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PW CONSOLIDATED BHD (420049-H)

Annual Report 2009

1PW CONSOLIDATED BHD. (420049-H)Annual Repor t 20 09

Contents

Corporate Information

Corporate Structure

Financial Highlights

Directors’ Profile

Chairman’s Statement

Corporate Governance Statement

Statement on Internal Control

Audit Committee Report

Directors’ Report

Directors’ Statement

Statutory Declaration

Independent Auditors’ Report To The Members

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement Of Changes In Equity

Consolidated Cash Flow Statement

Balance Sheet

Income Statement

Statement Of Changes In Equity

Cash Flow Statement

Notes To The Financial Statements

Shareholdings Statistics

Notice of Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Additional Compliance Information

List Of Material Properties Of The Group

Proxy Form

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11 - 12

13 - 15

16 - 19

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32 - 67

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2 PW CONSOLIDATED BHD. (420049-H) Annual Repor t 20 09

SECRETARY CH’NG LAY HOON

AUDIT COMMITTEE ONG KIM NAM (CHAIRMAN)CHEE WAI HONG (MEMBER)SHAMSUDDIN BIN MOHD SALLEH (MEMBER)

REGISTERED OFFICE

SUITE 12-A LEVEL 12MENARA NORTHAMNO. 55 JALAN SULTAN AHMAD SHAH10050 PENANGTEL : 04 - 228 0511FAX : 04 - 228 0518

BUSINESS ADDRESS PLOT 127, JALAN PERINDUSTRIAN BUKIT MINYAK 7TAMAN PERINDUSTRIAN BUKIT MINYAK14100 BUKIT MERTAJAMSEBERANG PERAI TENGAH, PENANG

SHARE REGISTRAR SYMPHONY SHARE REGISTRARS SDN. BHD. LEVEL 6, SYMPHONY HOUSEBLOCK D13, PUSAT DAGANGAN DANA 1JALAN PJU 1A/4647301 PETALING JAYASELANGORTEL : 603 - 7841 8000FAX : 603 - 7841 8008

AUDITORS

GRANT THORNTON CHARTERED ACCOUNTANTS

PRINCIPAL BANKERS

CIMB BANK BERHADALLIANCE BANK MALAYSIA BERHADRHB BANK BERHADEON BANK BERHADUNITED OVERSEAS BANK (MALAYSIA) BHD.OCBC BANK (MALAYSIA) BERHAD BANGKOK BANK BERHADMALAYAN BANKING BERHAD AGROBANKPUBLIC BANK BERHADBANK KERJASAMA RAKYAT MALAYSIA BERHAD SOLICITORS

SALINA, LIM KIM CHUAN & CO.GAN TEIK CHEE & HOLOH HAN MENG & CO.

STOCK EXCHANGE LISTING

MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHADSTOCK NAME : PWSTOCK CODE : 7134

DATO’ SIAH GIM ENG (EXECUTIVE CHAIRMAN & MANAGING DIRECTOR)

DATIN LAW HOOI LEAN (DEPUTY MANAGING DIRECTOR)

BOAY GOEY GNOH (EXECUTIVE DIRECTOR)

CHEE WAI HONG (NON-INDEPENDENT NON-EXECUTIVE DIRECTOR)

ONG KIM NAM (INDEPENDENT NON-EXECUTIVE DIRECTOR)

SHAMSUDDIN BIN MOHD SALLEH (INDEPENDENT NON-EXECUTIVE DIRECTOR)

DIRECTORS

Corporate Information


Corporate StructureAs At 7 May 2010

PW CONSOLIDATED BHD.(420049-H)

PINWEE BREEDER FARMS SDN. BHD.

(628503-W)

PW NUTRIFEED SDN. BHD.

(37629-M)

PW LIVESTOCK (M) SDN. BHD.

(613817-M)

PINWEE DUCK FARMS SDN. BHD.

(752833-H)

PW NUTRIFARM CORPORATION SDN. BHD.

(149054-P)

EVERAY AGRITECHSDN. BHD. (451057-H)

PINWEE BREEDER FARM (MALACCA) SDN. BHD. (559277-W)

PW BREEDER FARM(TAIPING) SDN. BHD. (346545-D)

PW NUTRIFARM VENTURE SDN. BHD. (208636-P)

PW NUTRI PROCESSING SDN. BHD. (668698-A)

PW TYRES & AUTO SERVICE SDN. BHD.

(750417-M)

PW PROPERTIES SDN. BHD.

(736271-D)

PINWEE LAYER FARM SDN. BHD.

(661667-D)

PINWEE FOOD PROCESSING SDN. BHD.

(541912-X)

PINWEE CHICKEN TRADING SDN. BHD.

(594854-W)

100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100%

80%20%

100% 100%


Five Years Group Financial Highlights

Revenue (RM ’000) Shareholders' fund (RM ’000)

Profit after taxation & Minority interest (RM ’000)Profit before taxation (RM ’000)

2009

2009

2009

2009

2009

2009

Net assets per share (RM) Earnings per share(sen)

FINANCIAL YEAR ENDED

RevenueShareholders’ fundProfit before taxationProfit after taxation & minority interestNet assets per share (RM)Earnings per share (sen)

(Restated)December

2005

263,997,49899,173,59911,278,836

6,136,537 1.72

10.07

December 2006

279,535,16999,568,351

6,596,1554,188,691

1.74 7.00

December2007

323,070,343129,567,365

6,888,6425,239,187

2.278.76

December2008

344,427,978127,596,569

1,945,6141,018,091

2.121.70

December2009

272,490,369127,707,859

685,585111,290

2.100.19


Directors’ Profile

DATO’ SIAH GIM ENG, a Malaysian, aged 51, the co-founder of the Company, was appointed as the Executive Chairman and Managing

Director of the Company on 12 May 2001. He is the driving force in the formulation and implementation of the Group’s corporate strategy.

With more than 30 years of experience in the feedmilling and poultry farming industry, his entrepreneurial skills have steered from a small

establishment to become of the leading feedmill and farming group in Northern Region of Malaysia. He is the husband of Madam Law

Hooi Lean, the Deputy Managing Director and the major shareholder of the company. He has attended all the five (5) Board Meetings of

the Company held during the financial year ended 31 December 2009.

DATIN LAW HOOI LEAN, a Malaysian, aged 49, holds a Master Degree in Business Administration from University of Ballarat, Australia.

She is a member of New Zealand Institute of Management. She is also a Fellow of The Society for Professional Management, United

Kingdom, a Certified Professional Manager from The Society of Business Practitioners (SBP), United Kingdom. She was appointed as the

Deputy Managing Director of the Company on 12 May 2001. She is primarily involved in the business development process, strategic

planning, providing directions and overseeing the administration of finance function of the Group. With more than 20 years experience

in the area of financial accounting and company management, she has been instrumental in ensuring the smooth running of the day-

to-day operations of the Company. She is the wife of Dato’ Siah Gim Eng, the Executive Chairman and Managing Director and the major

shareholder of the Company. She has attended all the five (5) Board Meetings of the Company held during the financial year ended 31

December 2009.

