BASWELL-AnnualReport2010 (1.2MB)

7/30/2019 BASWELL-AnnualReport2010 (1.2MB)

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Rise above adversity

Annual Report 2010


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1Annual Report 2010

NOTICE OF ANNUAL GENERAL MEETING 2 3

CORPORATE STRUCTURE 4

CORPORATE INFORMATION 5

DIRECTORS PROFILE 6 9

CHAIRMANS STATEMENT 10

STATEMENT ON CORPORATE GOVERNANCE 11 14

AUDIT COMMITTEE REPORT 15 18

STATEMENT ON INTERNAL CONTROL 19 20

DIRECTORS RESPONSIBILITY STATEMENT 21

OTHER COMPLIANCE INFORMATION 22

FINANCIAL STATEMENTS 23 59

LIST OF LANDED PROPERTIES 60

ANALYSIS OF SHAREHOLDINGS 61 62

FORM OF PROXY Enclosed

CONTENTS


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2 BASWELL RESOURCES BERHAD (540508-D)

NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting (AGM) of the Company will be held at Wisma Baswood,

Lot 6516, Batu 5-3/4, Jalan Kapar, 42100 Klang, Selangor Darul Ehsan on Wednesday, 30 March 2011 at 9:00 a.m. for the

following purposes:

AGENDA

1. To receive the Audited Financial Statements for the nancial year ended 30 September 2010 together

with the Reports of the Directors and the Auditors thereon.

2. To approve the payment of Directors Fees for the nancial year ended 30 September 2010. (Resolution 1)

3. To re-elect the following Directors who are retiring pursuant to Article 119 of the Companys Articles of

Association and being eligible, have offered themselves for re-election:

(a) Dr. Lai Chee Chuen; and

(b) Mr. Chong Yong Kai.

(Resolution 2)

(Resolution 3)

4. To consider and if thought t, to pass the following ordinary resolution in accordance with Section

129(6) of the Companies Act, 1965:

That pursuant to Section 129(6) of the Companies Act, 1965, Mr. Lim Boon Chiang be and is hereby

re-appointed as Director of the Company and to hold ofce until the conclusion of the next Annual

General Meeting. (Resolution 4)

5. To re-appoint Messrs. Thiang & Co. as Auditors of the Company until the conclusion of the next Annual

General Meeting of the Company and to authorise the Directors to x their remuneration. (Resolution 5)

6. As Special Business

To consider and if thought t, with or without any modication, to pass the following resolution as an

Ordinary Resolution:

ORDINARY RESOLUTION- Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

THAT pursuant to Section 132D of the Companies Act, 1965 and the approvals of the relevant

governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot

shares in the Company, at any time to such persons and upon such terms and conditions and for such

purposes as the Directors may, in their absolute discretion, deem t, PROVIDED THAT the aggregate

number of shares issued pursuant to this Resolution does not exceed ten per centum (10%) of the

issued and paid-up share capital of the Company for the time being; AND THAT the Directors be and

are also empowered to obtain the approval for the listing of and quotation for the additional shares soissued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately

upon the passing of this Resolution and continue to be in force until the conclusion of the next Annual

General Meeting of the Company. (Resolution 6)

7. To transact any other business of which due notice shall have been given.

By Order of the Board

CHUA SIEW CHUAN (MAICSA 0777689)ELAINE WONG WEI SYN (MAICSA 7048544)

Company Secretaries8 March 2011

NOTICE OF ANNUAL GENERAL MEETING


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3Annual Report 2010

Explanatory Note to Special Business:

Authority to issue shares pursuant to Section 132D of the Companies Act, 1965

The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act

1965 at the Tenth AGM of the Company (hereinafter referred to as the General Mandate).

The Company had been granted a General Mandate by its shareholders at the Ninth AGM of the Company held on 30 March 2010

(hereinafter referred to as the Previous Mandate).

The Previous Mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom.

The purpose to seek the General Mandate is to enable the Directors of the Company to issue and allot shares at any time to

such persons in their absolute discretion without convening a general meeting as it would be both time and cost-consuming

to organise a general meeting. This authority unless revoked or varied by the Company in general meeting, will expire at

the next AGM. The proceeds raised from the General Mandate will provide exibility to the Company for any possible fund

raising activities, including but not limited to further placing of shares, for purpose of funding current and/or future investmentproject(s), working capital and/or acquisition(s).

Notes:

1. Inrespectofdepositedsecurities,onlymemberswhosenamesappearintheRecordofDepositorson24March2011

(GeneralMeetingRecordofDepositors)shallbeeligibletoattendtheMeeting.

2. Amemberentitledtoattendandvoteatthemeetingisentitledtoappointaproxytoattendandvoteinsteadofhim.A

proxymaybutneednotbeamemberoftheCompanyandamembermayappointanypersontobehisproxywithout

limitationandtheprovisionsofSection149(1)(a)and(b)oftheCompaniesAct,1965shallnotapplytotheCompany.

3. Amembershallnotbeentitledtoappointmorethantwo(2)proxiestoattendandvoteprovidedthatwhereamemberoftheCompanywhoisanauthorisednomineeasdenedundertheSecuritiesIndustry(CentralDepository)Act1991,

hemayappointatleastone(1)proxyinrespectofeachsecuritiesaccountheholdswithordinarysharesoftheCompany

standingtothecreditofthesaidsecuritiesaccount.

4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorofhisattorneydulyauthorisedin

writingor,iftheappointerisacorporation,eitherunderitscommonsealorunderthehandofanofcerorattorneyduly

authorised.

5. TheinstrumentappointingaproxyorapowerofattorneymustbedepositedatSecuritiesServices(Holdings)Sdn.Bhd.

ofLevel7,MenaraMilenium,JalanDamanlela,PusatBandarDamansara,DamansaraHeights,50490KualaLumpurnot

lessthan48hoursbeforethetimeappointedforholdingthemeeting.

NOTICE OF ANNUAL GENERAL MEETING (CONTD)


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WOODMASTER FURNITURE

CONSOLIDATION SDN. BHD.(619555-T)

BASWOOD INDUSTRIES SDN. BHD.(124125-H)

AIMWOOD FURNITUREINDUSTRIES SDN. BHD.

(In Liquidation)

(175568-D)

DESWELL PACKAGING(M) SDN. BHD.

(221089-D)

100%

100%

100%

100%

CORPORATE STRUCTURE


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TAN SRI DATO BENTARA ISTANA NIK HASHIM BIN NIK AB. RAHMAN

Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman (Independent Non-Executive Chairman), a Malaysian, aged 68,was appointed to the Board of Directors of Baswell on 24 February 2010. Pursuant to Dr. Oh Han Chengs retirement at Ninth

Annual General Meeting of the Company held on 30 March 2010, he was re-designated as the Independent Non-Executive

Chairman w.e.f. 30 March 2010.

Tan Sri Dato Bentara Istana Nik Hashim graduated from Sultan Ismail College in Kota Bharu, Kelantan in 1962 and started his

career in 1963 as a Clerical Ofcer with the Land Ofce & General Hospital Kota Bharu, Kelantan. The following year, he was

appointed as a police inspector until 1968, when he left on a scholarship to read law. He was admitted as a Barrister-at-Law of

the Inner Temple, London in 1970 and upon his return, joined the Judicial and Legal Service (JLS).

Tan Sri Dato Bentara Istana Nik Hashim has held various posts in the JLS since 1970: a magistrate in Klang and Kuala

Terengganu; President of the Sessions Court in Temerloh and Muar; Deputy Director of the Legal Aid Bureau; Senior Federal

Counsel of the Ministry of Housing and Local Government; Judge Advocate, Ministry of Defence; Deputy Public Prosecutor,

Sarawak; State Legal Advisor, Terengganu; Senior Federal Counsel (Special Unit) in the Attorney Generals Chambers; Deputy

Parliamentary Draftsman; Public Trustee and Ofcial Administrator; the rst and founding Director General of the Judicial andLegal Training Institute (ILKAP) and Chairman of the Advisory Board in the Prime Ministers Department, Taiping Perak before

he was retired on national interest to be appointed to the Malaysian Judiciary.

