Lee Boon Teck 6,794,500 –

ANALYSIS OF WARRANT HOLDINGSas at 21 March 2011


Warrant Issue 2

Size of Warrant HoldingsNo. of

Warrant Holders% of Warrant

HoldersNo. of

Warrants% of TotalWarrants

1 – 999 11 2.75 7,500 0.01

1,000 – 10,000 111 27.75 618,440 0.81

10,001 – 1,000,000 273 68.25 20,788,480 27.19

1,000,001 and above 5 1.25 55,043,550 71.99

TOTAL 400 100.00 76,457,970 100.00

TOP TWENTY SHAREHOLDERS AS AT 21 MARCH 2011 – Warrant Issue 2

NO. NAME OF WARRANT HOLDERSNO. OF

WARRANTS %

1 HSBC (SINGAPORE) NOMINEES PTE LTD 38,462,850 50.31

2 LEE CHOON SIAN 7,500,000 9.81

3 LEE BOON TECK 6,101,700 7.98

4 KIM ENG SECURITIES PTE. LTD. 1,719,000 2.25

5 TAN SOO CHONG 1,260,000 1.65

6 OCBC SECURITIES PRIVATE LTD 885,000 1.16

7 DBS NOMINEES PTE LTD 708,090 0.93

8 WONG HAN YEW 599,850 0.78

9 ENG CHIN HUAT 420,000 0.55

10 OCBC NOMINEES SINGAPORE PTE LTD 374,445 0.49

11 LIM HUNG KIONG 361,400 0.47

12 TENG TIAN GEK 345,000 0.45

13 YO PENG SIA OR TAN SOOK KING 337,950 0.44

14 WONG CHOO HIN 333,000 0.44

15 PHILLIP SECURITIES PTE LTD 331,500 0.43

16 LIM AH LEK 330,000 0.43

17 UNITED OVERSEAS BANK NOMINEES PTE LTD 327,000 0.43

18 LYE SUN WOH 315,000 0.41

19 NGIN HOON PING 315,000 0.41

20 PHEE CHENG KOON 306,450 0.40

TOTAL 61,333,235 80.22

SUBSTANTIAL WARRANT HOLDERS – Warrant Issue 2As shown in the Register of Substantial Warrant Holders

No. of WarrantsName of Warrant Holders Direct Interest Deemed Interest

Lee Choon Sian 7,500,000 –

Lee Boon Teck 6,101,700 38,625,900

NOTICE OF ANNUAL GENERAL MEETING


NOTICE IS HEREBY GIVEN that the Annual General Meeting of KLW HOLDINGS LIMITED will be held at 19 Senoko Loop,

Singapore 758169 on 29 April 2011 at 10.00 am to transact the following business:-

AS ORDINARY BUSINESS

1. To consider and adopt the Directors’ Report and Financial Statements for the year ended

31 December 2010 together with the Auditors’ Report thereon.

2. To approve the Directors’ Fees of S$75,000/- for the year ended 31 December 2010 [2009:

S$75,000/-].

3. To re-elect Mr Low Hai Lee who is retiring pursuant to Article 109 of the Company’s Articles of

Association.

Mr Low is an independent director and will, upon re-election as a Director of the Company, remain

as a member of the Audit and Remuneration Committees. Mr Low will be considered independent

for the purposes of Rule 704(7) of the Catalist Rules.

4. To re-appoint Messrs Crowe Horwath First Trust LLP as auditors and to authorise the Directors to

fi x their remuneration.

5. To transact any other ordinary business which may properly be transacted at an Annual General

Meeting.

