fiamma holdings berhad - malaysiastock.biz currently, he also sits on the board of central sugars...

contents

01 corporate information

03 directors’ profi le

06 corporate structure

07 fi nancial highlights

08 chairman’s statement

10 products

17 audit committee report

21 statement on corporate governance

28 statement on internal control

29 fi nancial statements

84 analysis of shareholdings

86 analysis of warrantholdings

88 list of properties

89 notice of annual general meeting

92 Appendix I

proxy form

FIAMMA HOLDINGS BERHAD (88716-W) 1

corporate information

AUDITORS

KPMGLevel 10, KPMG Tower8 First AvenueBandar Utama47800 Petaling JayaSelangor Darul EhsanTel: (03) 7721 3388 Fax: (03) 7721 3399

PR INC IPAL BANK E RS

OCBC Bank (Malaysia) Berhad

AmBank (M) Berhad

HSBC Bank Malaysia Berhad

STOCK EXCHANGE L I S T I N G

Main Market of the Bursa Malaysia

Securities Berhad

B OARD OF D IRECTORS

Tan Sri Dato’ Azizan Bin Husain

Chairman,

Independent Non-Executive Director

Lim Choo Hong

CEO/Group Managing Director,

Non-Independent Executive Director

Lim Soo Kong

Non-Independent Non-Executive Director

Dato’ Bahar Bin Ahmad

Non-Independent Executive Director

Kok Sau Chun


Dr. Teh Chee Ghee


Margaret Chak Lee Hung


COMPANY SECRETAR IES

Chin Mee FoonChan Su SanTai Yit Chan

REGISTERED OFF ICE

Lot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul EhsanTel: (03) 7720 1188 Fax: (03) 7720 1111

REGISTRARS

Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel: (03) 2264 3883 Fax: (03) 2282 1886

AUDIT COMMITTEE

Tan Sri Dato’ Azizan Bin Husain Chairman, Independent Non-Executive Director

Lim Soo Kong Member, Non-Independent Non-Executive Director

Dr. Teh Chee Ghee Member, Independent Non-Executive Director

FIAMMA HOLDINGS BERHAD (88716-W)2


Tan Sri Dato’ Azizan Bin Husain (Chairman) / Malaysian

Tan Sri Dato’ Azizan Bin Husain, 66, is an Independent Non-Executive Director and Chairman of Fiamma Holdings Berhad. He was appointed to

the Board of Fiamma Holdings Berhad on 17 June 1999. He graduated from University Malaya, Kuala Lumpur with a Bachelor of Arts (Honours) in

1967. He also holds a Master degree in Urban and Regional Planning from the University of Colorado, United States of America.

He started his career in the Ministry of Agriculture before being posted to the Prime Minister’s Department where he held the posts of

Assistant Secretary, Centre for Development Studies and Principal Assistant Director, Economic Planning Unit and later as Sabah State Director of

Development. On 1 February 1987, he assumed the post of Deputy Secretary-General to the Ministry of Land and Regional Development. After

two and half years, he returned to the Prime Minister’s Department as the Deputy Director-General (Sectoral) Economic Planning Unit. In late 1991,

he was posted to the Ministry of Finance where he held the posts of Director, Public Sector Companies Monitoring Division and then as Deputy

Secretary General (Operations). On 1 January 1996, he was appointed as the Secretary-General, Ministry of Defence until 28 February 1999.

He also sits on the Board of TT Resources Berhad and Oriental Food Industries Holdings Berhad.

Tan Sri Dato’ Azizan is the Chairman of the Audit Committee and Nomination Committee and is also the Senior Independent Director of Fiamma

Holdings Berhad. He does not have any family relationship with any director and/or major shareholder of Fiamma Holdings Berhad. He attended

all the four board meetings held during the fi nancial year ended 30 September 2010.

Lim Choo Hong (Chief Executive Offi cer/Group Managing Director) / Malaysian

Mr Lim Choo Hong, 53, is a Non-Independent Executive Director and the Chief Executive Offi cer/Group Managing Director of Fiamma Holdings

Berhad. He was appointed to the Board of Fiamma Holdings Berhad on 16 August 1982. He is also a founder member of the Fiamma Holdings

Berhad Group. He is a businessman and entrepreneur and he has more than 30 years of business experience dealing in home appliances.

He also has more than 15 years’ experience in property development. Prior to his involvement in the Fiamma Holdings Berhad Group in 1979, he

was involved in the retail business in Singapore.

Mr Lim Choo Hong is a member of the Remuneration Committee. He also sits on the Board of all the subsidiary companies of the Group. He is

a shareholder of Casa Holdings Limited (a company listed on the Singapore Exchange Limited) which holds shares in Fiamma Holdings Berhad.

He is the spouse of Madam Kok Sau Chun. He attended all the four board meetings held during the fi nancial year ended 30 September 2010.

Dato’ Bahar Bin Ahmad (Executive Director) / Malaysian

Dato’ Bahar Bin Ahmad, 61, is a Non-Independent Executive Director of Fiamma Holdings Berhad. He was appointed to the Board of Fiamma

Holdings Berhad on 14 April 1997. He has also served the Malaysian Government in the Malaysian Administrative and Diplomatic Service from

April 1973 to December 1996 in various capacities, among others; Assistant Director of International Trade Division of Ministry of Trade and

Industry (from 1973 to 1977); Assistant Trade Commissioner, Malaysia Trade Offi ce in New York, United States of America (from 1977 to 1979);

Trade Commissioner, Malaysia Trade Offi ce, Manila, Philippines (from 1979 to 1981); Trade Commissioner, Malaysian Trade Commission, London,

United Kingdom (from 1981 to 1986); Principal Assistant Director, International Trade Division, Ministry of International Trade and Industry

(from 1986 to 1991) and Senior Trade Commissioner/Minister Counselor Malaysian High Commission, London, United Kingdom, and was admitted

to the Court of St James as a Diplomat (from 1991 to 1996).

Currently, he also sits on the Board of Central Sugars Refi nery Sdn Bhd, DRB-HICOM Auto Solutions Sdn Bhd, Islamic Research Centre Sdn

Bhd, Amtek International Ltd., Amtek Garment Sdn Bhd, Frazer-Nash Microelectronics (M) Sdn Bhd, Damai Akrab Sdn Bhd, HICOM-YAMAHA

Manufacturing Malaysia Sdn Bhd, HICOM Builders Sdn Bhd, Desa Puchong Sdn Bhd, Kenyir Splendour Berhad, Rebak Island Marina Berhad and

Tradewinds Premium Goods Sdn Bhd.

He does not have any family relationship with any director and/or major shareholder of Fiamma Holdings Berhad. He attended all the four board

meetings held during the fi nancial year ended 30 September 2010.

directors’ profi le


Lim Soo Kong (Non-Executive Director) / Singaporean

Mr Lim Soo Kong, 64, is a Non-Independent Non-Executive Director of Fiamma Holdings Berhad. He is a founder member of the Fiamma Holdings

Berhad Group and was appointed to the Board of Fiamma Holdings Berhad on 16 August 1982. He is a graduate in Mechanical Engineering from

the Singapore Polytechnic. He is a businessman and entrepreneur and has more than 30 years of experience dealing in home appliances, granite,

tiles, engineering, cables and trucks. He has more than 15 years experience in property development.

Mr Lim Soo Kong is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee. He also

sits on the Board of several subsidiary companies of the Group. He is a director and shareholder in Casa Holdings Limited, (a company listed on

Singapore Exchange Limited), which holds shares in Fiamma Holdings Berhad.

He does not have any family relationship with any director and/or major shareholder of Fiamma Holdings Berhad. He attended three of the four

board meetings held during the fi nancial year ended 30 September 2010.

Kok Sau Chun (Non-Executive Director) / Malaysian

Madam Kok Sau Chun, 51, is a Non-Independent Non-Executive Director of Fiamma Holdings Berhad. She was appointed to the Board of

Fiamma Holdings Berhad on 30 March 1992. She has held various administrative positions prior to her appointment. She also sits on the Board of

several subsidiary companies of the Group.

Madam Kok Sau Chun is the spouse of Mr Lim Choo Hong. She attended all the four board meetings held during the fi nancial year ended

30 September 2010.

Dr. Teh Chee Ghee (Non-Executive Director) / Malaysian

Dr. Teh Chee Ghee, 44, is an Independent Non-Executive Director of Fiamma Holdings Berhad. He was appointed to the Board of Fiamma Holdings

Berhad on 4 July 2001. He is currently the General Manager, Strategic Planning and Operations of TSH Resources Berhad. He holds a Doctor of

Philosophy degree in Trade Credit Management, a Master of Business Administration degree and an Honours Degree in Accounting, all from

University Malaya. He is a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certifi ed Public Accountants (MICPA)

and have served as a Council Member of MICPA from the year 2002 to 2006. He is a fellow member of the Chartered Association of Certifi ed

Accountants(FCCA), United Kingdom and the Chartered Tax Institute of Malaysia. He is also a member of the Association of Credit Management

Malaysia.

Dr. Teh commenced his career in 1990 in Arthur Andersen-HRM (Management Services) Sdn Bhd as an Associate Consultant. He also served in the

audit and business advisory division of Arthur Andersen & Co. between the years 1990 to 1994. He joined CWS Hygiene Sdn Bhd (CWS) as the

Finance & Administration Manager in 1994 and when the Zuellig Group acquired CWS in 1995, he was appointed the Regional Financial Controller

of Gold Coin Feedmills (M) Sdn Bhd. He joined Engtex Sdn Berhad as the Group Financial Controller in 1996 and was the Personal Assistant to the

Group Managing Director and Company Secretary of Engtex Group Berhad between September 2002 and May 2006. He served TH Group Berhad

from June 2006 to October 2010 as the Personal Assistant to the Group Managing Director. He was also the Acting Chief Operating Offi cer of

NCI Hospital (owned by Asiaprise Biotech Sdn Bhd, a wholly-owned subsidiary of TH Group Berhad) in Nilai from February 2010 to October 2010.

Dr. Teh also sits on the Board of Engtex Group Berhad as an Independent Non-Executive Director.

Dr. Teh is a member of the Audit Committee, Nomination and Remuneration Committee. He does not have any family relationship with any

director and/or major shareholder of Fiamma Holdings Berhad. He attended all the four board meetings held during the fi nancial year ended

30 September 2010.

DIRECTORS’ PROFILE


Margaret Chak Lee Hung (Non-Executive Director) / Malaysian

Ms Margaret Chak Lee Hung, 38, is a Non-Independent Non-Executive Director of Fiamma Holdings Berhad. She was appointed to the Board of

Fiamma Holdings Berhad on 28 February 2008.

She is the Group Financial Controller and Company Secretary of Casa Holdings Limited (“Casa”), a company listed on Singapore Exchange Limited,

and is responsible for all aspects of fi nancial management, accounting and company secretarial functions of the Casa Group. She joined Casa in

October 2005 and has more than 15 years of experience in fi nancial management and accounting. She holds a Bachelor of Economics (major in

Accountancy) Degree from Macquarie University, Sydney and is a member of the Institute of Certifi ed Public Accountants of Singapore.

She does not have any family relationship with any director and/or major shareholder of Fiamma Holdings Berhad. She attended all the four board

meetings held during the fi nancial year ended 30 September 2010.

Other Information

a. Confl ict of Interest The Company has entered into recurrent related party transactions with parties in which the directors of the Company, namely Lim Choo Hong and Lim Soo Kong have direct

and /or indirect interest. Kok Sau Chun is interested in the recurrent related party transactions by virtue of being spouse to Lim Choo Hong. Margaret Chak Lee Hung is deemed

to be a person connected to Lim Soo Kong (“LSK”) as she is accustomed to act in accordance with the directions and instruction of LSK. Therefore, Margaret Chak Lee Hung

is deemed interested in the recurrent related party transactions.

Save for the above mentioned disclosure, none of the other directors have any confl ict of interest with the Company.

b. Conviction of Offences None of the Directors have any conviction for offences within the past 10 years other than traffi c offences.