On 1 October 1995, Tan Sri Dato Bentara Istana Nik Hashim was appointed as a Judicial Commissioner of the High Court

Malaya and was posted to Kota Bharu and later to Kuala Lumpur. Two years later, he was conrmed as a Judge of the High

Court. On 1 August 2003 he was promoted to the Court of Appeal and subsequently on 17 June 2005, he was made a Judge

of the Federal Court until he retired on 1 July 2009 on reaching the age of 66 years and 6 months.

Tan Sri Dato Bentara Istana Nik Hashim was a member of the Royal Police Force Commission from 12 March 2004 until 11

March 2008. He has been a member of the Syariah Appeal Court, Kelantan since April 1998 and an Adjunct Professor in the

Faculty of Law and International Relations of the University of Darul Iman Malaysia from 1 February 2009 until 31 January

2010.

Tan Sri Dato Bentara Istana Nik Hashim currently sits on the Board of Inch Kenneth Kajang Rubber Public Limited Company

and Olympia Industries Berhad as Independent Non-Executive Director, respectively. In addition, he is a Director of Jetoil

Berhad. Tan Sri Dato Bentara Istana Nik Hashim has also been appointed as a Non-Executive Director/Chairman of Tropicana

Golf & Country Resort Bhd, a non-listed subsidiary of Dijaya Corporation Bhd.

On 27 October 2010, Tan Sri Dato Bentara Istana Nik Hashim was appointed as a member of the Audit Committee, the

Chairman of the Nomination Committee, as well as a member of the Remuneration Committee.

Tan Sri Dato Bentara Istana Nik Hashim does not have any family relationship with any other director and/or major shareholder

of the Company.

DIRECTORS PROFILE


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7Annual Report 2010

DIRECTORS PROFILE (contd)

DR. LAI CHEE CHUEN

Dr. Lai Chee Chuen (Managing Director/Chief Executive Ofcer), a Malaysian, aged 46, was appointed to the Board of Baswell on30 August 2002. He obtained his professional qualications from Chartered Institute of Management Accountants (CIMA) in

1986 and Chartered Association of Certied Accountants (CACA) in 1987. Subsequently, he obtained his Master of Business

Administration and Doctor of Philosophy in Finance from City University Business School, London, United Kingdom (UK) in

1992 and 1997 respectively. He has been an Associate of CIMA since 1991 and a Fellow of CACA since 1996. He has also been

a member of the Chartered Institute of Marketing since 2000. He worked in UK for 11 years between 1985 and 1996. He gained

substantial experience in nancial services working as a Senior Financial Accountant with Barclays Mercantile Group. Whilst

in the academia, he lectured in Finance and Accounting at London Business School and the City Banking College, London,

UK. Upon his return to Malaysia 1996, he joined Price Waterhouse (now known as PricewaterhouseCoopers) as Managing

Consultant and was subsequently promoted to Executive Director in 1999 in the Corporate Finance and Investment Banking

Division. He left in August 2000, to assume his position as Chief Executive Ofcer of Seloga Holdings Berhad. Subsequently,

he resigned on 31 July 2002 as Chief Executive Ofcer but remained as Corporate Adviser of Seloga Holdings Berhad until

31 December 2003. On 26 August 2003, he was appointed as Independent Non-Executive Director of SRII Berhad. Dr. Lai

resigned from the Board of SRII Berhad on 31 December 2009. He sits on Board of Key West Global Telecommunications

Berhad as Independent Non-Executive Director. Dr. Lai was appointed as Senior Independent Non-Executive Director of theCompany on 12 November 2003.

On 27 October 2010, Dr. Lai was re-designated as Managing Director/Chief Executive Ofcer of the Company. In view of his

re-designation, Dr. Lai ceased as Chairman of the Audit Committee, as well as member of the Nomination Committee and the

Remuneration Committee, respectively, on 27 October 2010.

Dr. Lai does not have any family relationship with any other director and/or major shareholder of the Company.

KHOO YEW KHENG

Khoo Yew Kheng (Executive Director), a Malaysian, aged 51, was appointed to the Board of Baswell on 30 August 2002. She

began her career in an accounting and taxation rm before venturing into furniture trading. After ve (5) years in furnituretrading, she co-founded Baswood Industries Sdn Bhd in 1984. Since then, she has acquired various management skills from

nance to operations management. She also played a pivotal role in product development, and driving innovations in the

design and manufacturing of the Groups product. Madam Khoo is not a director of any other public companies.

On 27 October 2010, Madam Khoo was re-designated as Executive Director of the Company.

She is Mr. Khoo Yew Neans sister. Other than that, she does not have any family relationship with any other director and/or

major shareholder of the Company.

KHOO YEW NEAN

Khoo Yew Nean (Executive Director), a Malaysian, aged 46, was appointed to the Board of Baswell on 30 August 2002. He

began his career as a Marketing Executive with a furniture trading company. He was promoted to Marketing Manager in1987. He left in 1991 to set up Deswell Packaging (M) Sdn Bhd (DPSB) and has assumed his present position of Managing

Director of DPSB since then. He is responsible for the overall day-to-day management of DPSB. Mr. Khoo is not a director of

any other public companies.

On 27 October 2010, he ceased as a member of the Remuneration Committee.

He is the brother of Madam Khoo Yew Kheng. Other than that, he does not have any family relationship with any other director

and/or major shareholder of the Company.


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LIM BOON CHIANG

Lim Boon Chiang (Independent Non-Executive Director), a Malaysian, aged 71, was appointed to the Board of Baswell on 30August 2002. He graduated from National Taiwan University, Taiwan with a degree in Electrical Engineering in 1967. Upon his

return in 1969, he joined Folin Brothers Sdn Bhd as Boiler Engineer. In 1973, he joined Texas Instrument Singapore as a Sales

Manager and was responsible for setting up the sales department.

Subsequently, in 1980, he was assigned to Texas Instrument South Korea as a Marketing Director. During his ten (10) years

tenure in South Korea, he had successfully built-up a sales and marketing team and formed a strong business base for Texas

Instrument South Korea. In 1990, he was reassigned to Texas Instrument Malaysia as a Marketing Director to oversee the

sales and marketing division of Texas Instrument Malaysia. He retired from Texas Instrument Malaysia in 1998. Subsequent

to his retirement, he joined Taliworks Corporation Berhad Group (TCB) in 1999 to take charge of Carpet International

Malaysia Manufacturing Sdn Bhd, a subsidiary company of TCB, as the Chief Operating Ofcer. In September 2002, he was

subsequently reassigned to Sungai Harmoni Sdn Bhd, a subsidiary company of TCB as Business Adviser. Mr. Lim is not a

director of any other public companies.

On 27 October 2010, Mr. Lim has been re-designated as a member of the Nomination Committee. He is also a member of theAudit Committee as well as the Chairman of the Remuneration Committee.

Mr. Lim does not have any family relationship with any other director and/or major shareholder of the Company.

DATO WONG KAM HOONG

Dato Wong Kam Hoong (Non-Independent Non-Executive Director), a Malaysian, aged 63, was appointed to the Board of

Directors of Baswell on 15 January 2010. He is a Chartered Accountant by profession and is the currently a Fellow of Chartered

Certied Accountants (UK) (F.C.C.A). He was a partner of Wong Liu & Partners, an accounting rm based in Perai, Penang until

1999.

Dato Wong stood for and won the parliamentary seat of Bayan Baru, Penang since 1995. He was appointed as the ParliamentSecretary, Ministry of Domestic Trade and Consumer Affairs in year 2000 and became the Deputy Minister of Culture, Arts

and Heritage in 2004.

Dato Wong has announced his retirement in year 2008 and had not stood for re-election in the same year. He was appointed

as the Chairman of National Film Development Corporation of Malaysia (FINAS) in year 2009. Dato Wong is not a director

of any other public companies.

Dato Wong is a member of the Audit Committee. On 27 October 2010, he ceased as a member of the Remuneration

Committee.

Dato Wong is the father-in-law of Mr. Ng Min Lin, a major shareholder of the Company. Other than that, he does not have any

family relationship with any other director and/or major shareholder of the Company.



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9Annual Report 2010

CHONG YONG KAI

Chong Yong Kai (Independent Non-Executive Director), a Malaysian, aged 64, was appointed to the Board of Baswell ResourcesBerhad on 23 January 2009 and a member of the following professional bodies, namely the Chartered Institute of Banker (UK),

the British of Institute of Management (UK)-MIMgt, the Institute of Credit Management (UK)-MICM, American Institute of

Management (US)-AIMA and Institute of Marketing-MIMM.