BOAY GOEY GNOH, a Malaysian, aged 42, Bachelor of Commerce (Hons) in Accounting. She joined the Group in 1998 and was appointed

as an Executive Director of the Company on 22 June 2009. She has more than 10 years experience in the field of accounting and finance.

Prior to her appointment in the Group, she was attached to Tongkah Mouldings Technologies Sdn Bhd and Sony Electronic (M) Sdn Bhd.

She has attended two (2) Board Meetings of the Company held after her appointment as an Executive Director.

ALLEN CHEE WAI HONG, a Malaysian, 37, was appointed as an Executive Director of the Company on 12 May 2001 and was re-designated

to Non-Independent Non-Executive Director on 22 January 2009. A Chartered Accountant by profession, he is a Fellow of the Association

of Chartered Certified Accountants of United Kingdom and a Member of the Malaysian Institute of Accountants. Mr Allen Chee holds an

LL.B from University of London and a Masters Degree in Business Administration from University Utara Malaysia. Prior to this Company he

was attached to BDO Binder Malaysia. He is currently the Managing Director of a professional advisory and services firm in Penang and

also sits on the Board of several private limited companies.

Mr. Allen Chee has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2009. He

is a member of the Audit Committee, the Remuneration Committee, Nominating Committee and the Option Committee.

ONG KIM NAM, a Malaysian, aged 54, was appointed as an Independent Non-Executive Director of the Company on 12 May 2001. A

Chartered Accountant by profession, he is a member of Malaysian Institute of Accountants and the Association of Chartered Certified

Accountants (United Kingdom). He has over 20 years of experience in the fields of auditing, accounting and taxation. Presently he is the

sole practitioner of O.K. Nam Associates, a firm of Chartered Accountants, which is based in Penang. He is the Independent Non-Executive

Director of Eng Kah Corporation Berhad, a company listed on Main Market of Bursa Malaysia Securities Berhad.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2009. He is the Chair-

man of the Audit Committee, a member of the Remuneration Committee and a member of the Nominating Committee.


Directors’ Profile (Cont’d)

SHAMSUDDIN BIN MOHD. SALLEH, a Malaysian, aged 51, was appointed as an Independent Non-Executive Director on 12 May 2001.

In his career spanning over 20 years with various companies including Loytape Bhd., Central Industries Corporation Bhd., American All-

Seasons Sdn Bhd. and Superbo (M) Sdn Bhd., he has garnered experience in the area of administration and personnel, sales and market-

ing within the manufacturing and agriculture industries. This enables him to participate actively in the overall operation matters of the

Company and as a whole, contribute positively towards the growth of the Company. Presently, as a Managing Director of Ivory Choice

Sdn Bhd and Sagarena Sdn Bhd, Encik Shamsuddin has spread his wing by venturing into property industry, employment agency and oil

and gas industries, namely Anggerik Laksana Sdn Bhd. He also sits on the Board of Director of several other private limited companies.

He has attended all the five (5) Board Meetings of the Company held during the financial year ended 31 December 2009. He is the Chair-

man of the Remuneration Committee, the Nominating Committee and Option Committee and he is a member of the Audit Committee.

Save as disclosed, none of the Directors have: -

1. any family relationship with any Director and/or major shareholder of the Company;

2. any conflict of interest with the Company; and

3. any conviction for offences within the past 10 years other than traffic offences.


Chairman’s Statement

On behalf of the Board of Directors, I am pleased to present the Annual Report and the audited financial statements of the Group and the Company for the financial year ended 31 December 2009.

Group Performance

The poultry industry faced another challenging year as the effects of 2008 economy crisis continued well into 3rd quarter of 2009. Overall, domestic economy contracted by 1.9% in 2009 and consumer sentiments were dampened by uncertain economic outlook.

The Group's performance during the year continued to be affected by high cost of imported grain and oversupply of broiler in the domestic market which had driven down the market price of broiler. The Group reported a lower revenue and profit before tax of RM272.5 million and RM0.7 million respectively for the financial year compared with the preceding financial year. In response to the challenging economic environment, the Group had embarked on several initiatives to streamline its operations and improve farm performance. Improvement in farm productivity is essentail to preserve Group's bottom line while the domestic broiler market is recovering from the demand and supply imbalance.

The Group also saw substantial increase in duck production during the year as all duck farms began to produce close to full capacity. The economy of scale is necessary to ensure the profitability of our duck segment via a lower unit cost base.

Corporate Development

During the year, the Group was awarded the Malaysian Livestock Industry Awards for the second time, this time in the category of Breeder Farm, after named the Best Feed Miller in 2007.

Prospect

We are optimistic about the performance of the Group in the year ahead as we are confident the cost cutting measures put in place by the management will bring positive result, and it is widely forecasted that the local economy will grow by 4.5-5.5% in 2010 following a rebound towards the end of 2009.

Dividend

The Board did not recommend dividend for financial year 2009.

Acknowledgement

On behalf of the Board, I would like to thank our shareholders, customers, suppliers, business partners, bankers and government authorities for their continuing support and to our colleagues at all level of the Group, our heartfelt appreciation for your hard work and dedication throughout the past one year.

Dato’ Siah Gim EngExecutive Chairman


Corporate Governance Statement

The Board of Directors is committed to maintaining high standard of corporate governance throughout the Group. This practice of good corporate governance is fundamental to the performance of duty and responsibilities of the Directors in enhancing shareholder value and safeguarding stakeholder interest of the Group.

The corporate governance practiced by the Group is consistent with the principles and best practices set out in the Malaysian Code on Corporate Governance (“Code”). This statement report on the compliance with the Code by the Group throughout the financial year ended 31 December 2009.

Board of DirectorsThe Board is primarily entrusted with the responsibility of setting the goals and strategic direction of the Group. In addition, the Board also oversees the operation of the Group’s business by devising and putting in place various measures of control. These controls are essential in minimizing the risk exposure of the Group.

Board CompositionThe Board is currently comprised of three Executive Directors, one Non-Independent Non-Executive Director and two Independent Non-Executive Directors. Hence, the Board’s composition meets the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Listing Requirements”) of having at least one-third (1/3) of the membership of the Board comprising independent directors. The wealth of knowledge, skills and experience of the Board members gives added strength to the leadership that is necessary for the effective stewardship of the Group.

The Board has clear division of responsibility and is balance in terms of power and authority. The Executive Directors are responsible for making and implementing operational decisions whilst Independent Non-Executive Directors are independent of the management and are free from any relationship that could materially interfere with the exercise of their independent judgment. Together, they play an important role in ensuring that the strategies proposed by the management are fully deliberated and examined, taking into account the interest of shareholders, employees, customers, suppliers and the many communities in which the Group conducts its business.