Note:

The effective ownership interest held by Fiamma Holdings Berhad in Sunrise Stream Sdn Bhd (“Sunrise Stream”) is NIL in 2010 (2009: NIL) as Sunrise Stream is under liquidation and the Company can no longer exercise signifi cant infl uence over Sunrise Stream.

corporate structureas at 31 December 2010

FIAMMA HOLDINGS BERHAD88716-W

100% Fiamma Sdn Bhd

100% Fimaco Sdn Bhd

70% Fiamma Trading Sdn Bhd

100% Itatech Sdn Bhd

100% Active Edge Sdn Bhd

100% FHB Management Sdn Bhd

100% Fiamma Development Sdn Bhd

100% Fiamma Land Sdn Bhd

70% Enex-Dynamic Sdn Bhd

70% Kingston Medical Supplies (Pte) Ltd

100% Uniphoenix Jaya Sdn Bhd

100% Oaksvilla Sdn Bhd

100% Fiamma Logistics Sdn Bhd

100% Exact Quality Sdn Bhd

100% MEC Marketing Sdn Bhd

99.99% Ebac Kitchen Sdn Bhd

100% Affl uent Crafts Sdn Bhd

100% Haustern Sdn Bhd (formerly known as Arif Industries Sdn Bhd)

100% Kinsmedic Sdn Bhd


Profit for the financial year attributable to shareholdersRM’000

8,9943,183 20,48214,50415,310

’06 ’07 ’10’09’08

Basic earnings per share

sen

11.413.84 17.3713.1120.45

’06 ’07 ’10’09’08

Net assets per share

RM

1.531.41 1.611.481.71

’06 ’07 ’10’09’08

2006 RM’000

2007 RM’000

2008RM’000

2009RM’000

2010RM’000

PROFITABILITY

Revenue 91,963 121,429 162,943 178,191 200,688

Operating profi t before depreciation, fi nance cost, foreign exchange gain/losses and tax 8,046 16,323 28,306 28,388 36,228

Profi t before taxation 4,124 12,552 22,029 21,795 30,252

Profi t for the fi nancial year attributable to shareholders 3,183 8,994 15,310 14,504 20,482

KEY BALANCE SHEET DATA

Total assets 139,361* 166,604 231,511 268,950 278,745

Cash and bank balances and deposits with fi nancial institution 15,821 19,361 12,315 24,493 26,228

Share capital 85,845 85,845 85,845 125,149 125,149

Shareholders’ funds 112,697 120,330 134,810 174,068 189,643

SHARE INFORMATION

Basic earnings per share (sen) 3.84 11.41 20.45* 13.11 17.37

Gross dividend per share (sen) 2.00 5.00 3.00 4.00 5.50

Dividend pay-out 1,572 3,931 2,653 4,717 6,485#

Net assets per share (RM) 1.41* 1.53 1.71 1.48 1.61

Five Year Group Financial Summary

* restated # proposed

fi nancial highlights


chairman’sstatement

On behalf of the Board of Directors of Fiamma Holdings Berhad

(Fiamma), I present to you the Annual Report and Audited Financial

Statements of our Company and Group for the fi nancial year ended

30 September 2010.

F I N A N C I A L R E S U LT S

Fiamma’s performance continued to strengthen in fi nancial year

2010, contributed by the improvement in the domestic economy

and increase in domestic spending in the year under review. I am

very pleased to report that Fiamma recorded a growth in revenue

of 12.63% from RM178.191 million in financial year 2009 to

RM200.688 million in fi nancial year 2010. The increase in Group

revenue was mainly due to strong performance of the trading and

services segment arising from increase in demand for the Group’s

products as well increase in product range.

The Group ’s p ro f i t be fo re t ax g rew by 38 .80% f rom

RM21.795 million for the previous fi nancial year to RM30.252 million

for the current fi nancial year, registering a new record for the profi t

before tax of the Group.

R E V I E W O F O P E R AT I O N S

Existing businesses

Financial year 2010 was another year of healthy growth for Fiamma

with several trading subsidiaries recording double digit growth in

revenue as well profi ts. During the year, the Group launched new

product ranges for built-in appliances, freezers, wine chillers, ceiling

fans and water heaters. The Group’s continued harnessing of its core

competencies and competitive edge has contributed signifi cantly to

its improved performance. Its aggressive advertising and promotional

strategies have also paid dividends. The Group also focused on brand

building and continued to enhance its customer as well as product

base whilst not losing focus on quality product sourcing and effi cient

delivery and after-sales services.

Property development

Fiamma’s property development activities in Kota Tinggi is ongoing.

During the fi nancial year, 16 units of double storey terrace houses

were launched and completed. Another 20 units of double storey

terrace houses were launched in the second quarter of fi nancial year

2010 and completion is expected in fi nancial year 2011.

Fiamma Land Sdn Bhd has obtained a conditional approval for the

proposed commercial development of land located in the vicinity of

Jalan Yap Kwan Seng in Kuala Lumpur and is now waiting for the

approval for the development order and the other relevant approvals.

The proposed commercial development of land in the vicinity of

Jalan Tuanku Abdul Rahman by Fiamma Development Sdn Bhd is still

pending approvals from relevant authorities.

P R O S P E C T S

The Malaysian economy registered a growth of 5.3% in the third

quarter of 2010 driven by domestic demand amid slowing external

demand. The expansion in domestic demand was supported by

private sector spending. The slowdown in the global economy has

led to the moderation in external demand. Domestic demand

expanded by 5.0% in the third quarter (2Q 10: 7.9%) led by a

sustained expansion in both private and capital spending. Private

consumption recorded a growth of 7.1% supported by favourable

labour market conditions and positive consumer confi dence.


Going forward, there is increased uncertainty over the sustainability

of global economic recovery. As the advanced economies continue

to be confronted with weak labour markets and fragile fi nancial

sectors, there are concerns over the limited policy fl exibility given

the immediate term need to address the fi scal position. In contrast,

most Asian economies remain on a fi rm recovery path, supported by

the strength of the domestic activity. New challenges are emerging in

the form of large and volatile capital infl ows into the regional

economies. Going forward, the quantitative easing measures by major

central banks will continue to have an infl uence on the magnitude

of capital infl ows to emerging economies.

Amid the moderation in global recovery, the pace of growth of the

Malaysian economy will be infl uenced by the expected continued

slowdown in external demand. Overall, growth will continue to be

supported by robust domestic economic activity. Private consumption

will benefit from the favourable employment situation, firm

commodity prices and the accommodative fi nancing environment.

Capital spending in domestic-oriented sectors and the economic

transformation programmes by the Government will underpin the

growth of private investment.

(Source :Economic and Financial Developments in the Malaysian

Economy in the Third Quarter of 2010, Bank Negara Malaysia)

Given the moderation in global recovery which will affect the pace of

growth of the Malaysian economy, Fiamma expects the coming year

to be challenging as it will be dependent on the performance of the

domestic economy. Nevertheless, Fiamma will continue to build on its

strengths and expertise by drawing on our proven winning strategies

to elevate our performance to new heights. We will continue to focus

on brand building and nurture our work force to achieve our objective

of being a performance driven organization. We will have unity in

growth and aspirations amidst our diverse brands and products.

The property development activities of Uniphoenix Jaya Sdn Bhd

and Oaksvilla Sdn Bhd in Kota Tinggi, Johor will continue with new

launches in 2011. The two vacant pieces of land that are strategically

located in the vicinity of Jalan Tuanku Abdul Rahman and Jalan Yap

Kwan Seng in Kuala Lumpur City Centre and which are intended for

commercial development, are expected to have good development

potentials for high end commercial properties. Construction will

commence when approvals from all relevant authorities have been

obtained.

D I V I D E N D S

In line with the increase in profitability, the Board is pleased

to recommend a final single tier dividend of 5.5% per share

totaling RM6.485 million in respect of the fi nancial year ended

30 September 2010, subject to shareholders’ approval at the

forthcoming Annual General Meeting.

A C K N O W L E D G E M E N T

On behalf of the Board and the Company, I would like to once again

thank our management team and staff for their commitment,

dedication and team work which has contributed to the Group’s

strong performance this fi nancial year and look forward to their

continued support. I would also like to express our gratitude to our

valuable shareholders, dealers and suppliers, business associates,

fi nancial institutions and the regulatory authorities for their continued

loyalty, trust and support to the Group. To my fellow board members,

thank you for your invaluable support and contributions.

Tan Sri Dato’ Azizan Bin Husain

Chairman


Audit Committee Report

The Board of Directors of Fiamma Holdings Berhad is pleased to present the report on the Audit Committee for the fi nancial year ended

30 September 2010.

1 . COMP OS IT I ON AND ATTENDANCE

The Audit Committee during the fi nancial year comprises the following members:-

Members No. of Meetings

Attended

Tan Sri Dato’ Azizan bin Husain

Chairman, Independent Non-Executive Director

4/4

Dr Teh Chee Ghee


4/4

Lim Soo Kong


3/4

The Audit Committee met four times during the fi nancial year on 26 November 2009, 25 February 2010, 25 May 2010 and 26 August 2010.

2 . TE RMS OF REFERENCE

Objectives

The Audit Committee was established in 1997 to act as a Committee of the Board of Directors. The primary function of the Audit Committee

(“Committee”) is to assist the Board of Directors (“the Board”) in fulfi lling the following objectives on the activities of the Group:-

a) Oversee and appraise the quality of the audits conducted by the Company’s internal and external auditors;

b) Maintain open lines of communication between the Board, the internal auditors and the external auditors for the exchange of views

and information, as well as to confi rm their respective authority and responsibilities; and

c) Determine the adequacy of the Group’s administrative, operating and accounting controls.

Composition

The Committee shall be appointed by the Board from amongst the directors and shall consist of not less than three members. All members

of the Committee shall be Non-Executive directors with a majority independent and at least one must be a member of the Malaysian Institute

of Accountants or possesses such other qualifi cations and/or experience as approved by Bursa Malaysia Securities Berhad.

The Chairman of the Committee shall be an Independent Non-Executive director appointed by the Board. He shall report on each meeting

of the Committee to the Board.

The Board shall review the terms of offi ce and performance of the Committee and each of its members at least once every three years to

determine whether the Committee and its members have carried out their duties in accordance with the terms of reference.


AUDIT COMMITTEE REPORT

Frequency of Meetings

Meetings shall be held not less than three times a year and the majority of the members present must be independent non-executive

Directors. The Chief Finance Offi cer and the Internal Audit Manager are normally in attendance at the meetings. Other members of the

Board and Management as well as the external auditors are invited to attend the meetings upon the invitation of the Committee.

The Company Secretary or other appropriate senior offi cial shall act as the Secretary of the Committee and shall be responsible, in conjunction

with the Chairman, for drawing up the agenda and circulating it, supported by relevant papers to the members prior to each meeting.

The Secretary shall also be responsible for recording the minutes of meetings of the Committee and circulating them to the members and

to the other members of the Board.

A quorum shall consist of two members and a majority of the members present must be independent directors. In the event of any

vacancies in the Committee resulting in the number of members reduced to below three, the Board shall within three months of that event,

appoint such number of new members to fi ll up the vacancy.

The Committee shall meet at least twice a year with the external auditor to discuss any matters without the presence of executive board

members of the Company.

Authority

The Committee is authorised by the Board :-

a) to investigate any activity within its terms of reference and shall have unrestricted access to both the internal and external auditors and

to all employees of the Group;

b) to have the resources which are required to perform its duties;

c) to have full and unrestricted access to any information pertaining to the Company;

d) to have direct communication channels with the internal and external auditors;

e) to obtain external legal or other independent professional advice whenever necessary; and

f) to convene meetings with the external auditors, without the attendance of the executive members of the committee, whenever

deemed necessary.