He started his banking career in 1964 with a Foreign Bank (United Commercial Bank-India which later became United Asian

Bank Berhad and now CIMB Bank Berhad) and held various positions namely Ofcer-in-charge of Credit Divisions, Internal

Audit and Relief Manager. He left the bank in 1979 to joint Hong Leong Finance Berhad as a Credit Executive. In 1980 he

joint Finplan Leasing Sdn Bhd as a Senior Manager which oversee the whole operation. In 1988 he joint Mechmar Capital

Sdn Bhd (formerly known as Titan Leasing Sdn Bhd) a wholly owned subsidiary of Mechmar Corporation Berhad as a General

Manager. He left in 1994 to be on its own as a Business, Financial and Corporate Affairs Advisor & Consultant for various group

of businesses and industries namely Hospitality, Entertainment, Budget, Restaurant and Leisure Out ts. He is presently

with a Group of companies involved in Housing Development, Building Construction and Interior Design as a Group Advisor

for Finance and Corporate Affairs. He has four decades of career and experience ranging from Finance, Corporate Affairs,

Reorganising and Restructuring of companies, Mergers and Acquisition and Fundings. He is not a director of any other publiccompanies.

Mr. Chong is a member of the Nomination Committee. On 27 October 2010, he was re-designated as the Chairman of the

Audit Committee and appointed as a member of the Remuneration Committee.

Mr. Chong does not have any family relationship with any other director and/or major shareholder of the Company.

The number of Board Meetings attended by directors during the nancial year are disclosed in the Statement on

Corporate Governance on page 12 of this Annual Report.

Save as disclosed above, none of the Directors,a. have any conict of interests with the Company; and

b. have been convicted of any offences within the past 10 years other than trafc offences.



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OnbehalfoftheBoardofDirectors(theBoard)ofBaswellResourcesBerhad,

IampleasedtopresenttheAnnualReportandtheAuditedFinancialStatementsoftheGroupandtheCompanyforthenancialyearended30September2010.

OPERATIONAL AND FINANCIAL REVIEW

The nancial year ended 30 September, 2010 has been impacted by the ongoing recession in the Groups primary markets in

Europe and U.S. The severe reduction in orders coupled with wafer thin margin had resulted in higher losses to the Group.

During the year, the Group signed a MOU with Metroplex Resources Ltd (HK) to bring in potential new orders. However, the

expected orders from the MOU failed to materialize and the Group decided to terminate the MOU on 9 August 2009.

The costs of maintaining and gearing up the operations for the MOU had severely drained the Groups nancial resources.

Consequently the Board decided to cease all furniture making operations on 9 August, 2010 in order to stem any furtherlosses.

The group achieved a lower turnover of RM11,608,995 resulting in a loss before tax of RM27,484,646 as compared to previous

year.

MARKET OUTLOOK

The outlook for the Groups remaining business in packaging remains challenging. Without the core and complementary

furniture making business, the turnaround in the packaging operations will increasingly look remote.

CORPORATE SOCIAL RESPONSIBILITY

Due to the lacklustre nancial performance of the Group, the Group has not undertaken any corporate social responsibility

activities for the nancial year ended 30 September, 2010.

WORDS OF THANKS AND APPRECIATION

On behalf of the Board, I wish to extend our sincere thanks and appreciation to the management and staff for their loyalty and

commitment despite the hardship facing the Group.

To all former employees, the Board would like to express their heartfelt appreciation.

I wish to thank my fellow Board members for their invaluable professional advices, guidance and contribution in making this

Board effective and efcient.

Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman

ChairmanoftheBoard

8 March 2011

CHAIRMANS STATEMENT


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11Annual Report 2010

The Board is fully committed to ensure that the highest standards of corporate governance are observed throughout the Group

so that the affairs of the Group are conducted in a transparent and objective manner with full accountability and integrity to

safeguard shareholders investment and ultimately enhancing their value. The Company is led and managed by an experiencedBoard comprising members with a wide range of business, nancial, and public services background.

The Board has overall responsibility for the strategic direction of the Group and oversees the Groups businesses to ensure

that they are properly managed.

The Board commits to observe and practise towards ensuring full application of the principles of corporate governance as set

out in Part 1 of the Malaysian Code on Corporate Governance (the Code) and had, to their best ability, complied with the

best practices as set out in Part 2 of the Code.

DIRECTORS

1. Board Composition

The Board consists of seven (7) members; comprising three (3) Executive Directors, three (3) Independent Non-Executive

Directors and one (1) Non-Independent Non-Executive Director. More than one third (1/3) of the Board comprises

Independent Non-Executive Directors. The Board is of the opinion that the composition of the Board fairly reects a balance

of executive and non-executive directors to ensure that the interest of not only the Group, but also the stakeholders and

the public in general are represented in all business strategies formulation and adoption.

Indeed, the Board is made-up of directors who possess the relevant experiences, knowledge and skills. Proactive discussions

were held during the Board meetings and various meetings of Board Committees in the strategic decision-making process.

The Board currently has no Senior Independent Non-Executive Director.

The proles of each Director is presented on pages 6 to 9 of this Annual Report.

2. Duties and Responsibilities of the Board

The Board takes full responsibility for the performance of the Group. The Boards duties and responsibilities include

determining the Groups overall strategic plans, performing periodic review of business and nancial performance,

engaging in succession planning and adopting practical risk management and internal controls for the Group.

The Managing Director/Chief Executive Ofcer, assisted by the Directors has overall responsibility in working towards

achieving strategic goals and objective for the Group together with the implementation of Groups policies, corporate

strategies and decisions. This is to facilitate the Non-Executive Directors to discharge their duties and responsibilities

effectively and to avoid any conict of interest situations.

The Board comprises highly reputable and professional persons of calibre, credibility and has the necessary skills and

experience to exercise independent judgement. With their combined experience and knowledge they provide sound

advice and impartial judgement for the benets of the Company, its shareholders and stakeholders.

3. Appointment to the Board

In order to comply with good practice for the appointment of new directors through a formal and transparent procedure,

the Board has set up a Nomination Committee which comprise exclusively of Independent Non-Executive Directors, to

evaluate and recommend candidates for directorships to the Board.

4. Re-election/Re-appointment of Directors

In accordance with the Companys Articles of Association, one third (1/3) of the directors shall retire by rotation at each

Annual General Meeting provided always that all directors shall retire from ofce at least once in three (3) years. The

directors retiring from ofce shall be eligible for re-election by the shareholders. The directors to retire shall be the

directors who have been longest in ofce since their last election or appointment when he has previously vacated ofce.

The re-election/re-appointment of Director(s) at the Annual General Meeting of the Company is subject to the prior

consent being obtained from the Director(s) to continue to hold ofce.

STATEMENT ON CORPORATE GOVERNANCE


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DIRECTORS (contd)

4. Re-election/Re-appointment of Directors (contd)

Pursuant to Section 129(6 ) of the Companies Act,1965, Mr. Lim Boon Chiang retires at the conclusion of the forthcoming

Tenth Annual General Meeting, and being eligible, Mr. Lim is seeking for re-appointment to the Board of Directors.

5. Board Meetings and Supply of Information to the Board

The Board meets at least four (4) times and, as and when required, during the nancial year to, amongst others, review and

approve the quarterly nancial statements and the annual audited nancial statements. The agenda for the Board Meetings,

together with appropriate reports and information on the Companys business operations, and proposal papers for the Boards

consideration are circulated to all the directors prior to the meetings in sufcient time so that all directors are given time to

prepare, obtain additional information or clarication prior to the meeting to ensure a smooth proceeding of each meeting.

The proceedings and resolutions reached at each Board Meeting are documented in the minutes and signed by Chairman

of the next Board Meeting. Besides Board Meetings, the Board exercises control on matters that require Boards approvalthrough circulation of Directors Resolutions.

All directors have access to all information within the Company as well as the advices and services of the company

secretary whether as a full Board or in their individual capacity to assist them in their decision making. Where necessary,

the directors may engage independent professionals at the Companys expense on specialized issues to enable the

directors to discharge their duties with adequate knowledge on the matters being deliberated.