Board MeetingThe Board meets on a quarterly basis and additionally as and when required, with a formal schedule of matters specifically reserved for the Board’s deliberation and decision. During the financial year under review, five (5) Board meetings were held and all the Directors have complied with the requirements in respect of Board meeting attendance as provided in the Articles of Association.

Dato’ Siah Gim Eng 5/5 Daton Law Hooi Lean 5/5Ms Boay Goey Gnoh 2/2 Mr. Allen Chee Wai Hong 5/5Mr. Ong Kim Nam 5/5En Shamsuddin Bin Mohd Salleh 5/5Mr. Tan Seow Phor (resigned on 30 June 2009) 2/3

Board Balance

Supply and Access to InformationThe Directors have full and unrestricted access to all information pertaining to the Group’s business and affairs, whether collectively or in their individual capacity, to enable them to discharge their duties. There are matters specifically reserved for the Board’s decision to ensure that the direction and control of the Group is firmly in its hands. Prior to the Board meetings, the Directors are provided with the agenda together with Board papers containing relevant reports and information.

All Directors have access to the advice and the services of the Company Secretary and under appropriate circumstances may obtain independent professional advice at the Company’s expense, in furtherance of their duties.

Appointment to the BoardThe Board had established a Nominating Committee which is responsible for the review and assessment of the skills, experience, size and composition of the Board on an ongoing basis to ensure effectiveness of the Board and the contribution of each director. The Nominating Committee is also responsible for assessing the suitability of proposed candidates for directorships and making recommendations to the Board on new appointments including Board Committees.

The Nominating Committee consists wholly of Non-Executive and Independent Directors. The Committee is chaired by Encik Shamsuddin Bin Mohd Salleh and other members are Mr. Ong Kin Nam and Mr. Allen Chee. The Committee had one (1) meeting during the financial year.


Corporate Governance Statement (Cont’d)

Re-electionIn accordance with the provisions of the Articles of Association of the Company, all directors are subject to retirement from office at least once in every three (3) years, but shall be eligible for re-election. The Articles also provide that any Director appointed during the year is required to retire and seek re-election at the following Annual General Meeting immediately after such appointment.

Directors TrainingAll Directors have completed the Mandatory Accreditation Programme (“MAP”) as required by Bursa Securities. The Company continues to identify suitable training programme for the enhancement of Directors’ skill and knowledge from time to time.

DIRECTOR’S REMUNERATION

The Level and Make-up of Remuneration

The remuneration framework for Executive Directors has an underlying objective of attracting and retaining directors needed to run the Company successfully. Remuneration packages of Executive Directors are structured to commensurate with corporate and the individual’s performance. In respect of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the individual concerned.

ProcedureThe Board had established a Remuneration Committee to review and recommend to the Board the remuneration package of the Executive Directors and the determination of remuneration packages of Non-Executives is a matter for consideration by the Board as a whole. The individuals concerned are required to abstain from discussions pertaining to their own remuneration packages.

The Remuneration Committee is comprised of Non-Executive Directors and is chaired by Encik Shamsuddin Bin Mohd Salleh with Mr. Ong Kim Nam and Mr. Allen Chee as the other members. The Committee met once during the financial year.

DisclosureDetails of the Directors’ remuneration for the financial year ended 31 December 2009 are as follow:

The aggregate remuneration of Directors categorized into appropriate components.

Fees Salaries, Others Total Allowance and Bonus RM RM RM RM Executive 81,000 1,688,300 32,900 1,802,200Non-Executive 105,000 21,100 - 126,100 186,000 1,709,400 32,900 1,928,300

The number of Directors whose total remuneration falls within the following bands.

Range of Remuneration (RM) Executive Non-executive0 – 50,000 1 3700,001 – 800,000 1 -1,000,001 – 1,200,000 1 - 3 3

SHAREHOLDERS

Dialogue between Company and InvestorsThe Board recognizes the importance of timely and equal dissemination of information to shareholders on the Group’s performance and direction. Communication with investor is effected through timely release of information on the Group’s corporate proposal, financial results and other material information to the public.


Corporate Governance Statement (Cont’d)

Dialogue between Company and Investors (Cont'd)Information and latest news on the Company’s operation are also made available to investors and shareholders through the Company website at www.pwconsolidated.com.

The Annual General Meeting (“AGM”)The Company's AGM serves as a forum for dialogue with shareholders. At each AGM, the Chairman of the Board briefs the shareholders on the progress and performance of the business of the Group. The status of all resolutions proposed at the AGM is submitted to Bursa Securities at the end of the meeting day. Apart from contact at general meetings, there is no formal program or schedule of meetings with investors, shareholders, stakeholders and the public generally. However, the management has the option of calling for meetings with investors/analysts as and when deemed necessary. Thus far, the management is of the opinion that this arrangement has been satisfactory to all parties.

ACCOUNTABILITY AND AUDIT

Financial ReportingThe Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group’s financial position by means of the annual and quarterly reports and other published information. In this regard, the Board is responsible for the preparation of financial statements by applying the appropriate accounting policies and prudent estimates that present a fair and balanced report of the financial state of affairs of the Group in accordance with the provisions in the Companies Act, 1965 and applicable approved accounting standard.

Internal ControlThe Statement on Internal Control as set out on page 11 and 12 of this Annual Report provides an overview of the state of internal controls within the Group.

Relationship with the AuditorsThe Board through the establishment of an Audit Committee maintains a formal and transparent relationship with the Group’s Auditors. The roles of the Audit Committee in relation to the Auditors are detailed on pages 13 to 15 of the Audit Committee Report in the Annual Report.

Corporate Social ResponsibilityOne of the PW Group’s missions is to produce quality and safe products for the Malaysian public. We believe that only by ensuring the sustainability of our operating environment can our long term success and our mission be achieved. In fact many of the practices and policies we implemented in the pursuit of economic benefit and excellence, and the goal of being a socially responsible corporate citizen are congruent.

The Group utilizes modern farming technique in the operation and management of all broiler farms with strict implementation of bio-security measures. All broiler farms are equipped with automated drinking system and semi automated feeding system with silo thereby reducing human contact. Feed performance are constantly monitored and feed backs to the Group’s feed mill for quality improvement and control purposes. Feed is formulated using ingredients and additives which will not result in chemical residue in the final product. The application of ‘green’ concept begin with the formulation of feed in the Group’s feed mill where it contains fiber and nutrient that reduce ammonia content in poultry excretion which results in reduction in ammonia gas released to the detriment of the flocks health and improved fly control. The broilers are almost totally on vegetarian diet thereby eliminating the use of fishmeal which could contribute to the problem of over fishing. In addition, the substitution of fishmeal with other ingredient also reduces the risk of E.Coli and Salmonella contamination. The Group is also moving toward converting existing open house chicken coops to closed-house system which is expected to significantly increase farm productivity, further enhancing bio-security and reducing pollution to surrounding area. To produce safe poultry meat to the consumers, comprehensive vaccination program under scrutiny of qualified veterinarian is in place and the use of hormone is prohibited and antibiotic is only allowed in treatment of sick birds. The Group’s practice also emphasis the welfare of the poultry and all poultry are treated as humanely as possible especially during handling and transporting.