Responsibilities and Duties

The Committee shall undertake the following responsibilities and duties:-

a) Recommend the nomination and appointment of the external auditors as well as the audit fee;

b) Discuss with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of the audit

and to ensure co-ordination of audit where more than one audit fi rm is involved;

c) Review the quarterly results and year-end fi nancial statements of the Group, before submission to the Board, focusing particularly on:-

• changes in or implementation of major accounting policies;

• signifi cant adjustments and unusual events arising from the audit;

• the going concern assumption; and

• compliance with applicable approved fi nancial reporting standards and other legal and regulatory requirements;

d) Discuss problems and reservations arising from the interim and fi nal audits, and any matter the external auditors may wish to discuss,

in the absence of management where necessary;

e) Discuss with the external auditors, their evaluation of the system of internal controls, the management letter and management’s

response and the audit report;



f) Review the effectiveness of internal control systems and to consider major fi ndings of internal investigations and management’s

response;

g) Establish the following with regard to the internal audit functions :-

• Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary

authority to carry out its work;

• Review the internal audit plan and the results of the internal audit process and where necessary, ensure that appropriate action

is taken on the recommendations of the internal audit function;

• Approve any appointment and termination of the internal auditors;

h) Review any related party transaction and confl ict of interests situation that may arise within the Company or Group including any

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

i) Consider the resignation and dismissal of the external auditors;

j) Report promptly any matters resulting in the breach of the Bursa Securities Listing Requirements to the Board. Where the Committee

is of the opinion that such matter reported by it to the Board has not been satisfactorily resolved, the Committee shall promptly report

such matter to Bursa Securities; and

k) Carry out any other activities as may be authorised by the Board.

3 . S UMMARY OF ACT IV IT IES DUR ING THE YEAR

The Committee met four times during the fi nancial year: on 26 November 2009, 25 February 2010, 25 May 2010 and 26 August 2010.

The main activities undertaken by the Audit Committee during the fi nancial year ended 30 September 2010 were as follows:-

a) Reviewed the quarterly reports and annual fi nancial statements of the Group and the Company prior to submission to the Board of

Directors for consideration and approval and subsequent release to the Bursa Malaysia Securities Berhad;

b) Reviewed the external auditors’ scope of work and audit plan, prior to the commencement of audit work;

c) Reviewed with the external auditors, the audit fi ndings, the audit report and management letters including management’s response;

d) Reviewed the internal audit reports and discussed the fi ndings and recommendations by the internal auditors;

e) Reviewed the Group’s key operational and business risks areas and the Group’s risk management policies in place to address and minimise

these risks;

f) Reviewed the related party transactions entered into by the Group and the Company and the disclosure of such transactions in the

annual report of the Company;

g) Reviewed the proposals and circular to shareholders in connection with recurrent related party transactions of a revenue or trading

nature;

h) Reviewed and recommended to the Board of Directors for approval the Audit Committee Report, the Statement on Internal Control

and Statement on Corporate Governance for inclusion in the Company’s Annual Report; and

i) Met with external auditors (without the presence of the Board) on 26 November 2009 to discuss audit fi ndings for the fi nancial year

ended 30 September 2009 and on 26 August 2010 to discuss audit planning for the fi nancial year ended 30 September 2010.



4 . I NTE RNAL AUDIT FUNCT ION

The Committee is supported by the internal audit function. The internal audit function (“IA”) is considered an integral part of the assurance

framework and its primary mission is to provide assurance on the adequacy and effectiveness of the risk, control and governance framework of

the Company and Group. The IA is independent of the activities and operations of the Group. The IA reports directly to the Audit Committee.

The total cost incurred in managing the internal audit function in fi nancial year 2010 was RM68,000.00.

The main role of the internal auditors is to assist the Committee and the Board in monitoring and managing risks and internal controls of

all the companies in the Group by undertaking regular and systematic reviews of the system of internal control so as to provide reasonable

assurance that such systems continue to operate satisfactorily and effectively in the Group. The internal auditors meet and report to the

Committee at least three times a year.

The Group’s internal audit function adopts a risk-based approach to the implementation and monitoring of the effectiveness of the Group’s

internal control systems. This monitoring process will form the basis for continually improving the risk management process of the Group in

meeting its overall goals.

5 . CONT I NU ING EDUCAT ION

During the fi nancial year, members of the Audit Committee attended the following training programmes:-

Directors Training Programmes

Tan Sri Dato’ Azizan bin Husain Character First

Lim Soo Kong Character First

Dr Teh Chee Ghee Supply Chain Management in the Malaysian Construction Industry

Audit Committee Institute Roundtable Discussion titled: Going Forward:

Risk & Reform - Implications for Audit Committee Oversight

Character First

APHM International Healthcare Conference 2010


Statement on Corporate Governance

The Board of Fiamma Holdings Berhad (“Fiamma”) recognises the importance of adopting high standards of corporate governance in order to

protect shareholders’ interest and to enhance shareholder’s value. As such, the Board of Fiamma strives to promote a strong culture of transparency,

accountability, integrity as well as corporate performance within the Group.

The Board is pleased to present below, a statement on the application of the principles and the extent of compliance with the Best Practices as set

out in the Malaysian Code on Corporate Governance (“Code”).

PART A – BOARD OF D IRECTORS

The Board is overall responsible for corporate governance, strategic direction, establishing corporate goals and monitoring the achievement of

these goals.

a) Board Meetings The Board ordinarily meets at least four times in a fi nancial year with additional meetings being convened as necessary. The Board met

on four (4) occasions during the fi nancial year ended 30 September 2010, on 26 November 2009, 25 February 2010, 25 May 2010 and

26 August 2010.

The members of the Board and their attendance at the meetings were as follows: -

Name of Directors No. of meetings attended

Tan Sri Dato’ Azizan Bin Husain (Chairman)* 4/4

Lim Choo Hong 4/4

Lim Soo Kong 3/4

Dato’ Bahar Bin Ahmad 4/4

Kok Sau Chun 4/4

Dr Teh Chee Ghee* 4/4

Margaret Chak Lee Hung 4/4

* Denotes Independent Non-Executive Director

b) Board Balance The Board currently has seven members comprising two Independent Non-Executive Directors, three Non-Independent

Non-Executive Directors and two Executive Directors. The Board has complied with paragraph 15.02 of the listing requirements of the

Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires the number of Independent Directors to make up at least two or one-

third, (whichever is the higher) of the membership of the Board.

The Fiamma Board comprises experienced businessmen and qualifi ed professionals. The Directors with their differing backgrounds, collectively

bring with them extensive experience and expertise in areas such as business development, fi nance, corporate affairs, marketing and

operations. A brief profi le of each Director is presented on pages 3 to 5 of the Annual Report.

There is a distinct and clear division of responsibility between the Chairman who is an Independent, Non-Executive Director and the

Chief Executive Offi cer (CEO)/Group Managing Director. The Chairman is responsible for ensuring Board effectiveness and conduct whilst

the CEO has overall responsibilities over the operating units, organisational effectiveness and implementation of Board policies and decisions

as well as developing and implementing business and corporate strategies. The Independent Non-Executive Directors provide independent

judgment and views and advice for the interest of the Group as well as the shareholders and investors.


STATEMENT ON CORPORATE GOVERNANCE

c) Supply of Information All Directors have full access to information concerning the Company and the Group. The Directors are provided with the relevant agenda

and a set of Board papers in suffi cient time prior to every Board meeting to enable them to obtain further information and explanation,

where necessary in order to be adequately informed before the meeting. The Board papers circulated include quarterly reports and annual

fi nancial statements, minutes of meetings of all Committees of the Board, report on recurrent related party transactions, updates from all

regulatory authorities, internal and external audit reports and reports on the Group’s fi nancial, operational and corporate developments.

All matters requiring Board approvals are also circulated prior to the Board Meetings and, during Board Meetings these matters are duly

discussed and deliberated with senior management and advisers where necessary, before decisions are made. The Directors also have access

to the advice and services of the Company Secretaries, senior management staff as well as to independent professional advisers including

the external auditors.

d) Board Committees The following Board Committees have been established to assist the Board in the execution of its duties. The terms of reference of these

Committees have been approved by the Board.

i) Audit Committee The Audit Committee was established in 1997. The composition, responsibilities, detailed terms of reference and the

activities of the Audit Committee during the fi nancial year are set out separately in the Audit Committee Report on pages 17 to 20 of

the Annual Report.

ii) Nomination Committee The Nomination Committee was established in May 2001. The Committee meets at least once a year. The members of the

Nomination Committee who served during the fi nancial year are:-

Tan Sri Dato’ Azizan Bin Husain (Chairman) Non-Executive Director – Independent

Dr. Teh Chee Ghee Non Executive Director – Independent

Mr. Lim Soo Kong Non Executive Director – Non-Independent

The Nomination Committee is responsible for identifying new nominees to the Board as well as to assess the effectiveness of the Board

and each individual Director.

The Nomination Committee met once during the fi nancial year.

iii) Remuneration Committee The Remuneration Committee was established in May 2001. The Committee meets at least once a year. The members of the Remuneration

Committee who served during the fi nancial year are:-

Mr. Lim Soo Kong (Chairman) Non Executive Director – Non-Independent

Mr. Lim Choo Hong CEO/Group Managing Director

Dr. Teh Chee Ghee Non Executive Director - Independent

The Remuneration Committee is responsible for determining the remuneration packages of the Executive Directors.

The Remuneration Committee met once during the fi nancial year.

In addition to the above Board Committees, the Board has identifi ed Tan Sri Dato’ Azizan bin Husain as the Senior Independent

Director of Fiamma to whom concerns may be conveyed.



e) Appointments to the Board The terms of reference of the Nomination Committee include the recommending of new candidates to the Board, Directors to fi ll the

seats on Board Committees and assessing the effectiveness of the Board and Board Committees. The Nomination Committee also assists

the Board to review annually, the required mix of skills and experience of the Non-Executive Directors.

f) Directors’ Training All the Directors have attended the Mandatory Accreditation Programme prescribed by the Bursa Securities. The Board is responsible for

evaluating and determining the training needs of its directors on a continuous basis.

All the Directors have attended at least one training programme for the fi nancial year ended 30 September 2010. The Directors will

continue to undergo relevant programmes and seminars to further enhance their knowledge and to keep abreast with developments in

the market place to enable them to discharge their duties and responsibilities more effectively. An in-house training programme was held on

25 May 2010 which was attended by all the Directors. The training programmes attended by the Directors during the fi nancial year ended

30 September 2010 included the following:

Directors Training Programmes Tan Sri Dato’ Azizan bin Husain Character First

Lim Choo Hong Character First

Smart Investment In Property Seminar (VIII) 2010

“Malaysia Properties : Bubble or Boom?”

Lim Soo Kong Character First

Dato’ Bahar bin Ahmad Character First

Corporate Governance & Media

Kok Sau Chun Character First

Dr Teh Chee Ghee Supply Chain Management in the Malaysian Construction Industry

Audit Committee Institute Roundtable Discussion titled : Going Forward :

Risk & Reform – Implications for Audit Committee Oversight

Character First

APHM International Healthcare Conference 2010

Margaret Chak Lee Hung Character First

Advanced Corporate Tax

g) Re-election of Directors In accordance with the Company’s Articles of Association, all Directors appointed by the Board are subject to election by the

shareholders at the fi rst Annual General Meeting (AGM) after their appointment. One-third of the existing remaining Directors including

the CEO/Group Managing Director are required to submit themselves for re-election by rotation at least once every three years at each AGM.



PART B – D IRECTORS ’ REMUNERAT ION

The Remuneration Committee recommends to the Board the remuneration framework and remuneration package of the Executive Directors. The

level of remuneration refl ects the experience and level of responsibilities undertaken by the Executive Directors. The determination of the fees of

the Non-Executive Directors is decided by the Board as a whole.

Details of Directors’ Remuneration The Company’s remuneration scheme is linked to performance, experience and scope of responsibilities. The aggregate Directors’ remuneration

paid or payable to all Directors of the Company by the Group for the fi nancial year ended 30 September 2010, and categorised into appropriate

components and bands are as follows:-

Fees

(RM)

Salaries,

Allowance/ EPF

(RM)

Bonus

(RM)

Benefi ts-In-Kind

(RM)

Total

(RM)

Executive Directors 399,000 985,440 243,000 59,800 1,687,240

Non-Executive Directors 303,000 48,000 – – 351,000

Total 702,000 1,033,440 243,000 59,800 2,038,240

No. of Directors

Remuneration Bands Executive Non-Executive Total

RM1 – RM50,000 – 2 2

RM50,001 – RM100,000 – 1 1

RM100,001 – RM150,000 – 2 2

RM300,001 – RM350,000 1 – 1

RM1,350,001 – RM1,400,000 1 – 1

Total 2 5 7

PART C – RE LAT IONS WITH SHAREHOLDERS AND INVESTORS

The Group is fully aware of the importance of effective and timely communication with shareholders and investors to keep them informed on

the Group’s latest financial performance, business and corporate developments. Such information is disseminated via the Company’s

annual reports, quarterly fi nancial reports, circulars to shareholders and the various announcements made during the year.

