chairman’s statement (cont’d) annual report 2010...2010/11/11 · jia li bao leather fashion co...

FINANCIAL PERFORMANCE

Our Group’s revenue grew by 14% to reach the best ever performance of RM360.1 million for the financial year 2010. The revenue growth was mainly driven by the increase in domestic sales during the financial year under review. Our overseas sales have seen uptrend performance since the last global financial crisis. Our Singapore operations reported a positive growth of 13% as compared to the same period last year as the recovery set in. The Group will continue to embark on its goal to deliver growth in sales and profitability by upgrading its chain of boutiques, opening new boutiques at strategic locations and fur ther improving its product quality and margin.

For the financial year 2010, the Group recorded a profit before tax of RM45.5 million as compared to RM29.5 million previously, an increase of 54.0%. Included in the profit before tax of RM45.5 million was an exceptional debt recovery amounting to RM4.2 million in relation to a joint-venture property project in Rawang the Group had entered into way back in 1997. Excluding this exceptional item, the profit before tax grew by 39.8% to RM41.3 million from RM29.5 million previously. The strong whole year results were attributed to higher sales generated and coupled with higher other income and lower finance costs incurred in the financial year under review.

The Group’s net cash position increased from RM5.1 million a year ago to RM40.7 million as at 30 June 2010. This remarkable achievement has put the Group on a stronger foothold and this augurs well for future expansion and growth oppor tunities.

ECONOMIC REVIEW

The Malaysian economy registered a strong growth of 8.9% in the second quar ter of 2010, driven by sustained expansion in domestic demand and continued robust growth in external demand. The stronger domestic demand was due to higher private and public sector spending, while the expansion in external demand spurred domestic production. On the supply side, major economic sectors continued to record strong growth during the quar ter, led by the manufacturing and services sectors.

Going forward, the domestic economy is expected to remain strong, sustained by robust private sector demand. While external developments may result in a moderation in the pace of growth, favourable employment conditions, sustained consumer and business sentiments, moderate inflation and an accommodative policy environment are expected to encourage domestic economic activity, while external demand would continue to be suppor ted by regional demand.

Overall, the outlook for the fashion retail industry remains optimistic. Following the rebound of the economy after the 2008 crisis we are beginning to see the return of consumer confidence as retailers are seeing improved spending patterns from customers. Some depar tment stores are also looking to expand their operations, while other retailers are looking to grow their market share both locally and overseas.

A growing population, increased employment and income levels, coupled with better education, results in growth in the middle and upper middle class segment. This segment offers a large market potential for the fashion retail industry.

OPERATIONAL REVIEW

Retailing

The quick recovery of the economy after the 2008 global financial crisis has help us record a revenue growth of 14% as compared with 2009, largely due to our effective marketing strategies and consistent brand building effor ts which cover the entire process from product initiation, creative design and to material use in tandem with the current fashion trend.

Although the local retail industry has been facing many challenges these past years, especially during the last financial year when consumers were generally cautious in their spending as the economy was still on the mend. But the Group has been able to maintain momentum by building on its strong branding and its retail networks. During the year under review, the Group has added two new license brands to fur ther expand its business, Jeep for ladies and men’s footwear in Malaysia and Savile Row will take on men’s and ladies’ apparel, leatherwear and footwear in Malaysia, Singapore and Indonesia. To fur ther enhance market penetration, the Group has embarked on a strategy of opening exclusive boutiques for its license brands Valentino Rudy and Santa Barbara Polo & Racquet Club, located in major shopping malls Klang Valley.

Following Singapore’s move to legalise casino operations, to boost its tourism industry against stiff competition from other destinations in the region, our Singapore operation has successfully secured a retail lot of approximately 1,630 square feet at the Marina Bay Sand for an exclusive BONIA boutique scheduled to be opened by end of 2010. The boutique will create excellent brand exposure and allow us to tap into the high value, high traffic tourists and punters at the Marina Bay Sand casino.

CHAIRMAN’S STATEMENT(cont’d)

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Annual Repor t 2010


CORPORATE DEVELOPMENTS

As par t of the plan to rationalise its Carlo Rino brand businesses under a separate business unit, the Company on 23 November 2009 incorporated a wholly owned subsidiary, CRG Incorporated Sdn Bhd, to under take this restructuring. On 13 April 2010, CRG Incorporated Sdn Bhd acquired 300,000 ordinary shares of RM1.00 each representing 60% equity interest in Apex Marble Sdn Bhd from Mcore Sdn Bhd, fellow subsidiary of the Company for a total cash consideration of RM2,525. The principal activities of Apex Marble Sdn Bhd are the marketing and distribution of Carlo Rino fashionable goods in Vietnam. Subsequently, on 1 June 2010, the Company transferred its entire shareholding in CRL Marketing Sdn Bhd, CRF Marketing Sdn Bhd and CR Boutique Sdn Bhd to CRG Incorporated Sdn Bhd for RM19.7 million in an internal share swap deal.

On 30 April 2010 the Company incorporated a wholly owned subsidiary in Malaysia known as Alpha Footwear Sdn Bhd to under take marketing, retailing and distribution of footwear. The newly incorporated subsidiary’s authorised share capital is RM100,000 comprising 100,000 ordinary shares of RM1.00 each of which 2 ordinary shares have been issued and fully paid-up.

On 25 June 2010, a wholly-owned subsidiary of the Company, Guangzhou Jia Li Bao Leather Fashion Co Ltd (“GJLB”), entered into a Joint Venture Agreement with Mr Zheng Yuan Qiang, a citizen of The People’s Republic

of China, to market, sell, distribute, import and export fashionable ladies’ leatherwear and accessories under the brand name of “BONIA” in the territory of The People’s Republic of China, which shall exclude Hong Kong, Macau and Taiwan, for a tenure of five (5) years with an option to renew for another five (5) years (“JV”). The JV shall be carried out through a formation of a joint venture company in The People’s Republic of China, namely Guangzhou Yong Yi Leather Fashions Co Ltd (“GYY”). On 19 May 2010, GYY was granted a business licence which is valid for a duration of ten (10) years. The registered capital of GYY is RMB3,000,000 on an equity basis of 40:60 between GJLB and Mr Zheng Yuan Qiang respectively.

On 12 August 2010, the Company disposed of 25% shareholdings of 125,000 ordinary shares of RM1.00 each in New Series Sdn Bhd (“NSSB”), a wholly owned subsidiary of the Company, to Mr Boonnam Boonamsap and Mr Chan Fook Hong for RM75,000 and RM50,000, representing 15% and 10% equity interest respectively (“the Disposal”). The remaining 75% equity of NSSB is to be transferred to Dominion Directions Sdn Bhd (“DDSB”), a wholly owned subsidiary of the Company (“the Transfer”). The consideration for the Disposal and the Transfer of RM125,000 and RM375,000 respectively, both at par value, were based on “willing-buyer willing-seller” basis after taking into consideration the net liabilities of NSSB as at 31 May 2010. The consideration for the Transfer will be at par value of RM375,000. Both considerations were fully settled by way of cash. NSSB’s principal activity is the marketing and distribution of men’s apparel.

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Annual Repor t 2010


FUTURE PROSPECTS

As the economy of the country star ts to gain more stability and track stronger growth, this will spell positive impact on consumer confidence and purchasing power.

Barring unforeseen circumstances, the Board of Directors foresees healthy year-on-year sales growth in the coming year with favourable economic and financial conditions.

DIVIDENDS

The Board of Directors has recommended a final dividend of 4% or 2.0 sen per ordinary share of 50.0 sen each, less tax of 25%, amounting to RM3,023,578 and a final tax-exempt dividend of 1% or 0.5 sen per ordinary shares of 50.0 sen each, which is not taxable in the hands of the shareholders pursuant to paragraph 28 of Schedule 6 of the Income Tax Act 1967, amounting to RM1,007,859 in respect of the financial year ended 30 June 2010. Coupled with the interim tax-exempt dividend of 5% or 2.5 sen per ordinary share of 50.0 sen each, amounting to RM5,039,295 paid on 18 August 2010, this financial year’s total payout shall be 10% or 5.0 sen per share.

The aforesaid final dividend will be proposed for shareholders’ approval

in the for thcoming Annual General Meeting. The entitlement date and payment date for the proposed final dividend will be determined and announced at a later date.

ACKNOWLEDGEMENTS

On behalf of the Board, I would like to express my utmost and sincere appreciation and gratitude to the management and staff for their conscientious effor ts, commitment and dedication to delivering results. The successes we achieved in financial year 2010 could not have been possible without their effor ts.

We are also grateful to our valued customers, par tners, shareholders, business associates, government authorities and financiers for their continued suppor t and confidence in the Group.

CHIANG SANG SEMGroup Executive Chairman1 October 2010

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Annual Repor t 2010

PENYATA PENGERUSI

Bagi pihak Lembaga Pengarah, saya dengan sukacitanya membentangkan Laporan Tahunan dan Laporan Penyata Kewangan Beraudit Bonia Corporation Berhad dan Syarikat Kumpulan bagi tahun kewangan berakhir 30 Jun 2010.

yang baik, sentimen pengguna dan perniagaan yang ber terusan, inflasi yang sederhana ser ta dasar dan suasana pro-perniagaan dijangka akan menyumbang kearah aktiviti ekonomi tempatan, sementara permintaan luar akan terus disokong oleh permintaan serantau.

Keseluruhan perkembangan untuk industri fesyen akan terus kekal optimistik setelah melihat keyakinan dan corak perbelanjaan lebih baik dari pelanggan dan pengguna berikutan pemulihan ekonomi selepas krisis 2008. Beberapa pasar raya cawangan tempatan juga ingin memperluaskan operasi mereka, dan peruncit lain juga ingin dapat mengembangkan pasaran mereka samada di pasaran tempatan ataupun luar negara. Per tambahan populasi, peningkatan peluang pekerjaan, tahap pendapatan dan pendidikan yang lebih baik mendorong per tumbuhan penduduk kelas per tengahan dan ini menawarkan potensi pasaran yang lebih besar untuk industri fesyen.

PRESTASI KEWANGAN

Perolehan Kumpulan telahpun meningkat sebanyak 14% dan mencapai prestasi terbaik iaitu RM360.1 juta untuk tahun kewangan 2010. Peningkatan ini didorong oleh hasil penjualan tempatan. Perolehan Kumpulan di luar negara telah memperlihatkan peningkatan prestasi sejak krisis kewangan global terakhir. Operasi Kumpulan di Singapura juga melaporkan peningkatan positif sebanyak 13 % berbanding tempoh yang sama pada tahun lepas. Kumpulan akan terus berusaha untuk meningkatkan jualan ser ta keuntungan dengan menaik taraf butik-butik sedia ada, pembukaan butik-butik baru di lokasi yang strategik dan terus meningkatkan mutu dan margin produk.

Pada tahun kewangan 2010, Kumpulan telah merekodkan keuntungan sebelum cukai sebanyak RM45.5 juta berbanding dengan RM29.5 juta, ini menyumbang peningkatan keuntungan sebanyak 54.0%. Keuntungan RM4.2 juta dari RM45.5 juta adalah jumlah pemulihan hutang yang diperoleh dari projek har tanah usaha sama di Rawang yang telah dijalankan sejak tahun1997. Selain dari pemulihan hutang tersebut, keuntungan sebelum cukai meningkat sebanyak 39.8% iaitu RM41.3 juta berbanding RM29.5 juta pada tahun sebelumnya. Pendapatan keseluruhan untuk tahun ini meningkat berpunca dari hasil jualan yang tinggi ditambah dengan hasil pendapatan lain dan kos kewangan yang rendah bagi laporan kewangan tahun ini.

Kedudukan tunai bersih Kumpulan telah mencapai RM40.7 juta bagi tahun kewangan 30 Jun 2010 berbanding RM5.1 juta pada tahun sebelumnya. Pencapaian hebat ini akan menyediakan landasan yang kukuh untuk Kumpulan terus berkembang dan mencapai pertumbuhan di masa akan datang.

LAPORAN EKONOMI

Ekonomi Malaysia telah menampakkan per tumbuhan sebanyak 8.9% pada suku kedua tahun 2010, berikutan terdapat peningkatan permintaan dalam dan luar negeri. Permintaan domestik yang tinggi bepunca dari perbelanjaan tinggi di sektor awam dan swasta. Ini juga merangsang per tumbuhan pengeluaran. Sektor-sektor ekonomi utama turut merekodkan per tumbuhan yang menggalakkan pada sektor pengeluaran, didahului dengan sektor pembuatan dan perkhidmatan.

Ekonomi tempatan juga dijangka akan terus kukuh berikutan permintaan ber terusan dari sektor swasta walaupun pembangunan luar boleh mengakibatkan kelembapan peningkatan. Namun, keadaan pekerjaan

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Annual Repor t 2010

PENYATA PENGERUSI(samb)

LAPORAN OPERASI

Peruncitan

Pemulihan ekonomi yang baik selepas krisis tahun 2008 telah merekodkan peningkatan perolehan sebanyak 14% berbanding pada tahun 2009, berikutan keberkesanan strategi pemasaran dan usaha-usaha pembinaan jenama yang konsisten bermula dari reka bentuk kreatif produk yang mengikut aliran fesyen terkini.

Walaupun industri fesyen tempatan berdepan dengan pelbagai cabaran, terutama sekali pada tahun kewangan lepas dimana pengguna umumnya sangat berhati-hati dalam perbelanjaan mereka terutama ekonomi masih berada di tahap pemulihan. Namun begitu, Kumpulan masih memelihara momentum perkembangan dengan memastikan penjenamaan dan rangkaian peruncitan yang efektif dan berkesan. Kumpulan telah meningkatkan operasi dengan menambah 2 lesen jenama iaitu Jeep dan Savile Row. Rangkaian jenama Jeep memfokuskan produk kasut lelaki dan wanita di Malaysia, manakala jenama Savile Row ter tumpu kepada pakaian, barangan kulit dan kasut di Malaysia, Singapura dan Indonesia. Untuk memantapkan peningkatan pasaran, Kumpulan juga telah memulakan satu strategi iaitu membuka butik eksklusif dibawah jenama Valentino Rudy dan Santa Barbara Polo Racquet Club di pusat-pusat membeli belah utama di sekitar Lembah Klang.

Berikutan langkah Singapura membenarkan operasi kasino untuk meningkatan industri pelancongan negara mereka, Kumpulan melalui anak syarikat di Singapura telah berjaya mendapat lot butik kira-kira 1,630 kaki persegi di Marina Bay Sand untuk dijadikan butik ekslusif BONIA yang dijangka akan memulakan operasi pada penghujung 2010. Butik ini akan memberi paparan jenama Kumpulan kepada pelancong dan pengunjung kasino di Marina Bay Sand.

PERKEMBANGAN KORPORAT

Sebagai sebahagian daripada rancangan untuk merasionalkan perniagaan-perniagaan jenama Carlo Rino dibawah satu unit perniagaan yang berasingan. Pada 23 November 2009, Syarikat telah menggabungkan sebuah anak syarikat milik penuh, CRG Incorporated Sdn Bhd untuk rancangan tersebut. Pada 13 April 2010, CRG Incorporated Sdn Bhd telah memperolehi 300,000 saham biasa bernilai RM1.00 setiap satu mewakili 60% ekuiti didalam Apex Marble Sdn Bhd dari Mcore Sdn Bhd, salah satu anak syarikat dengan per timbangan tunai sebanyak RM2,525. Aktiviti utama Apex Marble Sdn Bhd ialah memasarkan produk Carlo Rino di Vietnam. Kemudiannya, pada 1 Jun 2010, Syarikat telah memindahkan keseluruhan pemilikan saham CRL Marketing Sdn Bhd, CRF Marketing Sdn Bhd, dan CR Boutique Sdn Bhd ke CRG Incorporated Sdn Bhd melalui satu perjanjian penukaran saham dalaman berjumlah RM19.7 juta.

Pada 30 April 2010, Syarikat telah menggabungkan sebuah anak syarikat milik penuh di Malaysia yang dikenali sebagai Alpha Footwear Sdn Bhd untuk menjalankan pemasaran dan peruncitan kasut. Anak syarikat ini mempunyai 100,000 saham biasa bernilai RM100,000 yang mana setiap 2 saham biasa telah dikeluarkan dan berbayar sepenuhnya.

Pada 25 Jun 2010, sebuah anak syarikat, Guangzhou Jia li Bao Leather Fashion Co Ltd (“GJLB”) telah menandatangani perjanjian bersama Mr Zheng Yuan Qiang, seorang warganegara China untuk pemasaran, penjualan, impor t dan ekspor t barangan kulit dan aksesori wanita dibawah jenama “BONIA” di China kecuali di Hong Kong, Macau dan Taiwan bagi tempoh lima (5) tahun dengan pilihan untuk memperbaharui masa lanjutan selama lima (5) tahun (“JV”). JV akan beroperasi melalui pembentukan rakan kongsi syarikat di China iaitu Guangzhou Yong Yi Leather Fashions Co Ltd (“GYY”). Pada 19 Mei 2010, GYY telah mendapat lesen perniagaan selama sepuluh (10) tahun. Modal berdaftar GYY ialah RMB3,000,000 dengan kadar ekuiti 40:60 diantara GJLB dan Mr Zheng Yuan Qiang.

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Annual Repor t 2010

Pada 12 Ogos 2010, Syarikat telah melupuskan 25% pemilikan saham iaitu 125,000 saham biasa bernilai RM1.00 setiap satu didalam New Series Sdn Bhd (“NSSB”) sebuah anak syarikat milik penuh kepada Mr Boonnam Boonnamsap dan Mr Chan Fook Hong untuk RM75,000 dan RM 50,000, mewakili 15% dan 10% ekuiti masing-masing. 75% ekuiti NSSB selebihnya akan dipindah ke Dominion Directions Sdn Bhd (‘DDSB”), sebuah anak syarikat milik penuh. Per timbangan untuk pelupusan dan pemindahan ini yang bernilai nominal RM125,000 dan RM375,000 masing-masing, berdasarkan keputusan rela kedua-dua pihak setelah mengambilkira liabiliti bersih NSSB pada 31 Mei 2010. Bayaran kedua-dua ini telah dijelaskan sepenuhnya secara tunai. Aktiviti utama NSSB ialah pemasaran dan pengedaran pakaian lelaki.

PROSPEK MASA DEPAN

Ekonomi negara mula menampakkan kestabilan, kekukuhan dan kesan per tumbuhan semakin kuat, ini menyumbang kesan positif kepada keyakinan pengguna ser ta meningkatkan daya beli pengguna.

Oleh yang demikian, sekiranya tiada aral melintang, pihak lembaga pengarah meramalkan per tumbuhan yang menggalakan dalam peningkatan jualan dari tahun ke tahun.

DIVIDEN

Lembaga pengarah mencadangkan satu dividen akhir 4% atau 2.0 sen saham biasa dari setiap 50.0 sen, ditolak cukai 25% berjumlah RM3,023,578 dan satu dividen terkecuali daripada cukai akhir 1% atau 0.5 sen saham biasa dari setiap 50.0 sen, yang mana pemegang saham tidak akan dikenakan cukai mengikut perenggan 28, jadual 6, Akta Cukai Pendapatan 1967, berjumlah RM1,007,859 bagi tahun kewangan berakhir 30 Jun 2010. Selaras dengan dividen terkecuali daripada cukai sementara iaitu 5% atau 2.5 sen saham biasa dari setiap 50.0 sen berjumlah RM5,039,295 yang telah dibayar pada 18 Ogos 2010. Jumlah keseluruhan pembayaran dividen yang dibuat pada tahun kewangan ini adalah 10% atau 5.0 sen setiap saham.

Dividen akhir yang dicadangkan akan dibentangkan untuk mendapat kelulusan dari pemegang-pemegang saham pada mesyuarat agung tahunan. Tarikh hak dan pembayaran untuk dividen akhir akan diumumkan kelak.

PENGHARGAAN

Bagi pihak lembaga pengarah, saya ingin menyatakan penghargaan ikhlas diatas komitmen, dedikasi dan usaha pihak pengurusan dan kakitangan yang menyumbang kearah pencapaian kejayaan kita pada tahun kewangan 2010.

Kami juga ber terima kasih kepada pelanggan-pelanggan kami, rakan-rakan kongsi, pemegang-pemegang saham, sekutu-sekutu perniagaan, pihak kerajaan dan institusi-institusi kewangan di atas sokongan yang ber terusan dan keyakinan mereka terhadap Kumpulan.

CHIANG SANG SEMPengerusi Eksekutif Kumpulan1 Oktober 2010

PENYATA PENGERUSI(samb)

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Annual Repor t 2010

主席献词

我谨此代表董事局，提呈Bonia Corporation Berhad与其集团公司截至2010年6月30日财政年度的常年

报告，以及已审财务报表。

财务表现

本集团年收入在2010财政年度增长14%，达到历来最佳的3亿6010万令

吉。年收入的增长主要来自国内销售的增加。我们的海外销售量也在上个

全球金融危机后，展现了向上增长的趋势。随着经济复苏，我们在新加坡

的经营相较于去年同时期增长13%。本集团将继续通过对旗下连锁经销店

的提升、在策略性地点开设新经销店，以及进一步改善产品质量和利润，

来达致销量和收益增长的目标。

在2010财政年度，本集团取得4550万令吉的税前盈利，相较于之前的

2950万令吉，增加了54.0%。上述税前盈利包括了一项总值420万令吉

的特别债务回收，它涉及本集团于1997年在万挠参与的一项联营产业计

划。若不把这项特别项目计算在内，税前盈利则是从之前的2950万令吉

增长39.8%至4130万令吉。强劲的全年业绩来自所取得的较高销售量，加

上检讨财政年度里较高的其他收入及较低的财务成本。

本集团持有的净现金从一年前的510万令吉，增加至2010年6月30日的

4068万令吉，这项非凡成就置本集团于更强的立足点，预示着未来更好

的扩张和成长机会。

经济回顾

马来西亚经济在2010年第2季度取得8.9%的强劲成长，这有赖于国内需

求的持续扩大及国外需求的持续茁壮成长。较强的国内需求是由于私人

和公共领域的较高消费；而国外需求的扩大，刺激国内生产。至于供应方

面，主要经济领域在制造业及服务领域的带头下，继绩在该季度取得强劲

增长。

向前展望，在茁壮的私人领域需求的支撑下，预料国内经济将维持强劲。

当国外经济发展情况可能导致成长步伐放缓，有利的就业环境、持续的消

费和商业情绪、适度的通货膨胀及亲和的政策环境，预料将刺激国内经济

活动，而国外需求将继续获得区域需求的支持。

总体上，时尚零售业的前景保持乐观。随着2008年危机之后的经济回

弹，我们开始看到消费信心的重现，零售商正目睹群众消费格调的改进。

一些百货商场也准备扩张经营，其他零售商则放眼在本地和海外增强他们

的市场占有率。

人口的增加、上升的就业率和收入水平，加上更良好的教育程度，使到中

层和中上层阶级受惠而达致增长。这个市场部分为时尚零售业提供巨大的

潜能。

营运回顾

零售

2008年全球金融危机后的经济迅速复原，协助了我们取得较2009年增加

14%的年收入成长，这很大程度上归功于我们有效的市场策略和一贯的品

牌建设努力，它涵盖从产品启动、创意设计直到质料使用与当前时尚趋势

相符合的整个过程。

尽管本地零售业在过去几年经历了许多挑战，尤其是在上个财政年度，

当群众普遍上还在好转中的经济里谨慎消费时，本集团却成功通过建立强

劲品牌及其零售网来维持动力。在检讨年度期间，本集团就在旗下增加

了两个新的特许品牌，以进一步扩展业务，分别是 Jeep女与男士鞋类，和

Savile Row的男与女士服装、皮革产品和鞋类。其中Savile Row的经销权

概括马来西亚，新加坡和印尼。为了进一步达致市场的深入穿透度，集

团展开新策略，在巴生谷主要购物广场为Valentino Rudy和Santa Barbara Polo & Racquet Club两个特许品牌，开设了专营经销店。