The Group is adopting and committed to the usage of clean technology and environment safe practice as part of its corporate social responsibilities. The areas we focus on are resource conservation; including water conservation and energy conservation, waste reduction, waste treatment and recycling, usage of environmental safe and biodegradable products.

PW Group is an equal opportunity employer that practice meritocracy and the welfare of our work force are high in our agenda where we also provide ample opportunities and incentives for employee’s skill and personal development. Our staff regularly attend seminar and training program to equip themselves with latest knowledge and development in the relevent fields. Our workers and staff's medical needs are covered under comprehensive group personal accident, hospitalisation and surgical insurance and compensation scheme.


Statement On Internal Control

Introduction

The Group is committed to maintain a system of internal control and risk management structure that is effective in safeguarding shareholders’ investment and the Group’s asset consistent with the requirement of Malaysian Code of Corporate Governance.

This Statement on Internal Control is made in pursuant with paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, which requires Directors of Malaysian public listed companies to make a statement about their state of internal control within the Group, in their Annual Report.

Boards Responsibility

The Board has overall responsibility for the Group's system of internal control and for reviewing its effectiveness whilst the role of Management is to implement the Board's policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks threatening the Group during the financial year under review and prior to the date of approval of the annual report and financial statements.

Risk Management Framework

The Board maintains continuous commitment in strengthening the Group’s risk management framework and processes. Day-to-day risk management of the individual operating units are delegated to the Managing Director and respective senior managements. In this regard, the Managing Director is responsible for timely identification of the Group’s risks of each business units and implementation of systems to manage these risks. Periodic meetings are held to assess and monitor the Group’s risk as well as discuss, deliberate and appropriately addressed matters associated with strategic, financial and operational facets of the Group. Any significant weaknesses identified during the review together with the improvement measures to strengthen the internal controls were reported to the Audit Committee.

Internal Audit Function

The Group's internal audit function was outsourced to an independent audit film who report directly to the Audit Committee. The outsource audit firm perform regular reviews of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group. The Audit Committee conducts annual reviews on the adequacy of the internal audit firm's scope of work and resources. The Audit Committee regularly reviews the internal auditor's reports and discusses the highlighted issues with the Management to ensure every issue has been properly resolved.

Other Key Elements of Internal Control

The following key elements of a system of internal control are present in the Group:

(a) Control Environment

The Group has an organizational structure for planning, controlling and monitoring business operations in order to achieve the Group’s objective. Management of each operating unit has clear responsibility for identifying risk affecting their unit and the overall Group’s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis.

(b) Audit Committee

An Audit Committee, comprising a majority of independent non-executive directors was maintained throughout the financial year. The composition of the Audit Committee brings a wide range of deep experience, knowledge and expertise. They continue to meet, have full and unimpeded access to both the internal and external auditors during the financial year.

(c) Policies and Procedures

Clear, formalised and documented internal policies, standards and procedures are in place to ensure compliance with internal controls and relevant laws and regulations. Regular reviews are performed to ensure that documentation remains current and relevant.


Statement On Internal Control (Cont’d)

Weakness in internal controls that result in material losses

Based on findings in the internal auditors’ report for the financial year ended 31 December 2009, the Board is of the opinion that the general system of internal control is adequate and appeared to be working satisfactorily. A number of minor internal control weaknesses were identified during the year, all of which have been, or are being, addressed by Management. There were no material losses, contingencies or uncertainties incurred during the financial year as a result of weakness in internal control.

The Board is committed to put in more appropriate action plans, to ensure that the internal control system could continuously evolve to support the type of business and size of the operations of the Group.

The total costs incurred in managing the internal audit function for the financial year ended 31 December 2009 were approximately RM7,500.

This statement is issued in accordance with a resolution of the Directors dated 27 May 2010.


Audit Committee Report

The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2009.

The Audit Committee was established on May 2001.

MEMBERS AND MEETINGS

Members of the Audit Committee are as follows:-

Name Designation

Ong Kim Nam Chairman/Independent Non-Executive Director

Shamsuddin Bin Mohd. Salleh Independent Non-Executive Director

Allen Chee Wai Hong Non-Independent Non-Executive Director

There were five (5) Audit Committee meetings held during the financial year ended 31 December 2009. The details of the attendance

of the Audit Committee members are as follows:

Name Attendance

Ong Kim Nam 5/5

Shamsuddin Bin Mohd. Salleh 5/5

Allen Chee Wai Hong 5/5

SUMMARY OF ACTIVITIES

The Audit Committee carried out its duties in accordance with its Terms of Reference. During the financial year ended 31 December

2009, the activities of the Audit Committee included the following:-

• Reviewed the unaudited quarterly financial results of the Group with the management prior to submission to the Board of

Directors for consideration and approval and subsequent announcements;

• Reviewed the Audit Committee Report, and Statement of Internal Control for the financial year ended 31 December 2009 and

recommended its adoption to the Board;

• Considered the nomination of the external auditors for recommendation to the Board for re-appointment;

• Reviewed with the external auditors the results of the annual audit and management letter;

• Reviewed the scope, functions and resources of the outsourced internal audit function;

• Reviewed the year end financial statements prior to submission to the Board for consideration and approval;

• Reviewed the external auditors’ reports for the financial year ended 31 December 2009 in relation to audit and accounting

issues arising from the audit an consider the findings by the external auditors and management responses thereto;

• Considered the related party transactions that had arisen within the Company or the Group;

• Reviewed with the external auditors their audit plan prior to the commencement of audit;

TERMS OF REFERENCE

The Directors have approved and adopted the following Terms of Reference, which set out the roles and responsibilities of the Audit

Committee.

OBJECTIVES

The primary objective of the Audit Committee is to assist the Board of Directors of the Company in fulfilling its responsibilities

relating to corporate accounting, internal controls, management and financial reporting practices of the Group.


Audit Committee Report (Cont’d)

COMPOSITION

The members shall be appointed by the Board of Directors and shall consist of not less than three (3) members of whom a majority

shall compose of Independent Directors of the Company. No Alternate Directors shall be appointed members of the Committee.

At least one member of the Audit Committee:-

• Must be a member of the Malaysian Institute of Accountants; or

• If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience; and

- he must have passed the examination specified in Part I of the First Schedule of the Accountants Act, 1967; or

- he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants

Act, 1967.