The Annual General Meeting (AGM) remains the principle avenue for dialogue with shareholders and investors, where they may seek

clarifi cations on the Group’s performance, major developments of the Group as well as on the resolutions being proposed. Members of the Board

as well as the external auditors are present to answer questions raised.

In addition, shareholders and investors can access the Group’s website at www.fi amma.com.my for information on the Group. The shareholders

and investors are also able to access the latest corporate, fi nancial and market information of the Company via the Bursa Malaysia Berhad

website at www.bursamalaysia.com.



PART D – ACCOUNTABIL I TY AND AUDIT

a) Financial Reporting The Board is committed to presenting a balanced and meaningful assessment of the Group’s fi nancial performance and prospects at the

end of the fi nancial year, primarily through the annual fi nancial statements and quarterly announcement of the fi nancial results to

Bursa Malaysia Securities Berhad. The Board is assisted by the Audit Committee to ensure accuracy, adequacy and completeness of

the information to be disclosed.

b) Directors’ Responsibility for Preparing the Annual Audited Financial Statements The Board is responsible for ensuring that the fi nancial statements give a true and fair view of the fi nancial position of the Group and of

the Company as at the end of the accounting period. In preparing the fi nancial statements, the Directors have ensured that fi nancial

statements have been drawn up in accordance with Financial Reporting Standards and the Companies Act 1965.

c) Internal Control The Board acknowledges that it is responsible for maintaining a sound system of internal control which provides reasonable assurance

of effective and effi cient operations, and compliance with regulations as well as with internal procedures and guidelines. The Statement

on Internal Control of the Group as set out on Page 28 of the Annual Report provides an overview of the state of internal controls within

the Group.

d) Relationship with the Auditors Through the Audit Committee, the Group has established a transparent and appropriate relationship with the Group’s internal and

external auditors. The Audit Committee meets with the external auditors at least twice a year to review audit plans, audit reports and to

facilitate exchange of views on issues requiring attention. In addition, audit fi ndings and reports are highlighted to the Audit Committee

and Board.

e) Corporate Social Responsibility The Group is committed to sustainable development and regards safety, health and environment an integral part of its business. The Group

acknowledges its corporate social responsibility in the community and will continue to support worthy causes. During the fi nancial year, the

Group has contributed towards fund raising projects for needy individuals as well as organisations.

PART E – OTHE R INFORMAT ION

a) Non-Audit Fees The amount of non-audit fees paid and payable to external auditors by the Company and its subsidiaries for the fi nancial year ended 30

September 2010 amounted to RM7,000.00.

b) Profi t Forecast Not applicable as no profi t forecast was published.



c) Share Buy-back The Company did not undertake any share buy-back for the fi nancial year ended 30 September 2010. All the shares purchased by the

Company todate were retained as treasury shares. As at 30 September 2010, a total of 7,234,900 shares were retained as treasury shares.

d) Imposition of Sanctions/Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory

authorities.

e) Revaluation of Landed Properties The Group revalues its properties comprising land and buildings every fi ve years and at shorter intervals whenever the fair value of the

revalued assets is expected to differ materially from their carrying value. The Group last revalued its properties in September 2008.

f) Material Contracts There were no material contracts entered into by the Group involving Directors’ or major shareholders’ interest during the fi nancial year.

g) Recurrent Related Party Transactions of a Revenue and Trading Nature Recurrent related party transactions of a revenue and trading nature of the Group conducted during the fi nancial year ended 30 September

2010 were as follows:-

Related Parties involved with Fiamma Holdings

Berhad (“Fiamma”) and/or its subsidiaries Relationship Nature of Transactions RM’000

Fiamma Trading Sdn Bhd (“FTSB”) Note 1 Purchases of home appliances 1,252

Sales of sanitaryware and products 605

Rental paid 306

Warehouse rental and charges paid 1,530

After sales service charges paid 664

Kinsmedic Sdn Bhd (“Kinsmedic”) Note 2 Rental paid 141

Warehouse rental and charges paid 396

Enex-Dynamic Sdn Bhd (“Enex”) Note 3 Rental paid –

Warehouse rental and charges paid 2

Purchase of water fi ltration products

and home appliances 306

Sales of water fi ltration products 1,224

Yongkang Puneng Electric Co Ltd (“Yongkang”) Note 4 Sales of kitchen appliances 1,998

Lim Choo Hong (“LCH”) Note 5 Rental of warehouse 23



Notes:

1. FTSB is a 70% owned subsidiary of Fiamma. Ching Wooi Kong, the other shareholder is also the Managing Director of FTSB, reporting to the Group Managing

Director, Lim Choo Hong(“LCH”). LCH holds 22.97% equity interest in Fiamma.

2. Kinsmedic is a 100% owned subsidiary of Kingston Medical Supplies Pte Ltd (“Kingston”) which is a 70% subsidiary of Fiamma. Ching Wooi Kong, the other

shareholder is also the Managing Director of both Kingston and Kinsmedic, reporting to the Group Managing Director, LCH. LCH holds 22.97% equity interest

in Fiamma.

3. Enex is a 70% owned subsidiary of Fiamma. Ching Wooi Kong is also the MD of Enex, reporting to the Group Managing Director, LCH. LCH holds 22.97% equity

interest in Fiamma.

4. Hu Zhong Huai (“HZH”) is an Executive Director and substantial shareholder of Casa Holdings Ltd (“CHL”). CHL is a substantial shareholder of Fiamma and HZH

is a deemed substantial shareholder of Fiamma through CHL by virtue of his substantial interest in CHL. The entire registered share capital of Yongkang is owned

by HZH and members of his immediate family.

5. LCH is a director of Fiamma and Ebac Kitchen Sdn Bhd (“Ebac”). Ebac is a 99.99% owned subsidiary of Fiamma which pays warehouse rental to LCH. LCH holds

22.97% equity interest in Fiamma.

PART F – COMP L IANCE STATEMENT

The Company has complied with all the Best Practices of Corporate Governance set out in Part 2 of the Code during the fi nancial year except

for the disclosure of details of the remuneration of each Director. The Board is of the view that the transparency and accountability aspects of

corporate governance on disclosure of Directors’ Remuneration by applicable bands of RM50,000 (which complies with the disclosure requirements

under the Bursa Securities Listing Requirements) are appropriately served by the band disclosure.


R E S P ONS IB I L I TY

The Board of Directors of Fiamma Holdings Berhad recognises its responsibility for maintaining a sound system of internal control and for reviewing its adequacy and integrity. The Board’s responsibility in relation to the system of internal control extends to all subsidiaries of the Group.

The system of internal control is designed to manage the principal business risks that may impede the Group from achieving its business objectives. Due to the limitations that are inherent in any system of internal control, the Group’s system of internal control can only manage rather than eliminate the risk of failure to achieve business objectives and therefore can only provide reasonable and not absolute assurance against material misstatement or loss.

R IS K MANAGEMENT

The Board of Directors regards risk management as an integral part of the Group’s business operations. Management is responsible for creating a risk-aware culture and for building the necessary knowledge for risk management.

The Board has assigned the Audit Committee with the duty of reviewing and monitoring the effectiveness of the Group’s system of internal control.

The Internal Audit Function assists the Audit Committee and the Board in the continuous process of identifying, evaluating and managing the signifi cant business risks faced by the Group.

The Board and Audit Committee are further assisted by the Group’s Risk Management Committee which comprises senior management and heads of department. The Risk Management Committee meets at least three times a year to review operational risks, identify new risk areas and assess losses incurred. Signifi cant issues are reported to the Audit Committee. In addition, confi rmation is provided by the heads of department on the effectiveness of internal control of their respective operating units on a quarterly basis.

KE Y FE ATURES OF THE SYSTEM OF INTE RNAL CONTROL

The Board of Directors is committed to maintaining a strong system of internal control for the proper conduct of the Group’s business operations to achieve the following objectives:

• Safeguard assets of the Group and shareholders’ interest

• Identify and manage risks affecting the Group

• Ensure compliance with regulatory requirements; and

• Ensure operational results are closely monitored and substantial variances are promptly explained.

Statement on Internal Control

The key features of the Group’s system of internal control are:

• An organisational structure with clearly defi ned lines of responsibility and delegated authority, which are properly communicated to all levels. Key responsibilities are properly segregated to ensure no one staff is in total control of the whole transaction.

• Financial results are reviewed quarterly by the Audit Committee and the Board.

• Key business risks are reviewed by the Board with the assistance of the Audit Committee, the Risk Management Committee and the Internal Auditors.

• The internal audit function, which reports directly to the Audit Committee conducts reviews on the system of internal control and the effectiveness of the process management in place to identify, manage and report risks. Weaknesses are properly communicated to management and staff to ensure prompt corrective actions are taken.

• The Chief Executive Officer (CEO) meets with the heads of department at least three times a year to discuss business, operational and key management issues. The CEO, the Executive Director and the Chief Finance Offi cer meet monthly to review the monthly fi nancial performance and cash fl ows of the companies in the Group.

• There is an effective reporting system in place to ensure timely generation of fi nancial information for management review.

• An annual budget is prepared to facilitate monitoring of the Group’s fi nancial performance and the actual monthly performance is reviewed against the budget.

• The Group has in place approval procedures for its purchases, operating and capital expenditure; and

• The Group has a centralised human resource function which outlines procedures for recruitment, training and appraisal.

INTERNAL AUDIT FUNCT ION

The Group’s internal audit function reports directly to the Audit Committee.

The internal audit team carries out the ongoing process of evaluating the effectiveness of the application of policies, processes and activities related to internal control and risk management.

The internal audit team also conducts audit review on high risk operational areas on a quarterly basis to ensure that appropriate action is taken in response to changes in risk and control assessments. These reports and proposed corrective actions are consolidated and tabled at the quarterly Audit Committee meetings for deliberation and approval. These reports are also presented to the Board by the Audit Committee.

This statement is made in accordance with a resolution of the Board of Directors dated 23 November 2010.

30directors’ report

34 balance sheets

36income statements

37consolidated statement of changes in equity

39cash fl ow statements

41notes to the fi nancial statements

81statement by directors

81 statutory declaration

82independent auditors’ report

fi nancialstatements


The Directors have pleasure in submitting their report and the audited fi nancial statements of the Group and of the Company for the fi nancial

year ended 30 September 2010.

PR I NC IPAL ACT IV IT IES

The Company is principally engaged in investment holding and property investment, whilst the principal activities of the subsidiaries are as stated

in Note 8 to the fi nancial statements. There has been no signifi cant change in the nature of these activities during the fi nancial year.

R E S ULTS

Group Company

RM’000 RM’000

Profi t for the fi nancial year 22,459 5,528

Attributable to:

Shareholders of the Company 20,482 5,528

Minority interests 1,977 –

22,459 5,528

R E S E R VE S AND PROVIS IONS

There were no material transfers to or from reserves and provisions during the fi nancial year under review except as disclosed in the fi nancial

statements.

DIV IDE NDS

Since the end of the previous fi nancial year, the Company paid a single tier dividend of 4 sen per ordinary share totaling RM4,716,000 in respect

of the fi nancial year ended 30 September 2009 on 9 April 2010.