The Board held ten (10) meetings during the nancial year ended 30 September 2010 and the attendance at the meetings

were as follows:

Name Designation Attendance

Tan Sri Dato Bentara Istana Nik

Hashim bin Nik Ab Rahman

Independent Non-Executive Chairman 7/8

Dr. Lai Chee Chuen Managing Director/Chief Executive Ofcer 9/10

Khoo Yew Kheng Executive Director 10/10

Khoo Yew Nean Executive Director 10/10

Lim Boon Chiang Independent Non-Executive Director 8/10

Chong Yong Kai Independent Non-Executive Director 10/10

Dato Wong Kam Hoong Non-Independent Non-Executive Director 9/9

Tan Beng Kheng

(Resignedw.e.f.2August2010)

Independent Non-Executive Director 5/6

6. Training of Directors

All the Directors the Company have attended and successfully completed the Mandatory Accreditation Programme(MAP). During the year, Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman had attended the following trainings:-

Trainings attended

Governance, Risk Management and Compliance: What Audit Committees and Chief Audit Executives Should Know

Making Corporate Boards More Effective

Analysing and Interpreting Financial Statements

Save for the Tan Tan Sri Dato Bentara Istana Nik Hashim bin Nik Ab Rahman, all other Directors of the Company have

conrmed that they have not attended any trainings for the nancial year ended 30 September 2010 as the Company was

unable to allocate any funding for such purposes.

Nonetheless, the Board will continue to evaluate and determine the training needs of the directors from time to time to

enhance their knowledge to enable them to discharge their responsibility more effectively.

The Board of Directors are kept abreast with general economic, industry and technical developments by senior

managements brieng to the Board from time to time.

STATEMENT ON CORPORATE GOVERNANCE (contd)


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Board Committees

The Board has established the following committees:

i. Audit CommitteeThe terms of reference, composition and summary of activities of the Audit Committee during the nancial year are setout under the Audit Committee Report on pages 15 to 18 of this Annual Report.

ii. Remuneration Committee

The Remuneration Committee comprises the following members:

Name Designation

Lim Boon Chiang (Chairman) Independent Non-Executive Director

Tan Sri Dato Bentara Istana Nik Independent Non-Executive Director

Hashim bin Nik Ab Rahman (Member)(Appointedw.e.f.27October2010)

Chong Yong Kai (Member)(Appointedw.e.f.27October2010)

Independent Non-Executive Director

Dr. Lai Chee Chuen (Member)(Ceasedw.e.f.27October2010)

Chief Executive Ofcer

Mr. Khoo Yew Nean (Member)(Ceasedw.e.f.27October2010)

Dato Wong Kam Hoong (Member)(Ceasedw.e.f.27October2010)

The Remuneration Committee is responsible for assessing the remuneration packages of the Executive Directors. Therespective Executive Directors would abstain from participating in decisions regarding their remuneration package.

Subject to shareholders approval in general meeting, the Board as a whole determines the level of remuneration of thenon-executive directors of the Company. The remuneration of the non-executive directors will be reviewed in order to takeinto recognition of their principal duties and responsibilities under the Code.

Directors Remuneration

The Directors remuneration aggregated and categorized into appropriate components, the number of Directors whoseremuneration falls into the successive bands of RM50,000.00, as below,

ParticularsExecutives Directors

(RM)Non-Executive Directors

(RM)Total(RM)

Fee 137,828 137,828

Salaries and other emoluments 600,000 218,314 818,314

Employees provident fund 114,000 114,000

Benet in kinds 21,050 21,050

Total 735,050 356,142 1,091,192

Range of remuneration Executives Directors NonExecutive Directors Total

RM50,000 and below 4 4

RM50,001 - RM100,000 2 2RM100,001 - RM150,000

RM150,001 - 200,000 2 2

RM200,001 - 250,000 1 1Total 3 6 9

iii. Nomination Committee

The Nomination Committee comprises the following members:

Name Designation

Tan Sri Dato Bentara Istana Nik Independent Non-Executive Director

Hashim bin Nik Ab Rahman (Chairman)(Appointedw.e.f.27October2010)

Lim Boon Chiang (Member)(Re-designatedw.e.f.27October2010)

Independent Non-Executive Director

Chong Yong Kai (Member) Independent Non-Executive Director

Dr. Lai Chee Chuen (Member)

(Ceasedw.e.f.27October2010)

Chief Executive Ofcer

The main responsibilities of this Committee are to propose and recommend new candidates to the Board on an on-goingbasis, if necessary and to annually review the mix of skills and experience and other qualities, including core competencieswhich the directors should possess in order to ensure that the effectiveness and efciency of the Nomination Committeeis always maintained in discharging its duties and responsibilities.



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Accountability and Audit

a. Financial ReportingThe Board aims to present a balanced, clear and understandable assessment of the Groups nancial positions and prospects

in the annual nancial statements and quarterly announcements to the shareholders, investors and regulatory authorities.

The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out in page 27 of the Annual Report.

b. Internal ControlThe Board recognizes that it has overall responsibility for maintaining a sound system of internal control for the Group in

order to safeguard shareholders interest of the Groups assets. The system of internal control not only covers nancial

controls but also operational and compliance controls as well as risk management. Information on the Groups internal

control is presented in the Statement of Internal Control on pages 19 to 20 of this Annual Report.

c. Relationship with AuditorsThe external auditors have continued to report to shareholders of the Company on their ndings which are included as

part of the Companys nancial reports with respect to each nancial years audit on the statutory nancial statements.

The roles of the Audit Committee, the internal and external auditors of the Company are described in the Audit Committee

Report as set out on pages 15 to 18 of this Annual Report. The Board and the Audit Committee have always maintained a

professional and transparent relationship with the Companys auditors.

Shareholders

i. Relationship with ShareholdersThe Board recognises the need for transparency and accountability to the Companys shareholders as well as regular

communication with its shareholders, stakeholders and investors on the performance and major developments in the

Company. The Company ensures that timely releases of the quarterly nancial results, press releases and corporate

announcements are made to its shareholders and investors, which are clear, unambiguous, succinct, accurate and

contains sufcient and relevant information to enable shareholders and investors to make informed investments decision.

ii. Annual General Meeting (AGM)

The AGM is the principal forum for dialogue with shareholders. At the Companys AGM, shareholders participation is always

encouraged and welcomed. It is a useful opportunity for the directors to communicate face to face with shareholders

and to present the Companys business operations, performance and future plans. The directors are prepared to answer

queries and to receive feedback from the shareholders. The external auditors are also present to provide their professional

and independent clarication on issues of concern raised by the shareholders, if any. Notice of the AGM and Annual

Report are sent out with sufcient notice before the date of the meeting. The Statement Accompanying the Notice of the

AGM and explanatory notes on the proposed resolution under Special Business are provided to help the shareholders to

decide on their vote on the resolution.

Where Extraordinary General Meetings are held to obtain shareholders approval on certain business or corporate

proposals, comprehensive circulars to shareholders would be sent within prescribed deadlines in accordance with

regulatory and statutory provisions.

Best Practice of the CodeThe Board is committed to achieve high standards of corporate governance throughout the Group and to the highest level of

integrity and ethical standards in all its business dealings. The Board considers that the Group has complied throughout the

current nancial year under review with the Best Practices as set out in the Code unless stated otherwise.

This Statement on Corporate Governance has been duly approved at the Board of Directors Meeting held on

25 February 2011.



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TERMS OF REFERENCE

The terms of reference of the Audit Committee are as follows:

Objectives

The principal objectives of the Audit Committee is to assist the Board of Directors (Board) in discharging its statutory duties

and responsibilities relating to accounting and reporting practices of the Company and each of its subsidiaries. In addition, the

Audit Committee shall:

evaluate the quality of the audits performed by the internal and external auditors;

provide assurance that the nancial information presented by management is relevant, reliable and timely;

oversee compliance with laws and regulations and observance of a proper code of conduct; and

determine the quality, adequacy and effectiveness of the Groups control environment.