随着新加坡为了面对本区域其他地方的剧烈竞争，合法化赌场经营来促进

旅游业，我们在新加坡的营运商成功在Marina Bay Sand取得了一个大约

1630平方尺的零售单位，一间BONIA专营经销店将在2010年底前开业。

该经销店将能营造出色的品牌曝光机会，及允许我们打入Marina Bay Sand赌场高价值、高流量的游客和赌客生意的市场。

企业发展

以个别分开的商业单位来合理化Carlo Rino品牌的业务，本公司在2009年

11月23日组成一间独资附属公司CRG Incorporated Sdn Bhd，来执行这

项重组计划。在2010年4月13日，CRG Incorporated Sdn Bhd向附属本

公司的Mcore Sdn Bhd获取占了Apex Marble Sdn Bhd的60%股本权益的

30万每股1令吉普通股，酬金为2525令吉。Apex Marble Sdn Bhd主要业

务是负责Carlo Rino时尚商品在越南的市场营销和分销。最终，在2010年

6月1日，本公司在一项内部股权交换交易下，以1970万令吉转移在CRL

42

Annual Repor t 2010

主席献词(续)

Marketing Sdn Bhd、CRF Marketing Sdn Bhd和CR Boutique Sdn Bhd的全

部股份给CRG Incorporated Sdn Bhd。

在2010年4月30日，本公司在马来西亚组成一间名为Alpha Footwear Sdn Bhd的独资附属公司，负责部份鞋类的市场营销、零售和分销。该新组成

的附属公司的批准股本金是10万令吉，由10万每股1令吉的普通股组成，

其中2个普通股已发行及全额付清。

在2010年6月25日，本公司的一间独资附属公司,广州市佳丽宝皮革服

饰有限公司(“GJLB”)与中国公民郑远强先生缔结联营合约，在中国(不包

括香港、澳门和台湾)以“BONIA”品牌名字行销、售卖、分销、进口和

出口时尚女士皮革产品及饰品，有效期5年，可选择再更新合约另外5年

(“ JV”)。但JV的执行需通过所成立的一间名为广州市永逸皮革服饰有限

公司(“GYY”)。在2010年5月19日，GYY获发给一张有效期限10年的商

业执照。GYY的注册资本为300万人民币，股权分配为GJLB与郑远强先

生之间各别占有40:60。

在2010年8月12日，本公司转卖在独资附属公司New Se r i e s Sdn Bhd (“NSSB”)的 25%股权，即 12万 5000每股 1令吉的普通股给 Boonnam Boonamsap先生和Chan Fook Hong先生，前者占15%股权总值7万5000令吉，后者占10%股权总值5万令吉。在NSSB剩余的75%股权，将转移到本

公司独资附属公司Dominion Directions Sdn Bhd(“DDSB”)。票面价值各

别为12万5000令吉与37万5000令吉的上述股权转卖和股权转移，其酬金

是在考虑了NSSB于2010年5月31日的净负债后，依据了“愿买愿卖”模

式。该项股权转移的酬金将是根据37万5000令吉的票面价值。两宗交易

的酬金都经由现金付清。NSSB主要业务是男士服装的市场营销和分销。

未来展望

国家经济开始取得稳定的步伐，并缔造更强劲的成长，这将为民众的消费

信心及购买力带来正面影响。

除非出现预料不到的情况，董事局预测，随着有利的经济和财务情况，来

年将能取得与今年同期数字相等的销售成长。

股息

关于2010年6月30日届满的财政年度，董事局建议派发4%或每50.0仙普通

股2.0仙的年终股息，扣除25%税务，总计为302万3578令吉，以及，1%或每50.0仙普通股0.5仙的年终股息，依照所得税法令的表6第28节不必扣

税，总计为100万7859令吉。加上2010年8月18日预发的5%或每50.0仙普

通股2.5仙的期中股息，总计为503万9295令吉，这个财政年度发放的总

股息将为10%或每股5.0仙。

上述年终股息，将在来临的年度大会里提出寻求股东们的核准通过。其领

取和支付日期将在较后宣布。

致谢

我谨此代表董事局，向管理层和全体员工表达我最高及真诚的谢意，感谢

他们以认真尽责的努力、承诺及献身精神，为公司带来成果。若是没有他

们的努力，我们是不可能在2010财政年度取得这么样的成就的。

我们也感激我们尊贵的顾客、合伙人、股东、生意伙伴、政府当局和银行

伙伴对本集团的持续支持及信赖。

张送森集团执行主席

2010年10月1日

43

Annual Repor t 2010

CORPORATE SOCIAL RESPONSIBILITY

The Group is committed to managing our business in a socially responsible manner which is aligned with the Group’s business strategy.

Our position as one of the leaders in designing, manufacturing, marketing and distribution of fashionable leather goods, apparel and accessories brings with it many responsibilities. We recognise that it is equally impor tant to measure the impact of our activities on our customers, employees, shareholders, communities and the environment.

In par ticular, we are committed to ensuring that BONIA engages with and makes a positive contribution to the local communities.

We believe that a firm commitment to Corporate Social Responsibility (CSR) activities forms the basis of good corporate citizenship and promotes good corporate governance. As a commitment to CSR, The Group has been involved in various activities during the financial year.

THE WORKPLACE

The Group believes that people are our most impor tant asset in helping us attain our objectives. Our workforce is constantly growing to meet the demands of our rapid progress. Therefore, training programmes and specialised courses to upgrade the skills and improve competency levels of our employees are conducted regularly to help them achieve their full potential. Apar t from organising in-house training activities, our employees are encouraged to attend external courses sponsored by the Group. The Group also promotes staff appreciation and recognition effor ts such as long service awards, appreciation dinners, bir thday celebrations, festive gatherings, family and spor t events. Moreover, it provides its employees in the manufacturing division with quality facilities and amenities. During the year under review, the Group has conducted the following major activities:

• Management Camp Series 2, a 2-days training programs entitled“Quest for Excellence” attended by the Group’s executive staff;

• Frontliners Recognition Camp, a 3-days team building andmotivational program for frontliners from all over Malaysia;

• FrontlinersAppreciationNight,galadinnerwithpresentationofTopFrontliners Awards and Long Service Awards;

• Staff Appreciation Night, gala dinner with presentation of LongService Awards.

44

Annual Repor t 2010

CORPORATE SOCIAL RESPONSIBILITY(cont’d)

THE COMMUNITY

During the year under review, the Group contributed a total of RM381,000 in monetary assistance to various community projects, allocating 70% to education, 10% to disaster relief and the remaining por tion to several charitable organizations and local communities. The main beneficiaries of the Group’s contributions are the following organizations:

• SamWeiKeongTempleFund,Melaka;• PersatuanKebajikanTi-Ratana(CharityConcer t);• BreastCancerWelfareAssociation(CharityGolf);• MalaysianJUSCOFoundation(GolfTournament);• YayasanBaktiKhidmatMasyarakatMalaysia(CharityConcer t);• YayasanInsandanIlmu;• BuddhistTzu-Chi Merit Society Malaysia (Haiti Ear thquake Relief

Fund);• PersatuanRumahSayangan;• TheFederationofChineseAssociationsMalaysia(HuazongBuilding

Fund);• MercyMalaysia(MalaysiaforHaitiCharityMovieScreening);• YayasanNanyangPress(YushuEar thquake);• ChongHwaIndependentHighSchool;• MalaysianAEONFoundation(CharityDinner);• NationalCancerSocietyMalaysia(CharityGolf);and• Parent-TeacherAssociationsofseveralschools.

The substantial monetary contribution to the education sector was in line with our belief that education plays a key role in suppor t of our Government’s vision to create a knowledge-based society.

The Group also believes that “actions speak louder than words” and put into action our newly created Bonia Club CSR team during the year under review. The team visited Rumah Sayangan at Taman Billion, Cheras, a home for abused and underprivileged children and contributed food and daily necessities together with a monetary contribution of RM10,000 to the home. We also conducted a blood donation drive in aid of the National Blood Bank at our corporate office.

THE MARKETPLACE

The Group has built a good reputation as a manufacturer and distributor of quality products and provider of excellent customer service. In view of our commitment to providing only the best forour customers, quality remains the main emphasis of all our production and management systems, and stringent controls are carried out right from the initial raw material stage to the final stage before finished goods are delivered.

THE ENVIRONMENT

The Group believes that it has a par t to play in contributing towards a greener environment, no matter how small each step may be. Through various effor ts, the Group has implemented key energy saving measures such as maintaining air-conditioning on a need-to-use basis, switching off non-essential lighting and equipment during non-operating hours, initiatives among staff to create awareness towards the recycling of waste materials, and continuous improvements in our manufacturing process. We have recently introduced a range of eco-friendly handbags made from genuine leather tanned with vegetable dyes using traditional Italian techniques. Unlike chemical dyes, which pollute the ear th; vegetable dyes are easily disposed of and recycled into fer tilizers. Vegetable tanning also creates leather products that are not only of high quality that age beautifully, but are kinder on your skin as well.

45

Annual Repor t 2010

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS

RevenueRM’000

Total Shareholders’ EquityRM’000

Profit before TaxRM’000

Net Basic EPSSen

Profit after Tax and Minority InterestsRM’000

Gross Dividend%

30 June 2006 30 June 2007 30 June 2008 30 June 2009 30 June 2010 Revenue (RM’000) 221,372 246,346 300,189 314,891 360,099

Profit before Tax (RM’000) 21,494 37,112 38,334 29,515 45,455

Profit after Tax and Minority Interests (RM’000) 13,831 28,203 27,948 20,607 33,547

Total Shareholders’ Equity (RM’000) 90,075 136,734 164,095 177,477 203,804

Net Basic EPS (sen) * 10.6 16.0 14.1 10.2 16.6

Gross Dividend (%) 10.0 6.0 10.0 8.0 10.0

* Comparitive EPS has been restated to take into account the effect of the bonus issue and subdivision of ordinary share of RM1.00 each into RM0.50 each on 23 April 2007.

2010

2010

2010 2010

20102010

2009

2009

2009 2009

20092009

2008

2008

2008 2008

2008

2006

2008

2007

2007

2007 2007

20072007

2006

2006

2006 2006

2006

360,099

203,804

45.455 33,547

10.0 16.6

314,891

177,477

29,515 20,607

8.0 10.2

300,189

164,095

38,334 27,948

10.0

10.0

14.1

246,346

136,734

37,112 28,203

6.0 16.0

221,372

90,075

21,494 13,831

10.6

47

Annual Repor t 2010

EVENT HIGHLIGHTS

BONIA ANNUAL GOLF TOURNAMENT

Bonia Corporation Berhad hosted its 9th Bonia Challenge Golf Tournament at the Mines Resor t and Golf Club on the November 12th, 2009. This golf tournament was held to bring together the Group’s business associates in a social and informal environment in appreciation for their consistent suppor t. It was a fierce battle on the green, all in the spirit of healthy competition and the winners were given prizes during lunch held after the games.

BONIA WINS AT PUTRA BRAND AWARDS

Bonia Corporation Berhad (Bonia) received a Bronze award under the Apparel and Accessories category at the inaugural Putra Brand Awards held in March 2010. The Awards was introduced by the Association of Accredited Adver tising Agents (4As) to give recognition to local brands and SMEs, based on consumers’ preferences. The Putra Brand Awards differs from Malaysia’s Most Valuable Brands (MMVB) Awards, also an initiative of 4As, which is based on the value of a brand capsulated in a brand valuation exercise.

BONIA BAGS TWO AWARDS IN NOVEMBER 2009

Bonia Corporation Berhad has received two awards in ceremonies held in November 2009, in recognition for its ongoing commitment to brand building and business excellence. The Group managed to regain its place in Malaysia’s 30 Most Valuable Brands Award 2009, a study conducted by Interbrand and commissioned by The Association of Accredited Adver tising Agents Malaysia (4As) and The Edge.

Bonia also received an award for Business Leadership in the Retail-Chains Sector of the inaugural Malaysia Business Leadership Awards, under the auspices of the Kuala Lumpur Malay Chamber of Commerce (KLMCC).

BONIA HI-TEA FASHION SHOW

BONIA hosted a special High-Tea Fashion Show on February 19th, 2010 for its Exclusively BONIA members. Held at the BONIA boutique in Subang Parade, Subang Jaya, the event was a tribute to the fashion brand’s loyal fan base and was attended by over 200 BONIA lovers.

At the event, guests were entitled to an additional 10% discount across the store and were treated to a fashion show featuring the latest Spring/Summer 2010 collection - Eternal Skies. Some guests also walked away with attractive lucky draw prizes including vouchers and 2 suitcases from the Lussio Premio luggage collection.

48

Annual Repor t 2010

BONIA INTRODUCES ITALIAN DESIGNER BEHIND ETERNAL SKIES COLLECTION

BONIA introduced Italian designer, Gaetano De Franceschi to the local fashion scene at the BONIA Eternal Skies Pavilion Pit Stop Fashion Show on April 3rd, 2010. Mr. De Franceschi is the latest designer appointed by BONIA as par t of the brand’s commitment to deliver fashion accessories of high quality craftsmanship and cutting edge styling.

The Eternal Skies collection is the first of many collections that Mr. DeFranceschi will be involved in. Mr. De Franceschi, who is also the Chief Designer of Italian based design firmSynergyDesignGroup hasworkedwith several leading international fashion brands such as Hugo BOSS and Michael Kors.

BONIA’s LATEST ECO-FRIENDLY BRIANNA RANGE

In their effor t to suppor t the green cause, BONIA launched the Brianna range of eco-friendly handbags in July 2010. The bags are made from genuine leather tanned with vegetable dyes using traditional Italian techniques. Unlike chemical dyes, which pollute the ear th, vegetable dyes are easily disposed of and recycled into fer tilizers. Vegetable tanning also creates leather products that are not only of high quality and age beautifully, but are kinder on your skin as well. The Brianna range is also designed with minimal metal accessories, making it a truly eco-friendly selection of handbags.

With no compromise on style, the Brianna also features the signature braid and tassel that are detachable and can be linked on both the front and side of each bag for personalization.

SEMBONIA SPONSORS KELLY CLARKSON CONCERT

As a co-sponsor of the Kelly Clarkson “All I Ever Wanted Tour” Concer t, Live in Kuala Lumpur on April 25th, 2010, SEMBONIA rewarded their customers with a tickets to the concer t. Customers who made purchases from April 16th-24th, 2010, were in the running to win 10 lucky draw prizes of two tickets to the Kelly Clarkson concer t, each worth RM138.

Additionally, the top five spenders at any SEMBONIA boutique within the contest period also won prizes of two tickets, wor th RM338 each.Tickets to the Kelly Clarkson “All I Ever Wanted Tour” Concer t in Kuala Lumpur were also available for purchase at all SEMBONIA boutiques at a 30% discount for customers spending RM500 and above.

EVENT HIGHLIGHTS(cont’d)

49

Annual Repor t 2010

EVENT HIGHLIGHTS(cont’d)

BONIA LAUNCHES ‘MYSTIQUE’: FALL/WINTER 10/11 COLLECTION AND ADVERTISING CAMPAIGN

BONIA unveiled their Fall/Winter 2010/2011 collection and adver tising campaign on August 4th, 2010 aptly titled ‘Mystique’.

The collection emphasized on ‘understated elegance’ with an aura of mystique surrounding it. The creative decisions surrounding the ‘Mystique’ adver tising campaign embodied the values of sophistication, glamour and mysteriousness in order to complement and enhance the appeal of the products. Elements such as cobblestoned alleyways, vintage lamp posts and telephone booths in the campaign images, coupled with fashion styling and a colour landscape reminiscent of the classic European spy novel complement the pieces in this collection perfectly.

SANTA BARBARA POLO & RACQUET CLUB IN SUNWAY PYRAMID

Santa Barbara Polo & Racquet Club, a licensed brand under the Bonia Group, officiallyopeneditsfirstmen’sboutiqueinSunwayPyramidshoppingcentreon August 25th, 2010.

The ‘Santa Barbara Polo & Racquet Club’ apparels and merchandize were firstestablishedinconjunctionwiththeopeningofthesportandsocialclub‘Santa Barbara Polo & Racquet Club’ in the US in 1910. The bir th place of the brand, Santa Barbara, is famously known as the Riviera of California.

The brand was first introduced in Malaysia 18 years ago, and in 2007, Bonia Group became the representative for the men’s range of apparels and products offered by the Santa Barbara Polo & Racquet Club. The Santa Barbara Polo & Racquet Club apparels, merchandizes and accessories are available in all major depar tment stores nationwide.

CARLO RINO IN FAHRENHEIT 88 FEATURES FIRST EVER LADIES APPAREL COLLECTION

Carlo Rino recently opened the doors of their latest outlet in the hip and happening Fahrenheit 88 shopping mall (formerly known as KL Plaza) in Bukit Bintang’s trendy shopping stretch. The boutique is the first ever to house their ladies apparel collection to complement the shoes and handbags they are more recognized for.

The collection featured European inspired designs, made perfect for Asian fitting. An array of designs and splash of colours catering for different functions and occasions was showcased in a fashion show on September 18th, 2010 at the concourse of Fahrenheit 88.

50

Annual Repor t 2010

FINANCIALSTATEMENTS

052 directors’ repor t056 statement by directors056 statutory declaration057 independent auditors’ repor t059 balance sheets061 income statements062 statements of changes in equity064 cash flow statements066 notes to the financial statements

DIRECTORS’ REPORT

The Directors have pleasure in submitting their repor t and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2010.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding and management company. The principal activities of the subsidiaries are set out in Note 11 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS Group Company RM’000 RM’000

Profit for the financial year attributable to: Equity holders of the Company 33,547 22,208 Minority interests (344) -

33,203 22,208

DIVIDENDS

Dividends paid, declared or proposed since the end of the previous financial year were as follows:

RM’000

In respect of financial year ended 30 June 2009: First and final dividend of 5% or 2.5 sen per share, less tax of 25%, paid on 16 December 2009 3,779 Special dividend of 3% or 1.5 sen per share, less tax of 25%, paid on 16 December 2009 2,268

6,047

In respect of financial year ended 30 June 2010: An interim tax exempt dividend of 5% or 2.5 sen per share, paid on 18 August 2010 5,039

The Directors have proposed a final dividend of 4% or 2.0 sen per share, less tax of 25%, amounting to RM3,023,578 and a final tax exempt dividend of 1% or 0.5 sen per share amounting to RM1,007,859 in respect of the financial year ended 30 June 2010, subject to the approval of members at the for thcoming Annual General Meeting.

RESERVES AND PROVISIONS

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

OPTIONS GRANTED OVER UNISSUED SHARES

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

52

Annual Repor t 2010

DIRECTORS’ REPORT(cont’d)

ISSUE OF SHARES AND DEBENTURES

The Company has not issued any new shares or debentures during the financial year.

DIRECTORS

The Directors who have held for office since the date of the last repor t are:

Chiang Sang Sem (Group Executive Chairman cum Chief Executive Officer)Chiang Fong Yee (Alternate Director to Mr. Chiang Sang Sem)Chiang Heng Kieng (Group Managing Director)Chiang Sang Bon (Group Executive Director)Chiang Fong Tat (Group Executive Director)Chong Chin Look (Group Finance Director)Datuk Ng Peng Hong @ Ng Peng Hay (Independent Non-Executive Director)Dato’ Shahbudin Bin Imam Mohamad (Non-Independent Non-Executive Director)Lim Fong Boon (Independent Non-Executive Director)Chong Sai Sin (Independent Non-Executive Director)

DIRECTORS’ INTERESTS

The Directors holding office at the end of the financial year and their beneficial interests in the ordinary shares of the Company and of its related corporations during the financial year ended 30 June 2010, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, were as follows:

Number of ordinary shares of RM0.50 each Balance Balance as at as at 1.7.2009 Bought Sold 30.6.2010

Shares in the Company

Direct interests

Chiang Sang Sem 2,367,000 - - 2,367,000Chiang Fong Yee 856,300 - - 856,300Chiang Sang Bon 305,000 - - 305,000Chiang Fong Tat 599,000 - - 599,000Chong Chin Look 500,000 - - 500,000

Indirect interests

Chiang Sang Sem 62,109,226 - - 62,109,226Chiang Fong Yee 10,000 - - 10,000Chiang Heng Kieng 69,000 - - 69,000Chiang Sang Bon 59,000 - - 59,000Chiang Fong Tat 25,000 - - 25,000

By vir tue of his interest in the ordinary shares of the Company, Chiang Sang Sem is also deemed to be interested in ordinary shares of all the subsidiaries to the extent the Company has an interest.

None of the other Directors holding office at the end of the financial year held any interest in ordinary shares of the Company or of its related corporations during the financial year.

53

Annual Repor t 2010


DIRECTORS’ BENEFITS

Since the end of the previous financial year, none of the Directors have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest except for any benefit which may be deemed to have derived by vir tue of the remuneration received and receivable by cer tain Directors from the related corporations in their capacity as Directors of those related corporations.

There were no arrangements during and at the end of the financial year, to which the Company is a par ty, which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY

(I) AS AT THE END OF THE FINANCIAL YEAR

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable steps:

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

(ii) to ensure that any current assets other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.

(b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature except for the effects arising from the gain on disposal of subsidiaries as a consequence of internal group reorganisation which had resulted in an increase in the Company’s profit for the financial year by RM17,735,000 as disclosed in Note 11 (viii) to the financial statements.

(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT

(c) The Directors are not aware of any circumstances:

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

(ii) whichwouldrenderthevaluesattributedtocurrentassetsinthefinancialstatementsoftheGroupandoftheCompanymisleading;and

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

(d) In the opinion of the Directors:

(i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this repor t is made; and

(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year, which will or may affect the ability of the Group or of the Company to meet their obligations as and when they fall due.

54

Annual Repor t 2010


OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (cont’d)

(III) AS AT THE DATE OF THIS REPORT

(e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person.

(f) There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year.

(g) The Directors are not aware of any circumstances not otherwise dealt with in the repor t or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 37 to the Financial Statements.

SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Significant events subsequent to the balance sheet date are disclosed in Note 38 to the financial statements.

AUDITORS

The auditors, BDO, have expressed their willingness to continue in office.

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

Chiang Sang Sem Chiang Heng KiengGroup Executive Chairman Group Managing Directorcum Chief Executive Officer

Kuala Lumpur1 October 2010

55

Annual Repor t 2010

STATEMENT BY DIRECTORS

STATUTOR Y DECLARATION

In the opinion of the Directors, the financial statements set out on pages 59 to 131 have been drawn up in accordance with applicable approved Financial Repor ting Standards in Malaysia and the provisions of 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 June 2010 and of the results of the operations of the Group and of the Company and of the cash flows of the Group and of the Company for the financial year then ended.

On behalf of the Board,

Chiang Sang Sem Chiang Heng Kieng Group Executive Chairman Group Managing Directorcum Chief Executive Officer


I, Chong Chin Look, being the Group Finance Director primarily responsible for the financial management of Bonia Corporation Berhad, do solemnly and sincerely declare that the financial statements set out on pages 59 to 131 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by vir tue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly )declared by the abovenamed at )Kuala Lumpur this )1 October 2010 ) Chong Chin Look

Before me:S.IDERAJU (No. W451)Commissioner for OathsKuala Lumpur

56

Annual Repor t 2010

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Bonia Corporation Berhad, which comprise the balance sheets as at 30 June 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 59 to 131.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with applicable approved Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error ; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBILITY

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

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

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

OPINION

In our opinion, the financial statements have been properly drawn up in accordance with applicable approved Financial Repor ting Standards in Malaysia and the provisions of 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 June 2010 and of the results of the operations of the Group and of the Company and of the cash flows of the Group and of the Company for the financial year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965, we also repor t the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ repor ts of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 11 to the financial statements.