The Directors recommend a fi nal single tier dividend of 5.5 sen per ordinary share totaling RM6,485,000 in respect of the fi nancial year ended

30 September 2010.

DIRE CTORS OF THE COMPANY

Directors who served since the date of the last report are:

Tan Sri Dato’ Azizan bin Husain

Lim Choo Hong

Dato’ Bahar bin Ahmad

Lim Soo Kong

Kok Sau Chun

Dr Teh Chee Ghee

Margaret Chak Lee Hung

Directors’ Reportfor the fi nancial year ended 30 September 2010


DIR ECTORS ’ INTERESTS

The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries)

of those who were Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM1.00 each

At At

1.10.2009 Bought Sold 30.9.2010

Shares in the Company

Fiamma Holdings Berhad

Lim Choo Hong

– direct interest 27,090,000 – – 27,090,000


– direct interest 90,000 – – 90,000

Lim Soo Kong

– direct interest 2,131,100 – – 2,131,100

Kok Sau Chun

– deemed interest 27,090,000 – – 27,090,000

Deemed interest through Casa Holdings Limited

Lim Soo Kong 32,301,000 – – 32,301,000

Lim Choo Hong 32,301,000 – – 32,301,000

Kok Sau Chun 32,301,000 – – 32,301,000

Number of warrants

At At

1.10.2009 Bought Sold 30.9.2010

Warrants in the Company


Lim Choo Hong

– direct interest 12,040,056 – – 12,040,056


– direct interest 40,000 – – 40,000

Kok Sau Chun

– deemed interest 12,040,056 – – 12,040,056

Deemed interest through Casa Holdings Limited

Lim Soo Kong 14,356,000 – – 14,356,000

Lim Choo Hong 14,356,000 – – 14,356,000

Kok Sau Chun 14,356,000 – – 14,356,000

DIRECTORS’ REPORT

for the fi nancial year ended 30 September 2010


DIRE CTORS ’ INTEREST (CONT INUED)

By virtue of their interests in the ordinary shares of the Company, Lim Choo Hong, Kok Sau Chun, Lim Soo Kong and Dato’ Bahar bin Ahmad are also

deemed interested in the ordinary shares of the subsidiaries during the fi nancial year to the extent that Fiamma Holdings Berhad has an interest.

The other Directors holding offi ce at 30 September 2010 do not have any interest in the ordinary shares of the Company and of its related

corporations during the fi nancial year.

DIRE CTORS ’ BENEF ITS

Since the end of the previous fi nancial year, no Director of the Company has received nor become entitled to receive any benefi t (other than a

benefi t included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the fi nancial statements or

the fi xed salary of a full time employee of related corporations) by reason of a contract made by the Company or a related corporation with the

Director or with a fi rm of which the Director is a member, or with a company in which the Director has a substantial fi nancial interest, other than

disclosed in Note 28 to the fi nancial statements.

There were no arrangements during and at the end of the fi nancial year which had the object of enabling Directors of the Company to acquire

benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

I SS UE OF S HARES AND DEBENTURES

There were no changes in the authorised, issued and paid-up capital of the Company during the fi nancial year.

There were no debentures issued during the fi nancial year.

OP T I ONS GRANTED OVER UNISSUED SHARES

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

At the end of the fi nancial year, 52,406,000 warrants remained unexercised. The warrants are in registered form and constituted by a deed poll and

entitle the registered holder to subscribe for one (1) new ordinary share of RM1.00 each in the Company at a price of RM1.00 per ordinary share

for every warrant held. The conversion ratio is subject to the aforesaid Deed Poll and can be exercised at any time during the ten year subscription

period expiring on 26 November 2018.

OTHE R S TATUTORY INFORMAT ION

Before the fi nancial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

(i) all known bad debts have been written off and adequate provision made for doubtful debts, and

(ii) all current assets have been stated at the lower of cost and net realisable value.

DIRECTORS’ REPORT



OT HER S TATUTORY INFORMAT ION (CONT INUED)

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 provision 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 Group and in the Company fi nancial statements misleading, or

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

misleading or inappropriate, or

(iv) not otherwise dealt with in this report or the fi nancial statements, that would render any amount stated in the fi nancial statements of the

Group and of the Company misleading.

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

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

of any other person, or

(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the fi nancial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period

of twelve months after the end of the fi nancial 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.

In the opinion of the Directors, the results of the operations of the Group and of the Company for the fi nancial year ended 30 September 2010

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 fi nancial year and the date of this report.

S IGNIF I CANT E VENT DUR ING THE F INANCIAL YEAR

The signifi cant event during the fi nancial year is disclosed in Note 30 to the fi nancial statements.

SUB SE QUE NT E VENT

The subsequent event is disclosed in Note 31 to the fi nancial statements.

AUDITORS

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

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

Lim Choo Hong Dato’ Bahar bin Ahmad

Kuala Lumpur,

3 December 2010

DIRECTORS’ REPORT



Group Company

Note 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Non-current assets

Property, plant and equipment 3 31,216 33,931 428 725

Intangible assets 4 1,046 1,046 – –

Prepaid lease payments 5 14,866 15,088 – –

Investment property 6 18,808 21,455 55,201 56,001

Land held for property development 7 59,943 59,943 – –

Investments in subsidiaries 8 – – 40,901 40,901

Investments in associates 9 – – – –

Receivables, deposits and prepayments 10 – – 51,204 38,297

Deferred tax assets 11 188 746 – –

Total non-current assets 126,067 132,209 147,734 135,924

Current assets

Property development costs 12 19,566 19,960 – –

Inventories 13 49,947 43,332 – –

Receivables, deposits and prepayments 10 56,655 48,498 210 130

Tax recoverable 282 458 21 70

Cash and cash equivalents 14 26,228 24,493 148 154

Total current assets 152,678 136,741 379 354

Total assets 278,745 268,950 148,113 136,278

Equity

Share capital 125,149 125,149 125,149 125,149

Treasury shares (5,775) (5,775) (5,775) (5,775)

Reserves 3,467 3,867 467 467

Retained earnings 66,802 50,827 10,944 10,132

Total equity attributable to shareholders of the Company 189,643 174,068 130,785 129,973

Minority interest 8,152 6,625 – –

Total equity 15 197,795 180,693 130,785 129,973

Balance Sheetsat 30 September 2010


Group Company

Note 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Non-current liabilities

Borrowings 16 – 8,460 – –

Deferred tax liabilities 11 8,145 8,269 3,553 3,626

Total non-current liabilities 8,145 16,729 3,553 3,626

Current liabilities

Payables and accruals 17 33,942 31,754 13,775 2,679

Borrowings 16 38,268 37,873 – –

Taxation 595 1,901 – –

Total current liabilities 72,805 71,528 13,775 2,679

Total liabilities 80,950 88,257 17,328 6,305

Total equity and liabilities 278,745 268,950 148,113 136,278

The notes on pages 41 to 80 are an integral part of these fi nancial statements.

BALANCE SHEETS

at 30 September 2010


Group Company

Note 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Revenue 18 200,688 178,191 7,372 5,939

Cost of sale (131,784) (124,208) (1,063) (955)

Gross profi t 68,904 53,983 6,309 4,984

Decrease in fair value of investment property (360) (148) (800) (837)

Other income 1,039 2,736 549 365

Distribution expenses (19,923) (14,872) – –

Administrative expenses (15,939) (15,006) (319) (416)

Other expenses (1,215) (2,076) (182) (119)

Operating profi t 19 32,506 24,617 5,557 3,977

Interest income 149 101 – –

Finance costs (2,403) (2,923) (1) (1)

Profi t before taxation 30,252 21,795 5,556 3,976

Tax expense 21 (7,793) (6,038) (28) (1,191)

Profi t for the fi nancial year 22,459 15,757 5,528 2,785

Attributable to:

Shareholders of the Company 20,482 14,504 5,528 2,785

Minority interests 1,977 1,253 – –

Profi t for the fi nancial year 22,459 15,757 5,528 2,785

Basic earnings per ordinary share (sen): 22 17.37 13.11


Income Statementsfor the fi nancial year ended 30 September 2010


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reco

gnise

d di

rect

ly in

equ

ity

–

Fore

ign

exch

ange

tran

slatio

n

diffe

renc

es

–

– –

– 8

5 –

–

85

– 85

Issua

nce

of R

ight

s Sha

res

39

,304

– –

– –

– –

39,3

04

– 39

,304

Capi

talis

atio

n fo

r Rig

hts S

hare

s

– –

– –

– –

(11,

791)

(1

1,79

1)

–

(11,

791)

Shar

e iss

ue e

xpen

ses

–

–

(1

91)

– –

– –

(191

) –

(1

91)

Profi

t fo

r the

fi na

ncia

l yea

r

– –

– –

– –

14,5

04

14,5

04

1,25

3 15

,757

Reva

luat

ion

rese

rve

trans

ferre

d

to

reta

ined

ear

ning

s

– –

– –

– (2

3)

23

– –

–

Divid

ends

to sh

areh

olde

rs

23

– –

– –

– –

(2,6

53)

(2,6

53)

– (2

,653

)

Divid

end

paid

by

a su

bsid

iary

to

min

ority

shar

ehol

ders

– –

– –

– –

– –

(307

) (3

07)

At 3

0 Se

ptem

ber 2

009/

1

Oct

ober

200

9

125,

149

(5,7

75)

46

421

149

3,25

1 50

,827

17

4,06

8 6,

625

180,

693

Net l

oss r

ecog

nise

d di

rect

ly in

equ

ity

–

Fore

ign

exch

ange

tran

slatio

n

diffe

renc

es

–

– –

– (1

91)

– –

(1

91)

–

(191

)

Profi

t fo

r the

fi na

ncia

l yea

r

– –

– –

– –

20,4

82

20,4

82

1,97

7 22

,459

Reva

luat

ion

rese

rve

trans

ferre

d

to

reta

ined

ear

ning

s

– –

– –

– (2

09)

209

– –

–

Divid

ends

to sh

areh

olde

rs

23

– –

– –

– –

(4,7

16)

(4,7

16)

–

(4,7

16)

Divid

end

paid

by

a su

bsid

iary

to

min

ority

shar

ehol

ders

– –

– –

– –

– –

(4

50)

(4

50)

At 3

0 Se

ptem

ber 2

010

12

5,14

9 (5

,775

) 46

42

1 (4

2)

3,04

2 66

,802

18

9,64

3 8,

152

197,

795

Consolidated Statement of Changes in Equityfor the fi nancial year ended 30 September 2010


Non-distributable Distributable

Share Treasury Share Capital Retained Total

Note capital shares premium reserve earnings equity

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 October 2008 85,845 (5,775) 237 421 21,791 102,519

Profi t for the fi nancial year – – – – 2,785 2,785

Dividends to shareholders 23 – – – – (2,653) (2,653)

Issuance of Rights Shares 39,304 – – – – 39,304

Capitalisation for

Rights Share – – – – (11,791) (11,791)

Share issue expenses – – (191) – – (191)

At 30 September 2009/

1 October 2009 125,149 (5,775) 46 421 10,132 129,973

Profi t for the fi nancial year – – – – 5,528 5,528

Dividends to shareholders 23 – – – – (4,716) (4,716)

At 30 September 2010 125,149 (5,775) 46 421 10,944 130,785


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Cash fl ows from operating activities


Adjustments for:

Allowance for/(Reversal of) doubtful debts 443 293 (492) (365)

Amortisation of prepaid lease payment 222 222 – –

Depreciation 3,770 3,300 298 300

Dividend income – – (5,339) (3,896)

Excess of fair value of net assets over acquisition costs – (233) – –

Gain on disposal of property, plant and equipment – (35) – –

Gain on disposal of investment property (206) (1,750) – –

Impairment loss on goodwill – 476 – –

Interest expense 2,026 2,534 – –

Interest income (149) (101) – –

Inventories written down and written off 2,138 2,381 – –

Loss on disposal of property, plant and equipment 1 16 – –

Decrease in fair value of investment property 360 148 800 837

Property, plant and equipment written off 34 25 – –

Provision for warranty 26 70 – –

Unrealised foreign exchange gain (1) (4) – –

Operating profi t before changes in working capital 38,916 29,137 823 852

Changes in working capital:

Inventories (8,753) 5,505 – –

Receivables, deposits and prepayments (8,600) (1,118) (12,495) (13,527)

Payables and accruals 1,991 (611) 11,096 1,813

Property development cost 394 (487) – –

Cash generated from/(used in) operations 23,948 32,426 (576) (10,862)

Dividends received – – 5,339 2,996

Interest paid (2,026) (2,534) – –

Tax paid net of refund (8,432) (4,982) (52) (132)

Net cash generated from/(used in) operating activities 13,490 24,910 4,711 (7,998)

Cash Flow Statementsfor the fi nancial year ended 30 September 2010


Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Cash fl ows from investing activities

Acquisition of subsidiaries – (15,899) – (16,583)

Acquisition of property, plant and equipment (1,096) (1,561) (1) (109)

Interest received 149 101 – –

Proceeds from disposal of property, plant and equipment 2 170 – –

Proceeds from disposal of investment property 2,493 8,153 – –

Net cash generated from/(used in) investing activities 1,548 (9,036) (1) (16,692)

Cash fl ows from fi nancing activities

Dividends paid to minority shareholders (450) (307) – –

Dividends paid to shareholders of the Company (4,716) (2,653) (4,716) (2,653)

Repayment of borrowings (net) (8,065) (13,414) – –

Proceeds from Rights Issue – 27,513 – 27,513

Repayment of shareholders’ advance of a subsidiary – (12,975) – –

Share issue expenses – (191) – (191)

Net cash (used in)/generated from fi nancing activities (13,231) (2,027) (4,716) 24,669

Net increase/(decrease) in cash and cash equivalents 1,807 13,847 (6) (21)

Cash and cash equivalents at beginning of fi nancial year (Note i) 24,493 10,623 154 175

Effect of exchange rate fl uctuation on cash held (72) 23 – –

Cash and cash equivalents at end of fi nancial year (Note i) 26,228 24,493 148 154

(i) Cash and cash equivalents

Cash and cash equivalents included in the cash fl ow statements comprise the following balance sheet amounts:

Group Company

2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000

Deposits placed with licensed banks 14 12,343 10,703 – –

Cash and bank balances 14 13,885 13,790 148 154

26,228 24,493 148 154


CASH FLOW STATEMENTS



Fiamma Holdings Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of

Bursa Malaysia Securities Berhad. The addresses of its registered offi ce and principal place of business are as follows:

Registered offi ce

Lot 6.05, Level 6, KPMG Tower,

8, First Avenue, Bandar Utama,

47800 Petaling Jaya,

Selangor.