Chairman

The Chairman shall be an Independent Non-Executive Director.

Quorum

A quorum shall consist of two (2) members and a majority of the members present must be Independent Directors.

Secretary

The Secretary of the Audit Committee shall be the Company Secretary or any other person so appointed by the Audit Committee

from time to time.

Meetings

The Audit Committee shall regulate its own proceedings. The Committee shall meet at least four (4) times a year. The Committee

may, as and when deemed necessary, invite other Board members and senior management members to attend the meeting. The

Committee shall meet at least twice a year with the external auditors without the presence of any executive Director of the Board.

Authority

The Audit Committee is authorised by the Board of Directors to investigate any activity within its terms of reference. The Committee

shall have unrestricted access to the external auditors and to all employees of the Group. The Committee may, with the approval

of the Board, consult legal or other professionals where they consider it necessary to discharge their duties at the expense of the

Company.

Functions

The functions of the Audit Committee shall be: -

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

- To review with the external auditors the nature and scope of the audit plan, the evaluation of the system of internal control,

problems and reservations arising from the audit and any matters which may wish to discuss with the external auditors, the

internal auditors or both, in the absence of the Executive Board members and management where necessary;

- To review the external auditors management letter and managements’ response;

- To review and report to the Board of Directors on the quarterly results and year end financial statements, prior to the approval

by the Board of Directors, focusing particularly on:-

(i) changes in or implementation of major accounting policies and practices;

(ii) significant and unusual events; and

(iii) compliance with applicable approved accounting standards and other legal requirements;

- To review the adequacy of the scope, function, competency and resources of the internal audit function, and that it has the necessary

authority to carry out its work;

- To review the internal audit programme and results of the internal audit process, and, where necessary, ensure that appropriate actions

are taken on the recommendations of the internal audit function;

- To review any appraisal or assessment of the performance of members of the internal audit function including appointment

or termination of senior staff members and to provide opportunity for the resigning staff member, if any, to submit his reasons

for resigning.


Audit Committee Report (Cont’d)

Functions (Cont'd)

- To consider any related party transactions and conflict of interest situation that may arise within the Company or Group;

- To undertake such other responsibilities as may be agreed to by the Audit Committee and the Board of Directors.

Reporting Procedure

The Chairman of the Committee reports to the Board after each Committee meeting the result of the deliberations of the Committee.

The Committee shall prepare reports, at least once a year, to the Board summarizing the Committee’s activities during the year in

discharging of its duties and responsibilities and the related significant results and findings.

Internal Audit Function

In 2009, the Group has outsourced the internal audit function to an external party to assist the Committee in ensuring the adequacy

and effectiveness of the Group’s risk management and internal control systems.


Directors’ Report For The Year Ended 31 December 2009

The directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2009.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding and the provision of management services.

The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

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

RESULTS GROUP COMPANY RM RM

Profit/(loss) after taxation for the year 87,015 (12,145) Attributable to :Equity holders of the Company 111,290 (12,145)Minority interests (24,275) - 87,015 (12,145)

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2009 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

DIVIDENDS

No dividends have been declared or paid by the Company since the end of the previous financial year.

The directors do not recommend any dividend payment for the financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the notes to the financial statements.

SHARE CAPITAL AND DEBENTURE

During the financial year, the Company did not issue any share or debenture and did not grant any option to anyone to take up unissued shares of the Company.

TREASURY SHARES

During the financial year, the Company did not repurchase any of its issued ordinary shares from the open market.

Of the total 60,911,250 issued and fully paid ordinary shares as at 31 December 2009, 1,133,500 are held as treasury shares by the Company, and accordingly the number of outstanding ordinary shares in issue and fully paid as at that date is therefore 59,777,750 ordinary shares of RM1 each.

Further relevant details are disclosed in Note 15 to the financial statements.


Directors’ Report For The Year Ended 31 December 2009 (Cont’d)

----------- Number of ordinary shares of RM1 each -----------

Balance Balance

at at

1.1.09 Bought Sold 31.12.09

The Company

Direct Interest :

Dato’ Siah Gim Eng 9,719,215 - - 9,719,215

Datin Law Hooi Lean 7,961,798 - - 7,961,798

Chee Wai Hong 605,878 - - 605,878

Ong Kim Nam 7,500 - - 7,500

Deemed Interest :

Dato’ Siah Gim Eng 14,390,548 - - 14,390,548

Datin Law Hooi Lean 16,147,965 - - 16,147,965

EMPLOYEE SHARE OPTION SCHEME

The Company’s Employee Share Option Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary

General Meeting held on 18 November 2003. The ESOS will be in force for a period of five years expiring on 14 January 2009. The

Company has extended the existing ESOS for another 5 years until 14 January 2014.

As at balance sheet date, no options were offered.

The salient features of the ESOS are disclosed in Note 14 to the financial statements.

DIRECTORS

The directors who served since the date of the last report are as follows :

Dato’ Siah Gim Eng

Datin Law Hooi Lean

Chee Wai Hong

Ong Kim Nam

Shamsuddin Bin Mohd Salleh

Boay Goey Gnoh (appointed on 30.6.09)

Tan Seow Phor (retired on 30.6.09)

DIRECTORS’ INTERESTS IN SHARES

According to the Register of Directors’ Shareholdings, the interests of directors in office at the end of the financial year in shares in

the Company and its related corporations during the financial year are as follows :

By virtue of their shareholdings in the Company, Dato’ Siah Gim Eng and Datin Law Hooi Lean are also deemed interested in the

shares of all the subsidiaries of the Company, to the extent that the Company has interests.



DIRECTORS' BENEFITS

Since the end of the previous financial year, no director of the Company has 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 shown in the

financial statements) by reason of a contract made by the Company or a related corporation with a 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, other than those related party

transactions disclosed in the notes to the financial statements.

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

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

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for

doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been

made for doubtful debts, and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary

course of business had been written down to an amount which they might be expected to realise.

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

(i) that would render the amount written off for bad debts, or the amount of the allowance for doubtful debts in the Group and

in the Company inadequate to any substantial extent, or

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company

misleading, or

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, or

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the

Company misleading or inappropriate.

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

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures

the liabilities of any other person, or

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable,

within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially

affect the ability of the Group and of the Company to meet their obligations as and when they fall due.



AUDITORS

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

Signed in accordance with a resolution of the directors :

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

Dato’ Siah Gim Eng Datin Law Hooi Lean

Penang,

Date : 26 April 2010


Directors’ Statement

We, Dato’ Siah Gim Eng and Datin Law Hooi Lean, being two of the directors of PW Consolidated Bhd. state that in the opinion

of the directors, the financial statements set out on pages 22 to 67 are properly drawn up in accordance with Financial Reporting

Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of

the Company as at 31 December 2009 and of their financial performance and cash flows for the financial year then ended.