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

(d) The audit repor ts on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

INDEPENDENT AUDITORS’ REPORTto the members of Bonia Corporation Berhad

57

Annual Repor t 2010

INDEPENDENT AUDITORS’ REPORTto the members of Bonia Corporation Berhad

(cont’d)

OTHER MATTERS

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

BDO Hiew Kim Loong AF: 0206 2858/08/12 (J)Char tered Accountants Char tered Accountant


58

Annual Repor t 2010

BALANCE SHEETSas at 30 June 2010

Group Company 2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

ASSETS

Non-current assets

Proper ty, plant and equipment 7 62,328 69,309 17,274 18,310Investment proper ties 8 12,127 12,127 - -Prepaid lease payments for land 9 216 219 - -Intangible assets 10 4,876 4,878 - -Investments in subsidiaries 11 - - 81,531 64,246Investments in associates 12 112 73 - 236Other investments 13 575 596 - -Deferred tax assets 14 808 1,361 - - 81,042 88,563 98,805 82,792

Current assets

Inventories 15 57,869 60,685 - -Trade and other receivables 16 54,709 48,821 24,562 29,919Current tax assets 2,943 2,555 2,376 1,177Cash and cash equivalents 17 70,017 44,138 10,244 64

185,538 156,199 37,182 31,160

TOTAL ASSETS 266,580 244,762 135,987 113,952

59

Annual Repor t 2010

BALANCE SHEETSas at 30 June 2010

(cont’d)


EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Share capital 18 100,786 100,786 100,786 100,786Reserves 19 103,018 76,691 27,040 10,879

203,804 177,477 127,826 111,665Minority interests 2,349 3,072 - -

TOTAL EQUITY 206,153 180,549 127,826 111,665

LIABILITIES

Non-current liabilities

Borrowings 20 18,936 15,576 4,240 398Deferred tax liabilities 14 244 235 57 24 19,180 15,811 4,297 422

Current liabilities

Trade and other payables 23 26,679 22,964 3,689 1,499Borrowings 20 10,399 23,375 175 366Current tax payables 4,169 2,063 - - 41,247 48,402 3,864 1,865

TOTAL LIABILITIES 60,427 64,213 8,161 2,287

TOTAL EQUITY AND LIABILITIES 266,580 244,762 135,987 113,952

The accompanying notes form an integral par t of the financial statements.

60

Annual Repor t 2010

INCOME STATEMENTSfor the financial year ended 30 June 2010


Revenue 26 360,099 314,891 23,632 22,134Cost of sales 27 (154,639) (135,763) - -

Gross profit 205,460 179,128 23,632 22,134Other operating income 8,860 6,268 22,268 2,888Selling and distribution expenses (103,039) (87,235) - -General and administrative expenses (62,830) (63,244) (19,704) (15,373)Finance costs 28 (2,993) (5,250) (222) (1,999)Share of loss of associates (3) (152) - -

Profit before tax 29 45,455 29,515 25,974 7,650Tax expense 30 (12,252) (8,453) (3,766) (3,857)

Profit for the financial year 33,203 21,062 22,208 3,793

Attributable to:

Equity holders of the Company 33,547 20,607 22,208 3,793Minority interests (344) 455 - -

33,203 21,062 22,208 3,793

Basic earnings per ordinary share attributable to equity holders of the Company (sen) 31 16.64 10.22


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Annual Repor t 2010

STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 30 June 2010

Attributable to equity holders of the Group Exchange Share Share translation Retained Minority Total capital premium reserve earnings Total interests equity GROUP Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance as at 30 June 2008 100,786 476 2,229 60,604 164,095 2,693 166,788

Foreign currency translation gain - - 333 - 333 - 333

Gain recognised directly in equity - - 333 - 333 - 333

Profit for the financial year - - - 20,607 20,607 455 21,062

Total recognised incomes and expenses for the financial year - - 333 20,607 20,940 455 21,395

Additional acquisition of shares from a minority shareholder - - - - - (53) (53)

Dividends paid 32 - - - (7,558) (7,558) - (7,558)

Dividend paid to minority interest of a subsidiary - - - - - (23) (23)


Foreign currency translation loss - - (1,173) - (1,173) - (1,173)

Loss recognised directly in equity - - (1,173) - (1,173) - (1,173)

Profit for the financial year - - - 33,547 33,547 (344) 33,203

Total recognised incomes and expenses for the financial year - - (1,173) 33,547 32,374 (344) 32,030

Additional acquisition of shares from a minority shareholder - - - - - (356) (356)

Dividends paid 32 - - - (6,047) (6,047) - (6,047)

Dividend paid to minority interest of a subsidiary - - - - - (23) (23)



62

Annual Repor t 2010

STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 30 June 2010(cont’d)

Non- distributable Distributable Share Share Retained capital premium earnings Total Note RM’000 RM’000 RM’000 RM’000

COMPANY

Balance as at 30 June 2008 100,786 476 14,168 115,430

Profit for the financial year, representing total recognised income and expenses for the financial year - - 3,793 3,793

Dividends paid 32 - - (7,558) (7,558)


Profit for the financial year, representing total recognised income and expenses for the financial year - - 22,208 22,208

Dividends paid 32 - - (6,047) (6,047)



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Annual Repor t 2010

CASH FLOW STATEMENTSfor the financial year ended 30 June 2010


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax 45,455 29,515 25,974 7,650

Adjustments for :

Allowance for doubtful debts 3,877 153 4,174 2 Allowance for doubtful debts no longer required (3,836) (180) (4,182) (1,172) Amortisation of prepaid lease payments for land 9 3 7 - - Amortisation of trademarks 10 3 - - - Bad debts written off 359 6 - - Depreciation of proper ty, plant and equipment 7 13,465 12,958 1,118 1,066 Dividend income - - (21,725) (20,045) Fair value adjustments on investment proper ties 8 - (184) - - Gain on disposal of prepaid lease payments for land - (59) - - Gain on disposal of proper ty, plant and equipment, net (89) (282) - - Impairment loss on investments in subsidiaries - - 1,715 5,700 Impairment loss on subordinated bonds 13 - 3,000 - 3,000 Interest expense 28 1,512 3,830 167 1,977 Interest income (221) (366) (86) (452) Inventories written off 15 75 187 - - (Gain)/Loss on disposal of subsidiaries (10) - (17,835) 3 (Gain)/Loss on disposal of an associate 12 (53) - 110 - Profit received from fund trust accounts (467) (837) (164) (443) Proper ty, plant and equipment written off 7 863 300 - - Reversal of impairment loss on proper ty, plant and equipment 7 - (41) - - Share of loss of an associate 3 152 - - Unrealised loss/(gain) on foreign currency translations, net 108 (103) 118 (720) Waiver of debts owing from a subsidiary - - 2,700 -

Operating profit/(loss) before changes in working capital 61,047 48,056 (7,916) (3,434)

Changes in working capital: Inventories 2,180 (2,105) - - Trade and other receivables (7,076) 6,212 - 138 Trade and other payables 4,012 (4,382) 2,430 574

Cash generated from/(used in) operations 60,163 47,781 (5,486) (2,722)

Tax paid (10,631) (12,390) - 1,283Tax refunded 687 2,232 499 -

Net cash from/(used in) operating activities 50,219 37,623 (4,987) (1,439)

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Annual Repor t 2010

CASH FLOW STATEMENTSfor the financial year ended 30 June 2010(cont’d)


CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 221 366 86 452Dividend received - - 16,294 15,034Decrease/(Increase) in fixed deposits pledged to licensed banks 13 (31) - -Acquisition of additional shares in subsidiaries - - (1,265) -Additional acquisition of share from a minority shareholder (356) (53) - -Acquisition of an associate 12 (115) - - -Proceed from disposal of a subsidiary 11(ii) 100 - 100 5Proceed from disposal of an associate 12 126 - 126 -Proceed from disposal of non-current asset classified as held for sale - 3,960 - -Proceeds from disposal of prepaid lease payments for land - 439 - -Proceeds from disposal of proper ty, plant and equipment 462 990 - -Profit received from trust fund accounts 467 837 164 443Purchase of investment proper ties 8 - (2,086) - -Purchase of proper ty, plant and equipment 7(a) (7,776) (17,162) (82) (1,129)Purchase of trademarks (1) - - -Repayments from subsidiaries - - 2,549 1,288Repayments to subsidiaries - - (240) -Advances to an associate (2) (2) (2) (2)

Net cash (used in)/from investing activities (6,861) (12,742) 17,730 16,091

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid (1,512) (3,830) (167) (1,977)Dividends paid to shareholders (6,047) (7,558) (6,047) (7,558)Dividends paid to minority shareholders (23) (23) - -Drawdowns of term loans 4,601 114 4,000 -Repayments of hire-purchase and lease creditors (718) (966) (298) (285)Repayments of term loans (576) (30,939) - (30,000)Net (repayments)/financing of trust receipts (874) 178 - -Drawdowns of bankers’ acceptances 899 - - -Repayments of bankers’ acceptances (11,185) (7,113) - -

Net cash used in financing activities (15,435) (50,137) (2,512) (39,820)

Net increase/(decrease) in cash and cash equivalents 27,923 (25,256) 10,231 (25,168)

Effect of exchange rate changes (59) (45) - -

Cash and cash equivalents at beginning of the financial year 39,341 64,642 (4) 25,164

Cash and cash equivalents at end of the financial year 17(e) 67,205 39,341 10,227 (4)


65

Annual Repor t 2010

NOTES TO THE FINANCIAL STATEMENTS30 June 2010

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at Lot 10, The Highway Centre, Jalan 51/205, 46050, Petaling Jaya, Selangor Darul Ehsan.

The principal place of business of the Company is located at No. 62, Jalan Kilang Midah, Taman Midah, Cheras, 56000 Kuala Lumpur.

The financial statements are presented in Ringgit Malaysia (‘RM’), which is also the Company’s functional currency. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated.

The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 1 October 2010.

2. PRINCIPAL ACTIVITIES

The Company is principally an investment holding and management company. The principal activities of the subsidiaries are set out in Note 11 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

3. BASIS OF PREPARATION The financial statements of the Group and of the Company have been prepared in accordance with applicable approved Financial Repor ting

Standards (‘FRSs’) in Malaysia and the provisions of the Companies Act, 1965.

4. SIGNIFICANT ACCOUNTING POLICIES

4.1 Basis of accounting

The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements.

The preparation of financial statements requires the Directors to make estimates and assumptions that affect the repor ted amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the Group’s accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although these estimates and assumptions are based on the Directors’ best knowledge of events and actions, actual results could differ from those estimates.

4.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiaries made up to the end of the financial year using the purchase method of accounting.

Under the purchase method of accounting, the cost of business combination is measured at the aggregate of fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination.

At the acquisition date, the cost of business combination is allocated to identifiable assets acquired, liabilities assumed and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition date. The excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill (see Note 4.7(a) to the financial statements on goodwill). If the cost of business combination is less than the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, the Group will:

66

Annual Repor t 2010

NOTES TO THE FINANCIAL STATEMENTS30 June 2010(cont’d)

4. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

4.2 Basis of consolidation (cont’d)

(a) reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the combination; and

(b) recognise immediately in the consolidated income statements any excess remaining after that reassessment.

Whenabusinesscombinationincludesmorethanoneexchangetransaction,anyadjustmenttothefairvaluesofthesubsidiary’sidentifiableassets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation.

Subsidiaries are consolidated from the acquisition date, which is the date on which the Group effectively obtains control, until the date on which the Group ceases to control the subsidiaries. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the existence and effect of potential voting rights that are currently conver tible or exercisable are taken into consideration.

Intragroup balances, transactions and unrealised gains and losses on intragroup transactions are eliminated in full. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. If a subsidiary uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

The gain or loss on disposal of a subsidiary, which is the difference between the net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the carrying amount of goodwill and the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the consolidated income statements.

Minority interest is that por tion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measured at the minority’s share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minority’s share of changes in the subsidiaries’ equity since that date.

Where losses applicable to the minority in a subsidiary exceed the minority interest in the equity of that subsidiary, the excess and any fur ther losses applicable to the minority are allocated against the Group’s interest except to the extent that the minority has a binding obligation and is able to make additional investment to cover the losses. If the subsidiary subsequently repor ts profits, such profits are allocated to the Group’s interest until the minority’s share of losses previously absorbed by the Group has been recovered.

Minority interest is presented in the consolidated balance sheets within equity and is presented in the consolidated statements of changes in equity separately from equity attributable to equity holders of the Company.

Minority interest in the results of the Group is presented in the consolidated income statements as an allocation of the total profit or loss for the financial year between minority interest and equity holders of the Company.

For purchases or disposals from or to minority shareholders for consideration other than cash and not at fair value, the accretion or dilution of the Group’s interests is treated as an equity transaction between the Group and its minority shareholders. The difference between the Group’s share of net assets immediately before and immediately after the change in stakes, and any consideration received or paid is adjusted against the Group’s reserves.

All other changes in stakes and changes in composition of the Group are treated as equity transactions between the Group and its majority and minority shareholders. The difference between the Group’s share of net assets before and after the change, and any consideration received or paid is adjusted to or against the Group’s reserves.

4.3 Property, plant and equipment and depreciation

All items of proper ty, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset.

67

Annual Repor t 2010


(cont’d)


4.3 Property, plant and equipment and depreciation (cont’d)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of par ts that are replaced is derecognised. The costs of the day-to-day servicing of proper ty, plant and equipment are recognised in the income statements as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

Each par t of an item of proper ty, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has different useful life, is depreciated separately.

After initial recognition, proper ty, plant and equipment, except for freehold land and proper ties under construction, are stated at cost less any accumulated depreciation and any accumulated impairment losses.

Freehold land is not depreciated. Proper ties under construction are not depreciated until such time when the asset is available for use.

Depreciation on other proper ty, plant and equipment is calculated to write off the cost of the assets to their estimated residual value on a straight-line basis over their estimated useful lives. The principal annual depreciation rates are as follows:

Buildings 2% Plant and machinery 15% - 20% Furniture, fittings and counter fixtures 10% - 33½% Office equipment 10% - 50% Renovation 10% - 33½% Electrical installations 10% - 15% Motor vehicles 20%

At each balance sheet date, the carrying amount of an item of proper ty, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.8 to the financial statements on impairment of assets).

The residual values, useful lives and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of proper ty, plant and equipment. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate.

Thecarryingamountofanitemofproperty,plantandequipmentisderecognisedondisposalorwhennofutureeconomicbenefitsareexpectedfrom its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in the income statements.

4.4 Leases and hire-purchase

4.4.1 Finance leases and hire-purchase

Assets acquired under finance leases and hire-purchase which transfer substantially all the risks and rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Group’s incremental borrowing rate is used. Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as proper ty, plant and equipment and the corresponding obligations are treated as liabilities. The proper ty, plant and equipment capitalised are depreciated on the same basis as owned assets.

The minimum lease payments are appor tioned between the finance charges and the reduction of the outstanding liability. The finance charges are recognised in the income statements over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire-purchase liabilities.68

Annual Repor t 2010



4.4 Leases and hire-purchase (cont’d)

4.4.2 Operating leases

A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

4.4.3 Leases of land and buildings

For leases of land and buildings, the land and buildings elements are considered separately for the purpose of lease classification and these leases are classified as operating or finance leases in the same way as leases of other assets.

The minimum lease payments including any lump-sum upfront payments made to acquire the interest in the land and buildings are allocated between the land and the buildings elements in propor tion to the relative fair values of the leasehold interests in the land element and the buildings element of the lease at the inception of the lease.

Leasehold land that normally has an indefinite economic life and where the lease does not transfer substantially all the risk and rewards incidental to ownership is treated as an operating lease. The lump-sum upfront payments made on entering into or acquiring leasehold land are accounted for as prepaid lease payments and are amortised over the lease term on a straight-line basis.

The buildings element is classified as a finance or operating lease in accordance with Note 4.4.1 or Note 4.4.2 to the financial statements. If the lease payment cannot be allocated reliably between these two elements, the entire lease is classified as a finance lease, unless it is clear that both elements are operating leases, in which case the entire lease is classified as an operating lease.

For a lease of land and buildings in which the amount that would initially be recognised for the land element is immaterial, the land and buildings are treated as a single unit for the purpose of lease classification and is accordingly classified as a finance or operating lease. In such a case, the economic life of the buildings is regarded as the economic life of the entire leased asset.

4.5 Investment properties

Investment proper ties are proper ties which are held to earn rentals yields or for capital appreciation or for both and are not occupied by the Group. Investment proper ties are initially measured at cost, which includes transaction costs. After initial recognition, investment proper ties of the Group are carried at fair value. The fair value of investment proper ties are the prices at which the proper ties could be exchanged between knowledgeable, willing par ties in an arm’s length transaction. The fair value of investment proper ties reflect market conditions at the balance sheet date, without any deduction for transaction costs that may be incurred on sale or other disposal.

Fair values of investment proper ties are arrived at by reference to market evidence of transaction prices for similar proper ties. It is performed by registered independent valuers with appropriate recognised professional qualification and has recent experience in the location and category of the investment proper ties being valued.

A gain or loss arising from a change in the fair value of investment proper ties is recognised in the income statements for the period in which it arises.

Investment proper ties are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The gains or losses arising from the retirement or disposal of investment proper ty is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in the income statements in the period of the retirement or disposal.

69

Annual Repor t 2010


(cont’d)


4.6 Investments

(i) Subsidiaries

A subsidiary is an entity in which the Group and the Company have power to control the financial and operating policies so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or conver tible are considered when assessing whether the Group and the Company have such power over another entity.

An investment in subsidiary, which is eliminated on consolidation, is stated in the Company’s separate financial statements at cost less impairment losses, if any. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in the income statements.

(ii) Associates

An associate is an entity over which the Group and the Company have significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to par ticipate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

In the Company’s separate financial statements, an investment in associate is stated at cost less impairment losses, if any.

An investment in associate is accounted for in the consolidated financial statements using the equity method of accounting. The investment in associate in the consolidated balance sheets is initially recognised at cost and adjusted thereafter for the post acquisition change in the Group’s share of net assets of the investment.

The interest in the associate is the carrying amount of the investment in the associate under the equity method together with any long-term interest that, in substance, form par t of the Group’s net interest in the associate.

The Group’s share of the profit or loss of the associate during the financial year is included in the consolidated financial statements, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. Distributions received from the associate reduce the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Group’s propor tionate interest in the associate arising from changes in the associate’s equity that have not been recognised in the associate’s profit or loss. Such changes include those arising from the revaluation of proper ty, plant and equipment and from foreign exchange translation differences. The Group’s share of those changes is recognised directly in equity of the Group.

Unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate.

When the Group’s share of losses in the associate equal to or exceeds its interest in the associate, the carrying amount of that interest is reduced to nil and the Group does not recognise fur ther losses unless it has incurred legal or constructive obligations or made payments on its behalf.

The most recent available financial statements of the associates are used by the Group in applying the equity method. Where the repor ting dates of the financial statements are not coterminous, the share of results is arrived at using the latest audited financial statements for which the difference in repor ting dates is not more than three (3) months. Adjustments are made for the effects of any significant transactions or events that occur between the intervening period.

Upon disposal of such investment, the difference between the net disposal proceeds and its carrying amount is included in the income statements.

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Annual Repor t 2010



4.6 Investments (cont’d)

(iii) Other investments

Investments, other than investments in subsidiaries, associates and investment proper ties, are stated at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which the decline is identified.

Upon disposal of such investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statements.

4.7 Intangible assets

(a) Goodwill

Goodwill acquired in a business combination is recognised as an asset at the acquisition date and is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill arising on acquisition of an associate is the excess of cost of investment over the Group’s share of the net fair value of net assets of the associates’ identifiable assets, liabilities and contingent liabilities at the date of acquisition.

Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised. The excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of investment is included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

(b) Other intangible assets

Other intangible assets are recognised only when the identifiability, control and future economic benefit probability criteria are met.

The Group recognises at the acquisition date separately from goodwill, an intangible asset of the acquiree if the fair value can be measured reliably, irrespective of whether the asset had been recognised by the acquiree before the business combination.

Intangible assets are initially measured at cost. The cost of intangible assets acquired in a business combination is its fair values as at the date of acquisition.

After initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite useful lives are amortised on a straight-line basis over the estimated economic useful lives and are assessed for any indication that the asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. The amortisation expense on intangible assets with finite useful lives is recognised in the income statements and is included within the general and administrative expenses line item.

71

Annual Repor t 2010


(cont’d)


4.7 Intangible assets (cont’d)

(b) Other intangible assets (cont’d)

An intangible asset has an indefinite useful life when based on the analysis of all the relevant factors; there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to the Group. Intangible assets with indefinite useful lives are tested for impairment annually and wherever there is an indication that the carrying amount may be impaired. Such intangible assets are not amortised. Their useful lives are reviewed each period to determine whether events and circumstances continue to support the indefinite useful life assessment for the asset. If they do not, the change in the useful life assessment for indefinite to finite is accounted for as a change in accounting estimate in accordance with FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors.

Expenditure on internally developed products is recognised as an intangible asset if the Group can demonstrate that it is technically feasible to develop the product for it to be sold, that adequate resources are available to complete the development and that there is an intention to complete and sell the product. The Group must also demonstrate that it is able to sell the product to generate future economic benefits and that the expenditure on the project can be measured reliably.

Expenditure on an intangible item that are initially recognised as an expense are not recognised as par t of the cost of an intangible asset at a later date.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use. The gain or loss arising from the derecognition determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset is recognised in the income statements when the asset is derecognised.

Trademarks

Trademarks acquired have finite useful lives and are carried at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives of seven (7) years. Cost of renewing trademarks is recognised in the income statements as incurred.

4.8 Impairment of assets

The carrying amounts of assets, except for financial assets (excluding investments in subsidiaries and associates), inventories, deferred tax assets and investment proper ties measured at fair value, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment or more frequently if events or changes in circumstances indicate that the goodwill or intangible asset might be impaired.

The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (‘CGU’) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group’s CGU or groups of CGU that are expected to benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.

Following the adoption of FRS 8 Operating Segments as disclosed in Note 4.18 to the financial statements, the consequential amendment to FRS 136 Impairment of Assets is also mandatory for financial periods beginning on or after 1 July 2009. This amendment requires goodwill acquired in a business combination to be tested for impairment as par t of the impairment testing of CGU to which it relates. The CGU to which goodwill is allocated shall represent the lowest level within the Group at which the goodwill is monitored for internal management purposes and not larger than an operating segment determined in accordance with FRS 8.

The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use.

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4.8 Impairment of assets (cont’d)

In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in the income statements when the carrying amount of the asset or the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro-rata basis of the carrying amount of each asset in the CGU. The impairment loss is recognised in the income statements immediately.

An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed if, and only if, there has been a change in the estimates used to determine the assets’ recoverable amount since the last impairment loss was recognised.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Such reversals are recognised as income immediately in the income statements.

4.9 Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the weighted average method. The cost of consumables and raw materials comprises all costs of purchase plus the cost of bringing the inventories to their present location and condition. The cost of work-in-progress and finished goods includes the cost of raw materials, direct labour, other direct cost and a propor tion of production overheads based on normal operating capacity of the production facilities.

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

4.10 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favourable to the Group.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavourable to the Group.

4.10.1 Financial instruments recognised on the balance sheets

Financial instruments are recognised on the balance sheets when the Group has become a par ty to the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends and losses and gains relating to a financial instrument or a component that is a financial liability shall be recognised as income or expense in the income statements. Distributions to holders of an equity instrument are debited directly to equity, net of any related tax effect. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle on a net basis or to realise the asset and settle the liability simultaneously.

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(cont’d)


4.10 Financial instruments (cont’d)

4.10.1 Financial instruments recognised on the balance sheets (cont’d)

(a) Receivables

Trade and other receivables, including amounts owing by associates and related par ties, are carried at anticipated realisable value. Known bad debts are written off and specific allowance is made for debts considered to be doubtful of collection.

Receivables are not held for trading purposes.

(b) Cash and cash equivalents

Cash and cash equivalents include cash and bank balances, bank overdrafts, shor t term placements with licensed banks, placements with licensed banks, deposits and other shor t term highly liquid investments, which are readily conver tible to cash and are subject to insignificant risk of changes in value.

(c) Payables

Liabilities for trade and other amounts payable, including amounts owing to related par ties, are recognised at fair value of the consideration to be paid in the future for goods and services received.

(d) Interest bearing loans and borrowings

All loans and borrowings are recognised at the amount of proceeds received less directly attributable transaction costs.

(e) Equity instruments

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. Otherwise, they are charged to the income statements.

Dividends to shareholders are recognised in equity in the period in which they are declared.

If the Company reacquires its own equity instrument, the consideration paid, including any attributable transaction costs is deducted from equity as treasury shares until they are cancelled. No gain or loss is recognised in the income statements on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Where such shares are issued by resale, the difference between the sales consideration and the carrying amount is shown as a movement in equity.