Principal place of business

Wisma Fiamma,

No. 20, Jalan 7A/62A,

Bandar Manjalara,

52200 Kuala Lumpur.

The consolidated fi nancial statements as at and for the fi nancial year ended 30 September 2010 comprise the Company and its subsidiaries

(together referred to as the Group) and the Group’s interest in associates.

The Company is principally engaged in investment holding and property investment, whilst the principal activities of the subsidiaries are as

stated in Note 8 to the fi nancial statements.

The fi nancial statements were approved by the Board of Directors on 3 December 2010.

1 . BAS I S OF PREPARAT ION

(a) Statement of compliance

The fi nancial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards

(“FRSs”) issued by the Malaysian Accounting Standards Board (“MASB”), generally accepted accounting principles in Malaysia

and the Companies Act, 1965. These fi nancial statements also comply with the applicable disclosure provisions of the Listing

Requirements of the Bursa Malaysia Securities Berhad.

During the fi nancial year, the Group adopted FRS 8, Operating Segments and the impact is disclosed as follows:-

FRS 8, Operating Segments

FRS 8, which replaces FRS 1142004

, Segment Reporting, requires identifi cation and reporting of operating segments based on internal

reports that are regularly reviewed by the chief operating decision maker of the Group in order to allocate resources to the segment

and to assess its performance.

As of 1 October 2009, the Group determines and presents operating segments based on the information that internally is provided

to the Chief Executive Offi cer, who is the Group’s chief operating decision maker (See Note 24). Comparative segment information

has been re-presented. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no fi nancial

impact on the Group.

Previously, the Group presents segment information in respect of its two business segments namely investment holdings, property

investment and development and trading.

Notes to the Financial Statements


1 . BAS IS OF PREPARAT ION (CONT INUED)

(a) Statement of compliance (Continued)

The Group and the Company have not applied the following accounting standards, amendments and interpretations that have been

issued by the MASB but are not yet effective for the Group and the Company:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2010

FRS 4, Insurance Contracts

FRS 7, Financial Instruments: Disclosures

FRS 101, Presentation of Financial Statements (revised)

FRS 123, Borrowing Costs (revised)

FRS 139, Financial Instruments: Recognition and Measurement

Amendments to FRS 1, First-time Adoption of Financial Reporting Standards

Amendments to FRS 2, Share-based Payment: Vesting Conditions and Cancellations

Amendments to FRS 7, Financial Instruments: Disclosures

Amendments to FRS 101, Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

Amendments to FRS 127, Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled

Entity or Associate

Amendments to FRS 132, Financial Instruments: Presentation

– Puttable Financial Instruments and Obligations Arising on Liquidation

– Separation of Compound Instruments

Amendments to FRS 139, Financial Instruments: Recognition and Measurement

– Reclassifi cation of Financial Assets

– Collective Assessment of Impairment for Banking Institutions

Improvements to FRSs (2009)

IC Interpretation 9, Reassessment of Embedded Derivatives

IC Interpretation 10, Interim Financial Reporting and Impairment

IC Interpretation 11, FRS 2 – Group and Treasury Share Transactions

IC Interpretation 13, Customer Loyalty Programmes

IC Interpretation 14, FRS 119 – The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and Their Interaction

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 March 2010

Amendments to FRS 132, Financial Instruments: Presentation – Classifi cation of Rights Issues

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010

FRS 1, First-time Adoption of Financial Reporting Standards (revised)

FRS 3, Business Combinations (revised)

FRS 127, Consolidated and Separate Financial Statements (revised)

Amendments to FRS 2, Share-based Payment

Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations

Amendments to FRS 138, Intangible Assets

IC Interpretation 12, Service Concession Agreements

IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation

IC Interpretation 17, Distributions of Non-cash Assets to Owners

Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives

NOTES TO THE FINANCIAL STATEMENTS


1 . BAS I S OF PREPARAT ION (CONT INUED)

(a) Statement of compliance (Continued)


Amendments to FRS 1, First-time Adoption of Financial Reporting Standards

– Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters

– Additional Exemptions for First-time Adopters

Amendments to FRS 7, Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments

Amendments to FRS 2, Group Cash-settled Share Based Payment

IC Interpretation 4, Determining whether an Arrangement contains a Lease

IC Interpretation 18, Transfers of Assets from Customers

Improvements to FRSs (2010)

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011

IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments

Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement


FRS 124, Related Party Disclosures (revised)

IC Interpretation 15, Agreements for the Construction of Real Estate

The Group and Company plans to apply the abovementioned standards, amendments and interpretations:

(i) from the annual period beginning 1 October 2010 for those standards, amendments or interpretations that will be effective

for annual periods beginning on or after 1 January 2010, 1 March 2010 and 1 July 2010 except for FRS 4, IC Interpretation 12,

IC Interpretation 13 and IC Interpretation 14 which are not applicable to the Group and Company;

(ii) from the annual period beginning 1 October 2011 for those standards, amendments or interpretations that will be effective

for annual periods beginning on or after 1 January 2011 and 1 July 2011, except for IC Interpretation 18 which is not applicable

to the Group and Company; and

(iii) from the annual period beginning 1 October 2012 for FRS 124 and IC Interpretation 15 (applicable to Group only).

The initial application of a standard, an amendment or an interpretation, which will be applied prospectively, is not expected to have

any fi nancial impacts to the current and prior years’ fi nancial statements upon their fi rst adoption.

The impacts and disclosures as required by FRS 108.30(b), Accounting Policies, Changes in Accounting Estimates and Errors, in respect

of applying FRS 7 and FRS 139 are not disclosed by virtue of the exemptions given in these respective FRSs.

The initial applications of the other standards, amendments and interpretations are not expected to have any material impact on the

fi nancial statements of the Group and of the Company.

(b) Basis of measurement

The fi nancial statements have been prepared on the historical cost basis except for the following assets and liabilities as explained in

their respective accounting policy notes:

• Property, plant and equipment

• Intangible assets

• Prepaid lease payments

• Investment property



1 . BAS IS OF PREPARAT ION (CONT INUED)

(c) Functional and presentation currency

The fi nancial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All fi nancial information

presented in RM has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of fi nancial 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 signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies that have signifi cant

effect on the amounts recognised in the fi nancial statements other than those disclosed in the following notes:

• Note 4 - measurement of the recoverable amounts of cash-generating units

• Note 6 - valuation of investment property

• Note 11 - recognition of unutilised tax losses and capital allowances

• Note 29 - business combinations

2 . S IGNIF I CANT ACCOUNT ING POL IC IES

The accounting policies set out below have been applied consistently to the periods presented in these fi nancial statements, and have been

applied consistently by Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the ability to exercise its power to govern

the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting

rights that presently are exercisable are taken into account.

Under the purchase method of accounting, the fi nancial statements of subsidiaries are included in the consolidated fi nancial

statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairment losses, unless the investment is

classifi ed as held for sale (or included in a disposal group that is classifi ed as held for sale).

(ii) Associates

Associates are entities in which the Group has signifi cant infl uence, but not control, over the fi nancial and operating policies.

Associates are accounted for in the consolidated fi nancial statements using the equity method unless it is classifi ed as held for

sale (or included in a disposal group that is classifi ed as held for sale). The consolidated fi nancial statements include the Group’s

share of the income and expenses of the equity accounted associates, after adjustments to align the accounting policies with

those of the Group, from the date that signifi cant infl uence commences until the date that signifi cant infl uence ceases.



2 . S I GNIF I CANT ACCOUNT ING POL IC IES (CONT INUED)

(a) Basis of consolidation (Continued)

(i) Associates (Continued)

When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest

(including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent

that the Group has an obligation or has made payments on behalf of the investee.

Investments in associates are stated in the Company’s balance sheet at cost less impairment losses, unless the investment is

classifi ed as held for sale (or included in a disposal group that is classifi ed as held for sale).

(iii) Changes in Group composition

Where a subsidiary issues new equity shares to minority interests for cash consideration and the issue price has been established

at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equity interest with the

corresponding gain or loss recognised in the income statement.

When a group purchases a subsidiary’s equity shares from minority interests for cash consideration and the purchase price has

been established at fair value, the accretion of the Group’s interests in the subsidiary is accounted for as a purchase of equity

interest for which the acquisition method of accounting is applied.

The Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders.

Any 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 Group reserves.

(iv) Minority interest

Minority interest at the balance sheet date, being the portion of the net identifi able assets of subsidiaries attributable to equity

interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated

balance sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders

of the Company. Minority interest in the results of the Group are presented on the face of the consolidated income statement

as an allocation of the total profi t or loss for the year between minority interest and the equity shareholders of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further

losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding

obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profi ts, the

Group’s interest is allocated with all such profi ts until the minority’s share of losses previously absorbed by the Group has been

recovered.

(v) Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing

the consolidated fi nancial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent

of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the

extent that there is no evidence of impairment.



2 . S IGNIF I CANT ACCOUNT ING POL IC IES (CONT INUED)

(b) Land held for property development

Land held for property development consists of land or such portions thereof on which no development activities have been carried

out or where development activities are not expected to be completed within the Company’s normal operating cycle of 2 to 3 years.

Such land is classifi ed as non-current asset and is stated at cost less accumulated impairment losses, if any.

Land held for property development is reclassifi ed as property development costs at the point when development activities have

commenced and where it can be demonstrated that the development activities can be completed within the Company’s normal

operating cycle of 2 to 3 years.

Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions,

conversion fees and other relevant levies.

(c) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at

the dates of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional

currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are

measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was

determined. Foreign currency differences arising on retranslation are recognised in the income statement.

(ii) Operations denominated in functional currencies other than RM

The assets and liabilities of operations in functional currencies other than RM, including goodwill and fair value adjustments

arising on acquisition, are translated to RM at exchange rates at the balance sheet date. The income and expenses of foreign

operations are translated to RM at average exchange rates prevailing for the year.

Foreign currency differences are recognised in translation reserve. On disposal, accumulated translation differences are recognised

in the consolidated income statement as part of the gain or loss on sale.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are stated at cost / valuation less accumulated depreciation and any impairment

losses.

The Group revalues its property comprising land and building every 5 years and at shorter intervals whenever the fair value of

the revalued assets is expected to differ materially from their carrying value.

Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any defi cit arising is offset against the

revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount

is charged to the income statement.




(d) Property, plant and equipment (Continued)

(i) Recognition and measurement (Continued)

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable

to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and

restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct

labour and, for qualifying assets, borrowing costs are capitalised in accordance with the Group’s accounting policy. Purchased

software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition

date. The fair value of property is the estimated amount for which a property could be exchanged between a willing buyer

and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably,

prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices

for similar items.