AS SPECIAL BUSINESS

To consider and if thought fi t, to pass the following Ordinary Resolution, with or without any modifi cations:

6. Authority to issue shares

“THAT pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual

Section B: Rules of Catalist (“Catalist Rules”) of Singapore Exchange Securities Trading Limited

(“SGX-ST”), authority be and is hereby given to the Directors of the Company to:-

(a) (i) issue shares in the capital of the Company whether by way of rights, bonus or

otherwise; and/or

(ii) make or grant offers, agreements or options or other instruments convertible into

shares (collectively “Instruments”) that might or would require shares to be issued,

including but not limited to the creation and issue of (as well as adjustments to)

options, warrants, debentures or other instruments convertible into shares,

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force)

issue shares in pursuance of any Instruments made or granted by the Directors while this

Resolution was in force, at any time and upon such terms and conditions and for such

purposes and to such persons as the Directors may in their absolute discretion deem fi t;

and

[Resolution 1]

[Resolution 2]

[Resolution 3]

[Resolution 4]



provided that:-

(A) the aggregate number of shares (including shares to be issued in pursuance of the

Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this

Resolution does not exceed 100 per cent (100%) of the total number of issued shares

excluding treasury shares (as calculated in accordance with sub-paragraph (B) below), of

which the aggregate number of shares (including shares to be issued in pursuance of the

Instruments, made or granted pursuant to this Resolution) to be issued other than on a pro

rata basis to existing shareholders of the Company does not exceed 50 per cent (50%) of

the total number of issued shares excluding treasury shares (as calculated in accordance

with sub-paragraph (B) below);

(B) (subject to such manner of calculation as may be prescribed by SGX-ST), for the purpose

of determining the aggregate number of shares (including shares to be issued in pursuance

of the Instruments, made or granted pursuant to this Resolution) that may be issued under

sub-paragraph (A) above, the percentage of issued shares excluding treasury shares shall

be based on the total number of issued shares excluding treasury shares at the time of the

passing of this Resolution, after adjusting for:-

a. new shares arising from the conversion or exercise of any convertible securities, new

shares arising from exercising share options or vesting of share awards outstanding

or subsisting at the time of passing of the resolution approving this Resolution

provided the options or awards were granted in compliance with Part VIII of Chapter

8 of the Catalist Rules; and

b. any subsequent bonus issue, consolidation or subdivision of shares;

(C) in exercising the authority conferred by this Resolution, the Company shall comply with the

provisions of the Catalist Rules for the time being in force (unless such compliance has been

waived by SGX-ST) and the Articles of Association of the Company; and

(D) and unless revoked or varied by the Company in general meeting, the authority conferred

by this Resolution shall continue in force until the conclusion of the next Annual General

Meeting of the Company or the date by which the next Annual General Meeting of the

Company is required by law to be held, whichever is the earlier.”

[See Explanatory Note]

BY ORDER OF THE BOARD

JENNIFER LEE SIEW JEE

Company Secretary

Singapore, 13 April 2011

[Resolution 5]



Notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two proxies to attend and vote in his stead.

2. Where a member appoints more than one proxy, he shall specify the percentage of shares to be represented by each proxy, failing

which, the fi rst named proxy shall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be

deemed to be an alternate to the fi rst named.

3. A proxy need not be a member of the Company.

4. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body, such person as it

thinks fi t to act as its representative at the meeting.

5. The instrument appointing a proxy must be deposited at the registered offi ce of the Company, at 19 Senoko Loop, Singapore 758169

not less than 48 hours before the time appointed for holding the meeting.

Explanatory Note:

The Ordinary Resolution 5 proposed in item 6 above, if passed, will empower the Directors from the date of this Meeting until the date of the

next Annual General Meeting, or the date by which the next Annual General Meeting is required by law to be held or when varied or revoked by

the Company in general meeting, whichever is the earlier, to allot and issue shares in the Company. The number of shares that the Directors

may allot and issue under this resolution would not exceed one hundred per centum (100%) of the total number of issued shares in the

capital of the Company at the time of the passing of this resolution. For issue of shares other than on a pro rata basis to all shareholders,

the aggregate number of shares to be issued shall not exceed fi fty per centum (50%) of the total number of issued shares in the capital of the

Company.

PROXY FORM

KLW HOLDINGS LIMITED (Company Registration No. 199504141D)

(Incorporated in the Republic of Singapore)

*I/We, (Name) (NRIC/Passport No.)

of (Address)

being a member/members of the abovenamed Company, hereby appoint:-

Name Address NRIC / Passport No.

Proportion of Shareholdings

and/or (delete as appropriate)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the Annual General

Meeting of the Company to be held on 29 April 2011 at 10.00am and at any adjournment thereof. The proxy is to vote on

the business before the meeting as indicated below. If no specifi c direction as to voting is given, the proxy will vote or abstain

from voting at his/her discretion, as he/she will on any other matter arising at the Meeting.