4.10.2 Financial instruments not recognised on the balance sheets

Foreign currency forward contracts are used to hedge foreign exposures as a result of receipts and payments in foreign currency. Any gains or losses arising from contracts entered into as hedges of anticipated future transactions are deferred until the dates of such transactions at which time they are included in the measurement of such transactions.

All other gains or losses relating to hedged instruments are recognised in the income statements in the same period as the exchange differences on the underlying hedged items.

4.11 Borrowing costs

All borrowing costs are recognised in the income statements in the period in which they are incurred.

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4.12 Income taxes

Income taxes include all domestic and foreign taxes on taxable profit. Income taxes also include other taxes such as withholding taxes which are payable by foreign subsidiaries on distributions to the Group and Company.

Taxes in the income statement comprise current tax and deferred tax.

(a) Current tax

Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss for a period.

Current taxes for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted at the balance sheets date.

(b) Deferred tax

Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the balance sheets and its tax base.

Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit.

A deferred tax asset is recognised only to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of par t or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profits.

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 the deferred income taxes relate to the same taxation authority.

Deferred tax will be recognised as income or expense and included in the income statements for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax will be charged or credited directly to equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheets date.

4.13 Contingent liabilities and assets

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncer tain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncer tain future events beyond the control of the Group. The Group does not recognise contingent assets but disclose its existence where inflows of economic benefits are probable, but not vir tually cer tain.

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(cont’d)


4.13 Contingent liabilities and assets (cont’d)

In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest.

4.14 Employee benefits

4.14.1 Shor t term employee benefits

Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and non-monetary benefits are recognised as an expense in the financial year when employees have rendered their services to the Group and the Company.

Shor t term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Shor t term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.

4.14.2 Defined contribution plans

The Company and its subsidiaries incorporated in Malaysia make contributions to a statutory provident fund and foreign subsidiaries make contributions to their respective countries’ statutory pension schemes. The contributions are recognised as a liability after deducting any contribution already paid and as an expense in the period in which the employees render their services.

4.15 Foreign currencies

4.15.1 Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

4.15.2 Foreign currency transactions and balances

Transactions in foreign currencies are conver ted into Ringgit Malaysia at rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the balance sheet date are translated into Ringgit Malaysia at rates of exchange ruling at that date unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. All exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the income statements in the period in which they arise. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition, and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined for presentation currency purposes.

4.15.3 Foreign operations

Financial statements of foreign operations are translated at financial year end exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income statements. All resulting translation differences are recognised as a separate component of equity.

In the consolidated financial statements, exchange differences arising from the translation of net investment in foreign operations are taken to equity. When a foreign operation is par tially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statements as par t of the gain or loss on disposal.

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4.15 Foreign currencies (cont’d)

4.15.3 Foreign operations (cont’d)

Exchange differences arising on a monetary item that forms par t of the net investment of the Company in a foreign operation shall be recognised in the income statements in the separate financial statements of the Company or the foreign operation, as appropriate. In the consolidated financial statements, such exchange differences shall be recognised initially as a separate component of equity and recognised in the income statements upon disposal of the net investment.

Goodwill and fair value adjustments to the assets and liabilities arising from the acquisition of a foreign operation are treated as assets and liabilities of the acquired entity and translated at the exchange rate ruling at the balance sheets date.

4.16 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable net of discounts and rebates.

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specific recognition criteria have been met for each of the Group’s activities as follows:

(a) Sales of goods

Revenue from sale of goods is recognised when significant risk and rewards of ownership of the goods has been transferred to the customer and where the Group retains neither continuing managerial involvement over the goods, which coincides with the delivery of goods and acceptance by customers.

(b) Dividend income

Dividend income is recognised when the rights to receive payment is established.

(c) Interest income

Interest income is recognised as it accrues, using the effective interest method unless collectibility is in doubt.

(d) Rental income

Rental income is recognised on an accrual basis unless collectibility is in doubt.

4.17 Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group or the Company expects a provision to be reimbursed (for example, under an insurance contract), the reimbursement is recognised as a separate asset but only when the reimbursement is vir tually cer tain.

Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed.

Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

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Annual Repor t 2010


(cont’d)


4.18 Operating segments

During the previous financial year, segment repor ting was presented based on business segments and geographical segments of the Group. Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a par ticular economic environment that is subject to risks and returns that are different from those components operating in other economic environments.

Following the adoption of FRS 8 Operating Segments during the current financial year, operating segments are defined as components of the Group that:

(a) engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group); and

(b) whose operating results are regularly reviewed by the Group’s chief operating decision maker (i.e. the Group’s Chief Executive

Officer) in making decisions about resources to be allocated to the segment and assessing its performance; and

(c) for which discrete financial information is available.

An operating segment may engage in business activities for which it has yet to earn revenues.

The Group repor ts separately information about each operating segment that meets any of the following quantitative thresholds:

(a) Its repor ted revenue, including both sales to external customers and intersegment sales or transfers, is ten (10) per cent or more of the combined revenue, internal and external, of all operating segments.

(b) The absolute amount of its repor ted profit or loss is ten (10) per cent or more of the greater, in absolute amount of:

(i) the combined repor ted profit of all operating segments that did not repor t a loss; and

(ii) the combined repor ted loss of all operating segments that repor ted a loss.

(c) Its assets are ten (10) per cent or more of the combined assets of all operating segments.

Operating segments that do not meet any of the quantitative thresholds may be considered repor table, and separately disclosed, if the management believes that information about the segment would be useful to users of the financial statements.

Total external revenue repor ted by operating segments shall constitute at least seventy five (75) percent of the Group’s revenue.

5. ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs

5.1 New FRS adopted during the current financial year

FRS8andtheconsequentialamendmentsresultingfromFRS8aremandatoryforannualfinancialperiodsbeginningonorafter1July2009.

FRS 8 sets out the requirements for the disclosure of information on the Group’s operating segments, products and services, the geographical areas in which it operates and its customers.

The requirements of this Standard are based on the information about the components of the Group that management uses to make decisions about operating matters. This Standard requires the identification of operating segments on the basis of internal repor ts that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance, as elaborated in Note 4.18 to the financial statements.

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Annual Repor t 2010

5. ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (cont’d)

5.1 New FRS adopted during the current financial year (cont’d)

The Group concluded that the operating segments defined by the Group under FRS 8 were the same as the business segments defined previously under FRS 114

2004. Likewise, the measures used to assess the performance of the segments correspond to those previously

presented under FRS 1142004

. Consequently, the adoption of FRS 8 has no significant impact on the presentation of the Group’s repor table segments and impairment on cash-generating units based on the new definition of operating segments.

5.2 Early adoption of new FRS and Amendment to FRS

During the financial year, the Group early adopted FRS 4 Insurance Contracts in accordance with the transitional provisions in paragraphs 41 and 45 of FRS 4. These transitional provisions require simultaneous adoption of Financial Guarantee Contracts (Amendments to IAS 39 and IFRS 4) issued by the International Accounting Standard Board (‘IASB’) in August 2005. This pronouncement permits the accounting policy choice of scoping financial guarantee contracts in accordance with FRS 139 Financial Instruments: Recognition and Measurement, or as insurance contracts in accordance with FRS 4.

The disclosure requirements in FRS 4 need not apply to comparative information that relates to annual periods beginning before 1 January 2010.

Consequentially, the Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in FRS 4. The Group recognises these insurance contracts as recognised insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

At every repor ting date, the Group shall assess whether its recognised insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in income statement.

Recognised insurance liabilities shall only be removed from the balance sheet when, and only when, it is extinguished via a discharge, cancellation or expiration.

The early adoption of FRS 4 does not result in any adjustment to recognised items of assets, liabilities, income and expenses of the Group in both, the current year and prior years. Financial guarantees of the Company are disclosed in Note 25 to the financial statements.

5.3 New FRSs and amendments to FRSs not adopted

(a) FRS 7 Financial Instruments: Disclosures and the consequential amendments resulting from FRS 7 are mandatory for annual financial periods beginning on or after 1 January 2010. FRS 7 replaces the disclosure requirements of the existing FRS 132 Financial Instruments: Disclosure and Presentation.

This Standard applies to all risks arising from a wide array of financial instruments and requires the disclosure of the significance of financial instruments for an entity’s financial position and performance. By vir tue of the exemption provided under paragraph 44AB of FRS 7, the impact of applying FRS 7 on the financial statements upon first adoption of the FRS as required by paragraph 30(b) of FRS 108 is not disclosed.

(b) FRS 123 Borrowing Costs and the consequential amendments resulting from FRS 123 are mandatory for annual financial periods beginning on or after 1 January 2010.

This Standard removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. However, capitalisation of borrowing costs is not required for assets measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis, even if they take a substantial period of time to get ready for use or sale. The Group does not expect any material on the financial statements arising from the adoption of this Standard.


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5.3 New FRSs and amendments to FRSs not adopted (cont’d)

(c) FRS 139 Financial Instruments: Recognition and Measurement and the consequential amendments resulting from FRS 139 are mandatory for annual financial periods beginning on or after 1 January 2010.

This Standard establishes the principles for the recognition and measurement of financial assets and financial liabilities including circumstances under which hedge accounting is permitted. By vir tue of the exemption provided under paragraph 103AB of FRS 139, the impact of applying FRS 139 on the financial statements upon first adoption of the FRS as required by paragraph 30(b) of FRS 108 is not disclosed.

(d) Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiar y, Jointly Controlled Entity or Associate is mandatory for annual financial periods beginning on or after 1 January 2010.

These amendments allow first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements. The cost method of accounting for an investment has also been removed pursuant to these amendments. The Group does not expect any impact on the financial statements arising from the adoption of this Standard.

(e) Amendments to FRS 2 Share-based Payment: Vesting Conditions and Cancellations are mandatory for annual financial periods beginning on or after 1 January 2010.

These amendments clarify that vesting conditions comprise service conditions and performance conditions only. Cancellations by par ties other than the Group are accounted for in the same manner as cancellations by the Group itself and features of a share-based payment that are non-vesting conditions are included in the grant date fair value of the share-based payment. These amendments are not relevant to the Group’s operations.

(f) FRS 101 Presentation of Financial Statements is mandatory for annual financial periods beginning on or after 1 January 2010.

FRS 101 sets out the overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.

This Standard introduces the titles ‘statement of financial position’ and ‘statement of cash flows’ to replace the current titles ‘balance sheet’ and ‘cash flow statement’ respectively. A new statement known as the ‘statement of comprehensive income’ is also introduced in this Standard whereby all non-owner changes in equity are required to be presented in either one statement of comprehensive income or in two statements (i.e. a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity.

This Standard also introduces a new requirement to present a statement of financial position as at the beginning of the earliest comparative period if there are applications of retrospective restatements that are defined in FRS 108, or when there are reclassifications of items in the financial statements.

Additionally, FRS 101 requires the disclosure of reclassification adjustments and income tax relating to each component of other comprehensive income, and the presentation of dividends recognised as distributions to owners together with the related amounts per share in the statement of changes in equity or in the notes to the financial statements.

This Standard introduces a new requirement to disclose information on the objectives, policies and processes for managing capital based on information provided internally to key management personnel as defined in FRS 124 Related Par ty Disclosures. Additional disclosures are also required for puttable financial instruments classified as equity instruments.

Apar t from the new presentation and disclosure requirements described, the Group does not expect any other impact on the consolidated financial statements arising from the adoption of this Standard.


(cont’d)

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Annual Repor t 2010



(g) AmendmentstoFRS139,FRS7andICInterpretation9aremandatoryforannualfinancialperiodsbeginningonorafter1January2010.

These amendments permit reclassifications of non-derivative financial assets (other than those designated at fair value through profit or loss upon initial recognition) out of the fair value through profit or loss category in rare circumstances.

Reclassifications from the available-for-sale category to the loans and receivables category are also permitted provided there is intention and ability to hold that financial asset for the foreseeable future. All of these reclassifications shall be subjected to subsequent reassessments of embedded derivatives.

These amendments also clarifies the designation of one-sided risk in eligible hedged items and streamlines the terms used throughout the Standards in accordance with the changes resulting from FRS 101.

By vir tue of the exemptions provided under paragraphs 103AB of FRS 139 and 44AB of FRS 7, the impact of applying these amendments on the consolidated financial statements upon first adoption of the FRS 139 and FRS 7 respectively as required by paragraph 30(b) of FRS 108 are not disclosed. However, the Group does not expect any impact on the financial statements arising from the adoption of the amendment to IC Interpretation 9.

(h) Amendments to FRS 132 Financial Instruments: Presentationismandatoryforannualfinancialperiodsbeginningonorafter1January2010.

These amendments require cer tain puttable financial instruments, and financial instruments that impose an obligation to deliver to counterpar ties a pro rata share of the net assets of the entity only on liquidation to be classified as equity.

Puttable financial instruments are defined as financial instruments that give the holder the right to put the instrument back to the issuer for cash, or another financial asset, or are automatically put back to the issuer upon occurrence of an uncer tain future event or the death or retirement of the instrument holder.

Presently, theGroupdoes not expect any impacton the consolidatedfinancial statements arising from the adoptionof this Standard.However, the Group is in the process of assessing the impact of this Standard in conjunction with the implementation of FRS 139 and would onlybeabletoprovidefurtherinformationintheinterimfinancialstatementsfollowedbythenextannualfinancialstatements.

(i) Improvements to FRSs (2009) are mandatory for annual financial periods beginning on or after 1 January 2010.

Amendment to FRS 5 Non-current Assets Held for Sale and Discontinued Operations clarifies that the disclosure requirements of this FRS specifically apply to non-current assets (or disposal groups) classified as held for sale or discontinued operations.

Amendment to FRS 8 Operating Segments clarifies the consistency of disclosure requirement for information about profit or loss, assets and liabilities.

Amendment to FRS 107 Statement of Cash Flows clarifies the classification of cash flows arising from operating activities and investing activities. Cash payments to manufacture or acquire assets held for rental to others and subsequently held for sale, and the related cash receipts, shall be classified as cash flows from operating activities. Expenditures that result in a recognised asset in the statement of financial position are eligible for classification as cash flows from investing activities.

Amendment to FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors clarifies that only Implementation Guidance issued by the Malaysian Accounting Standards Board that are integral par ts of FRSs is mandatory.

Amendment to FRS 110 Events after the Reporting Period clarifies the rationale for not recognising dividends declared after the repor ting date but before the financial statements are authorised for issue.


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Annual Repor t 2010



(i) Improvements to FRSs (2009) are mandatory for annual financial periods beginning on or after 1 January 2010. (cont’d)

Amendment to FRS 116 Property, Plant and Equipment removes the definition per taining the applicability of this Standard to proper ty that is being constructed or developed for future use as investment proper ty but has yet to satisfy the definition of ‘investment proper ty’ in FRS 140 Investment Property. This amendment also replaces the term ‘net selling price’ with ‘fair value less costs to sell’, and clarifies that proceeds arising from routine sale of items of proper ty, plant and equipment shall be recognised as revenue in accordance with FRS 118 Revenue rather than FRS 5.

Amendment to FRS 117 Leases removes the classification of leases of land and of buildings, and instead, requires assessment of classification based on the risks and rewards of the lease itself. The reassessment of land elements of unexpired leases shall be made prospectively in accordance with FRS 108. As at the repor ting date, the Group has carrying amount of prepaid lease payments for land of RM216,000 (see Note 9 to the financial statements). The Group expects to reclassify the prepaid lease payments for land as land held in accordance with FRS 116 upon adoption of this amendment and shall present a statement of financial position as at the beginning of the earliest comparative period in accordance with FRS 101.

Amendment to FRS 118 Revenue clarifies reference made on the term ‘transaction costs’ to the definition in FRS 139.

Amendment to FRS 119 Employee Benefits clarifies the definitions in the Standard by consistently applying settlement dates within twelve (12) months in the distinction between shor t-term employee benefits and other long-term employee benefits. This amendment also provides additional explanations on negative past service cost and cur tailments.

Amendment to FRS 120 Accounting for Government Grants and Disclosure of Government Assistance streamlines the terms used in the Standard in accordance with the new terms used in FRS 101.

Amendment to FRS 123 Borrowing Costs clarifies that interest expense calculated using the effective interest rate method described in FRS 139 qualifies for recognition as borrowing costs.

Amendment to FRS 127 Consolidated and Separate Financial Statements clarifies that investments measured at cost shall be accounted for in accordance with FRS 5 when they are held for sale in accordance with FRS 5.

Amendment to FRS 128 Investments in Associates clarifies that investments in associates held by venture capital organisations, or mutual funds, unit trusts and similar entities shall make disclosures on the nature and extent of any significant restrictions on the ability of associates to transfer funds to the investor in the form of cash dividends, or repayment of loans or advances. This amendment also clarifies that impairment loss recognised in accordance with FRS 136 Impairment of Assets shall not be allocated to any asset, including goodwill, that forms the carrying amount of the investment. Accordingly, any reversal of that impairment loss shall be recognised in accordance with FRS 136.

Amendment to FRS 129 Financial Reporting in Hyperinflationary Economies streamlines the terms used in the Standard in accordance with the new terms used in FRS 101. This amendment also clarifies that assets and liabilities that are measured at fair value are exempted from the requirement to apply historical cost basis of accounting.

Amendment to FRS 131 Interests in Joint Ventures clarifies that venturers’ interests in jointly controlled entities held by venture capital organisations, or mutual funds, unit trusts and similar entities shall make disclosures on related capital commitments. This amendment also clarifies that a listing and description of interests in significant joint ventures and the propor tion of ownership interest held in jointly controlled entities shall be made.

Amendment to FRS 134 Interim Financial Reporting clarifies the need to present basic and diluted earnings per share for an interim period when the entity is within the scope of FRS 133 Earnings Per Share.


(cont’d)

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Annual Repor t 2010



(i) Improvements to FRSs (2009) are mandatory for annual financial periods beginning on or after 1 January 2010. (cont’d) Amendment to FRS 136 Impairment of Assets clarifies the determination of allocation of goodwill to each cash-generating unit

whereby each unit shall not be larger than an operating segment as defined in FRS 8 before aggregation. This amendment also requires additional disclosures if the fair value less costs to sell is determined using discounted cash flow projections.

Amendment to FRS 138 Intangible Assets clarifies the examples provided in the Standard in measuring the fair value of an intangible

asset acquired in a business combination. This amendment also removes the statement on the rarity of situations whereby the application of the amortisation method for intangible assets results in a lower amount of accumulated amortisation than under the straight-line method.

Amendment to FRS 140 Investment Properties clarifies that proper ties that are being constructed or developed for future use as investment proper ty are within the definition of ‘investment proper ty’. This amendment fur ther clarifies that if the fair value of such proper ties cannot be reliably determinable but it is expected that the fair value would be readily determinable when construction is completed, the proper ties shall be measured at cost until either its fair value becomes reliably determinable or construction is completed, whichever is earlier.

Amendments to FRS 5, FRS 120, FRS 129 and FRS 131 are not relevant to the Group. The Group does not expect any impact on the financial statements arising from the adoption of other amendments, except for Amendment to FRS 117 Lease.

(j) IC Interpretation 9 Reassessment of Embedded Derivatives ismandatoryforannualfinancialperiodsbeginningonorafter1January2010.

This Interpretation prohibits the subsequent reassessment of embedded derivatives unless there is a change in the terms of the host contract that significantly modifies the cash flows that would otherwise be required by the host contract. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation.

(k) IC Interpretation 10 Interim Financial Reporting and Impairment is mandatory for annual financial periods beginning on or after 1 January 2010.

This Interpretation prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation.

(l) IC Interpretation 11 FRS 2 - Group and Treasury Share Transactions is mandatory for annual periods beginning on or after 1 January 2010.

This Interpretation requires share-based payment transactions in which the Company receives services from employees as consideration for its own equity instruments to be accounted for as equity-settled, regardless of the manner of satisfying the obligations to the employees.

If the Company grants rights to its equity instruments to the employees of its subsidiaries, this Interpretation requires the Company to recognise the equity reserve for the obligation to deliver the equity instruments when needed whilst the subsidiaries shall recognise the remuneration expense for the services received from employees.

If the subsidiaries grant rights to equity instruments of the Company to its employees, this Interpretation requires the Company to account for the transaction as cash-settled, regardless of the manner the subsidiaries obtain the equity instruments to satisfy its obligations. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation.

The Group would like to draw attention to the withdrawal of this Interpretation for annual periods beginning on or after 1 January 2011 as disclosed in Note 5.3(z) to the financial statements.


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Annual Repor t 2010



(m) IC Interpretation 13 Customer Loyalty Programmes is mandatory for annual periods beginning on or after 1 January 2010.

This Interpretation requires the separation of award credits as a separately identifiable component of sales transactions involving the award of free or discounted goods or services in the future. The fair value of the consideration received or receivable from the initial sale shall be allocated between the award credits and the other components of the sale.

If the Group supplies the awards itself, the consideration allocated to the award credits shall only be recognised as revenue when the award credits are redeemed. If a third par ty supplies the awards, the Group shall assess whether it is acting as a principal or agent in the transaction.

If the Group is acting as the principal in the transaction, it shall measure its revenue as the gross consideration allocated to the award credits. If the Group is acting as an agent, it shall measure its revenue as the net amount retained on its own account, and recognise the net amount as revenue when the third party becomes obliged to supply the awards and entitled to receive the consideration for doing so.

The Group is acting as a principal in a loyalty programme operated by cer tain subsidiaries whereby loyalty points are given to customers for each sale transaction in cer tain boutiques of the Group. These loyalty points have an indefinite life from the date of the sale transactions and entitle customers to discounts upon redemption.

The Group does not expect any material impact on the financial statements arising from the adoption of this amendment.

(n) IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction is mandatory for annual periods beginning on or after 1 January 2010.

This Interpretation applies to all post-employment defined benefits and other long-term employee defined benefits. This Interpretation clarifies that an economic benefit is available if the Group can realise it at some point during the life of the plan or when the plan liabilities are settled, and that it does not depend on how the Group intends to use the surplus.

A right to refund is available to the Group in stipulated circumstances and the economic benefit available shall be measured as the amount of the surplus at the balance sheet date less any associated costs. If there are no minimum funding requirements, the economic benefit available shall be determined as a reduction in future contributions as the lower of the surplus in the plan and the present value of the future service cost to the Group. If there is a minimum funding requirement for contributions relating to the future accrual of benefits, the economic benefit available shall be determined as a reduction in future contributions at the present value of the estimated future service cost less the estimated minimum funding required in each financial year.

This IC Interpretation is not relevant to the Group operations.

(o) Amendments to FRS 132 is mandatory for annual periods beginning on or after 1 January 2010 and 1 March 2010 in respect of the transitional provisions in accounting for compound financial instruments and classification of rights issues respectively.

These amendments remove the transitional provisions in respect of accounting for compound financial instruments issued before 1 January 2003 pursuant to FRS 132

2004 Financial Instruments: Disclosure and Presentation. Such compound financial instruments shall be classified into its liability and equity components when FRS 139 first applies.

The amendments also clarifies that rights, options or warrants to acquire a fixed number of the Group’s own equity instruments for a fixed amount of any currency shall be classified as equity instruments rather than financial liabilities if the Group offers the rights, options or warrants pro rata to all of its own existing owners of the same class of its own non-derivative equity instruments.

TheGroupdoesnotexpectanyimpactontheconsolidatedfinancialstatementsarisingfromtheadoptionofthisamendment.


(cont’d)

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Annual Repor t 2010



(p) FRS 1 First-time Adoption of Financial Reporting Standards is mandatory for annual periods beginning on or after 1 July 2010.

This Standard supersedes the existing FRS 1 and shall be applied when the Group adopts FRSs for the first time via the explicit and unreserved statement of compliance with FRSs. An opening FRS statement of financial position shall be prepared and presented at the date of transition to FRS, whereby:

(i) All assets and liabilities shall be recognised in accordance with FRSs;

(ii) Items of assets and liabilities shall not be recognised if FRSs do not permit such recognition;

(iii) Items recognised in accordance with previous GAAP shall be reclassified in accordance with FRSs; and

(iv) All recognised assets and liabilities shall be measured in accordance with FRSs.

All resulting adjustments shall therefore be recognised directly in retained earnings at the date of transition to FRSs. TheGroupdoesnotexpectanyimpactontheconsolidatedfinancialstatementsarisingfromtheadoptionofthisamendment.