When signifi cant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate

items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from

disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other

expenses” respectively in the income statements. When revalued assets are sold, the amounts included in the revaluation surplus

reserve are transferred to retained earnings.

(ii) Reclassifi cation to investment property

Property that is being constructed for future use as investment property is accounted for as property, plant and equipment until

construction or development is complete, at which time it is remeasured to fair value and reclassifi ed as investment property.

Any gain or loss arising on remeasurement is recognised in the income statement.

When the use of a property changes from owner-occupied to investment property, the property is remeasured to fair value and

reclassifi ed as investment property. Any gain arising on remeasurement is recognised directly in equity. Any loss is recognised

immediately in the income statement.

(iii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it

is probable that the future economic benefi ts embodied within the part will fl ow to the Group and its cost can be measured

reliably. The carrying amount of those parts that are replaced is derecognised. The costs of the day-to-day servicing of property,

plant and equipment are recognised in the income statement as incurred.




(d) Property, plant and equipment (Continued)

(iv) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item

of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless

it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated.

Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

The estimated useful lives are as follows:

2010 2009

• buildings 50 years 50 years

• renovation 3-5 years 3-5 years

• plant and machinery, tools and piping 3-15 years 3-20 years

• offi ce equipment, furniture and fi ttings 3-5 years 3-5 years

• motor vehicles 4-5 years 4-5 years

• computers 4 years 4 years

• moulds 2 years 2 years

The depreciable amount is determined after deducting the residual value.

Depreciation methods, useful lives and residual values are reassessed at the balance sheet date.

(v) Change in estimates

Estimates in respect of certain items of plant and machinery were revised in 2010 (see Note 3).

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases.

Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of

the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting

policy applicable to that asset.

(ii) Operating lease

Other leases are operating leases and, except for leasehold land classifi ed as investment property, the leased assets are not

recognised on the Group’s balance sheet. Property interest held under an operating lease, which is held to earn rental income

or for capital appreciation or both, is classifi ed as investment property.

Leasehold land that normally has an indefi nite economic life and title is not expected to pass to the Group by the end of the

lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for

as prepaid lease payments, except for leasehold land classifi ed as investment property.

Certain leasehold land were revalued in June 2003 and the Group has retained the unamortised revalued amount as the surrogate

carrying amount of prepaid lease payments in accordance with the transitional provision in FRS 117.67A when it fi rst adopted

FRS 117, Leases in 2007.




(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations and is measured at cost less any accumulated impairment losses.

For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest

in the fair values of the net identifi able assets and liabilities.

With the adoption of FRS 3 beginning 1 October 2006, goodwill represents the excess of the cost of the acquisition over the

Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities of the acquiree.

Any excess of the Group’s interest in the net fair value of acquiree’s identifi able assets, liabilities and contingent liabilities over

the cost of acquisition is recognised immediately in the income statements.

Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional

investment over the carrying amount of the net assets acquired at the date of exchange.

(ii) Trademark

Trademark acquired by the Group with indefi nite useful life is stated at cost less impairment losses, where applicable. The policy

for the recognition and measurement of impairment losses is in accordance with Note 2(l).

(iii) Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefi ts

embodied in the specifi c asset to which it relates. All other expenditure is expensed as incurred.

(iv) Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets

unless such lives are indefi nite. Goodwill and intangible assets with indefi nite useful lives are tested for impairment annually

and whenever there is an indication that they may be impaired. Other intangible assets are amortised from the date that they

are available for use.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty

payments that have been avoided as a result of the patent or trademark being owned. The fair value of other intangible assets

is based on the discounted cash fl ows expected to be derived from the use and eventual sale of the assets.

(g) Investment property

(i) Investment property carried at fair value

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital

appreciation or for both. These include land held for a currently undetermined future use. Properties that are occupied by the

companies in the Group are accounted for as owner-occupied rather than as investment properties.

Investment properties are measured initially at cost and subsequently at fair value with any change therein recognised in the

income statements.




(g) Investment property (Continued)

(ii) Reclassifi cation to/from investment property

When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the income statement. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through the income statement.

When an item of inventory or property development is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to the transfer and its fair value is recognised in the income statements.

When the use of a property changes such that it is reclassifi ed as property, plant and equipment/inventories/property development, its fair value at the date of reclassifi cation becomes its cost for subsequent accounting.

(iii) Determination of fair value

An external, independent valuation company, having appropriate recognised professional qualifi cations and recent experience in the location and category of property being valued, will be used whenever there is indication of signifi cant change in fair values of the investments properties. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated

cash fl ows expected to be received from renting out the property. A yield that refl ects the specifi c risks inherent in the net cash fl ows then is applied to the net annual cash fl ows to arrive at the property valuation.

Valuations refl ect, where appropriate: the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, and the market’s general perception of their creditworthiness; the allocation of maintenance and insurance responsibilities between the Group and the lessee; and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices and where appropriate counter-notices have been served validly and within the appropriate time.

(h) Property development costs

Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and net realisable value.

The excess of revenue recognised in the income statement over billings to purchasers is shown as accrued billings under trade and

other receivables and the excess of billings to purchasers over revenue recognised in the income statement is shown as progress billings under trade and other payables.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. The cost of inventories is based on weighted average cost. For fi nished goods, cost consists of raw materials, direct labour and an appropriate proportion of fi xed and variable production overheads. The cost of raw materials comprises the original purchase price plus incidentals in bringing these inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.




(i) Inventories (Continued)

Developed properties

Completed properties held for sale are stated at the lower of cost and net realisable value. Cost consists of costs associated with the acquisition of land, direct costs and appropriate proportions of common costs attributable to developing the properties to completion.

(j) Receivables Receivables are initially recognised at their cost when the contractual right to receive cash or another fi nancial asset from another

entity is established.

Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.

Receivables are not held for the purpose of trading.

(k) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignifi cant risk of changes in value. For the purpose of the cash fl ow statement, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(l) Impairment of assets

The carrying amounts of assets except for fi nancial assets, inventories, deferred tax assets and investment properties that are measured at fair value are reviewed at each reporting date to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefi nite useful life, recoverable amount is estimated at each balance sheet date.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash infl ows from continuing use that are largely independent of the cash infl ows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefi t from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless

the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. 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. Reversals of impairment losses are credited to the income statement in the fi nancial year in which the reversals are recognised, unless it reverses an impairment loss on a revalued asset, in which case it is credited directly to revaluation surplus. Where an impairment loss on the same revalued asset was previously recognised in the income statement, a reversal of that impairment loss is also recognised in the income statement.




(m) Share capital

(i) Shares issue expenses

Incremental costs directly attributable to issue of shares are recognised as a deduction from equity.

(ii) Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable

costs, is recognised as a deduction from equity and is not re-valued for subsequent changes in the fair value or market price

of shares. Repurchased shares are classifi ed as treasury shares and are presented as a deduction from total equity.

Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share

premium account or distributable reserves, or both.

Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration net of directly

attributable costs and the carrying amount of the treasury shares is recognised in equity.

(n) Borrowings

Borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income

statement over the period of the borrowings using the effective interest method.

(o) Employee benefi ts

Short term employee benefi ts

Short-term employee benefi t obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an

undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profi t-sharing plans if the Group has

a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation

can be estimated reliably.

The Group’s contributions to the Employees Provident Fund are charged to the income statements in the fi nancial year to which they

relate. Once the contributions have been paid, the Group has no further payment obligations.

(p) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated

reliably, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. Provisions are determined by

discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and

the risks specifi c to the liability.

(i) Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical

warranty data and a weighting of all possible outcomes against their associated probabilities.




(p) Provisions (Continued)

(ii) Contingent liabilities

Where it is not probable that an outfl ow of economic benefi ts will be required, or the amount cannot be estimated reliably,

the obligation is disclosed as a contingent liability, unless the probability of outfl ow of economic benefi ts is remote. Possible

obligations, whose existence will only be confi rmed by the occurrence or non-occurrence of one or more future events are also

disclosed as contingent liabilities unless the probability of outfl ow of economic benefi ts is remote.

Where the Company enters into fi nancial guarantee contracts to guarantee the indebtedness of other companies within its

group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company

treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required

to make a payment under the guarantee.

(q) Payables

Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver

cash or another fi nancial asset to another entity.

(r) Revenue recognition

(i) Goods sold

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and

allowances, trade discounts and volume rebates. Revenue is recognised when the signifi cant risks and rewards of ownership

have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods

can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Services

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction

at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed.

(iii) Rental income

Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the

lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(iv) Dividend income

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

(v) Property development

Revenue from property development activities is recognised based on the stage of completion measured by reference to surveys

of work performed or by reference to the proportion that property development costs incurred for work performed to date

bear to the estimated total property development costs.

Where the fi nancial outcome of a property development activity cannot be reliably estimated, property development revenue

is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property

development costs on the development units sold are recognised as an expense in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised

immediately in the income statement.




(s) Lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under fi nance leases are apportioned between the fi nance expense and the reduction of the outstanding liability. The fi nance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confi rmed.

(t) Interest income and borrowing costs

Interest income is recognised as it accrues, using the effective interest method.

All borrowing costs are recognised in the income statement using the effective interest method, in the period in which they are incurred except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use.

(u) Tax expense

Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the fi nancial year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profi t (tax loss). Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax liability is recognised for all taxable temporary differences.

A deferred tax asset is recognised to the extent that it is probable that future taxable profi ts will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

(v) Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS, if applicable, is determined by adjusting the profi t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes.

(w) Segment reporting

In the previous years, a segment was a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Offi cer of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete fi nancial information is available.



3 . P ROP E RTY, PLANT AND EQUIPMENT

Plant and Offi ce

machinery, equipment,

Group tools and furniture Motor

Buildings Renovation piping and fi ttings vehicles Computers Moulds Total

Cost/Valuation RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 October 2008 23,297 1,457 12,666 5,228 2,563 4,133 66 49,410

Acquisition of subsidiaries – – – 329 119 – – 448

Additions – 199 302 126 413 521 – 1,561

Disposals – – – (40) (318) – – (358)

Write off – (34) (7) (290) (5) (357) – (693)

Reclassifi cation – – – (38) – 38 – –

Exchange difference – – – 7 4 4 – 15


1 October 2009 23,297 1,622 12,961 5,322 2,776 4,339 66 50,383

Additions – – 323 128 135 481 29 1,096

Disposals – – (25) (5) – – – (30)

Write off – – (21) (162) – (428) – (611)

Exchange difference – – – (17) (9) (12) – (38)

At 30 September 2010 23,297 1,622 13,238 5,266 2,902 4,380 95 50,800

Accumulated depreciation

At 1 October 2008 1,842 725 3,144 2,984 1,205 3,624 60 13,584

Acquisition of subsidiaries – – – 311 119 – – 430

Depreciation for the fi nancial year 497 337 670 1,111 394 290 1 3,300

Disposals – – – (27) (179) (1) – (207)

Write off – (19) (7) (285) (6) (351) – (668)

Exchange difference – – – 6 2 5 – 13


1 October 2009 2,339 1,043 3,807 4,100 1,535 3,567 61 16,452

Depreciation for the fi nancial year 495 347 1,177 965 439 341 6 3,770

Disposals – – (24) (4) – (1) – (29)

Write off – – (20) (174) – (383) – (577)

Reclassifi cation – – – (1) – 1 – –

Exchange difference – – (1) (14) (6) (11) – (32)

At 30 September 2010 2,834 1,390 4,939 4,872 1,968 3,514 67 19,584

Carrying amounts

At 1 October 2008 21,455 732 9,522 2,244 1,358 509 6 35,826


1 October 2009 20,958 579 9,154 1,222 1,241 772 5 33,931

At 30 September 2010 20,463 232 8,299 394 934 866 28 31,216



3 . P ROP E RTY, PLANT AND EQUIPMENT (CONT INUED)

Offi ce

Plant and equipment,

machinery furniture

Company Renovation tools and piping and fi ttings Total

Cost RM’000 RM’000 RM’000 RM’000

At 1 October 2008 16 848 770 1,634

Additions 109 – – 109

At 30 September 2009/1 October 2009 125 848 770 1,743

Additions – – 1 1

At 30 September 2010 125 848 771 1,744

Accumulated depreciation

At 1 October 2008 6 275 437 718

Depreciation for the fi nancial year 24 123 153 300

At 30 September 2009/1 October 2009 30 398 590 1,018

Depreciation for the fi nancial year 25 119 154 298

At 30 September 2010 55 517 744 1,316

Carrying amounts

At 1 October 2008 10 573 333 916

At 30 September 2009/1 October 2009 95 450 180 725

At 30 September 2010 70 331 27 428

Property, plant and equipment acquired under hire purchase

In 2009, included in property, plant and equipment were motor vehicles acquired under hire purchase agreement with a net book value of

RM297,000. The hire purchase was fully repaid during the fi nancial year.