Composition and Meetings

In view of the re-designation of Dr. Lai Chee Chuen as the Managing Director/Chief Executive Ofcer on 27 October 2010, the

Audit Committee has undergone a restructuring on the same day and the members of the Audit Committee, attendance at

each Audit Committee Meeting during the nancial year ended 30 September 2010 are as follows:

Name Designation Directorship Attendance

Chong Yong Kai

(Re-designatedw.e.f.27October2010)

Chairman Independent Non-Executive Director 7/7

Lim Boon Chiang Member Independent Non-Executive Director 7/7

Dato Wong Kam Hoong Member Non-Independent Non-Executive Director 5/5

Tan Sri Dato Bentara Istana Nik Hashim bin

Nik Ab Rahman

(Appointedw.e.f.27October2010)

Member Independent Non-Executive Director N/A

Dr. Lai CHee Chuen

(Ceasedw.e.f.27October2010)

Chairman Independent Non-Executive Director 5/7

Note: There were seven (7) Audit Committee Meetings held during the fnancial year ended 30 September 2010.

1. Composition of members

The Board shall appoint the Audit Committee members from amongst themselves, comprising no fewer than three (3)

non-executive directors. The majority of the Audit Committee members shall be independent directors.

In this respect, the Board adopts the denition of independent director as dened under the Listing Requirements of

Bursa Malaysia Securities Berhad (Bursa Securities).

All members of the Audit Committee shall be nancially literate and at least one (1) member of the Audit Committee must

be:

(a) member of the Malaysian Institute of Accountant (MIA); or

(b) if he is not a member of MIA, he must have at least three (3) years of working experience and:

i. he must have passed the examinations specied in Part I of the First Schedule of the Accountants Act 1967; or

ii. he must be a member of one of the associations of the accountants specied in Part II of the First Schedule of

the Accountants Act 1967; or

(c) fulls such other requirements as prescribed or approved by Bursa Securities.

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

The term of ofce and performance of the Audit Committee and each of its members shall be reviewed by the Board atleast once every three (3) years to determine whether such Audit Committee and members have carried out their duties

in accordance with their terms of reference.

AUDIT COMMITTEE REPORT


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TERMS OF REFERENCE (contd)

1. Composition of members (contd)

Retirement and resignation

If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member resulting in noncompliance

to the composition criteria as stated in paragraph 1 above, the Board shall within three (3) months of the event appoint

such number of the new members as may be required to ll the vacancy.

2. Chairman

The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an independent

director.

In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst

themselves elect a Chairman who must be independent director to chair the meeting.

3. Secretary

The Company Secretary shall be the Secretary of the Audit Committee and as a reporting procedure, the Minutes shall

be circulated to all members of the Board.

4. Meetings

The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in

discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the

Chairmans discretion.

Upon the request of the external auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit

Committee to consider any matter the external auditor believes should be brought to the attention of the directors orshareholders.

Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee

waives such requirement.

The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman,

the Chief Executive Ofcer, the Finance Director, the head of internal audit and the external auditors in order to be kept

informed of matters affecting the Company.

The head of nance, the head of internal audit and a representative of the external auditors should normally attend

meetings. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. The

Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, without

executive Board members or employees present whenever deemed necessary and at least twice a year with the external

auditors.

Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present,

and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.

5. Minutes

Minutes of each meeting shall be kept at the registered ofce and distributed to each member of the Audit Committee

and also to the other members of the Board. The Audit Committee Chairman shall report on each meeting to the Board.

The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings

were held or by the Chairman of the next succeeding meeting.

6. Quorum

The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent

directors.

AUDIT COMMITTEE REPORT (contd)


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7. Objectives

The principal objectives of the Audit Committee are to assist the Board in discharging its statutory duties and responsibilities

relating to accounting and reporting practices of the holding company and each of its subsidiaries. In addition, the Audit

Committee shall:

(a) evaluate the quality of the audits performed by the internal and external auditors;

(b) provide assurance that the nancial information presented by management is relevant, reliable and timely;

(c) oversee compliance with laws and regulations and observance of a proper code of conduct; and

(d) determine the quality, adequacy and effectiveness of the Groups control environment.

8. Authority

The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the

Company,

(a) have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access

to information. All employees shall be directed to co-operate as requested by members of the Audit Committee.

(b) have full and unlimited/unrestricted access to all information and documents/resources which are required to perform

its duties as well as to the internal and external auditors and senior management of the Company and Group.

(c) obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary.

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function

or activity (if any).

(e) where the Audit Committee is of the view that the matter reported by it to the Board has not been satisfactorily

resolved resulting in a breach of the Listing Requirements, the Audit Committee shall promptly report such matter to

Bursa Securities.

9. Duties and Responsibilities

The duties and responsibilities of the Audit Committee are as follows:

(a) To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal;

(b) To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-

ordination where more than one audit rm is involved;

(c) To review with the external auditor his evaluation of the system of internal controls and his audit report;

(d) To review the quarterly and year-end nancial statements of the Board, focusing particularly on:

any change in accounting policies and practices;

signicant adjustments arising from the audit;

the going concern assumption; and

compliance with accounting standards and other legal requirements.

(e) To discuss problems and reservations arising from the interim and nal audits, and any matter the auditor may wish

to discuss (in the absence of management, where necessary);

(f) To review the external auditors management letter and managements response;

(g) To do the following, in relation to the internal audit function:

review the adequacy of the scope, functions, competency and resources of the internal audit function, and that

it has the necessary authority to carry out its work;

review the internal audit programme and results of the internal audit process and, where necessary, ensure that

appropriate actions are taken on the recommendations of the internal audit function;

review any appraisal or assessment of the performance of members of the internal audit function;

approve any appointment or termination of senior staff members of the internal audit function; and

take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.



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9. Duties and Responsibilities (contd)

(h) To consider any related party transactions and conict of interest situation that may arise within the Company or

Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(i) To report its ndings on the nancial and management performance, and other material matters to the Board;

(j) To consider the major ndings of internal investigations and managements response;

(k) To verify the allocation of employees share option scheme (ESOS) in compliance with the criteria as stipulated in

the by-laws of ESOS of the Company, if any;

(l) To determine the remit of the internal audit function;

(m) To consider other topics as dened by the Board; and

(n) To consider and examine such other matters as the Audit Committee considers appropriate.

Summary of Activities

The main activities of the Audit Committee in discharging its functions and duties during the nancial year under review wereas follows:

Reviewed with the external auditors the result of the audit and the audit reports.

Reviewed the quarterly unaudited nancial results of the Group and ensure compliance with approved accounting

standards, other legal and regulatory requirements, before recommending them for Boards approval.

Reviewed the audited nancial statements of the Group and the Company prior to submission to the Board for their

consideration and approval.

Reviewed the performance of the internal audit function.

Summary of Internal Audit Function

During the nancial year ended 30 September 2010, the Group has appointed an in-house internal auditor to carry out routine

audit and review of all operating units within the Group. The total cost incurred for the internal audit function in respect ofnancial year ended 30 September 2010 amounted to RM6,000.00.

The internal audits shall be performed based on risk based approach by focusing on:

Review and identify potential high-risk areas for compliance with internal control policies and procedures, legal and

regulatory bodies; and

Evaluate the adequacy and effectiveness of the internal control systems

The internal audit reports were forwarded to the management for attention and necessary action and presented to the Audit

Committee for deliberation and approval.

During the nancial year under review, a review on the system of internal controls as follows of the Groups operations were

completed:

Quality Assurance and Maintenance Department

Purchasing Department function of Furniture Division and Packaging Division

Marketing Department function of Furniture Division and Packaging Division



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Pursuant to Paragraph 15.26 of the Listing Requirements of the Bursa Malaysia Securities Berhad for the Main Market and the

Malaysian Code on Corporate Governance (the Code), the Board of Directors (Board) is pleased to provide the following

statement, which outlines the nature and scope of the Groups system of internal controls for the nancial year ended 30September 2010.

Directors ResponsibilitiesThe Board afrms its overall responsibility to maintain a sound system of internal controls and risk management practices

for the Group which includes the establishment of an appropriate control environment and framework as well as periodical

reviews of its effectiveness, adequacy and integrity so as to safeguard shareholders interest and investment and the Groups

assets.

The Board recognises that a sound system of internal controls, which include inter alia, nancial, operational, information

technology and organisational controls is an important part of managing risks in an effort to achieve overall corporate objectives.

The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve the Groups business

objectives. In pursuing these objectives, system of internal controls can only provide reasonable and not absolute assurance

against material misstatement, loss and fraud.