(q) FRS 3 Business Combinations is mandatory for annual periods beginning on or after 1 July 2010.

This Standard supersedes the existing FRS 3 and now includes business combinations involving mutual entities and those achieved by way of contract alone. Any non-controlling interest in an acquiree shall be measured at fair value or as the non-controlling interest’s propor tionate share of the acquiree’s net identifiable assets.

The time limit on the adjustment to goodwill due to the arrival of new information on the crystallisation of deferred tax benefits shall be restricted to the measurement period resulting from the arrival of the new information. Contingent liabilities acquired arising from present obligations shall be recognised, regardless of the probability of outflow of economic resources.

Acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred and the services are received. Consideration transferred in a business combination, including contingent consideration, shall be measured and recognised at fair value at acquisition date.

In business combinations achieved in stages, the acquirer shall remeasure its previously held equity interest at its acquisition date fair value and recognise the resulting gain or loss in income statements.

The Group expects that there will be impact on the financial statements arising from the adoption of this amendment upon completion of the acquisition of Jeco (Pte) Limited as disclosed in Note 38 (b) to the financial statements. Presently, the Group is unable to quantify the impact on the said acquisition as it has yet to be completed as at the date of approving the financial statements.

(r) FRS 127 Consolidated and Separate Financial Statements is mandatory for annual periods beginning on or after 1 July 2010.

This Standard supersedes the existing FRS 127 and replaces the current term ‘minority interest’ with a new term ‘non-controlling interest’ which is defined as the equity in a subsidiary that is not attributable, directly or indirectly, to a parent. Accordingly, total comprehensive income shall be attributed to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. If the Group loses control of a subsidiary, any gains or losses are recognised in profit or loss and any investment retained in the former subsidiary shall be measured at its fair value at the date when control is lost.

As at the repor ting date, the Group repor ts minority interests of RM2,349,000. The Group expects to reclassify this as non-controlling interests and remeasure the noncontrolling interests prospectively in accordance with the transitional provisions of FRS 127.


85

Annual Repor t 2010



(s) The following amendments to FRSs are mandatory for annual periods beginning on or after 1 July 2010, except for Amendments to FRS 139 which is mandatory for annual periods beginning on or after 1 January 2010.

Amendments to FRS 2 Share-based Payments clarifies that transactions in which the Group acquired goods as par t of the net assets acquired in a business combination or contribution of a business on the formation of a joint venture are excluded from the scope of this Standard.

Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations clarifies that non-current asset classified as held for distribution to owners acting in their capacity as owners are within the scope of this Standard. The amendment also clarifies that in determining whether a sale is highly probable, the probability of shareholders’ approval, if required in the jurisdiction, shall be considered. In a sale plan involving loss of control of a subsidiary, all assets and liabilities of that subsidiary shall be classified as held for sale, regardless of whether the Group retains a non-controlling interest in its former subsidiary after the sale. Discontinued operations information shall also be presented. Non-current asset classified as held for distribution to owners shall be measured at the lower of its carrying amount and fair value less costs to distribute.

Amendments to FRS 138 Intangible Assets clarifies that the intention of separating an intangible asset is irrelevant in determining the

identifiability of the intangible asset. In a separate acquisition and acquisition as par t of a business combination, the price paid by the Group reflects the expectations of the Group of an inflow of economic benefits, even if there is uncer tainty about the timing or the amount of the inflow. Accordingly, the probability criterion is always considered to be satisfied for separately acquired intangible assets. The useful life of a reacquired right recognised as an intangible asset in a business combination shall be the remaining contractual period of the contract in which the right was granted, and do not include renewal periods. In the case of a reacquired right in a business combination, if the right is subsequently reissued to a third par ty, the related carrying amount shall be used in determining the gain or loss on reissue.

Amendments to FRS 139 Financial Instruments: Recognition and Measurement remove the scope exemption on contracts for contingent consideration in a business combination. Accordingly, such contracts shall be recognised and measured in accordance with the requirements of FRS 139.

Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives clarifies that embedded derivatives in contracts acquired in a business combination, combination of entities or business under common controls, or the formation of a joint venture are excluded from this Interpretation.

Except for Amendments to FRS 2 and FRS 5 that are not relevant, the Group does not expect any impact on the financial statements arising from the adoption of the above amendments.

(t) IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation is mandatory for annual periods beginning on or after 1 July 2010.

This Interpretation applies to hedges under taken on foreign currency risk arising from net investments in foreign operations and the Group wishes to qualify for hedge accounting in accordance with FRS 139.

Hedge accounting is applicable only to the foreign exchange differences arising between the functional currency of the foreign operation and the functional currency of any parent (immediate, intermediate or ultimate parent) of that foreign operation. An exposure to foreign currency risk arising from a net investment in a foreign operation may qualify for hedge accounting only once in the consolidated financial statements.

Hedging instruments designated in the hedge of a net investment in a foreign operation may be held by any companies within the Group, as long as the designation, documentation and effectiveness requirements of FRS 139 are met. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation.


(cont’d)

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Annual Repor t 2010



(u) IC Interpretation 17 Distributions of Non-cash Assets to Owners is mandatory for annual periods beginning on or after 1 July 2010.

This Interpretation applies to non-reciprocal distributions of non-cash assets by the Group to its owners in their capacity as owners, as well as distributions that give owners a choice of receiving either non-cash assets or a cash alternative. This Interpretation also applies to distributions in which all owners of the same class of equity instruments are treated equally.

The liability to pay a dividend shall be recognised when the dividend is appropriately authorised and is no longer at the discretion of the Group. The liability shall be measured at the fair value of the assets to be distributed. If the Group gives its owners a choice of receiving either a non-cash asset or a cash alternative, the dividend payable shall be estimated by considering the fair value of both alternatives and the associated probability of the owners’ selection.

At the end of each repor ting period, the carrying amount of the dividend payable shall be remeasured and any changes shall be recognised in equity. At the settlement date, any difference between the carrying amounts of the assets distributed and the carrying amount of the dividend payable shall be recognised in income statements. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation.

(v) IC Interpretation 12 Service Concession Arrangements is mandatory for annual periods beginning on or after 1 July 2010.

This Interpretation applies to operators for public-to-private service concession arrangements, whereby infrastructure within the scope of this Interpretation shall not be recognised as proper ty, plant and equipment of the operator. The operator shall recognise and measure revenue in accordance with FRS 111 Construction Contracts and FRS 118 for the services performed. The operator shall also account for revenue and costs relating to construction or upgrade services in accordance with FRS 111.

Consideration received or receivable by the operator for the provision of construction or upgrade services shall be recognised at its fair value. If the consideration consists of an unconditional contractual right to receive cash or another financial asset from the grantor, it shall be classified as a financial asset. Conversely, if the consideration consists of a right to charge users of the public service, it shall be classified as an intangible asset. This IC Interpretation is not relevant to the Group’s operations.

(w) Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters is mandatory for annual periods beginning on or after 1 January 2011.

This amendment permits a first-time adopter of FRSs to apply the exemption of not restating comparatives for the disclosures required in Amendments to FRS 7 (Note 5.3 (x) to the financial statements).

The Group does not expect any impact on the financial statements arising from the adoption of this amendment.

(x) Amendments to FRS 7 Improving Disclosures about Financial Instruments are mandatory for annual periods beginning on or after 1 January 2011.

These amendments require enhanced disclosures of fair value of financial instruments based on the fair value hierarchy, including the disclosure of significant transfers between Level 1 and Level 2 of the fair value hierarchy as well as reconciliations for fair value measurements in Level 3 of the fair value hierarchy.

By vir tue of the exemption provided under paragraph 44G of FRS 7, the impact of applying these amendments on the financial

statements upon first adoption of FRS 7 as required by paragraph 30(b) of FRS 108 are not disclosed.

(y) Amendments to FRS 1 Additional Exemptions for First-time Adopters are mandatory for annual periods beginning on or after 1 January 2011.

These amendments permits a first-time adopter of FRSs to apply the exemption of not restating the carrying amounts of oil and gas assets determined under previous GAAP.



87

Annual Repor t 2010



(z) Amendments to FRS 2 Group Cash - settled Share-based Payment Transactions are mandatory for annual periods beginning on or after 1 January 2011.

Theseamendmentsclarifythescopeandtheaccountingforgroupcash-settledshare-basedpaymenttransactionsintheseparatefinancialstatements of the entity receiving the goods or services when that entity has no obligation to settle the sharebased payment transaction.

Consequently, IC Interpretation 8 Scope of FRS 2 and IC Interpretation 11 have been superseded and withdrawn.

The Group does not expect any impact on the financial statements arising from the adoption of these amendments.

(aa) IC Interpretation 4 Determining whether an Arrangement contains a Lease is mandatory for annual periods beginning on or after 1 January 2011.

This Interpretation requires the determination of whether an arrangement is, or contains, a lease based on an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset. This assessment shall be made at the inception of the arrangement and subsequently reassessed if cer tain condition(s) in the Interpretation is met.


(ab) IC Interpretation 18 Transfers of Assets from Customers is mandatory for annual periods beginning on or after 1 January 2011.

This Interpretation applies to agreements in which an entity receives from a customer an item of proper ty, plant and equipment that must be used to either connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services. The entity receiving the transferred item is required to assess whether the transferred item meets the definition of an asset set out in the Framework. The credit entry would be accounted for as revenue in accordance with FRS 118.


(ac) IC Interpretation 15 Agreements for the Construction of Real Estate is mandatory for annual periods beginning on or after 1 January 2012.

This Interpretation applies to the accounting for revenue and associated expenses by entities under taking construction or real estate directly or via subcontractors. Within a single agreement, the Group may contract to deliver goods or services in addition to the construction of real estate. Such an agreement shall therefore, be split into separately identifiable components.

An agreement for the construction of real estate shall be accounted for in accordance with FRS 111 if the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress. Accordingly, revenue shall be recognised by reference to the stage of completion of the contract.

An agreement for the construction of real estate in which buyers only have limited ability to influence the design of the real estate or to specify only minor variations to the basic designs is an agreement for the sale of goods in accordance with FRS 118. Accordingly, revenue shall be recognised by reference to the criteria in paragraph 14 of FRS 118 (e.g. transfer of significant risks and rewards, no continuing managerial involvement nor effective control, reliable measurement, etc.).

This IC Interpretation is not relevant to the Group’s operations.


(cont’d)

88

Annual Repor t 2010

6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies, repor ted amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an ongoing basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

6.1 Critical judgements made in applying accounting policies

The followings are judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements.

(a) Classification between investment proper ties and proper ty, plant and equipment

The Group has developed cer tain criteria based on FRS 140 in making judgement whether a proper ty qualifies as an investment proper ty. Investment proper ty is a proper ty held to earn rentals or for capital appreciation or both. Some proper ties comprise a por tion that is held to earn rentals or for capital appreciation and another por tion that is held for use in the production or supply of goods or services or for administrative purposes.

If these por tions could be sold separately (or leased out separately under a finance lease), the Group would account for the por tions separately. If the por tions could not be sold separately, the proper ty is an investment proper ty only if an insignificant por tion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual proper ty basis to determine whether ancillary services are so significant that a proper ty does not qualify as investment proper ty.

(b) Contingent liabilities

The determination of treatment of contingent liabilities is based on management’s view of the expected outcome of the contingencies for matters in the ordinary course of business.

6.2 Key sources of estimation uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncer tainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year :

(a) Impairment of goodwill on consolidation

The Group determines whether goodwill on consolidation is impaired at least on an annual basis. This requires an estimation of the value-in-use of the subsidiaries to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the subsidiaries and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Fur ther details are disclosed in Note 10 (a) to the financial statements.

(b) Taxation

(i) Deferred tax assets

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


89

Annual Repor t 2010


(cont’d)

6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)

6.2 Key sources of estimation uncertainty (cont’d)

(b) Taxation (cont’d)

(ii) Income taxes

Significant judgement is required in determining the capital allowances, deductibility of cer tain expenses and taxability of cer tain income during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncer tain during the ordinary course of business. The Group and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(c) Depreciation of proper ty, plant and equipment

The cost of proper ty, plant and equipment is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these proper ty, plant and equipment as disclosed in Note 4.3 to the financial statements. These are common life expectancies applied in the industry which the Group operates. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, and therefore future depreciation charges could be revised.

(d) Allowance for doubtful debts

The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses historical bad debt, customer concentration, customer creditwor thiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of allowance for doubtful debts. Where expectations differ from the original estimates, the differences will impact the carrying amount of receivables.

(e) Write down for obsolete or slow moving inventories

The Group writes down its obsolete or slow moving inventories based on an assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses fashion pattern, current economic trends and changes in customer preference when making a judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories.

Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories.

(f) Fair values of borrowings

The fair values of borrowings are estimated by discounting future contractual cash flows at the current market interest rates available to the Group for similar financial instruments. It is assumed that the effective interest rates approximate the current market interest rates available to the Group based on its size and its business risk.

90

Annual Repor t 2010


7. PROPERTY, PLANT AND EQUIPMENT

Group Balance Depreciation Balance as at Written charge for Translation as at 1.7.2009 Additions Disposals off the year adjustments 30.6.2010 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Carrying amount

Freehold land 3,002 - - - - - 3,002Buildings on freehold land 32,719 24 (73) - (764) (147) 31,759Buildings on long term leasehold land 4,875 - - - (123) - 4,752Plant and machinery 553 330 (38) - (227) (8) 610Plant and machinery under hire-purchase and lease 49 - - - (24) - 25Furniture, fittings and counter fixtures 13,510 5,041 (28) (523) (8,144) (70) 9,786Office equipment 2,959 1,154 (92) (32) (1,196) (31) 2,762Renovation 2,978 625 (3) (308) (1,350) (69) 1,873Electrical installations 665 257 - - (177) (14) 731Motor vehicles 2,434 162 (139) - (647) (23) 1,787Motor vehicles under hire-purchase and lease 1,612 368 - - (813) (11) 1,156Proper ties under construction 3,953 132 - - - - 4,085

69,309 8,093 (373) (863) (13,465) (373) 62,328

At 30.6.2010 Group Accumulated Accumulated Carrying

Cost depreciation impairment amount RM’000 RM’000 RM’000 RM’000

Freehold land 3,002 - - 3,002Buildings on freehold land 37,447 (5,412) (276) 31,759Buildings on long term leasehold land 8,309 (1,592) (1,965) 4,752Plant and machinery 2,597 (1,987) - 610Plant and machinery under hire-purchase and lease 123 (98) - 25Furniture, fittings and counter fixtures 36,742 (26,956) - 9,786Office equipment 10,522 (7,760) - 2,762Renovation 6,447 (4,574) - 1,873Electrical installations 1,312 (581) - 731Motor vehicles 3,847 (2,060) - 1,787Motor vehicles under hire-purchase and lease 4,352 (3,196) - 1,156Proper ties under construction 4,364 - (279) 4,085

119,064 (54,216) (2,520) 62,328

91

Annual Repor t 2010

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

Group Balance Depreciation Reversal of Balance as at Written Reclassi- charge for impairment Translation as at 1.7.2008 Additions Disposals off fications theyear fortheyear adjustments 30.6.2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Carrying amount

Freehold land 3,002 - - - - - - - 3,002Buildings on freehold land 22,929 609 - - 9,902 (747) - 26 32,719Buildings on long term leasehold land 5,628 11 (545) (127) - (135) 41 2 4,875Plant and machinery 597 124 - - - (168) - - 553Plant and machinery under hire-purchase and lease 74 - - - - (25) - - 49Furniture, fittings and counter fixtures 13,546 7,871 (135) (106) - (7,733) - 67 13,510Office equipment 2,835 1,414 (8) (23) - (1,274) - 15 2,959Renovation 1,822 2,446 - (11) - (1,286) - 7 2,978Electrical installations 428 387 - (9) - (141) - - 665Motor vehicles 508 2,026 (10) - 232 (360) - 38 2,434Motor vehicles under hire-purchase and lease 2,857 242 (171) - (232) (1,089) - 5 1,612Proper ties under construction 2,634 11,245 - (24) (9,902) - - - 3,953

56,860 26,375 (869) (300) - (12,958) 41 160 69,309

At 30.6.2009 Group Accumulated Accumulated Carrying

Cost depreciation impairment amount RM’000 RM’000 RM’000 RM’000

Freehold land 3,002 - - 3,002Buildings on freehold land 37,685 (4,690) (276) 32,719Buildings on long term leasehold land 8,309 (1,469) (1,965) 4,875Plant and machinery 2,432 (1,879) - 553Plant and machinery under hire-purchase and lease 123 (74) - 49Furniture, fittings and counter fixtures 35,221 (21,711) - 13,510Office equipment 10,796 (7,837) - 2,959Renovation 6,687 (3,709) - 2,978Electrical installations 1,071 (406) - 665Motor vehicles 4,126 (1,692) - 2,434Motor vehicles under hire-purchase and lease 4,197 (2,585) - 1,612Proper ties under construction 4,232 - (279) 3,953

117,881 (46,052) (2,520) 69,309


(cont’d)

92

Annual Repor t 2010



Company Balance Depreciation Balance as at charge for as at 1.7.2009 Additions the year 30.6.2010 RM’000 RM’000 RM’000 RM’000

Carrying amount

Freehold land 2,530 - - 2,530Buildings on freehold land 13,524 - (341) 13,183Furniture, fixtures and fittings 88 - (36) 52Office equipment 95 82 (42) 135Renovation 261 - (106) 155Electrical installations 34 - (11) 23Motor vehicles 977 - (230) 747Motor vehicles under hire-purchase 801 - (352) 449

18,310 82 (1,118) 17,274

At 30.6.2010 Accumulated Carrying Cost depreciation Amount RM’000 RM’000 RM’000

Freehold land 2,530 - 2,530Buildings on freehold land 17,080 (3,897) 13,183Furniture, fixtures and fittings 351 (299) 52Office equipment 296 (161) 135Renovation 780 (625) 155Electrical installations 75 (52) 23Motor vehicles 1,151 (404) 747Motor vehicles under hire-purchase 1,758 (1,309) 449

24,021 (6,747) 17,274

Company Balance Depreciation Balance as at charge for as at 1.7.2008 Additions the year 30.6.2009 RM’000 RM’000 RM’000 RM’000

Carrying amount

Freehold land 2,530 - - 2,530Buildings on freehold land 13,865 - (341) 13,524Furniture, fixtures and fittings 124 - (36) 88Office equipment 95 30 (30) 95Renovation 230 154 (123) 261Electrical installations 45 - (11) 34Motor vehicles 5 1,145 (173) 977Motor vehicles under hire-purchase 1,153 - (352) 801

18,047 1,329 (1,066) 18,310 93

Annual Repor t 2010


At 30.6.2009 Accumulated Carrying Cost depreciation amount RM’000 RM’000 RM’000

Freehold land 2,530 - 2,530Buildings on freehold land 17,080 (3,556) 13,524Furniture, fixtures and fittings 351 (263) 88Office equipment 214 (119) 95Renovation 780 (519) 261Electrical installations 75 (41) 34Motor vehicles 1,151 (174) 977Motor vehicles under hire-purchase 1,758 (957) 801

23,939 (5,629) 18,310

(a) During the financial year, the Group and the Company made the following cash payments to purchase proper ty, plant and equipment:

Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Purchase of proper ty, plant and equipment 8,093 26,375 82 1,329Financed by hire-purchase and lease arrangements (185) (80) - -Financed by term loans (132) (8,972) - -Transfer from related companies - - - (200)Trade-in value - (161) - -

Cash payments on purchase of proper ty, plant and equipment 7,776 17,162 82 1,129

(b) As at financial year end, the carrying amount of proper ty, plant and equipment under hire-purchase and lease arrangements of the Group and of the Company are as follows:


Plant and machinery 25 49 - -Motor vehicles 1,156 1,612 449 801

1,181 1,661 449 801

Details of the terms and conditions of the hire-purchase and lease arrangements are disclosed in Notes 20 and 36 to the financial statements.


(cont’d)

94

Annual Repor t 2010


(c) Net book value of proper ty, plant and equipment pledged as securities for banking facilities granted to the Group and to the Company are as follows:


Freehold land 3,002 3,002 2,530 2,530Buildings on freehold land 31,689 32,645 13,183 13,524Buildings on long term leasehold land 3,074 3,119 - -

37,765 38,766 15,713 16,054

8. INVESTMENT PROPERTIES

Group Balance Balance as at Fair value as at 1.7.2009 Additions adjustment 30.6.2010 RM’000 RM’000 RM’000 RM’000

Fair value

Freehold land, shoplots and clubhouse 6,377 - - 6,377Long term leasehold land and shoplots 5,750 - - 5,750

12,127 - - 12,127

Group Balance Balance as at Fair value as at 1.7.2008 Additions adjustment 30.6.2009 RM’000 RM’000 RM’000 RM’000

Fair value

Freehold land, shoplots and clubhouse 6,371 6 - 6,377Long term leasehold land and shoplots 3,486 2,080 184 5,750

9,857 2,086 184 12,127

The fair value of the investment proper ties of the Group was recommended by the Directors as at year end based on an indicative market value carried out by an independent professional valuer on an open market value basis.

Rental income of the Group derived from the investment proper ties amounted to RM389,000 (2009: RM381,000).


95

Annual Repor t 2010

8. INVESTMENT PROPERTIES (cont’d)

Direct operating expenses arising from investment proper ties generating rental income during the financial year are as follows:

Group 2010 2009 RM’000 RM’000

Repairs and maintenance 7 19Quit rent and assessment 34 38

9. PREPAID LEASE PAYMENTS FOR LAND

Group Balance Amortisation Balance as at charge for as at 1.7.2009 the year 30.6.2010 RM’000 RM’000 RM’000

Carrying amount

Long term leasehold land 219 (3) 216

At 30.6.2010 Accumulated Carrying Cost amortisation Amount RM’000 RM’000 RM’000


Group Balance Amortisation Balance as at charge for as at 1.7.2008 Disposal the year 30.6.2009 RM’000 RM’000 RM’000 RM’000

Carrying amount

Long term leasehold land 606 (380) (7) 219

At 30.6.2009 Accumulated Carrying Cost amortisation Amount RM’000 RM’000 RM’000


The long term leasehold land has been charged to a financial institution for banking facilities granted to the Group.


(cont’d)

96

Annual Repor t 2010


10. INTANGIBLE ASSETS

Group Balance Amortisation Balance as at charge for as at 1.7.2009 Additions the year 30.6.2010 RM’000 RM’000 RM’000 RM’000

Carrying amount

Goodwill 4,871 - - 4,871Trademarks 7 1 (3) 5

4,878 1 (3) 4,876

At 30.6.2010 Accumulated Accumulated Carrying Cost amortisation impairment amount RM’000 RM’000 RM’000 RM’000

Goodwill 10,612 - (5,741) 4,871Trademarks 1,021 (1,016) - 5

11,633 (1,016) (5,741) 4,876

Group Balance Amortisation Balance as at charge for as at 1.7.2008 Additions the year 30.6.2009 RM’000 RM’000 RM’000 RM’000

Carrying amount

Goodwill 4,871 - - 4,871Trademarks 7 - - 7

4,878 - - 4,878

At 30.6.2009 Accumulated Accumulated Carrying Cost amortisation impairment amount RM’000 RM’000 RM’000 RM’000

Goodwill 10,612 - (5,741) 4,871Trademarks 1,020 (1,013) - 7

11,632 (1,013) (5,741) 4,878

97

Annual Repor t 2010

10. INTANGIBLE ASSETS (cont’d)

(a) Goodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount. As the Directors are of the opinion that all the cash generating units (“CGU”) are held on a long-term basis, the value-in-use would best reflect its recoverable amount. The value-in-use is determined by discounting future cash flows over a three-year period. The future cash flows are based on management’s business plan, which is the best estimate of future performance. The ability to achieve the business plan targets is a key assumption in determining the recoverable amount for each CGU.

There remains a risk that the ability to achieve management’s business plan will be adversely affected due to unforeseen changes in the respective economies in which the CGUs operate and/or global economic conditions. Hence, in computing the value-in-use for each CGU, the management has applied a discount rate of 11% per annum and growth rates of 5% to 10% per annum depending on the products, markets and business plan of the subsidiaries.