Signed in accordance with a resolution of the directors :

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

Dato’ Siah Gim Eng Datin Law Hooi Lean

Date : 26 April 2010

Statutory Declaration

I, Datin Law Hooi Lean, the director primarily responsible for the financial management of PW Consolidated Bhd. do solemnly

and sincerely declare that the financial statements set out on pages 22 to 67 are to the best of my knowledge and belief, correct

and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory

Declarations Act, 1960.

Subscribed and solemnly declared by )

the abovenamed at Penang, this 26th )

day of April 2010 ) ...............................................................................

Datin Law Hooi Lean

Before me,

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

KARUPAYEE KAMALAN A/P R. MOTTAI

NO.: P015

Persuruhanjaya Sumpah Malaysia


Independent Auditors‘ Report To The Members Of PW Consolidated Bhd. Company No. 420049-H (Incorporated In Malaysia)

Report on the Financial Statements

We have audited the financial statements of PW Consolidated Bhd., which comprise the balance sheets as at 31 December 2009 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 22 to 67.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal 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 Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2009 and of their financial performance and cash flows for the financial year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following :(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

subsidiaries have been properly kept in accordance with the provisions of the Act,(b) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are

in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and

(c) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Matters

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

Grant Thornton John Lau Tiang Hua, DJNNo. AF : 0042 PartnerChartered Accountants No. 1107/03/12 (J) Chartered AccountantDate : 26 April 2010

Penang


Consolidated Balance SheetAt 31 December 2009

2009 2008

NOTE RM RM

ASSETS

Non-current assets

Property, plant and equipment 3 170,631,411 184,888,907

Investment properties 4 125,000 125,000

Prepaid land lease payments 5 9,707,299 9,966,725

Intangible assets 7 5,186,163 5,186,163

185,649,873 200,166,795

Current assets

Inventories 8 60,969,759 61,796,519

Trade receivables 9 24,145,981 37,095,543

Other receivables, deposits and prepayments 10 10,847,671 3,535,846

Tax recoverable 224,559 213,641

Fixed deposit with a licensed bank 12 65,000 65,000

Cash and bank balances 1,599,653 2,145,737

97,852,623 104,852,286

Non-current assets held for sale 13 6,769,907 -

104,622,530 104,852,286

TOTAL ASSETS 290,272,403 305,019,081

EQUITY AND LIABILITIES

Equity attributable to equity holders of the Company

Share capital 14 60,911,250 60,911,250

Treasury shares 15 (805,815) (805,815)

Share premium 918,539 918,539

Capital reserve 16 27,221,030 27,646,974

Retained profits 39,462,855 38,925,621

127,707,859 127,596,569

Minority interests 1,490,364 1,514,639

Total equity 129,198,223 129,111,208

Non-current liabilities

Borrowings 17 6,190,738 9,078,989

Deferred tax liabilities 18 14,470,932 15,995,554

20,661,670 25,074,543

Current liabilities

Trade payables 19 29,012,658 35,600,811

Other payables and accruals 20 6,783,945 16,583,224

Borrowings 17 103,475,231 98,040,080

Provision for taxation 1,140,676 609,215

140,412,510 150,833,330

Total liabilities 161,074,180 175,907,873

TOTAL EQUITY AND LIABILITIES 290,272,403 305,019,081

The notes set out on pages 32 to 67 form an integral part of these financial statements.


Consolidated Income StatementFor The Year Ended 31 December 2009


(Restated)

2009 2008

NOTE RM RM

Revenue 21 272,490,369 344,427,978

Cost of sales (250,083,510) (316,273,424)

Gross profit 22,406,859 28,154,554

Other income 22 3,208,990 1,705,618

Administrative expenses (17,567,875) (18,584,766)

Selling and distribution expenses (2,203,245) (3,335,508)

Profit from operations 5,844,729 7,939,898

Finance costs 23 (5,159,144) (6,564,935)

Profit after finance costs 685,585 1,374,963

Negative goodwill on consolidation written off - 570,651

Profit before taxation 24 685,585 1,945,614

Taxation 25 (598,570) (955,022)

Profit for the year 87,015 990,592

Attributable to :

Equity holders of the Company 111,290 1,018,091

Minority interests (24,275) (27,499)

87,015 990,592

Earnings per share attributable to

equity holders of the Company

- Basic (sen) 26 0.19 1.70


Consolidated Statement Of Changes In Equity For The Year Ended 31 December 2009

Minority Total

------------ Attributable to Equity Holders of the Company ------------- Interests Equity

------------Non-distributable------------ Distributable

Share Treasury Share Capital Retained

Capital Shares Premium Reserve Profits Total

NOTE RM RM RM RM RM RM RM RM

2009

Balance at beginning 60,911,250 (805,815) 918,539 27,646,974 38,925,621 127,596,569 1,514,639 129,111,208

Profit for the year - - - - 111,290 111,290 (24,275) 87,015

Realisation of revaluation surplus upon disposal of properties - - - (425,944) 425,944 - - -

Balance at end 60,911,250 (805,815) 918,539 27,221,030 39,462,855 127,707,859 1,490,364 129,198,223

2008

Balance at beginning 60,911,250 (805,815) 918,539 27,748,714 40,794,677 129,567,365 8,687,857 138,255,222

Profit for the year - - - - 1,018,091 1,018,091 (27,499) 990,592

Dividends 27 - - - - (2,988,887) (2,988,887) - (2,988,887)

Realisation of revaluation surplus upon disposal of properties - - - (101,740) 101,740 - - -

Acquisition of additional equity interests of existing subsidiaries from minority interests - - - - - - (7,145,719) (7,145,719)

Balance at end 60,911,250 (805,815) 918,539 27,646,974 38,925,621 127,596,569 1,514,639 129,111,208



Consolidated Cash Flow StatementFor The Year Ended 31 December 2009

2009 2008

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 685,585 1,945,614

Adjustments for :

Allowance for doubtful debts 2,964,464 1,503,236

Amortisation of prepaid land lease payments 297,214 277,079

Bad debts written off 49,990 -

Depreciation 14,565,333 13,644,822

Gain on disposal of investment properties - (246,860)

Interest expense 5,159,144 6,564,935

Interest income (423,596) (363,175)

Gain on disposal of long leasehold land (839,322) -

(Gain)/Loss on disposal of property, plant and

equipment (1,276,205) 223,138

Negative goodwill on consolidation

written off - (570,651)

Property, plant and equipment written off 96,892 101,981

Unrealised gain on foreign exchange - (8,731)

Operating profit before working capital changes 21,279,499 23,071,388

* Decrease/(Increase) in inventories 1,434,688 (8,895,867)