Internal Control and Control Environment

The Group has incorporated the following key elements into its system of internal controls:

The Managing Director/Chief Executive Ofcer played a major role as the link between the Board and management in

implementing the Boards expectation of effective system of internal controls in managing the Groups business.

The Managing Director/Chief Executive Ofcer and respective management team attended to various management and

operations meetings, and reviewed nancial and operational reports, in order to monitor the performance and protability

of the Groups business. The Managing Director/Chief Executive Ofcer and the management visit the operating units

regularly and all matters arose are promptly and effectively dealt with.

The Audit Committee holds regular meetings in order to deliberate on ndings and recommendations for improvementon the state of affairs and system of internal controls in the presence of management. The matters discussed in the Audit

Committees meeting will be reported to the Board.

The Group has formulated various departmental operational manuals to assist them in designing, operating, monitoring

and managing the control processes. With the operational manuals, the key commercial and nancial risks are being

identied so as to ensure that reasonable assurance on the effectiveness and efciency of the system of internal controls

will mitigate various risks faced by the Group to an appropriate level and acceptable to the Board.

The Group has performed on-going review and timely updating of departmental operational manuals from time to time.

The Group has arranged regular interactive meetings between the senior management personnel in order to rectify any

weaknesses highlighted in respective area. In doing so, the senior management personnel determine proactive actions to

create awareness on the importance of staffs and line managements involvement in the system of internal controls by

allowing various management personnel to have access to important information for better decision making.

The Group has established the Safety and Health measures in safeguarding the Groups assets as well as shareholders

and stakeholders interest.

The Group has adequate system of internal controls covering management, nancial, operational and compliance

controls. In addition, the operational manuals for Furniture Division and Packaging Division will also help facilitate the day-

to-day running of the Groups businesses within clearly dened key functions of each department in the most efcient

and effective manner. The development of the system of internal controls entails identifying, evaluating and managing

the risks faced by the Group. The Board maintains an ongoing commitment to strengthen the Groups internal control

environment and processes.

STATEMENT ON INTERNAL CONTROL


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Conclusion

Generally, it can be concluded that the Group has implemented a good system of internal controls with respect to the various

operating activities at all levels. Since the cessation of the furniture-making operations in August 2010, the maintenance of theGroups internal Control System was limited to the remaining packing business.

This Statement on Internal Audit Control has been duly approved at the Board of Directors Meeting held on 25 February 2011.

STATEMENT ON INTERNAL CONTROL (contd)


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DIRECTORS RESPONSIBILITY STATEMENT IN RELATION

TO THE FINANCIAL STATEMENTS

This statement is prepared as required by the Listing Requirements of the Bursa Malaysia Securities Berhad for the Main

Market.

The Directors are required to prepare nancial statements which give a true and fair view of the state of affairs of the Group

and the Company as at the end of the nancial year and of the results and the cash ows of the Group and the Company for

that year then ended.

The Directors consider that in preparing the nancial statements,

The Group and the Company have used appropriate accounting policies and are consistently applied;

Reasonable and prudent judgements and estimates were made; and

All applicable approved accounting standards in Malaysia have been followed.

The Directors are responsible for ensuring that the Group and the Company maintain accounting records that disclose with

reasonable accuracy the nancial position of the Group and the Company, and which enable them to ensure that the nancial

statements comply with the Companies Act, 1965.

The Directors have general responsibilities for taking such steps that appropriate systems are reasonably available to them

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

misstatements. Such systems, by their nature, can only provide reasonable and not absolute assurance against material

misstatement, loss or fraud.

This Directors Responsibility Statement has been duly approved at the Board of Directors Meeting held on 25 February 2011.


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1. Utilisation of Proceeds Raised from Corporate Proposal

There were no proceeds raised from any corporate proposal announced at the date of this report.

2. Share Buyback

There were no share buyback of the Companys shares during the nancial year.

3. Options or Convertible Securities

There were no options or convertible securities exercised during the nancial year as the Company has not issued any

options or convertible securities.

4. Depository Receipt Programme

The Company did not sponsor any Depository Receipt Programme during the nancial year.

5. Imposition of Sanctions and/or Penalties

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

relevant regulatory bodies.

6. Non-audit Fees Paid to External AuditorsThere were no non-audit fees paid to external auditors for the nancial year ended 30 September 2010.

7. Prot Estimate, Forecast or Projection or Unaudited ResultsThe Company did not make any release on the prot estimate or projection during the nancial year.

There are no prot forecast and unaudited results released which differ by ten percent (10%) or more from the audited

results for the nancial year ended 30 September 2010.

8. Prot GuaranteeNo prot guarantee was received by the Company during the nancial year.

9. Material ContractsThere were no material contracts entered into by the Company and its subsidiaries that involves directors and/or majorshareholders interests since the end of the previous nancial year, save as disclosed on page 57 in Note 23 to the

nancial statements.

10. Revaluation Policy

Freehold land and buildings stated at valuation are revalued at regular intervals of at least once in every ve years based

on market value basis.

OTHER COMPLIANCE INFORMATION


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FINANCIAL STATEMENT

DIRECTORS REPORT 24 26

STATEMENT BY DIRECTORS 27

STATUTORY DECLARATION 27

INDEPENDENT AUDITORS REPORT 28 30

CONSOLIDATED BALANCE SHEET 31

CONSOLIDATED INCOME STATEMENTS 32

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 33

STATEMENT OF CHANGES IN EQUITY 34

CONSOLIDATED CASH FLOW STATEMENTS 35

NOTES TO THE FINANCIAL STATEMENTS 36 59


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DIRECTORS REPORT

The Directors present their report together with the audited nancial statements of the Group and of the Company for the

nancial year ended 30 September 2010.

PRINCIPAL ACTIVITIES

The principal activities of the Company are that of an investment holding company and provision of management services to

its subsidiaries.

The principal activities of the subsidiary companies are stated in Note 3 to the nancial statements.

There were no signicant changes in the nature of these activities during the nancial year.

CORPORATE STATUS

The Company is listed on the Bursa Malaysia. The Company had on 9 August 2010, announced to Bursa Malaysia that it was

designated a PN17 company pursuant to paragraphs 8.04(2) of the Listing Requirements and Practice Note 17 (PN17) of the

Main Market Listing Requirements (MMLR).

The anticipated Sale Orders from the overseas buyers through a Memorandum of Understanding with Metroplex Resources

Limited dated 20 January 2010 did not materialise, and owing to the escalating costs of preparing and increasing work force

of our subsidiaries factories to meet the anticipated production, the Group expended all its funds and was unable to meet its

debt liabilities when they fell due.

Due mainly to this, the Group ceased its furniture-manufacturing operations with effect from 9 August 2010.

This rendered the Company to be classied as a PN17 company.

FINANCIAL RESULTS

GROUP COMPANY

RM RM

Net loss for the year (27,367,742) (55,453,226)

DIVIDEND

No dividend has been paid or declared by the Company since the end of the previous nancial year. The Directors do not

recommend any dividend in respect of the current nancial year.

ISSUE OF SHARES AND DEBENTURES

There was no issue of shares and debentures during the nancial year.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the nancial year.

RESERVES AND PROVISIONS

All material transfer to or from reserves or provisions during the nancial year have been disclosed in the nancial statements.

BAD AND DOUBTFUL DEBTS

Before the income statements and balance sheets were made out, the Directors took reasonable steps to ascertain that

action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satised

themselves that all known bad debts have been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the Directors are not aware of any circumstance which would render the amount written off for

bad debts or the amount of the allowance for doubtful debts in the nancial statements of the Group and of the Company

inadequate to any substantial extent.


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DIRECTORS REPORT (contd)

CURRENT ASSETS

Before the income statements and balance sheets were made out, the Directors took reasonable steps to ensure that any

current asset, other than debts, which were unlikely to be realised in the ordinary course of business their values as shown in

the accounting records of the Group and of the Company have been written down to an amount which they might be expected

so to realise.

At the date of this report, the Directors are not aware of any circumstance which would render the values attributed to the

current assets in the nancial statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this report, the Directors are not aware of any circumstance which has arisen which render adherence to the

existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

Except for the liabilities arising from the nancial obligations to its subsidiaries described in Note 9 and Note 10 to the nancialstatements, at the date of this report, there does not exist: -

i) any charge on the assets of the Group and of the Company which has arisen since the end of the nancial year which

secures the liabilities of any other person; or

ii) any contingent liability of the Group and of the Company which has arisen since the end of the nancial year.