The following describes each key assumption on which the management has based its cash flow projections for the purposes of the impairment test for goodwill:

(i) The discount rate was estimated based on the Group’s weighted average cost of capital.

(ii) Growth rate used has been based on historical trend of each segment taking into account industry outlook for that segment.

(iii) The profit margin applied to the projections are based on the historical profit margin trend for the individual CGU.

With regard to the assessment of value-in-use of the goodwill, the management believes that no reasonably possible change in any of the above key assumptions would cause the carrying values of the CGU to materially exceed their recoverable amounts.

(b) Trademarks represent the registration cost of Bonia, Sembonia and Carlo Rino brands.

11. INVESTMENTS IN SUBSIDIARIES

Company 2010 2009 RM’000 RM’000

Unquoted shares - at cost 89,446 70,796Less: Impairment losses (7,915) (6,550)

81,531 64,246

An impairment loss on investments in subsidiaries amounting RM1,715,000 (2009: RM5,700,000) have been recognised during the financial year due to declining business operations and the net tangible assets of these subsidiaries are lower than the cost of investments.


(cont’d)

98

Annual Repor t 2010


11. INVESTMENTS IN SUBSIDIARIES (cont’d)

The details of the subsidiaries are as follows:

Interest in equity held

Country of 2010 2009 Name of company incorporation % % Principal activities

Subsidiaries of Bonia Corporation Berhad

CB Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable leather goods

CB Holdings (Malaysia) Sdn. Bhd. Malaysia 100 100 Proper ty investment and management services

Ataly Industries Sdn. Bhd. Malaysia 100 100 Proper ty investment

Luxury Parade Sdn. Bhd. Malaysia 100 100 Proper ty investment

Eclat World Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable men’s footwear

CB Franchising Sdn. Bhd. Malaysia 100 100 Franchising of leather goods and apparels

BCB Proper ties Sdn. Bhd. Malaysia 100 100 Proper ty development

Pasti Anggun Sdn. Bhd. Malaysia - 70 Proper ty development

Long Bow Manufacturing Sdn. Bhd. Malaysia 100 100 Manufacturing and marketing of leather goods

De Mar ts Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable ladies’ footwear

Mcore Sdn. Bhd. Malaysia 60 60 Marketing and distribution of fashionable leather

goodsFuture Classic Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable

leather goods

Daily Frontier Sdn. Bhd. Malaysia 100 100 Marketing, distribution and expor t of fashionable goods and accessories

Armani Context Sdn. Bhd. Malaysia 100 100 Interior design, adver tising and promotion

Banyan Sutera Sdn. Bhd. Malaysia 100 100 Marketing and distribution of fashionable goods

* Active World Pte. Ltd. Singapore 100 100 Wholesaling and retailing of fashionable leather goods and apparels

*# Kin Sheng Group Limited Hong Kong 100 100 Investment holdings

Dominion Directions Sdn. Bhd. Malaysia 100 100 Marketing and distribution of men’s apparel and accessories

SBFW Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable

ladies’ footwear

99

Annual Repor t 2010





Subsidiaries of Bonia Corporation Berhad (cont’d)

SBL Marketing Sdn. Bhd. Malaysia 100 100 Designing, promoting and marketing of fashionable leather goods

^ CR Boutique Sdn. Bhd. Malaysia - 100 Franchising of leather goods and apparels

^ CRF Marketing Sdn. Bhd. Malaysia - 100 Designing, promoting and marketing of fashionable ladies’ footwear

^ CRL Marketing Sdn. Bhd. Malaysia - 100 Designing, promoting and marketing of fashionable leather goods

CRG Incorporated Sdn. Bhd. Malaysia 100 - Investment holdings

SB Boutique Sdn. Bhd. Malaysia 100 100 Franchising of leather goods and apparels

New Series Sdn. Bhd. Malaysia 100 100 Marketing and distribution of men’s apparels

Mcolours & Design Sdn. Bhd. Malaysia 100 100 Product design, research and development

Scarpa Marketing Sdn. Bhd. Malaysia 100 100 Wholesaling, retailing and marketing of fashionable footwear

** Alpha Footwear Sdn. Bhd. Malaysia 100 - Marketing, retailing and distribution of men’s and ladies’ footwear

Subsidiaries of Dominion Directions Sdn. Bhd.

VR Directions Sdn. Bhd. Malaysia 75 70 Marketing and distribution of men’s apparel and accessories, and ladies’ apparel

SB Directions Sdn. Bhd. Malaysia 100 100 Marketing and distribution of fashionable

accessories

Galaxy Hallmark Sdn. Bhd. Malaysia 100 100 Marketing and distribution of men’s apparels and accessories

Subsidiaries of CRG Incorporated Sdn. Bhd.

^ CR Boutique Sdn. Bhd. Malaysia 100 - Franchising of leather goods and apparels

^ CRF Marketing Sdn. Bhd. Malaysia 100 - Designing, promoting and marketing of fashionable ladies’ footwear

^ CRL Marketing Sdn. Bhd. Malaysia 100 - Designing, promoting and marketing of fashionable leather goods


(cont’d)

100

Annual Repor t 2010






Subsidiaries of CRG Incorporated Sdn. Bhd. (cont’d)

^ Apex Marble Sdn. Bhd. Malaysia 60 - Marketing and distribution of fashionable goods

Subsidiary of Mcore Sdn. Bhd.

^ Apex Marble Sdn. Bhd. Malaysia - 90 Marketing and distribution of fashionable goods

Subsidiaries of Active World Pte. Ltd.

* Jetbest Enterprise Pte. Ltd. Singapore 100 100 Wholesaling, retailing, impor ting and expor ting of leather goods and accessories

* SCRL Pte. Ltd. Singapore 100 100 Wholesaling, retailing and marketing of fashionable footwear, carrywear and accessories

* SBLS Pte. Ltd. Singapore 100 100 Wholesaling, retailing and marketing of fashionable footwear, carrywear and accessories

** Active Franchise Pte. Ltd. Singapore 100 - General wholesale trade including general impor ters and expor ters

Subsidiaries of Kin Sheng Group Limited

*# Bonia (Shanghai) Commerce Limited China 100 100 Retailing, marketing, promoting, designing, impor ting and expor ting of leather goods, apparels and accessories* Guangzhou Jia Li Bao Leather Fashion Co. Ltd. China 100 100 Wholesaling, retailing, impor ting and expor ting of

leather goods and accessories

* Guangzhou Bonia Fashions China Co. Ltd. China 100 100 Manufacturing, marketing, retailing of fashionable leather goods, apparels and accessories

*# Kin Sheng International Trading Co. Limited Hong Kong 100 100 General trading and marketing of fashionable goods

^ Due to internal group reorganisation.* Subsidiaries not audited by BDO.# Subsidiaries audited by BDO Member Firms.** No auditors’ repor t on the financial statements of this subsidiary was issued as it was newly incorporated during the financial year.

101

Annual Repor t 2010


(cont’d)


During the financial year :

(i) Mcore Sdn. Bhd. (“Mcore”), 60% owned subsidiary of the Company, had acquired 50,000 ordinary shares of RM1.00 each representing 10% equity interest in Apex Mable Sdn. Bhd. (“AMSB”) from a minority shareholder, for a total cash consideration of RM1. Subsequent to this acquisition, AMSB became a wholly owned subsidiary of Mcore.

(ii) the Company had disposed off its entire equity interest in Pasti Anggun Sdn. Bhd. for a total cash consideration of RM100,000. The gain arising from the said disposal to the Group and the Company are RM10,000 and RM100,000 respectively.

(iii) Active World Pte. Ltd., a wholly owned subsidiary of the Company, had incorporated a wholly-owned subsidiary, Active Franchise Pte. Ltd. in Singapore, with an authorised share capital of SGD1 comprising 1 ordinary share of SGD1.00 each, of which 1 share has been issued and fully paid up.

(iv) Dominion Directions Sdn. Bhd. (“DDSB”), a wholly owned subsidiary of the Company, had acquired 50,000 ordinary shares of RM1.00 each representing 5% equity interest in VR Directions Sdn. Bhd. (“VRDSB”) from a minority shareholder, for a total cash consideration of RM370,367. Subsequent to the acquisition, DDSB is now holding 75% equity interest in VRDSB.

(v) the Company had incorporated a wholly owned subsidiary, Alpha Footwear Sdn. Bhd. in Malaysia, with an authorised share capital of

RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 shares have been issued and fully paid up. The incorporation of the subsidiary does not have any material impact to the Group’s financial statements.

(vi) the Company fur ther subscribed 500,000 newly issued shares of RM1.00 each at par in CR Boutique Sdn. Bhd. (“CRBSB”).

(vii) the Company had incorporated a wholly owned subsidiary, CRG Incorporated Sdn. Bhd. (“CRG”) in Malaysia, with an authorised share capital of RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which 2 shares have been issued and fully paid up. The incorporation of the subsidiary does not have any material impact to the Group’s financial statements.

(viii) As a result of internal group reorganisation:

(a) CRG had acquired 300,000 ordinary shares of RM1.00 each representing 60% equity interest in AMSB from Mcore, for a total cash consideration of RM2,525. The remaining 200,000 ordinary shares of RM1.00 each representing 40% equity interest in AMSB was disposed off to an existing director of Mcore, for a total cash consideration of RM1,648. Subsequent to this disposal, the Group’s equity interest in AMSB was diluted from 100% to 60%.

(b) CRG had acquired 500,000 ordinary shares of RM1.00 each representing 100% equity interest in CRL Marketing Sdn. Bhd. (“CRLMSB”) from the Company, for a total consideration of RM10,337,488 by way of issuance of 10,337,488 new ordinary shares of RM1.00 each at RM1.00 per share of CRG.

(c) CRG had acquired 500,000 ordinary shares of RM1.00 each representing 100% equity interest in CRF Marketing Sdn. Bhd. (“CRFMSB”) from the Company, for a total consideration of RM4,995,385 by way of issuance of 4,995,385 new ordinary shares of RM1.00 each at RM1.00 per share of CRG.

(d) CRG had acquired 1,000,000 ordinary shares of RM1.00 each representing 100% equity interest in CRBSB from the Company, for a total consideration of RM4,402,598 by way of issuance of 4,402,598 new ordinary shares of RM1.00 each at RM1.00 per share of CRG.

The total gains arising from the above disposals for (b) to (d) to the Company is RM17,735,000.

(ix) the Company fur ther subscribed 500,000 newly issued shares of RM1.00 each at par in SB Boutique Sdn. Bhd..

(x) the Company fur ther subscribed 264,527 newly issued shares of RM1.00 each at par in CRG.

102

Annual Repor t 2010



In the previous financial year,

(i) Kin Sheng Group Limited (“KSG”), a wholly owned subsidiary of the Company, had incorporated a wholly owned subsidiary in China known asGuangzhouBoniaFashionsChinaCo.Ltd..Theincorporationofthesubsidiarydoesnothaveanymaterial impacttotheGroupfinancialstatements.

(ii) KSG had acquired the equity interest in Guangzhou Jia Li Bao Leather Fashion Co. Ltd. (“GJLBLF”) for a total cash consideration of USD650,000 from Active World Pte. Ltd., another wholly owned subsidiary of the Company. The acquisition of GJLBLF does not have any material impact to the Group financial statements.

(iii) Active World Pte. Ltd., a wholly owned subsidiary, had incorporated two wholly owned subsidiaries in Singapore known as SCRL Pte. Ltd. and SBLS Pte. Ltd.. The incorporation of the subsidiaries does not have any material impact to the Group financial statements.

(iv) the Company had transferred its entire equity interest in Kin Sheng International Trading Co. Ltd. (“KSIT”) to KSG for a total cash consideration of HKD10,000.

(v) the Company had acquired entire equity interest in Banyan Sutera Sdn. Bhd. from minority shareholders for a total cash consideration of RM1.00.

(vi) a wholly owned subsidiary, Mcore Sdn. Bhd., had acquired 150,000 ordinary shares of RM1.00 each representing 30% equity interest in Apex Marble Sdn. Bhd. from a minority shareholder for a total cash consideration of RM1.00.

(vii) the Company incorporated a wholly owned subsidiary in Malaysia known as SCARPA Marketing Sdn. Bhd.. The incorporation of the subsidiary does not have any material impact to the Group financial statements.

(viii) the Company fur ther subscribed 1,500,001 and 1,500,001 newly issued shares of RM1.00 each at par in Long Bow Manufacturing Sdn. Bhd. and Banyan Sutera Sdn. Bhd. respectively.

(ix) the Company fur ther subscribed 2,150,001 newly issued shares of RM1.00 each at par in CB Holdings (Malaysia) Sdn. Bhd..

(x) the Company fur ther subscribed 2,250,001 newly issued shares of RM1.00 each at par in Eclat World Sdn. Bhd..

(xi) the Company fur ther subscribed 2,400,001 newly issued shares of RM1.00 each at par in Armani Context Sdn. Bhd..

(xii) the Company fur ther subscribed 9,999,999 newly issued shares of HKD1.00 each at par in KSG.

12. INVESTMENTS IN ASSOCIATES


Unquoted equity shares, at cost 115 236 - 236Share of post acquisition reserves, net of dividends received (3) (163) - -

112 73 - 236

103

Annual Repor t 2010

12. INVESTMENTS IN ASSOCIATES (cont’d)

The details of the associates are as follows:

Interest in equity held by the Company


Makabumi Sdn. Bhd. Malaysia 40 40 Dormant

^ Guangzhou Yong Yi Leather Fashions China 40 - Marketing and distribution of fashionable leather goods Co. Ltd.

BBA International Co. Ltd. Thailand - 49 Marketing and distribution of fashionable leather goods

^ In applying the equity method of accounting, the unaudited financial statements of Guangzhou Yong Yi Leather Fashion Co. Ltd. for the one (1) month ended 30 June 2010 have been used.

During the financial year :

(i) the Company had disposed off its entire equity interest in BBA International Co. Ltd. (“BBA”) to the existing shareholders and directors of BBA, for a total cash consideration of THB1,236,139 (equivalent to RM126,162). The gain and loss arising from the said disposal to the Group and the Company are RM52,761 and RM109,196 respectively.

(ii) Guangzhou Jia Li Bao Leather Fashion Co. Ltd. (‘JLB’), a wholly-owned subsidiary of the Company, has entered into an agreement with a third par ty, for a tenure of five (5) years with an option to renew for another five (5) years to expand its business in The People’s Republic of China. The said agreement has been carried out through a formation of an associate in The People’s Republic of China, Guangzhou Yong Yi Leather Fashion Co. Ltd. (‘Guangzhou Yong Yi’).

According to the agreement, JLB is required to contribute RMB1,200,000 representing 40% of the registered share capital of Guangzhou Yong Yi. JLB has contributed RMB240,000 (approximately RM115,000) as at the financial year end. The balance of RMB960,000 (approximately RM458,000) was contributed only after the financial year end.

The financial statements of the above associates are coterminous with those of the Group, except for BBA International Co. Ltd. which has a financial year end of 30 September 2009. In applying the equity method of accounting in the previous financial year, the unaudited financial statements of BBA International Co. Ltd. for the twelve (12) months ended 30 June 2009 have been used.

The summarised financial information of the associates are as follows:

2010 2009 RM’000 RM’000

Assets and liabilities

Current assets 278 1,350Non-current assets 5 37

Total assets 283 1,387

Current liabilities

Current liabilities 204 883

Total liabilities 204 883


(cont’d)

104

Annual Repor t 2010

12. INVESTMENTS IN ASSOCIATES (cont’d)

The summarised financial information of the associates are as follows: (cont’d)

2010 2009 RM’000 RM’000

Results

Revenue - 1,689Loss for the year (8) (309)

13. OTHER INVESTMENTS


At cost

Unquoted

Non-current asset

Club memberships 575 596 - -

Current asset

Subordinated bonds 3,000 3,000 3,000 3,000Less: Impairment loss (3,000) (3,000) (3,000) (3,000) - - - -

575 596 - -

The investments in unquoted subordinate bonds is in relation to the unsecured term loan amounting to RM 30,000,000 previously obtained from a financialinstitutionwhereaconditionisimposedontheCompanytosubscribeforthesubordinatedbondsissuedpursuanttothePrimaryCollateralisedLoan Obligations Transactions and shall be limited to 10% of the principal term loan amount. The subordinated bonds are unquoted and are held until thematurityofthetermloanon3June2009.Inthepreviousfinancialyear,thesaidtermloanwasfullysettledandanimpairmentlossonunquotedsubordinated bonds of RM3,000,000 has been recognised due to the default by obligors in the Primary Collateralised Loan Obligations Transactions.

14. DEFERRED TAX

(a) The deferred tax assets and liabilities are made up of the following:


Balance as at 1 July 2009/2008 (1,126) (1,214) 24 9Recognised in the income statements (Note 30) 562 88 33 15

Balance as at 30 June 2010/2009 (564) (1,126) 57 24


105

Annual Repor t 2010


(cont’d)

14. DEFERRED TAX (cont’d)

(b) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Presented after appropriate offsetting as follows:


Deferred tax assets, net (808) (1,361) - -Deferred tax liabilities, net 244 235 57 24

(564) (1,126) 57 24

Deferred tax liabilities of the Group

Property, plant and equipment Offsetting Total RM’000 RM’000 RM’000

At 1 July 2009 362 (127) 235Recognised in the income statements (56) 65 9

At 30 June 2010 306 (62) 244

At 1 July 2008 454 (138) 316Recognised in the income statements (92) 11 (81)

At 30 June 2009 362 (127) 235

Deferred tax assets of the Group

Unused tax losses and Other unabsorbed deductible capital temporary allowances differences Offsetting Total RM’000 RM’000 RM’000 RM’000

At 1 July 2009 233 1,255 (127) 1,361Recognised in the income statements 120 (738) 65 (553)

At 30 June 2010 353 517 (62) 808

At 1 July 2008 236 1,432 (138) 1,530Recognised in the income statements (3) (177) 11 (169)

At 30 June 2009 233 1,255 (127) 1,361

106

Annual Repor t 2010


15. DEFERRED TAX (cont’d)

(b) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: (cont’d)

Deferred tax liabilities of the Company

Other deductible temporary differences Offsetting Total RM’000 RM’000 RM’000 At 1 July 2009 24 - 24Recognised in the income statements 35 (2) 33

At 30 June 2010 59 (2) 57

At 1 July 2008 9 - 9Recognised in the income statements 15 - 15

At 30 June 2009 24 - 24

Deferred tax assets of the Company

Unabsorbed capital allowances Offsetting Total RM’000 RM’000 RM’000

At 1 July 2009 - - -Recognised in the income statements 2 (2) -

At 30 June 2010 2 (2) -

(c) The amount of temporary differences for which no deferred tax assets have been recognised in the balance sheets are as follows:

Group 2010 2009 RM’000 RM’000

Unused tax losses 5,143 6,866Unabsorbed capital allowances 752 471Other deductible temporary differences 1,128 282

7,023 7,619

Deferred tax assets of cer tain subsidiaries have not been recognised in respect of these items as it is not probable that taxable profit of the subsidiaries will be available against which the deductible temporary differences can be utilised.

107

Annual Repor t 2010


(cont’d)

15. INVENTORIES

Group 2010 2009 RM’000 RM’000

At cost

Raw materials 4,412 3,885Work-in-progress 954 989Finished goods 52,350 55,661Consumables 153 150

57,869 60,685

The inventories of the Group is net of inventories written off of RM75,000 (2009: RM187,000).

16. TRADE AND OTHER RECEIVABLES


Trade receivables

Third par ties 38,789 36,263 - -Less: Allowance for doubtful debts (108) (211) - -

38,681 36,052 - -

Other receivables, deposits and prepayments

Amounts owing by subsidiaries - - 31,946 40,991Amount owing by an associate 194 192 194 192Other receivables 4,744 2,113 3,678 -Deposits 8,448 10,583 10 10Prepayments 6,622 3,934 - -

20,008 16,822 35,828 41,193

Less: Allowance for doubtful debts - subsidiaries - - (7,394) (11,082) - associate (194) (192) (194) (192) - other receivables (3,786) (3,861) (3,678) -

16,028 12,769 24,562 29,919

54,709 48,821 24,562 29,919

108

Annual Repor t 2010


16. TRADE AND OTHER RECEIVABLES (cont’d)

(a) Trade receivables are non-interest bearing and the normal trade credit terms granted by the Group and by the Company range from 30 to 120 days.

(b) The allowance for doubtful debts for trade receivables of the Group is net of bad debts written off of RM217,000 (2009: RM1,136,000).

(c) Amounts owing by subsidiaries are unsecured, interest-free and receivable on demand in cash and cash equivalents.

(d) Amount owing by an associate is unsecured, interest-free and receivable on demand in cash and cash equivalents.

(e) In the previous financial year, the allowance for doubtful debts for other receivables, deposits and prepayments of the Group is net of bad debts written off of RM29,000.

(f) Information on the financial risk of trade and other receivables is disclosed in Note 36 to the financial statements.

(g) The currency exposure profile of trade and other receivables are as follows:


Ringgit Malaysia 40,221 32,500 20,747 21,763Brunei Dollar 48 46 - -Chinese Renminbi 889 2,118 - -Euro 496 428 - -Hong Kong Dollar 417 422 3,815 8,156Singapore Dollar 9,908 10,663 - -U.S. Dollar 2,692 2,644 - -Japanese Yen 38 - - -

54,709 48,821 24,562 29,919

17. CASH AND CASH EQUIVALENTS


Cash in hand and at banks 24,966 11,169 96 64Fixed deposits with licensed banks 7,709 5,944 - -Shor t term placements with licensed banks 5,200 13,430 - -Placements with licensed banks 32,142 13,595 10,148 -

70,017 44,138 10,244 64

109

Annual Repor t 2010


(cont’d)

17. CASH AND CASH EQUIVALENTS (cont’d)

(a) Included in the fixed deposits with licensed banks of the Group is an amount of RM1,190,000 (2009: RM1,203,000) pledged to licensed banks as securities for banking facilities granted to cer tain subsidiaries.

(b) Placements with licensed banks represent monies deposit into the fixed income fund, which are not restricted to fixed maturity date.

(c) Information on financial risks of cash and cash equivalents is disclosed in Note 36 to the financial statements.

(d) The currency exposure profile of cash and cash equivalents are as follows:


Ringgit Malaysia 52,330 31,183 10,244 64Chinese Renminbi 1,126 1,274 - -Hong Kong Dollar 1,381 583 - -Singapore Dollar 14,751 9,280 - -U.S. Dollar 300 1,753 - -Others 129 65 - -

70,017 44,138 10,244 64

(e) For the purpose of cash flow statements, cash and cash equivalents comprise the following as at the balance sheets date:


Cash and bank balances 24,966 11,169 96 64Fixed deposits with licensed banks 7,709 5,944 - -Shor t term placements with licensed banks 5,200 13,430 - -Placements with licensed banks 32,142 13,595 10,148 -Less: Bank overdrafts included in bank borrowings (Note 20) (1,622) (3,594) (17) (68)

68,395 40,544 10,227 (4)Less: Fixed deposits pledged to licensed banks (1,190) (1,203) - -

67,205 39,341 10,227 (4)

110

Annual Repor t 2010


18. SHARE CAPITAL

Group and Company 2010 2009 Number Number of shares of shares ’000 RM’000 ’000 RM’000

Ordinary shares of RM0.50 each:

Authorised 500,000 250,000 500,000 250,000

Issued and fully paid

Balance as at beginning and end of financial year 201,571 100,786 201,571 100,786

The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company and are entitled to one vote per share at meetings of the Company. All ordinary shares rank pari passu with regard to the Company’s residual assets.

19. RESERVES


Non-distributable

Share premium 476 476 476 476Exchange translation reserve 1,389 2,562 - -

1,865 3,038 476 476

Distributable

Retained earnings 101,153 73,653 26,564 10,403

103,018 76,691 27,040 10,879

(a) Exchange translation reserve

The exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form par t of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the repor ting entity or the foreign operation.

(b) Retained earnings

Effective 1 January 2008, the Company is given the option to make an irrevocable election to move to a single tier system or continue to use its tax credit under Section 108 of the Income Tax Act 1967 for the purpose of dividend distribution until the tax credit is fully utilised or latest by 31 December 2013.