RESOLUTIONS

To be used ona Show of Hands

To be used inThe event of a Poll

For* Against*No. of votes

For**No. of votes

Against**

1. Directors’ Report and Audited Accounts for the year

ended 31 December 2010

2. Directors’ Fees for the year ended 31 December 2010

3. Re-election of Mr Low Hai Lee as a Director.

4. Re-appointment of Messrs Crowe Horwath First Trust

LLP as Auditors

5. Authority to issue shares

* Please indicate your vote “For” or “Against” with a tick ( ) within the box provided.

** If you wish to exercise all your votes “For” or “Against”, please tick ( ) within the box provided.

Alternatively, please indicate the number of votes as appropriate.

Dated this day of 2011

Signature/Common Seal of Member

Notes:-

1. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or

if such appointer is a corporation under its common seal or under the hand of its attorney. A proxy need not be a member of the

Company.

2. An instrument appointing a proxy must be deposited at the Registered Offi ce of the Company, 19 Senoko Loop Singapore 758169 not

less than 48 hours before the time appointed for holding the meeting.

3. If this Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he thinks fi t.

CORPORATE INFORMATION

BOARD OF DIRECTORSLee Boon Teck Executive Chairman

Teo Hin Guan Independent Director

Ho Pong Chong Independent Director

Low Hai Lee Independent Director

AUDIT COMMITTEEHo Pong Chong Chairman

Teo Hin Guan Member

Low Hai Lee Member

NOMINATING COMMITTEEHo Pong Chong Chairman

Lee Boon Teck Member

Teo Hin Guan Member

REMUNERATION COMMITTEETeo Hin Guan Chairman

Ho Pong Chong Member

Low Hai Lee Member

COMPANY SECRETARYJennifer Lee Siew Jee, FCIS

REGISTERED OFFICE19 Senoko Loop

Singapore 758169

Telephone: 6754 1854

Fax: 6752 9908

www.klw.com.sgThis annual report has been reviewed by the Company’s sponsor, KW

Capital Pte. Ltd., for compliance with the relevant rules of the Singapore

Exchange Securities Trading Limited ("SGX-ST"). The Company’s Sponsor

has not independently verifi ed the contents of this annual report.

This annual report has not been examined or approved by the SGX-ST and

the SGX-ST assumes no responsibility for the contents of this annual report,

including the correctness of any of the statements or opinions made or

reports contained in this annual report.

The details of the contact person for the Sponsor is:

Name : Mr Yang Eu Jin

(Registered Professional, KW Capital Pte. Ltd.)

Address : 80 Raffl es Place, #25-01, UOB Plaza 1

Singapore 048624

Tel : 6238 3377

REGISTRAR AND SHARE TRANSFER OFFICEIntertrust Singapore Corporate Services Pte Ltd3 Anson Road #27-01

Springleaf Tower

Singapore 079909

AUDITORSCrowe Horwath First Trust LLP7 Temasek Boulevard

#11-01 Suntec Tower One

Singapore 038987

Partner-in-charge: Alfred Cheong

PRINCIPAL BANKERSOversea-Chinese Banking Corporation Limited63 Chulia Street

OCBC Centre

Singapore 049514

Malayan Banking BerhadCommercial Business Unit

Region Johor / Melaka

Level 8, Offi ce Tower

Johor Bahru City Square

No. 108, Jalan Wong Ah Fook

80000 Johor Bahru

Johor Darul Takzim

Malaysia

KLW HOLDINGS LIMITED

KLW

HO

LD

ING

S L

IMIT

ED

AN

NU

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RE

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2010

GR

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TH

KLW HOLDINGS LIMITED19 Senoko Loop Singapore 758169

Tel: (65) 6754 1854 Fax: (65) 6752 9908

www.klw.com.sg

Annual Report 2010

Documents

Annual Report 2010 - KLW · This annual report has been reviewed by the Company’s sponsor, KW ... Permodalan Felda Malaysia Berhad has agreed to take up a 30% stake of our door