All liabilities, present and contingent, have become enforceable on 9 August 2010, when the Company was classied as a

PN17 company.

CHANGE OF CIRCUMSTANCES

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

nancial statements of the Group and of the Company which would render any amount stated in the nancial statements

misleading.

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the nancial year were not, in the opinion of the

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

EVENTS SUBSEQUENT TO BALANCE SHEET DATE

There has not arisen in the interval between the end of the nancial year and the date of this report any item, transaction or

event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations

of the Group and of the Company for the nancial year in which this report is made.

DIRECTORS OF THE COMPANY

The Directors in ofce since the date of the last report are:

Dr. Oh Han Cheng - Retired at AGM held on 30 March 2010.

Khoo Yew Kheng (F)

Khoo Yew Nean

Dr. Lai Chee Chuen

Lim Boon Chiang

Chong Yong Kai

Dato Wong Kam Hoong - Appointed on 15 January 2010

Tan Beng Kheng - Appointed on 15 January 2010. Resigned on 2 August 2010.

Tan Sri Dato Bentara Istana Nik Hashim Bin Nik Ab. Rahman - Appointed on 24 February 2010

Under Section 129 of the Companies Act 1965, Lim Boon Chiang who has attained the age of seventy years subsequent to

the nancial year end shall retire at the forthcoming annual general meeting.


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DIRECTORS INTERESTS

According to the register of Directors shareholdings, the interests of Directors in ofce at the end of the nancial year in the

ordinary shares of the Company and its related corporations are as follows:

Number of Ordinary shares of RM1.00 each

As at

1-10-2009 Bought Sold

As at

30-9-2010

Shareholdings in the names of Directors

Shares in the Company

Khoo Yew Kheng 6,433,146 (5,400,000) 1,033,146

Khoo Yew Nean 806,130 806,130

By virtue of their interest in the shares of the Company, all the Directors are deemed to have benecial interest in the shares

of the subsidiary companies to the extent the Company has an interest.

DIRECTORS BENEFITS

During and at the end of the nancial year, no arrangements subsisted to which the Company is a party with the object or

objects of enabling Directors of the Company to acquire benets by means of the acquisition of shares in, or debentures of

the Company or any other body corporate.

Since the end of the previous nancial year, no Director has received or become entitled to receive a benet (other than a

benet disclosed as Directors remuneration as stated in Note 20 to the nancial statements) by reason of a contract made by

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

in which the Director has a substantial nancial interest.

AUDITORS

The auditors, Messrs. Thiang & Co., have indicated their willingness to continue in ofce.

Signed on behalf of the Board

in accordance with a resolution

of the Directors,

...............................

DR. LAI CHEE CHUEN

DIRECTOR

...............................

KHOO YEW KHENGDIRECTOR

Klang.

Date:

DIRECTORS REPORT (contd)


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We, DR. LAI CHEE CHUEN and KHOO YEW KHENG, being two of the Directors of BASWELL RESOURCES BERHAD, do

hereby state on behalf of the Directors that, in the opinion of the Directors, the accompanying nancial statements, together

with the notes thereto, are drawn up in accordance with applicable Financial Reporting Standards in Malaysia and the provisionsof the Companies Act, 1965, so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30

September 2010 and of the results of theirs operations and of the cash ows of the Group and of the Company for the year

ended on that date.

Signed on behalf of the Board in accordance

with a resolution of the Directors,

...............................

DR. LAI CHEE CHUENDIRECTOR

...............................

KHOO YEW KHENGDIRECTOR

Klang.

Date:

STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965

STATUTORY DECLARATION

Pursuant to Section 169(16) of the Companies Act, 1965

I, DR. LAI CHEE CHUEN, being the Director primarily responsible for the accounting records and nancial management

of BASWELL RESOURCES BERHAD, do solemnly and sincerely declare that to the best of my knowledge and belief,

the accompanying nancial statements, together with the noted thereto, are correct and I make this solemn declaration

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

Subscribed and solemnly declared by the abovenamed DR. LAI CHEE CHUEN I.C. No. 640831-08-6331 at Klang in the stateof Selangor Darul Ehsan on this day of

...............................

Before me,


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Report on the Financial Statements

We have audited the nancial statements of Baswell Resources Berhad, which comprise the balance sheets as at 30

September 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cashow statements of the Group and of the Company for the year then ended, and a summary of signicant accounting policies

and other explanatory notes, as set out on pages 31 to 59.

Directors Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation and fair presentation of these nancial statements in

accordance with the Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes

designing, implementing and maintaining internal control relevant to the preparation and fair presentation of nancial

statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors Responsibility

Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordancewith approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan

and perform the audit to obtain reasonable assurance whether the nancial statements are free from material misstatement.

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

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

misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, we have considered

the internal control relevant to the Companys preparation and fair presentation of the nancial statements in order to design

our audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation

of the nancial statements.

We found that there were insufcient audit evidence and explanations for some of the nancial matters, described more

appropriately in the Notes to the Financial Statements and the Basis for Disclaimer of Opinion paragraph (below), which

provide the basis for our disclaimer of audit opinion.

Basis for Disclaimer of Opinion

1. On 9 August 2010, pursuant to its announcement to Bursa Malaysia, the Company and its subsidiaries (Group) were

classied as a PN17 company, due mainly to the Groups inability to meet its debt liabilities when they fell due, and that it

has ceased its furniture-manufacturing operations since that date.

2. We draw attention the following matters in the subsidiaries:

a) Baswood Industries Sdn Bhd (Baswood):

i) On 13 December 2010, Baswood entered into a Sale and Purchase Agreement to dispose its freehold industrial

land and buildings for a total consideration of RM19,000,000. The disposal has not been completed as at the date

of the report.

ii) Baswood had provided an impairment loss of RM3,238,065 (2009: Nil) on Property, Plant and Equipment,

based on the Baswoods Board of Directors assumption that the net realisable value of the Baswoods freehold

industrial land and buildings is RM19,000,000. The impairment loss on the Freehold Land and Factory Buildings

of RM2,732,041 was written off against the Revaluation Reserves and the balance, RM506,024 was charged to

the income statement for nancial year.

iii) The Board of Directors of Baswood was uncertain on the extent of the recoverability of the Trade Receivables.

Accordingly, the Board of Directors made a general al lowance of 80% on the trade receivables for bad and doubtful

debts amounting to RM536,798 (2009: RM159,000). The auditors were unable to ascertain the appropriateness

of the basis, the quantum and adequacy of this allowance.

b) Deswell Packaging Sdn Bhd (Deswell):

i) The Board of Directors of Deswell was uncertain on the extent of the recoverability of the Trade Receivables.

Accordingly, the Board of Directors of Deswell made a specic and general allowances on the trade receivables

for bad and doubtful debts amounting to RM1,795,870 (2009: RM770,533) and RM2,098,000 (2009: RM98,000)

respectively. The auditors are unable to ascertain the appropriateness for the basis, the quantum and adequacy

of the allowances for bad and doubtful debts amounting to RM1,795,870 and RM2,098,000.

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OFBASWELL RESOURCES BERHAD


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Basis for Disclaimer of Opinion (contd)

ii) There was a Writ of Summons dated 26 July 2010 petitioned by a Trade Creditor to recover its debts of

RM1,834,708 plus interest 8% per annum from Deswell. The Directors of Deswell informed the auditors thatDeswell has made arrangement with the Creditor to pay them by instalments.

iii) Factory Rental of RM539,869 has been long outstanding. Deswell does not have the ability to pay the rental.

c) Aimwood Furniture Industries Sdn Bhd (Aimwood):

i) Due to Aimwoods inability to pay its debt liabilities when fell due, Aimwood was put under a Creditors Winding

Up Order by the Court under Section 218 of the Companies Act 1965, on the 23 November 2010, on which date

the Liquidator, Dato Robert Teo Keng Tuan of Messrs. RSM NWT Advisory Services Sdn. Bhd was appointed.

ii) Aimwood made a gross loss in its trading activity. The auditors were unable to satisfy themselves as to the

cause(s) of this matter. The Directors of Aimwood have explained that Aimwood anticipated sale orders from

overseas buyers and began to incur expenditure in preparing the factories and increasing the labour force to meet

these demands. However, the sales did not materialise, and due to those escalated costs, Aimwood suffered

gross loss in its trading accounts.

iii) There was no physical stock-take at nancial year-end due mainly to the non-accessibility of the management

staff into Aimwoods premises during the period when Aimwood was put under a Provisional Liquidator in a Court

Winding Up Petitions. The Directors of Aimwood are of the opinion that the value of the stock as at nancial year

ended 30 September 2010 was RM 1,742,835.