111

Annual Repor t 2010


(cont’d)

19. RESERVES (cont’d) (b) Retained earnings (cont’d)

The Company has decided not to make this election and has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and balance in the tax exempt account to frank the payment of dividends amounting to RM23,374,000 out of its retained profits as at 30 June 2010 without incurring additional tax liabilities. Retained earnings not covered by tax credit amounted to RM3,190,000. The Company has tax exempt accounts amounting to approximately RM6,403,000 (2009: RM6,403,000) available for distribution of tax exempt dividends. Cer tain subsidiaries have tax exempt accounts amounting to approximately RM4,003,000 (2009: RM3,417,000) available for distribution of tax exempt dividends out of their respective retained profits.

20. BORROWINGS


Current liabilities

Secured Bank overdrafts 172 294 - 68Bankers’ acceptances 400 383 - -Hire-purchase and lease creditors 21 606 724 158 298Term loans 22 953 679 - -

2,131 2,080 158 366

Unsecured

Bank overdrafts 1,450 3,300 17 -Bankers’ acceptances 6,818 17,121 - -Trust receipts - 874 - -

8,268 21,295 17 -

Total 10,399 23,375 175 366


Secured

Hire-purchase and lease creditors 21 831 1,277 240 398Term loans 22 18,105 14,299 4,000 -

Total 18,936 15,576 4,240 398

112

Annual Repor t 2010

20. BORROWINGS (cont’d)


Total borrowings

Bank overdrafts 17 1,622 3,594 17 68Bankers’ acceptances 7,218 17,504 - -Hire-purchase and lease creditors 21 1,437 2,001 398 696Term loans 22 19,058 14,978 4,000 -Trust receipts - 874 - -

29,335 38,951 4,415 764

(a) Cer tain bank overdrafts and bankers’ acceptances of the Group and of the Company are secured by first fixed charges over cer tain freehold and long term leasehold land and buildings of the Company and its subsidiaries as disclosed in Notes 7, 8 and 9 to the financial statements.

(b) Trust receipt of the Group is secured by a corporate guarantee from the Company.

(c) The currency exposure profile of borrowings are as follows:


Ringgit Malaysia 27,215 35,838 4,415 764Singapore Dollar 2,120 3,113 - -

29,335 38,951 4,415 764

(d) Information on financial risks of borrowings is disclosed in Note 36 to the financial statements.

21. HIRE-PURCHASE AND LEASE CREDITORS


Minimum hire-purchase and lease payments: - not later than one year 672 817 171 322 - later than one year and not later than five years 880 1,384 248 419

1,552 2,201 419 741Less: Future interest charges (115) (200) (21) (45)

Present value of hire-purchase and lease payments 1,437 2,001 398 696


113

Annual Repor t 2010


(cont’d)

21. HIRE-PURCHASE AND LEASE CREDITORS (cont’d)


Repayable as follows:

Current liabilities

- not later than one year 606 724 158 298


- later than one year and not later than five years 831 1,277 240 398

1,437 2,001 398 696

22. TERM LOANS


Secured

Term loan I is repayable as follows: - 12 equal monthly instalments of RM48,652 each commencing January 2006 - 12 equal monthly instalments of RM50,216 each commencing January 2007 - 12 equal monthly instalments of RM52,585 each commencing January 2008 - 108 equal monthly instalments of RM54,461 each commencing January 2009 3,873 4,280 - -

Term loan II is repayable by 300 equal monthly instalments of SGD3,286 (RM7,885) each commencing January 2006 1,497 1,612 - -

Term loan III is repayable by 180 equal monthly instalments of RM26,307 each commencing October 2009 3,188 3,187 - -

Term loan IV is repayable as follows: - 24 equal monthly instalments of RM70,000 each commencing November 2010 - 36 equal monthly instalments of RM80,000 each commencing November 2012 - 36 equal monthly instalments of RM111,710 each commencing November 2015 6,500 5,899 - -

Term loan V is repayable by 95 equal monthly instalments of RM41,667 each and a final instalment of RM41,635 commencing October 2011 4,000 - 4,000 -

19,058 14,978 4,000 -

114

Annual Repor t 2010

22. TERM LOANS (cont’d)


Repayable as follows:

Current liabilities

- within one year 953 679 - -


- more than one year and less than five years 7,273 4,262 1,875 - - more than five years 10,832 10,037 2,125 -

18,105 14,299 4,000 -

19,058 14,978 4,000 -

Term loans I, II, III and IV are secured by means of legal charge over freehold land and buildings of subsidiaries and guaranteed by the Company.

Term loan V is secured by means of legal charge over the buildings on freehold land of the Company.

There are no fixed repricing periods for these loans.

23. TRADE AND OTHER PAYABLES


Trade payablesThird par ties 10,774 10,403 - -

Other payables, deposits and accruals

Amounts owing to subsidiaries - - 37 277Other payables 3,772 3,300 38 176Deposits 1,011 1,070 - -Accruals 11,122 8,191 3,614 1,046

15,905 12,561 3,689 1,499

26,679 22,964 3,689 1,499

(a) Trade payables are non-interest bearing and the normal credit terms granted to the Group range from 30 to 90 days.

(b) Amount owing to subsidiaries are unsecured, interest-free and repayable on demand in cash and cash equivalents.

(c) Information on the financial risks of trade and other payables is disclosed in Note 36 to the financial statements.


115

Annual Repor t 2010

23. TRADE AND OTHER PAYABLES (cont’d)

(d) The currency exposure profile of trade and other payables are as follows:


Ringgit Malaysia 17,841 16,215 3,689 1,499Chinese Renminbi 638 974 - -Euro - 1 - -Hong Kong Dollar 691 368 - -Singapore Dollar 7,317 5,016 - -U.S. Dollar 192 390 - -

26,679 22,964 3,689 1,499

24. COMMITMENTS

(a) Operating lease commitments

The Group had entered into non-cancellable lease arrangements for boutiques, offices and staff housing, resulting in future rental commitments. The Group has aggregate future minimum lease commitments as at the balance sheet as follows:

Group 2010 2009 RM’000 RM’000

Not later than one year 11,375 15,927Later than one year and not later than five years 10,923 12,797

22,298 28,724

Cer tain lease rental are subject to contingent rental which are determined based on a percentage of sales generated from boutiques.

(b) Capital commitments

Group 2010 2009 RM’000 RM’000

Approved and contracted for :

Investment in an associate (Note 12) 458 -

Proper ty, plant and equipment: - proper ties under construction 1,153 2,439 - others 1,849 7,242

3,460 9,681


(cont’d)

116

Annual Repor t 2010


25. CONTINGENT LIABILITIES

Company - Unsecured

As at 30 June 2010, the Company has given corporate guarantees amounting to RM119,620,000 (2009: RM122,000,000) to financial institutions for banking facilities granted to and utilised by cer tain subsidiaries.

2010 2009 RM’000 RM’000

The amount of banking facilities utilised by the subsidiaries as at the financial year end: - secured borrowings 16,591 16,535 - unsecured borrowings 9,549 22,535

26,140 39,070

The Directors are of the view that the chances of the financial institutions to call upon the corporate guarantees are remote. Accordingly, the Directors are of the view that the fair values of the above secured and unsecured corporate guarantees for banking facilities of subsidiaries are negligible.

26. REVENUE


Sale of goods 359,710 314,510 - -Rental income 389 381 1,907 2,089Dividend income from unquoted investments in subsidiaries (gross) (Note 29) - - 21,725 20,045

360,099 314,891 23,632 22,134

27. COST OF SALES

Group 2010 2009 RM’000 RM’000

Inventories sold 154,639 135,763

117

Annual Repor t 2010


(cont’d)

28. FINANCE COSTS


Bank charges 820 926 55 22Credit card charges 645 483 - -Genting World Card charges 16 11 - -Interest expense on: - bank guarantee 18 24 1 1 - bank overdrafts 62 152 - 1 - bankers’ acceptances 440 997 - - - hire-purchase and lease 93 138 24 37 - term loans 881 2,441 142 1,938 - trust receipts 17 69 - - - others 1 9 - -

2,993 5,250 222 1,999

29. PROFIT BEFORE TAX


Profit before tax is arrived at after charging:

Allowance for doubtful debts: - trade 89 132 - - - non-trade 3,788 21 4,174 2Amortisation of trademarks 10 3 - - -Amortisation of prepaid lease payments for land 9 3 7 - -Auditors’ remuneration: - Statutory - Auditors of the ultimate holding company: - current year 230 216 28 25 - over provision in prior years (1) - - -- Other auditors: - current year 203 152 - - - under provision in prior years 13 5 - - - Non statutory 5 22 5 5Bad debts written off 359 6 - -Depreciation of proper ty, plant and equipment 7 13,465 12,958 1,118 1,066Directors’ remuneration: - Fees - payable by the Company 306 306 306 306 - payable by subsidiaries 260 215 - - - Emoluments other than fees - payable by the Company 5,154 1,825 5,154 1,825 - payable by subsidiaries 92 1,230 - -Impairment loss on investments in subsidiaries 11 - - 1,715 5,700Impairment loss on subordinated bonds 13 - 3,000 - 3,000

118

Annual Repor t 2010


29. PROFIT BEFORE TAX (cont’d)


Profit before tax is arrived at after charging: (cont’d)

Inventories written off 15 75 187 - -Lease of office equipment 41 41 - -Loss on disposal of an associate 12 - - 110 -Loss on disposal of a subsidiary - - - 3Loss on disposal of proper ty, plant and equipment 47 - - -Proper ty, plant and equipment written off 7 863 300 - -Realised loss on foreign currency transactions 776 240 - -Rental of premises 23,744 20,156 - -Unrealised loss on foreign currency translations 111 - 118 -Waiver of debts owing from a subsidiary - - 2,700 -

And after crediting:

Allowance for doubtful debts no longer required 3,836 180 4,182 1,172Dividend income from unquoted investments in subsidiaries (gross) 26 - - 21,725 20,045Fair value adjustments on investment proper ties 8 - 184 - -Gain on disposal of prepaid lease payments for land - 59 - -Gain on disposal of proper ty, plant and equipment 136 282 - -Gain on disposal of subsidiaries 10 - 17,835 -Gain on disposal of an associate 12 53 - - -Interest income from: - fixed deposits with licensed banks 31 111 - - - shor t term placements with licensed banks 111 116 10 31 - subsidiaries - - - 302 - others 79 139 76 119Profit received from trust fund accounts 467 837 164 443Realised gain on foreign currency transactions 348 726 1 102Rental income 3 50 - -Reversal of impairment loss on proper ty, plant and equipment 7 - 41 - -Unrealised gain on foreign currency translations 3 103 - 720

119

Annual Repor t 2010


(cont’d)

30. TAX EXPENSE


Income tax expense based on profit for the financial year : Malaysian income tax 10,989 7,582 3,800 3,937 Foreign income tax 638 482 - -

11,627 8,064 3,800 3,937

(Over)/Under provision in prior years: Malaysian income tax (22) 292 (67) (95) Foreign income tax 85 9 - -

11,690 8,365 3,733 3,842

Deferred tax (Note 14) Relating to origination and reversal of temporary difference 456 573 27 4Under/(Over) provision in prior years 106 (485) 6 11

562 88 33 15

12,252 8,453 3,766 3,857

The Malaysian income tax is calculated at the statutory tax rate of 25% (2009: 25%) of the estimated taxable profits for the fiscal year.

Tax expense for other taxation authorities are calculated at the rates prevailing in those respective jurisdictions.

120

Annual Repor t 2010


30. TAX EXPENSE (cont’d)

The numerical reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rates of the Group and of the Company are as follows:


Profit before tax 45,455 29,515 25,974 7,650

Tax at Malaysian statutory tax rate of 25% (2009: 25%) 11,364 7,379 6,494 1,913

Tax effect in respect of: Non-allowable expenses 2,138 1,888 2,609 2,200 Depreciation on non-qualifying proper ty, plant and equipment 736 586 269 232 Lower tax rates in foreign jurisdiction (14) (226) - - Movements in deferred tax assets not recognised (149) 434 - - Non-taxable incomes (1,369) (1,199) (5,545) (404) Tax incentive and allowances (623) (224) - - Effect of changes in tax rate - (1) - -

12,083 8,637 3,827 3,941

Under/(Over) provision in prior years 169 (184) (61) (84)

Tax expense for the financial year 12,252 8,453 3,766 3,857

Tax savings of the Group are as follows:

Group 2010 2009 RM’000 RM’000

Arising from utilisation of previously unrecognised tax losses 197 141

The Group has unused tax losses and unabsorbed capital allowances of approximately RM5,143,000 (2009: RM6,866,000) and RM752,000 (2009: RM471,000) respectively.

121

Annual Repor t 2010


(cont’d)

31. EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share for the financial year is calculated by dividing the profit for the financial year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

2010 2009

Profit attributable to equity holders of the Company (RM’000) 33,547 20,607

Weighted average number of ordinary shares in issue (’000) 201,571 201,571

Basic earnings per ordinary share (sen) 16.64 10.22

32. DIVIDENDS

Group and Company 2010 2009 Gross Amount of Gross Amount of dividend dividend dividend dividend per share net of tax per share net of tax Sen RM’000 Sen RM’000

Dividends paid:

First and final dividend paid in respect of the financial year ended 30 June 2009/2008 2.5 3,779 2.5 3,779Special dividend paid in respect of the financial year ended 30 June 2009/2008 1.5 2,268 2.5 3,779

4.0 6,047 5.0 7,558

Aninterimtaxexemptdividendof5%or2.5senpershareamountingtoRM5,039,295inrespectofthefinancialyearwasdeclaredandpaidon18August2010.Thefinancialstatementsforthecurrentfinancialyeardonotreflectthisinterimdividend,whichwasdeclaredafterthebalancesheetdate.

Afinaldividendof4%or2.0senpershare,lesstaxof25%,amountingtoRM3,023,578andafinaltaxexemptdividendof1%or0.5senpershareamountingtoRM1,007,859inrespectofthecurrentfinancialyearhavebeenproposedbytheDirectorsafterthebalancesheetdateforshareholders’approvalattheforthcomingAnnualGeneralMeeting.Thefinancialstatementsforthecurrentfinancialyeardonotreflecttheseproposeddividends.Thesedividends,ifapprovedbymemberswillbeaccountedforasanappropriationofretainedprofitsinthefinancialyearending30June2011.

33. EMPLOYEE BENEFITS


Wages, salaries and bonuses 45,333 38,595 5,843 2,367Contributions to defined contribution plan 5,251 4,323 697 273Social security contributions 476 449 6 3Other benefits 6,931 6,040 92 47

57,991 49,407 6,638 2,690

122

Annual Repor t 2010


34. RELATED PARTY DISCLOSURES

(a) Identities of related par ties

Par ties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the par ty or exercise significant influence over the par ty in making financial and operating decisions, or vice versa, or where the Group and the par ty are subject to common control or common significant influence. Related par ties may be individuals or other entities.

The Company has controlling related par ty relationship with its direct and indirect subsidiaries.

Related par ties other than those disclosed elsewhere in the financial statements and their relationship with the Group are as follows:

Related party RelationshipCassardi International Co. Ltd. A company in which a major shareholder of VR Directions Sdn. Bhd., a

subsidiary, Boonnam Boonnamsap has substantial financial interests.

Long Bow Manufacturing (S) Pte. Ltd. A company in which a Director, who is also a major shareholder of the Company has substantial financial interests.

Bonia International Holdings Pte. Ltd. A company in which a Director, who is also a major shareholder of the Company has substantial financial interests.

PT Super Prima A company in which a Director of Banyan Sutera Sdn. Bhd., a subsidiary, Jonto Sunarso has substantial financial interests.

(b) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related par ties during the year :


Interest income received/receivable from subsidiaries - - - 302Rental income received/receivable from subsidiaries - - 1,907 2,089Gross dividends received from subsidiaries - - 21,725 20,045Management fees paid/payable to subsidiaries - - 740 842Purchases from Cassardi International Co. Ltd. 1,264 439 - -Royalty paid/payable to: - Cassardi International Co. Ltd. 581 612 - -- Bonia International Holdings Pte. Ltd. 1,375 1,398 - -Payment of permitted reimbursement expenses paid to PT Super Prima - 1,434 - -Sales of goods to: - PT Super Prima - 2,760 - - - an associate - BBA International Co. Ltd. - 1,379 - -Rental expense paid/payable to Long Bow Manufacturing (S) Pte. Ltd. 200 200 - -

The related par ty transactions described above were entered into in the normal course of business and have been established under negotiated and mutually agreed terms.

123

Annual Repor t 2010

34. RELATED PARTY DISCLOSURES (cont’d)

(c) Compensation of key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of

the entity, directly and indirectly, including any director (whether executive or otherwise) of the Group.

The remuneration of Directors and other key management personnel during the financial year was as follows:


Shor t term employee benefits 10,143 6,707 5,354 2,175Contributions to defined contribution plans 1,104 732 625 244

11,247 7,439 5,979 2,419

35. SEGMENT INFORMATION

(a) Business segments

The Group has three (3) repor table operating segments that are organised and managed separately according to the nature of products and services and specific exper tise, which requires different business and marketing strategies. The repor table segments are summarised as follows:

Retailing Designing, promoting and marketing of fashionable apparels, footwear, accessories and leather goods.

Manufacturing Manufacturing and marketing of fashionable leather goods.

Investment and Investment holding and rental and development of commercial proper ties.property development

The accounting policies of operating segments are the same as those described in the summary of significant accounting policies.

Segment performance is evaluated based on operating profit which, in cer tain respect as explained in the table below, is measured differently from operating profit in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third par ties.

Segment assets exclude tax assets and assets used primarily for corporate purposes.

Segment liabilities exclude tax liabilities, loans and borrowings that are managed under centralised treasury function.


(cont’d)

124

Annual Repor t 2010

35. SEGMENT INFORMATION (cont’d)

(a) Business segments (cont’d)

2010 Investment Manu- and property Consoli- Retailing facturing development Elimination dation RM’000 RM’000 RM’000 RM’000 RM’000

RevenueTotal Revenue 357,541 2,169 389 - 360,099Inter-segment sales - 15,711 31,791 (47,502) -

Revenue from external customers 357,541 17,880 32,180 (47,502) 360,099

ResultsSegment operating profit 54,100 259 26,651 (32,780) 48,230Share of loss of associates - - (3) - (3)Interest income 221Finance costs (2,993)

Profit before tax 45,455Tax expense (12,252)

Profit for the financial year 33,203

Other informationSegment assets 182,138 23,533 162,741 (105,695) 262,717Interest in associates - - 112 - 112Unallocated assets - Deferred tax assets 808 - Current tax assets 2,943

Total assets 266,580

Segment liabilities 25,519 6,219 5,192 (10,251) 26,679Unallocated liabilities - Deferred tax liabilities 244 - Current tax payables 4,169Unallocated corporate borrowings 29,335

Total liabilities 60,427

Capital expenditure 7,193 309 591 - 8,093Depreciation on proper ty, plant and equipment 10,724 870 1,871 - 13,465Amortisation of prepaid lease payments for land - 3 - - 3Amortisation of trademarks 3 - - - 3Non-cash expenses other than depreciation and amortisation 1,497 75 3,713 - 5,285


125

Annual Repor t 2010


(cont’d)


(a) Business segments (cont’d)

2009 Investment Manu- and property Consoli- Retailing facturing development Elimination dation RM’000 RM’000 RM’000 RM’000 RM’000

RevenueTotal revenue 313,153 1,357 381 - 314,891Inter-segment sales - 15,909 29,982 (45,891) -

Revenue from external customers 313,153 17,266 30,363 (45,891) 314,891

ResultsSegment operating profit 35,374 626 3,448 (4,896) 34,552Share of loss of associates - - (152) - (152)Interest income 365Finance costs (5,250)

Profit before tax 29,515Tax expense (8,453)

Profit for the financial year 21,062

Other informationSegment assets 176,550 24,497 116,539 (76,813) 240,773Interest in associates - - 73 - 73Unallocated assets - Deferred tax assets 1,361 - Current tax assets 2,555

Total assets 244,762

Segment liabilities 30,872 8,361 2,167 (18,436) 22,964Unallocated liabilities - Deferred tax liabilities 235 - Current tax payables 2,063Unallocated corporate borrowings 38,951

Total liabilities 64,213

Capital expenditure 11,146 9,977 5,252 - 26,375Depreciation on proper ty, plant and equipment 10,385 768 1,805 - 12,958Amortisation of prepaid lease payments for land - 7 - - 7Non-cash expenses other than depreciation and amortisation 231 340 3,075 - 3,646

126

Annual Repor t 2010


(b) Geographical segments

The Group operates mainly in Malaysia and Singapore. In determining the geographical segments of the Group, revenue is based on the geographical location of customers. Total assets and capital expenditure are based on the geographical location of assets. The composition of each geographical segment is as follows:

(i) Malaysia : Manufacturing, designing, promoting and marketing of fashionable apparel, footwear, accessories and leather goods, and development of commercial proper ties.

(ii) Singapore : Designing, promoting and marketing of fashionable apparels, footwear, accessories and leather goods.

The following table provides an analysis of the Group’s revenue, segment assets and capital expenditure:

Revenue from external customers by location of Segment assets by Capital expenditure by customers location of assets location of assets

2010 2009 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Malaysia 268,938 226,342 218,381 188,190 6,954 22,185Singapore 62,711 55,746 33,762 39,842 1,115 2,501Others 28,450 32,803 10,574 12,741 24 1,689

360,099 314,891 262,717 240,773 8,093 26,375

36. FINANCIAL INSTRUMENTS

(a) Financial risk management objective and policies

The Board of Directors recognises the impor tance of financial risk management in the overall management of the Group’s business. A sound risk management system will not only mitigate financial risk but will be able to create oppor tunities if risk elements are properly managed.

The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders while minimising potential adverse effects on the performance of the Group. Financial risk management is carried out through risk reviews, internal control systems and adherence to the Group’s financial risk management policies, set out as follows:

(i) Interest rate risk

The Group’s income and operating cash flow are substantially independent of changes in market interest rates. Interest rate exposure arises from the Group’s borrowings and fixed deposits and is managed through the use of fixed and floating rate debts and deposits. The Group does not use derivative financial instruments to hedge its risk.


127

Annual Repor t 2010


(cont’d)

36. FINANCIAL INSTRUMENTS (cont’d)

(a) Financial risk management objective and policies (cont’d)

(i) Interest rate risk (cont’d)

The following table set out the carrying amounts, the weighted average effective interest rate as at the balance sheets date and the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to interest rate risk:

Weighted average effective Within More than interest rate 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years Total Note % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GroupAt 30 June 2010

Fixed rateFixed deposits with licensed banks 17 0.47 7,709 - - - - - 7,709Hire-purchase and lease creditors 21 5.67 (606) (493) (290) (48) - - (1,437)

Floating rateShort term placements with licensed banks 17 2.17 5,200 - - - - - 5,200

Placements with licensed banks 17 2.33 32,142 - - - - - 32,142Bank overdrafts 20 7.50 (1,622) - - - - - (1,622)Bankers’ acceptances 20 3.41 (7,218) - - - - - (7,218)Term loans 22 5.49 (953) (1,532) (1,807) (1,924) (2,010) (10,832) (19,058)

GroupAt 30 June 2009

Fixed rateFixed deposits with licensed banks 17 0.73 5,944 - - - - - 5,944Hire-purchase and lease creditors 21 5.24 (724) (554) (438) (235) (50) - (2,001)

Floating rateShor t term placements with licensed banks 17 1.79 13,430 - - - - - 13,430Placements with licensed banks 17 2.14 13,595 - - - - - 13,595Bank overdrafts 20 5.91 (3,594) - - - - - (3,594)Bankers’ acceptances 20 4.74 (17,504) - - - - - (17,504)Trust receipts 20 5.71 (874) - - - - - (874)Term loans 22 5.97 (679) (688) (1,007) (1,208) (1,359) (10,037) (14,978)

128

Annual Repor t 2010




(i) Interest rate risk (cont’d)

Weighted average effective Within More than interest rate 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years Total Note % RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

CompanyAt 30 June 2010

Fixed rateHire-purchase and lease creditors 21 4.25 (158) (136) (104) - - - (398)

Floating ratePlacements with licensed banks 17 3.49 10,148 - - - - - 10,148Bank overdrafts 20 7.55 (17) - - - - - (17)Term loan 22 4.27 - (375) (500) (500) (500) (2,125) (4,000)

At 30 June 2009

Fixed rateHire-purchase and lease creditors 21 4.29 (298) (158) (142) (98) - - (696)

Floating rateBank overdrafts 20 7.05 (68) - - - - - (68)

(ii) Liquidity risk

The Group is actively managing its operating cash flow to ensure all commitments and funding needs are met. As par t of the overall liquidity management, it is the Group’s policy to ensure continuity in servicing its cash obligations in the future by way of forecasting its cash commitments and to maintain sufficient levels of cash or cash equivalents to meet its working capital requirements. In addition, the Group also maintains available banking facilities sufficient to meet its operational needs.