(Increase)/Decrease in receivables (1,482,180) 2,212,039

(Decrease)/Increase in payables (16,387,432) 12,643,228

Cash generated from operations 4,844,575 29,030,788

Income tax paid (1,603,250) (2,993,703)

Income tax refund 601 272,327

Interest paid (5,159,144) (6,564,935)

Interest received 310,286 359,049

Net cash (used in)/from operating activities/

carried forward (1,606,932) 20,103,526



Consolidated Cash Flow StatementFor The Year Ended 31 December 2009 (Cont’d)

2009 2008

RM RM

Net cash (used in)/from operating activities/

brought forward (1,606,932) 20,103,526

CASH FLOWS FROM INVESTING ACTIVITIES

** Acquisition of property, plant and equipment (2,722,692) (15,018,760)

*** Acquisition of additional equity interests of

existing subsidiaries - (6,591,110)

Acquisition of long leasehold land (1,526,042) -

Interest received 113,310 4,126

Placement of deposit for land purchase - (292,564)

Proceeds from disposal of long leasehold land 2,302,142 -

Proceeds from disposal of investment properties - 1,100,000

Proceeds from disposal of property, plant

and equipment 4,285,486 416,019

Net cash from/(used in) investing activities 2,452,204 (20,382,289)

CASH FLOWS FROM FINANCING ACTIVITIES

Drawdown/(Repayment) of bankers acceptance 9,315,000 (171,015)

Dividends paid - (2,988,887)

Payment of hire purchase payables (4,383,223) (4,934,639)

Drawdown of promissory note 12,211,000 2,533,000

Repayment of term loans (3,066,095) (863,330)

(Repayment)/Drawdown of trust receipts (16,692,459) 9,153,615

Withdrawal of fixed deposits - 43,731

Net cash (used in)/from financing activities (2,615,777) 2,772,475

NET (DECREASE)/INCREASE IN CASH AND

CASH EQUIVALENTS (1,770,505) 2,493,712

CASH AND CASH EQUIVALENTS

AT BEGINNING (18,874,547) (21,368,259)

CASH AND CASH EQUIVALENTS AT END (20,645,052) (18,874,547)

Represented by :

Cash and bank balances 1,599,653 2,145,737

Bank overdrafts (22,244,705) (21,020,284)

(20,645,052) (18,874,547)



Consolidated Cash Flow StatementFor The Year Ended 31 December 2009 (Cont’d)

2009 2008

RM RM

* Inventories

Cash flow from inventories 826,760 (9,591,780)

Adjustment for amortisation of prepaid land

lease payments 25,434 45,720

Adjustment for depreciation 582,494 650,193

1,434,688 (8,895,867)

** Acquisition of property, plant and equipment

Total cost 9,766,411 19,822,364

Acquired under hire purchase loans (3,938,256) (4,803,604)

Acquired in exchange for settlement of debt by a

receivable (3,105,463) -

Total cash consideration 2,722,692 15,018,760

*** Cash flow on acquisition of additional equity

interests of existing subsidiaries

Property, plant and equipment - 32,621,823

Prepaid land lease payments - 717,401

Inventories - 6,168,379

Receivables - 13,948,009

Tax recoverable - 35,197

Cash and bank balances - 268,059

Payables - (20,969,786)

Borrowings - (11,526,053)

Deferred tax liabilities - (2,854,995)

Provision for taxation - (30,347)

Share of assets and liabilities based on existing

equity interests - (11,231,968)

Share of net assets acquired from minority interests - 7,145,719

Negative goodwill recognised - (570,651)

Goodwill on consolidation - 16,042

Total cash consideration paid - 6,591,110



Balance SheetAt 31 December 2009

2009 2008

NOTE RM RM

ASSETS

Non-current assets

Investment in subsidiaries 6 39,188,963 39,188,963

Current assets

Amount due from subsidiaries 11 22,272,177 22,268,049

Cash and bank balances 29,470 16,761

22,301,647 22,284,810

TOTAL ASSETS 61,490,610 61,473,773

EQUITY AND LIABILITIES

Share capital 14 60,911,250 60,911,250

Treasury shares 15 (805,815) (805,815)

Share premium 918,539 918,539

(Accumulated loss)/Retained profits (8,705) 3,440

Total equity 61,015,269 61,027,414

Current liabilities

Other payables and accruals 20 458,541 446,359

Provision for taxation 16,800 -

475,341 446,359

TOTAL EQUITY AND LIABILITIES 61,490,610 61,473,773



Income StatementFor The Year Ended 31 December 2009

2009 2008

NOTE RM RM

Revenue 21 348,000 228,000

Administrative expenses (343,345) (351,010)

Profit/(Loss) before taxation 24 4,655 (123,010)

Taxation 25 (16,800) -

Loss for the year (12,145) (123,010)



Statement Of Changes In EquityFor The Year Ended 31 December 2009

--- Non-distributable ---

(Accumulated/

loss)

Share Treasury Share Retained Total

Capital Shares Premium Profits Equity

NOTE RM RM RM RM RM

2009

Balance at beginning 60,911,250 (805,815) 918,539 3,440 61,027,414

Loss for the year - - - (12,145) (12,145)

Balance at end 60,911,250 (805,815) 918,539 (8,705) 61,015,269

2008

Balance at beginning 60,911,250 (805,815) 918,539 3,115,337 64,139,311

Loss for the year - - - (123,010) (123,010)

Dividends 27 - - - (2,988,887) (2,988,887)

Balance at end 60,911,250 (805,815) 918,539 3,440 61,027,414



Cash Flow StatementFor The Year Ended 31 December 2009

2009 2008

RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 4,655 (123,010)

Working capital changes :

Increase in payables 12,182 220,897

Net cash from operating activities 16,837 97,887

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid - (2,988,887)

Net change in subsidiaries balances (4,128) 2,887,559

Net cash used in financing activities (4,128) (101,328)

NET INCREASE/(DECREASE) IN CASH 12,709 (3,441)

CASH AT BEGINNING 16,761 20,202

CASH AT END 29,470 16,761



Notes To The Financial Statements31 December 2009

1. CORPORATE INFORMATION

General

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 financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 26 April 2010.

Principal activities

The principal activities of the Company consist of investment holding and the provision of management services.

The principal activities of the subsidiaries are disclosed in Note 6.

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

2. SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies adopted by the Group and by the Company are consistent with those adopted in the previous financial years unless otherwise indicated below.

2.1 Basis of Preparation

The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in the accounting policies below and comply with Financial Reporting Standards and the Companies Act, 1965 in Malaysia.

2.2 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed as follows :

(i) Depreciation of property, plant and equipment

The depreciable costs of property, plant and equipment are allocated on the straight line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 5 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual value of these assets.

(ii) Net realisable values of inventories The management reviews for slow-moving and obsolete inventories. These reviews require judgement and

estimates. Possible changes in these estimates could result in a revision to the valuation of inventories.