There was no alternative means for the auditors to verify the quantity, obsolescence, costing of the Inventories

at the nancial year-end.

iv) Aimwood had provided an impairment loss of RM2,197,970 (2009: Nil) on Property, Plant and Equipment, based

on the Aimwoods Board of Directors assumption that the net realisable value is 50% of the net book value at

the nancial year end for al l categories of property, plant and equipment.

v) Aimwood had written off RM4,394,657 (2009: nil) from the inventories. The Board of Directors of Aimwood was

of the opinion that the nished goods and work-in-progress may be realised at 50% of the raw material price, andaccordingly, valued them as such in the nancial statements.

vi) The Board of Directors of Aimwood was uncertain on the extent of the recoverability of the Trade Receivables

since Aimwood ceased its manufacturing and trading activities on 9 August 2010. Accordingly, the Board of

Directors of Aimwood made a general and specic allowance for bad and doubtful debts of 80% of the Trade

Receivables, amounting to RM2,670,748 (2009: RM281,708).

vii) Aimwood had defaulted in its hire-purchase instalment payments during the nancial year. The hire purchase

agreements include terms, which allow the lender institutions to proceed with legal proceedings against

Aimwood and its corporate guarantor (the Company), for recovery of the principal amounts outstanding together

with interest and penalty charges.

viii) During the year, the Aimwood had defaulted in its repayments to its banks borrowings. The banking agreements

include terms which allow the lender banks to proceed with legal proceedings against the Aimwood, its holding

company (Baswood) and corporate guarantor (the Company) for recovery of the principal amounts outstandingtogether with interest and penalty charges.

3. The audited nancial statements of the subsidiaries were qualied by the auditors due to the following matters:

a) The subsidiaries are insolvent and unable to pay their debt liabilities when they fell due.

b) The preparation of their nancial statements on the going concern basis was no longer applicable.

c) The appropriateness of the basis, quantum and adequacy of the following:

i) Allowance for write down of inventories;

ii) Allowance for bad and doubtful debts of the trade receivables;

iii) Impairment loss on property, plant and equipment.

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OFBASWELL RESOURCES BERHAD (contd)


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Basis for Disclaimer of Opinion (contd)

4. In view of the matters set out in the preceding paragraphs, the Group and the Company are insolvent and unable tocontinue as a going concern. Therefore the usage of the going concern assumption for the preparation of the nancial

statements is no longer applicable.

5. Accordingly, the nancial statements of the Group and the Company include adjustments and provisions in respect of the

recoverability and re-classication of assets and liabilities to reect the status of the Group and the Company, which is

insolvent.

Disclaimer of Opinion

In our opinion, due to the material matters stated in the Basis for Disclaimer of Opinion paragraph, we are unable to form an

audit opinion on the nancial statements of the Group and the Company.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

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

b) We are satised that the accounts of the subsidiaries that have been consolidated with the Companys nancial statements

are in form and content appropriate and proper for the purposes of the preparation of the nancial statements of the

Group and we have received satisfactory information and explanations required by us for those purposes.

c) The nancial statements of the subsidiaries contain qualications under Section 174(3) of the Act.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act

1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

THIANG & CO.AF: 0415

Chartered Accountants

THIANG KAI GOH463/05/11(J/PH)

Partner

Klang, Malaysia.

Date:

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OFBASWELL RESOURCES BERHAD (contd)


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GROUP COMPANY

NOTE 2010 2009 2010 2009

RM RM RM RM

ASSETS

Non current assets

Property, plant and equipment 2 22,598,545 31,417,352

Investment in subsidiary companies 3 8,900,000 42,387,635

22,598,545 31,417,352 8,900,000 42,387,635

Current assets

Inventories 4 1,865,025 9,906,411

Trade receivables 5 2,969,869 11,650,529

Other receivables, deposits and prepayments 6 450,298 948,774 27,944 14,335Tax recoverable 4,835 2,817

Amount due from subsidiary companies 7 3,838,641 11,626,567

Cash and bank balances 481,766 66,410 256,138 492

5,771,793 22,574,941 4,122,723 11,641,394

TOTAL ASSETS 28,370,338 53,992,293 13,022,723 54,029,029

EQUITY AND LIABILITIES

Equity attributable to equity holders of theCompany

Share capital 8 48,000,000 48,000,000 48,000,000 48,000,000

Reserves (51,883,419) (22,054,052) (51,278,799) 4,174,427Total equity (3,883,419) 25,945,948 (3,278,799) 52,174,427

Non-current liabilities

Hire-purchase liabilities 9 355,159

Bank borrowings (secured) 10 6,862,318

Deferred taxation 11 116,904

7,334,381

Current liabilities

Trade payables 12 8,015,930 9,096,966

Other payables, accruals and other liabilities 13 9,526,088 2,440,670 12,556,829 587,518Amount due to Directors 14 1,557,916 2,126,271 1,557,916 1,247,627

Amount due to shareholders 15 2,160,000 2,160,000

Hire-purchase liabilities 9 367,165 251,676

Bank borrowings (secured) 10 10,599,881 6,776,924

Taxation 26,777 19,457 26,777 19,457

32,253,757 20,711,964 16,301,522 1,854,602

Total liabilities 32,253,757 28,046,345 16,301,522 1,854,602

TOTAL EQUITY AND LIABILITIES 28,370,338 53,992,293 13,022,723 54,029,029

CONSOLIDATED BALANCE SHEETAs at 30 September 2010

The accompanying notes form an integral part of this balance sheet.


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CONSOLIDATED INCOME STATEMENTFor the year ended 30 September 2010

GROUP COMPANY

NOTE 2010 2009 2010 2009

RM RM RM RM

Revenue 16 11,608,995 20,505,399 804,000 804,000

Cost of sales 17 (17,068,624) (33,513,438)

Gross loss (5,459,629) (13,008,039) 804,000 804,000

Other operating income 261,115 410,668

Distribution costs (1,015,151) (1,538,763)

Administration expenses (13,156,261) (3,401,869) (1,559,824) (1,143,165)

Other operating expenses 18 (7,098,651) (54,612,351)

Loss from operations (26,468,577) (17,538,003) (55,368,175) (339,165)

Finance costs 19 (1,016,069) (1,146,013) (85,051) (40)

Loss before taxation 20 (27,484,646) (18,684,016) (55,453,226) (339,205)

Income tax credit 21 116,904 61,999 1,903

Net loss for the year (27,367,742) (18,622,017) (55,453,226) (337,302)

EARNING PER SHARE (SEN) 22 (57.02) (38.80)

The accompanying notes form an integral part of this statement.


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Non-Distributable Distributable

Share Share Revaluation Accumulated Total

capital premium reserve losses Equity

RM RM RM RM RM

2009

As at 1 October 2008 48,000,000 4,388,784 627,243 (8,448,062) 44,567,965


As at 30 September 2009 48,000,000 4,388,784 627,243 (27,070,079) 25,945,948

2010

As at 1 October 2009 48,000,000 4,388,784 627,243 (27,070,079) 25,945,948

Impairment loss on Property,

Plant and Equipment (627,243) (1,834,382) (2,461,625)


As at 30 September 2010 48,000,000 4,388,784 (56,272,203) (3,883,419)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 30 September 2010

The accompanying notes form an integral part of this statement.


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Nondistributable Distributable

Retainedprots/

Share Share (Accumulated Total

capital premium losses) equity

RM RM RM RM

2009

As at 1 October 2008 48,000,000 4,388,784 122,945 52,511,729

Net loss for the year (337,302) (337,302)

As at 30 September 2009 48,000,000 4,388,784 (214,357) 52,174,427

2010

As at 1 October 2009 48,000,000 4,388,784 (214,357) 52,174,427


As at 30 September 2010 4

Documents

BASWELL-AnnualReport2010 (1.2MB)