(iii) Credit risk

Credit risk, which is the risk of counter par ties defaulting, is controlled by the application of credit approvals, credit limits and monitoring procedures. Credit evaluations are performed on all customers requiring credit and strictly limiting the Group’s associations to par ties with high credit wor thiness. Trade receivables are monitored on an ongoing basis to ensure that the Group is exposed to minimal credit risk.

The Group has no significant concentration of credit risk as at the balance sheet date. The maximum exposures to credit risk are represented by the carrying amounts of the financial assets in the balance sheets.

129

Annual Repor t 2010



(iii) Credit risk (cont’d)

In respect of the deposits, cash and bank balances placed with major financial institutions in Malaysia and Singapore, the Directors believe that the possibility of non performance by these financial institutions is remote on the basis of their financial strength.

(iv) Foreign currency exchange risk

The Group is exposed to foreign currency exchange risk as a result of the Group’s transactions with foreign trade receivables and trade payables. The Group monitors the movement in foreign currency exchange rates closely to ensure their exposures are minimised.

(b) Fair values

The carrying amounts of the financial instruments of the Group and of the Company as at balance sheet date approximate their fair values except as set out below:

Group Company Carrying Fair Carrying Fair amount value amount value Note RM’000 RM’000 RM’000 RM’000

At 30 June 2010

Non-current unquoted investments # 13 575 575 - -Hire-purchase and lease creditors 21 (1,437) (1,386) (398) (377)Term loans 22 (19,058) (18,368) (4,000) (4,394)

At 30 June 2009

Non-current unquoted investments # 13 596 596 - -Hire-purchase and lease creditors 21 (2,001) (1,969) (696) (667)Term loans 22 (14,978) (14,287) - -

# TheDirectorsbelievethatthecarryingamountsofnon-currentunquotedinvestmentsarenotsignificantlydifferentfromthefairvalues.

The following methods and assumptions are used to determine the fair value of financial instruments:

(i) The carrying amounts of the financial assets and liabilities maturing within twelve months approximate their fair values due to the relatively shor t term maturity of these financial instruments issued.

(ii) The fair value of borrowings is estimated based on the current market rates offered for loans of the similar nature.


(cont’d)

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37. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

There are no significant events during the financial year other than changes made in the Group’s and Company’s investments in subsidiaries and associates as disclosed in Notes 11 and 12 respectively.

38. SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

(a) On 12 August 2010, the Company disposed off 125,000 ordinary shares of RM1.00 each representing 25% equity interest in New Series Sdn. Bhd. (“NSSB”), a wholly-owned subsidiary of the Company, to the existing shareholder and director of VRDSB and DDSB, for a total cash consideration of RM125,000. The remaining 75% equity interest in NSSB has been transferred to DDSB. The consideration for the transfer is at par value of the shares amounted RM375,000. The par tial disposal does not have any material impact to the Group’s financial statements.

(b) On 9 September 2010, the Company entered into a Share Sale Agreement (“SSA”) with third par ties to acquire 70% equity interest in Jeco (Pte) Limited (“Jeco”) for an aggregate total cash consideration of SGD28,000,000 (approximately RM65,000,000).

Jeco was incorporated in Singapore under the Companies Act (Cap. 50) of Singapore as a limited private company on 2 October 1972. The principal activities of Jeco are the management and exploitation of intellectual proper ty relating to bags, leather goods, accessories, and related products in Singapore and the Asia Pacific region.

Jeco has a wholly owned subsidiary namely Lianbee-Jeco Pte. Ltd. (“LJ”), which in turn wholly owns Lianbee-Jeco (M) Sdn. Bhd. (“LBM”). LJ is principally engaged in the business of retailing, impor ting and expor ting leather goods and general merchandise while LBM is principally engaged in trading in leather goods and footwear.

The acquisition is in the due diligence process as at the date of approving this financial statements.

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Annual Repor t 2010

ANALYSIS OF SHAREHOLDINGS as at 13 October 2010

ANALYSIS OF SHAREHOLDINGS

Authorised Share Capital: RM500,000,000Issued Share Capital: 201,571,850 Ordinary Shares Paid-up Share Capital: RM100,785,925Class of Shares: Ordinary Shares of RM0.50 eachVoting Right: 1 Vote per Ordinary Share

No. of Size of Shareholdings Shareholders % No. of Shares %

Less than 100 39 2.48 1,486 *100 to 1,000 231 14.73 179,586 0.091,001 to 10,000 987 62.95 4,566,972 2.2710,001 to 100,000 256 16.33 7,744,442 3.84100,001 to less than 5% of issued shares 52 3.32 72,593,274 36.015% of issued shares and above 3 0.19 116,486,090 57.79

Total 1,568 100.00 201,571,850 100.00

* Negligible

SUBSTANTIAL SHAREHOLDERSas per the Register of Substantial Shareholder (Section 69L of the Companies Act 1965)

Name No. of Shares %

Permodalan Nasional Berhad 66,489,098 32.98Bonia Holdings Sdn Bhd 49,996,992 24.80

DIRECTORS’ SHAREHOLDINGS

Shareholdings Name Direct % Indirect %

Chiang Sang Sem 2,367,000 1.17 62,109,226^^^ 30.81Chiang Fong Yee (Alternate Director to Mr Chiang Sang Sem) 856,300 0.42 10,000^ *Chiang Heng Kieng - - 69,000^ 0.03Chiang Sang Bon 305,000 0.15 59,000^^ 0.03Chong Chin Look 500,000 0.25 - -Chiang Fong Tat 599,000 0.30 25,000^ 0.01Datuk Ng Peng Hong @ Ng Peng Hay - - - -Dato’ Shahbudin Bin Imam Mohamad - - - -Lim Fong Boon - - - -Chong Sai Sin - - - -

^^^ Deemed interested through his substantial shareholdings in Bonia Holdings Sdn Bhd, Kontrak Kosmomaz Sdn Bhd, SGP Investment Pte Ltd, Golden Shine Finance Limited and through his spouse and children.

^^ Deemed interested through his spouse and child.^ Deemed interested through his spouse.* Negligible

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Annual Repor t 2010

ANALYSIS OF SHAREHOLDINGS as at 13 October 2010(cont’d)

THIRTY LARGEST SHAREHOLDERS as per the Record of Depositors

No. Name No. of Shares %

1. PERMODALAN NASIONAL BERHAD 66,489,098 32.98 2. BONIA HOLDINGS SDN BHD 31,351,992 15.55 3. AMSEC NOMINEES (TEMPATAN) SDN BHD 18,645,000 9.25 [Beneficiar y: AmBank (M) Berhad for Bonia Holdings Sdn Bhd] 4. HSBC NOMINEES (ASING) SDN BHD 9,897,600 4.91 [Beneficiar y: Exempt An for HSBC Private Bank (Suisse) S.A. (Spore TST Accl)] 5. CIMSEC NOMINEES (ASING) SDN BHD 8,200,400 4.07 [Beneficiar y: Exempt An for CIMB Securities (Singapore) Pte Ltd (Retail Clients)] 6. KONTRAK KOSMOMAZ SDN BHD 5,583,434 2.77 7. CITIGROUP NOMINEES (ASING) SDN BHD 5,000,000 2.48 [Beneficiar y: GSCO for Truffle Hound Global Value LLC] 8. LEE ENG CHENG 4,845,000 2.40 9. SUDISAMA SDN BHD 4,702,600 2.33 10. LIM KWEE LIAN 4,326,200 2.15 11. AVON MORE ALPS SDN BHD 4,044,200 2.01 12. HLB NOMINEES (ASING) SDN BHD 3,096,000 1.54 [Beneficiar y: Pledged Securities Account for SGP Investment Pte Ltd] 13. NIK HATMAH BINTI NIK HASSAN 2,835,000 1.41 14. AMANAHRAYA TRUSTEES BERHAD 2,772,700 1.38 [Beneficiar y: Public Dividend Select Fund ] 15. CHIANG SANG SEM 2,367,000 1.17 16. HLB NOMINEES (ASING) SDN BHD 1,200,000 0.60 [Beneficiar y: Pledged Securities Account for Golden Shine Finance Limited] 17. OSK NOMINEES (ASING) SDN BHD 1,200,000 0.60 [Beneficiar y: Kim Eng Securities Pte Ltd for Exquisite Holdings Limited] 18. TA NOMINEES (TEMPATAN) SDN BHD 1,019,000 0.50 [Beneficiar y: Pledged Securities Account for Lim Choong Kong] 19. MAYBAN NOMINEES (ASING) SDN BHD 785,000 0.39 [Beneficiar y: DBS Bank for Albizia Asean Opportunities Fund] 20. CHONG SEE MOI 777,500 0.38 21. CHIANG FONG YEE 729,000 0.36 22. BHLB TRUSTEE BERHAD 633,100 0.31 [Beneficiar y: Exempted - Trust Account for EPF Investment for Member Savings Scheme] 23. CHIANG FONG TAT 599,000 0.30 24. CHIANG BOON TIAN 588,000 0.29 25. NISSIN SDN BHD 543,546 0.27 26. CHONG CHIN LOOK 500,000 0.25 27. CHIANG SANG YAU 417,898 0.21 28. KWAN YOONG YU 413,898 0.20 29. MILAN QUEST SDN BHD 400,000 0.20 30. CHIANG HENG PANG 354,000 0.18

Total 184,316,166 91.44

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Age of Land Net Book Date Existing Building Area Value ofLocation of Property Description Tenure Use (Year) (Sq Ft) RM’000 Acquisition

ATALY INDUSTRIES SDN BHD GRN 55091 Lot No. 20501 2-storey Freehold Hostel 28 1,540 99 21/05/1992No. 29, Jalan Budiman Terrace House Taman Midah, Cheras 56000 Kuala Lumpur

BONIA CORPORATION BERHAD GRN 50053 Lot No. 50644 6-storey Office Freehold Office cum 12 24,374 15,713 01/12/1998No. 62, Jalan Kilang Midah cum Warehouse Warehouse Taman Midah, Cheras 56000 Kuala Lumpur

CB HOLDINGS (MALAYSIA) SDN BHD QT No. 85228 Lot No. 2794 Shopping Freehold Vacant 16 432 - 17/05/1993UG-51, Upper Ground Floor Complex Lot Plaza Phoenix Batu 6, Jalan Cheras 56000 Kuala Lumpur PN No. 1339 Lot No. 385 Shopping Leasehold Office 24 1,806 1,702 29/08/1994Unit 2B, 3.04 & 3.05 Complex Lot (Expiring KOMTAR Shopping Complex in 2084) 10000 Pulau Pinang PN No. 1339 Lot No. 385 Office Lot Leasehold Vacant 24 1,134 291 31/12/1994Unit C2, 4.03B (Expiring KOMTAR Shopping Complex in 2092) 10000 Pulau Pinang

LONG BOW MANUFACTURING SDN BHD Lot No. PT 428 HS(M) 387 Industrial Land Leasehold Office cum 24 135,100 2,975 07/02/1989Lot 18, Merlimau Industrial Estate and Building (Expiring in Factory Phase ll 77300 Merlimau 2085) Melaka Lot No. PT 683 HS(D) 1499 Single-Storey Freehold Hostel 18 3,199 71 12/06/1992No. 1483, Jalan Jasin Semi-detached Tmn Bunga Muhibbah House 77300 Merlimau, Melaka GRN 57103 Lot No. 21085 6-storey Freehold R&D Centre 2 13,713 10,533 31/01/2008No. 60, Jalan Kilang Midah Industrial cum Taman Midah, Cheras Buidling Warehouse 56000 Kuala Lumpur

LIST OF PROPERTIESheld by the Group as at 30 June 2010

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Annual Repor t 2010


LUXURY PARADE SDN BHD HS(D) No. 72947 PT No. 3865 6-storey Leasehold Rented Out 12 1,920 1,400 10/01/1995No. 3, Jalan 8/146, The Metro Centre Shop-lot (Expiring (Par tially) Bandar Tasik Selatan in 2087) 57000 Sungai Besi Kuala Lumpur HS(D) No. 72948 PT No. 3866 6-storey Leasehold Rented Out 12 1,920 1,400 10/01/1995No. 5, Jalan 8/146, The Metro Centre Shop-lot (Expiring (Par tially) Bandar Tasik Selatan in 2087) 57000 Sungai Besi Kuala Lumpur HS(D) No. 59989-59990 Shopping Freehold Rented Out 12 1,020 1,220 16/01/1995PT 12201-12202 Complex Lot Unit No. G61 The Summit Persiaran Kewajipan USJ 1, UEP-Subang Jaya 46700 Subang Jaya Selangor Darul Eshan HS(D) No. 182 PT SEK 4 Shopping Freehold Rented Out 12 1,038 778 19/03/1995Unit No. G0.07, Plaza Bukit Mer tajam Complex Lot 566, Jalan Arumugam Pillai 14000 Bukit Mer tajam HS(D) No. 55098 PT 4 Shopping Leasehold Rented Out 13 1,098 770 26/05/1995Unit No. 1.48, Level 3 Complex Lot (Expiring Plaza Uncang Emas in 2086) No. 85, Jalan Loke Yew 55200 Kuala Lumpur Geran 61152 Lot 39892 Club House Freehold Rented Out 4 7,599 3,000 03/02/2005The Club HouseAngkasa Condominium (Par tially) No. 5, Jalan Puncak Gading Taman Connaught, Cheras 56000 Kuala Lumpur 154 Units of Parking Bay Condominium Freehold Rented Out N.A - 1,379 20/06/2008Angkasa Condominium Covered & (Par tially) Mukim of Petaling Uncovered District of Wilayah Persekutuan Car Parks Wilayah Persekutuan HS(D) No. 102556 PT8200 Office Lot Freehold Office cum 5 28,540 6,506 06/01/20053rd, 4th, 5th & 6th Floor, Asmah Tower Warehouse Jalan Cerdas Taman Connaught, Cheras 56000 Kuala Lumpur

LIST OF PROPERTIESheld by the Group as at 30 June 2010(cont’d)

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Annual Repor t 2010

LIST OF PROPERTIESheld by the Group as at 30 June 2010

(cont’d)


LUXURY PARADE SDN BHD (cont’d) HS(D) No 76874-76878 PT 92 - 96 Shopping Leasehold Under N.A. 524 - 23/05/1996Unit No L1-046 Plaza Rakyat Complex Lot (Expiring Construction Pudu, Kuala Lumpur in 2081) PN(WP) 10228 Lot No. 31627 3-storey Leasehold Under N.A. 13,595 4,085 15/01/2008Mukim of Petaling Detached (Expiring Construction Daerah Kuala Lumpur Factory in 2085) Negeri Wilayah Persekutuan Geran 61148, Lot 39893 8 unit Freehold Rented Out 3 6,566 2,180 13/03/2009Mukim of Petaling, District of Kuala Lumpur Shop Lots (Par tially) A-0-1, A-0-2, A-0-7, A-0-8, B-0-5, B-0-6, B-0-7 & B-0-8 Puncak Banyan Apar tment Jalan 3/118B, Taman Sri Cendekia 56000 Kuala Lumpur

ACTIVE WORLD PTE LTD Mukim 25 Lot No.U18781L Condominium Freehold Hostel 6 1,463 1,839 05/09/2005158, Haig Road #16-01, Haig Cour t Singapore 438794

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1. To lay and discuss on the Directors’ Repor t and the Audited Financial Statements for the financial year ended 30 June 2010 together with the Auditors’ Repor t thereon.

2. To declare a Final Dividend of 4% less 25% Income Tax and a Final Tax-Exempt Dividend of 1% for the financial

year ended 30 June 2010. 3. To approve the payment of Directors’ fees for the financial year ended 30 June 2010. 4. To re-elect the following Directors who retire pursuant to Ar ticle 96 of the Ar ticles of Association of the

Company: (i) Mr Chiang Heng Kieng (ii) Mr Chiang Sang Bon (iii) Mr Chiang Fong Tat 5. To re-appoint Messrs BDO as Auditors of the Company and to authorise the Directors to fix their

remuneration.

To consider and if thought fit, to pass the following resolutions with or without amendments or modifications: 6. Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965 “THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant

governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company at any time and upon such terms and conditions, for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued in any one financial year of the Company does not exceed ten per centum (10%) of the issued share capital of the Company for the time being and that the Directors be and are hereby also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

7. Special Resolution-Proposed Amendment to the Articles of Association of the Company “THAT the following existing Ar ticle 138 of the Ar ticles of Association of the Company be deleted in its

entirely and be replaced with the following:-

NOTICE OF ANNUAL GENERAL MEETING

To refer to ExplanatoryNote 1

Ordinary Resolution 1


Ordinary Resolution 3Ordinary Resolution 4Ordinary Resolution 5



Special Resolution

NOTICE IS HEREBY GIVEN THAT the Nineteenth Annual General Meeting of the Company will be held at Langkawi Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Friday, 3 December 2010 at 11.30 a.m. for the transaction of the following businesses:

Existing Article 138 - Payment by post

Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the member or person entitled thereto, or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such persons and such address as such persons may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or persons entitled to the share in consequence

Proposed New Article 138 - Payment of dividends Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address or by direct electronic transfer to the bank account of the holder as appear in the Record of Depositors or Register of the Members or person entitled thereto, or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and such address as such person may in writing direct. Every such cheque or warrant shall

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Annual Repor t 2010

NOTICE OF ANNUAL GENERAL MEETING(cont’d)

8. To transact any other ordinary business of the Company for which due notice shall have been given.

NOTICE OF DIVIDEND PAYMENT

NOTICE IS HEREBY GIVEN THAT, subject to the approval of the shareholders of the Company at the Nineteenth Annual General Meeting, a Final Dividend of 4% less 25% Income Tax and a Final Tax-Exempt Dividend of 1% for the financial year ended 30 June 2010 will be paid on 23 December 2010 to the Depositors whose names appear in the Record of Depositors at the close of business on 15 December 2010.

A Depositor shall qualify for entitlement to the dividends only in respect of:

(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 15 December 2010 in respect of ordinary transfers; and

(b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board

TING OI LINGCHOK KWEE WAHTAN KEAN WAICompany Secretaries

Petaling Jaya11 November 2010

of the death or bankruptcy of the holder may direct and payment of the cheque, if purpor ting to be endorsed, shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby.

be made payable to the order of the person to whom it is sent or person entitled to the share in consequence of the death or bankruptcy of the holder may direct and the payment of any such cheque or warrant, if purpor ting to be endorsed, or direct electronic transfer shall operate as a good discharge to the Company in respect of the dividend represented thereby notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged or there is discrepancy given by the Member in the details of bank account(s). Every such cheque or warrant shall be sent or by electronic transfer at the risk of the person entitled to the money represented thereby. Where the shareholders have provided to the Central Depository the relevant contact details for purposes of electronic notifications, the Company shall notify them electronically once the Company has paid the cash dividends out of its accounts. All dividends unclaimed shall be dealt with by the Company in accordance with the Unclaimed Money Act, 1965.

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Annual Repor t 2010

NOTICE OF ANNUAL GENERAL MEETING(cont’d)

Notes:

1. A member is entitled to appoint a proxy (or in the case of corporation, to appoint a representative) to attend and vote on his place. A proxy need not be a member of the Company.

2. The Proxy Form must be signed by the appointer or his attorney duly authorized in writing or in the case of a corporation, executed under its common seal or attorney duly authorised in that behalf.

3. All the Proxy Forms must be deposited at the Company’s Registered Office situated at Lot 10, The Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the Meeting or at any adjournment thereof.

Explanatory Notes:

Item 1 of the AgendaTo lay and discuss on the Directors’ Report and the Audited Financial Statements for the financial year ended 30 June 2010 together with the Auditors’ Report thereon

This item is meant for discussion only as the provision of Section 169 (1) of the Companies Act 1965 does not require shareholders’ approval for the Audited Financial Statements. Henceforth, this item is not put forward for voting.

Item 6 of the AgendaAuthority to Issue Shares pursuant to Section 132D of the Companies Act 1965

The proposed Ordinary Resolution 7 is for the purpose of granting a general mandate for renewal (“General Mandate”) and empowering the Directors of the Company, pursuant to Section 132D of the Companies Act, 1965 to issue new shares in the Company from time to time provided that aggregate number of shares issued pursuant to the General Mandate does not exceed ten per centum (10%) of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delay and cost involved in convening a general meeting to approve such an issue of shares. This authority will, unless revoked or varied by the Company at a general meeting, expire at the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting is required by law to be held, whichever is the earlier.

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last annual general meeting held on 25 November 2009 and which will lapse at the conclusion of the forthcoming annual general meeting.

The General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisitions.

Item 7 of the AgendaProposed Amendment to the Articles of Association of the Company

The proposed Special Resolution, if passed, will empower the Directors of the Company to take such steps that are necessary to amend the Company’s Articles of Association to be in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to the implementation of e-Dividend.

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Annual Repor t 2010

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

1. The Directors who are standing for re-election at the Nineteenth Annual General Meeting

The Directors standing for re-election pursuant to Ar ticle 96 of the Ar ticles of Association of the Company are:

(i) Mr Chiang Heng Kieng(ii) Mr Chiang Sang Bon(iii) Mr Chiang Fong Tat

The profiles of the above Directors are set out in the section entitled “Profile of Directors” on pages 16 to 20. Their respective shareholdings in the Company are set out in the section entitled “Analysis of Shareholdings” on page 132.

2. The Details of Attendance of the Directors at Board Meetings

The details of attendance of each Director at the Board Meetings are set out on page 20.

3. The Date, Time and Place of the Annual General Meeting

The Nineteenth Annual General Meeting of the Company will be held as follows:

Date Time Place

3 December 2010 11.30 a.m. Langkawi Room, Bukit Jalil Golf & Country Resor t, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur Friday

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Annual Repor t 2010

No. Resolutions For Against

1. Declaration of Final Dividends

2. Approval for the payment of Directors’ fees

3. Re-election of Mr Chiang Heng Kieng as Director

4. Re-election of Mr Chiang Sang Bon as Director

5. Re-election of Mr Chiang Fong Tat as Director

6. Re-appointment of Auditors, Messrs BDO

7. Authority to Issue Shares

8. Special Resolution – Amendment to Ar ticles of Association

PROXY FORM

Please indicate with a ( √ ) in the appropriate box against the resolution how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his discretion.

Date:

I/We (FULL NAME IN BLOCK LETTERS)

of

being a member/members of BONIA CORPORATION BERHAD hereby appoint

(I/C No.: ) of

(ADDRESS)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf, at the Nineteenth Annual General Meeting of the Company to be held at Langkawi Room, Bukit Jalil Golf & Country Resor t, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Friday, 3 December 2010 at 11.30 a.m. or at any adjournment thereof, as indicated below:-

Signature/Seal of the Shareholder :

Notes:

1. A member is entitled to appoint a proxy (or in the case of a corporation, to appoint a representative) to attend and vote in his place. A proxy need not be a member of the Company.

2. The Proxy Form must be signed by the appointor or his attorney duly authorised in writing or in the case of a corporation, executed under its common seal or attorney duly authorised in that behalf.

3. All the Proxy Forms must be deposited at the Company’s Registered Office situated at Lot 10, The Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the Meeting or at any adjournment thereof.

No. of Shares CDS Account No.

Annual Repor t 2010

THE COMPANY SECRETARYBONIA CORPORATION BERHAD (223934-T)

Lot 10, The Highway CentreJalan 51/20546050 Petaling JayaSelangor Darul Ehsan

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