Notes To The Financial Statements31 December 2009 (Cont’d)

2. SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

2.2 Significant Accounting Estimates and Judgements (Cont'd)

(iii) Recoverability of receivables

The management reviews for bad and doubtful debts based on an assessment of the recoverability of receivables. Bad debts are written off and allowance for doubtful debts are made to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. The total allowance for doubtful debts made by the Group is disclosed in Note 9.

2.3 Subsidiaries and Basis of Consolidation

Subsidiaries Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise

control over the financial and operating activities so as to obtain benefits therefrom. Investment in subsidiaries which is eliminated on consolidation is stated at cost less accumulated impairment losses in

the Company’s separate financial statements.

Upon the disposal of investment in subsidiaries, the difference between net disposal proceeds and their carrying amount is charged or credited to the income statement.

Basis of Consolidation

The financial statements of the Group include the audited financial statements of the Company and all its subsidiaries made up to the end of the financial year. The Group adopts both the merger and acquisition method of consolidation.

The acquisitions of the subsidiaries prior to 31 October 2001 are accounted for using merger accounting principles in compliance with Malaysian Accounting Standard No. 2 “Accounting for Acquisitions and Mergers” the generally accepted accounting principles prevailing at that time. The results of the companies being merged are included for the full financial year and the consolidated financial statements are presented as if the companies had been combined throughout the previous financial years. Merger debit arising on consolidation which represents the excess of the nominal value of shares in subsidiaries acquired and the nominal value of shares issued for the acquisition is set off against Group reserves.

Under the acquisition method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill and is retained in the balance sheet.

Any excess of the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

Inter-company balances and transactions are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interest is measured at the minorities’ share of the acquisition fair values of the identifiable assets and liabilities of the acquiree company. Separate disclosure is made of minority interest.




2.4 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment except for freehold land, buildings and farm development are stated at cost less accumulated depreciation and accumulated impairment losses.

Freehold land, buildings and farm development are stated at revalued amount, which is the fair value at the date of revaluation less accumulated impairment losses. Subsequent additions are shown at cost while disposals are at valuation or cost as appropriate. Fair value is determined by market-based evidence appraisal that is undertaken by external independent professionally qualified valuers. Revaluations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the balance sheet date. Surplus arising on revaluation are credited to asset revaluation reserve. Any deficit arising from revaluation is charged against the revaluation reserve to the extent of a previous surplus held in the asset revaluation reserve for the same asset. In all other cases, a decrease in carrying amount is charged to the income statement.

Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its

residual value over its estimated useful life, at the following annual rates : Buildings 2% Farm development 10% Plant and machinery 7% - 10% Equipment, furniture and fittings 8% - 20% Motor vehicles 20% Freehold land is not depreciated as it has an infinite life.

Depreciation on capital expenditure in progress commences when the assets are ready for their intended use.

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

Upon the disposal and retirement of an item of property, plant and equipment, the difference between the net disposal

proceeds and its carrying amount is charged or credited to the income statement and the attributable portion of the revaluation surplus is taken directly to retained profits.

2.5 Hire Purchase

Property, plant and equipment financed under hire purchase are capitalised in the financial statements and are depreciated in accordance with the accounting policy as set out in Note 2.4. Outstanding obligations due under hire purchase after deducting finance costs are included as liabilities in the financial statements. The finance costs are charged to the income statement over the period of the respective agreements using the sum-of-digits method.

2.6 Investment Properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is arrived at by reference to market evidence of transaction prices for similar properties.




2.6 Investment Properties

Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

2.7 Leases

Leases that the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership to the Group.

(i) Operating Leases – as Lessor Asset leased out under operating leases are presented on the balance sheet according to the nature of the assets.

Rental income from operating leases is recognised on a straight-line basis over the term of lease. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

(ii) Operating Leases – as Lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease.

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expenses over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land elements and buildings elements of the lease at the inception of the lease. The upfront payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

Prepaid land lease payments on leasehold land are amortised on a straight line basis over the remaining lease term of the land.

2.8 Intangible Assets

Goodwill acquired in a business combination 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.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.



2. SIGNIFICANT ACCOUNTING POLICIES (Cont'd) 2.9 Inventories

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

Cost of finished goods includes materials, direct labour and attributable production overheads.

Cost of livestock consists of purchase price of livestock plus growing costs which include feeds and vaccines, direct labour, subcontract wages and attributable farming overheads.

Cost of parent stock consists of purchase price of parent stock and attributable costs including relevant overheads in rearing the parent stock and is amortised over its estimated economic egg-laying life of ten to twelve months.

All inventories costs are determined on the first-in, first-out basis.

Net realisable value is the estimated selling price less the estimated cost necessary to make the sale.

2.10 Receivables

Receivables are stated at their anticipated realisable values.

Known bad debts are written off and specific allowance is made for any debts considered to be doubtful of collection.

2.11 Non-current Assets Held for Sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the measurement of the non-current assets is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-current assets are measured at the lower of carrying amount and fair value less costs to sell.

2.12 Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

2.13 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.




2.14 Impairment of Assets Goodwill

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or group of units.

The Group reviews the carrying amount of its CGU at each balance sheet date to determine whether there is any indication of impairment or more frequently when indicators of impairment are identified. If any such indication exists, impairment is measured by comparing the carrying amount of the CGU with its recoverable amount.

CGU’s recoverable amount is the higher of CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows 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 CGU. Where the carrying amount of CGU exceeds its recoverable amount, the CGU is considered impaired and is written down to its recoverable amount. Impairment loss recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in the income statement in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period.

Other assets

At each balance sheet date, the Group reviews the carrying amounts of its assets other than prepaid land lease payments, inventories and financial assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.

An impairment loss is recognised as an expense in the income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased.

2.15 Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction, production or preparation of assets until they are ready for their intended use or sale are capitalised as part of the cost of those assets.

Other borrowing costs are recognised as expenses in the period in which they are incurred.




2.16 Income Recognition

Sales of goods

Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.

Management fees

Management fees are recognised on the accrual basis.

2.17 Employee Benefits

Short term benefits

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

Defined contribution plans

As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund. Such contributions are recognised as an expense in the income statement as incurred.

Share-based compensation The Company’s Employee Share Option Scheme (“ESOS”), an equity-settled, share-based compensation plan, allows

the Group’s employees to acquire ordinary shares of the Company. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period and taking into account the probability that the options will vest. The fair value of share options is measured at grant date, taking into account, if any, the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable on vesting date.

At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable on vesting date. It recognises the impact of the revision of original estimates in the profit or loss, and a corresponding adjustment to equity over the remaining vesting period. The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained profits.

The proceeds received net of any

malaysiastock.biz annual report 2009. pw consolidated bhd. (420049-h) 1. contents corporate...

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