Property, plant and equipment under the revaluation model

In 2008, included in the Group’s property, plant and equipment are buildings valued at RM21,455,000 which was revalued in September

2008 by independent professional qualifi ed valuers based on comparison method.

The professional qualifi ed valuers compared the buildings with similar properties that were either transacted recently or listed for sale

within the same location or other comparable localities. In comparing properties, due consideration is given to factors such as location, size,

amenities, true element and other relevant factors to arrive at the value.

Had the buildings been carried under the cost model, the carrying amounts would have been RM16,384,000 (2009 - RM16,758,000).

Change in estimates

During the fi nancial year ended 30 September 2010, a subsidiary conducted an operational effi ciency review on the company’s plant and

machinery. The expected useful life of certain plant and machinery were revised and the changes are disclosed in Note 2(d)(iv). The change

in estimates has increased depreciation charges which is recognised in Group cost of sales in the fi nancial year by RM305,000.



3 . P ROP E RTY, PLANT AND EQUIPMENT (CONT INUED)

Change in estimates (Continued)

The effect of this change on depreciation expense in future periods is as follows:

2011 2012 2013 2014 Later

RM’000 RM’000 RM’000 RM’000 RM’000

Group

Increase in depreciation expense 305 305 305 305 984

4 . I NTANGI BLE ASSETS

Acquired

Goodwill trademark Total

Group Note RM’000 RM’000 RM’000

Cost

At 1 October 2008 737 500 1,237

Acquisitions through business combinations 29 476 – 476

At 30 September 2009/30 September 2010 1,213 500 1,713

Impairment losses

At 1 October 2008 191 – 191

Impairment loss 19 476 – 476

At 30 September 2009/30 September 2010 667 – 667

Carrying amounts

At 1 October 2008 546 500 1,046

At 30 September 2009/1 October 2009 546 500 1,046

At 30 September 2010 546 500 1,046

Impairment test for cash generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash generating unit (“CGU”) which represent the lowest

level within the Group at which the goodwill is monitored for internal management purposes. The carrying amount of goodwill was allocated

to the distribution of pre-fabricated kitchen cabinets business and property development business.

The goodwill impairment test was based on the value in use. The value in use was determined by discounted cash fl ow model using

cash fl ow projections based on the awarded contracts or confi rmed orders. The key assumption for the computation of value in use is the

discount rate of 7% on the net cash fl ows.

The recoverable amount of the CGU of the pre-fabricated kitchen cabinet business division was determined to be higher than its

carrying amount and no impairment loss was recognised. However, the recoverable amount of the CGU of the property development

business was determined to be lower than its carrying amount and hence impairment loss was recognised in the fi nancial year ended

30 September 2009.



4 . INTANGI BLE ASSETS (CONT INUED)

Impairment test for acquired trademark

The MEC trademark is assessed to have an indefi nite useful life as there is no foreseeable limit to the period over which the trademark

is expected to generate net cash fl ow for the Group. A subsidiary of the Group is the proprietor and benefi cial owner of this registered

trademark in Malaysia and the trademark has been in existence and in use by the Group for more than 10 years.

5 . P RE PAID LEASE PAYMENTS

Leasehold land

Unexpired period

more than 50 years

2010 2009

Note RM’000 RM’000

Group

Cost

At 1 October/30 September 16,475 16,475

Amortisation

At 1 October 1,387 1,165

Amortisation for the fi nancial year 19 222 222

At 30 September 1,609 1,387

Carrying amounts

At 30 September 14,866 15,088

6 . INVE S TMENT PROPERTY

Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

At 1 October 21,455 28,006 56,001 56,838

Disposal of property (2,287) (6,403) – –

Decrease in fair value of property (360) (148) (800) (837)

At 30 September 18,808 21,455 55,201 56,001

Included in the above are:

Freehold land 1,339 3,626 – –

Leasehold land with unexpired lease period of less than 50 years – – 19,902 19,902

Buildings 17,469 17,829 35,299 36,099

18,808 21,455 55,201 56,001



6 . I NVE S TME NT PROPERTY (CONT INUED)

Investment property comprises commercial properties that are leased to third parties and carried at their fair values. The Directors estimate

the change in fair values of the remaining investment properties by reference to recent transacted price and discussion with the external

independent valuation fi rm.

Each of the leases contains an initial non-cancellable period ranging between 1 to 3 years (Note 26). Subsequent renewals are negotiated

with the lessee. No contingent rents are charged.

7 . LAND HE LD FOR PROPERTY DEVELOPMENT

Group

2010 2009

RM’000 RM’000

Freehold land – at cost

At 1 October 59,943 43,139

Acquisition of subsidiaries (Note 29) – 16,804

At 30 September 59,943 59,943

Land held for property development totaling RM43,139,000 (2009 - RM43,139,000) is free from encumbrance and is registered under the

name of the subsidiaries.

Land held for property development of a subsidiary totaling RM16,804,000 (2009 - RM16,804,000) is pledged to a bank for term loan

facilities (Note 16). The term loan facilities were fully repaid during the fi nancial year and the subsidiary is in process of discharging the

charge on the said property.

8 . INVE S TME NTS IN SUBS ID IAR IES

Company

2010 2009

RM’000 RM’000

Unquoted shares

At cost 41,501 41,501

Less: Allowance for diminution (600) (600)

40,901 40,901



8 . INVE S TMENTS IN SUBS ID IAR IES (CONT INUED)

Details of the subsidiaries are as follows:

Effective

Country of ownership

Name of subsidiary incorporation Principal activities interest

2010 2009

% %

Fiamma Sdn. Bhd. Malaysia Distribution of electrical home appliances 100 100

Subsidiaries of Fiamma Sdn. Bhd.

Fiamma Logistics Sdn. Bhd. Malaysia Provision of warehousing and logistics 100 100

services

Haustern Sdn. Bhd. Malaysia Dormant 100 100

(formerly known as

Arif Industries Sdn. Bhd.)

Exact Quality Sdn. Bhd. Malaysia Provision of after sales services of 100 100

electrical home appliances

MEC Marketing Sdn. Bhd. Malaysia Dormant 100 100

Ebac Kitchen Sdn. Bhd. Malaysia Distribution of pre-fabricated kitchen 99.99 99.99

cabinets and electrical home appliances

Affl uent Crafts Sdn. Bhd. Malaysia Retail sales of electrical home appliances 100 100

Fimaco Sdn. Bhd. Malaysia Distribution of electrical home appliances 100 100

Active Edge Sdn. Bhd. Malaysia Dormant 100 100

Fiamma Trading Sdn. Bhd. Malaysia Distribution of electrical home appliances, 70 70

sanitaryware and bathroom accessories

Itatech Sdn. Bhd. Malaysia Dormant 100 100

FHB Management Sdn. Bhd. Malaysia Property management 100 100

Fiamma Land Sdn. Bhd. Malaysia Property development 100 100

Fiamma Development Sdn. Bhd. Malaysia Property development 100 100



8 . I NVE S TME NTS IN SUBS ID IAR IES (CONT INUED)

Effective

Country of ownership

Name of subsidiary incorporation Principal activities interest

2010 2009

% %

Enex-Dynamic Sdn. Bhd. Malaysia Distribution of water fi ltration system, 70 70

health products and other products

Kingston Medical Supplies (Pte.) Ltd.* Singapore Distribution of medical devices 70 70

and healthcare products

Subsidiary of Kingston Medical

Supplies (Pte.) Ltd.

Kinsmedic Sdn. Bhd. Malaysia Distribution of medical devices 70 70

and healthcare products

Uniphoenix Jaya Sdn. Bhd.* Malaysia Property development 100 100

Oaksvilla Sdn. Bhd.* Malaysia Property development 100 100

* Not audited by KPMG.

9 . I NVE S TME NTS IN ASSOC IATES

The effective ownership interest held in Sunrise Stream Sdn. Bhd. (“Sunrise Stream”) and its subsidiaries (“Sunrise Stream Group”) is Nil in

2010 and 2009 as Sunrise Stream is under liquidation and the Company can no longer exercise signifi cant infl uence over the Sunrise Stream

Group. Sunrise Stream Group had ceased operations in April 2003.



1 0 . RE CE I VABLES , DEPOS ITS AND PREPAYMENTS

Group Company

2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000

Non-current

Amount due from subsidiaries a – – 51,952 43,561

Less: Allowance for doubtful debts – – (748) (5,264)

– – 51,204 38,297

Current

Trade

Trade receivables 56,226 48,357 – –

Less: Allowance for doubtful debts (1,247) (1,207) – –

b 54,979 47,150 – –

Non-trade

Other receivables, deposits and prepayments 1,676 1,348 210 130

1,676 1,348 210 130

56,655 48,498 210 130

Note a

The long term amount due from subsidiaries is non-trade in nature, unsecured, interest free and not repayable within the next twelve months.

This represent amount due from subsidiaries for which the Company has given letters of fi nancial support.

Note b

During the fi nancial year, bad debts of the Group amounting to RM403,000 (2009 - RM256,000) were written off against the allowance

for doubtful debts.

During the fi nancial year, amount due from a subsidiary amounting to RM4,024,000 (2009 - Nil) which allowance for doubtful debts was

previously provided for was waived by the Company..



1 1 . DE FE RRE D TAX (ASSETS ) / L IAB IL I T IES

Recognised deferred tax assets and liabilities

The recognised deferred tax assets and liabilities are as follows:

Unabsorbed Unutilised

capital tax

allowances losses Provision Total

Group RM’000 RM’000 RM’000 RM’000

Deferred tax assets

At 1 October 2008 (742) (98) (368) (1,208)

Recognised in the income statement 147 93 222 462

At 30 September 2009/1 October 2009 (595) (5) (146) (746)

Recognised in the income statement 555 – 3 558

At 30 September 2010 (40) (5) (143) (188)

Property, Other

plant and Investment temporary

equipment property differences Total

Group RM’000 RM’000 RM’000 RM’000

Deferred tax liabilities

At 1 October 2008 5,014 646 (13) 5,647

Recognised in the income statement 526 (329) 10 207

Acquisition of subsidiaries (Note 29) – – 2,415 2,415

At 30 September 2009/1 October 2009 5,540 317 2,412 8,269

Recognised in the income statement 578 601 (1,246) (67)

Adjustment to prior year acquisition of subsidiaries – – (57) (57)

At 30 September 2010 6,118 918 1,109 8,145

Property,

plant and Investment

equipment property Provision Total

Company RM’000 RM’000 RM’000 RM’000

Deferred tax liabilities

At 1 October 2008 1,002 2,562 (84) 3,480

Recognised in the income statement 87 84 (25) 146

At 30 September 2009/1 October 2009 1,089 2,646 (109) 3,626

Recognised in the income statement 62 (244) 109 (73)

At 30 September 2010 1,151 2,402 – 3,553



1 1 . DE FE RRED TAX (ASSETS ) / L IAB IL I T IES (CONT INUED)

Unrecognised deferred tax assets

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

2010 2009 RM’000 RM’000

Unabsorbed capital allowance – (332) Unutilised tax losses – (1,488) Other temporary differences – 382

– (1,438)

1 2 . P ROP E RTY DEVELOPMENT COSTS

Group

2010 2009 RM’000 RM’000

At 1 October Land 3,838 4,328 Development costs 16,438 17,509 Accumulated costs charged to income statement (316) (646)

19,960 21,191

Development costs incurred during the fi nancial year 3,152 3,486 Reversal of completed project - Land (8) (402) - Development costs (2,031) (3,038) - Accumulated costs charged to income statement 2,039 3,440 – – Additional land premium paid – 18

3,152 3,504

Transfer to inventories - Land (6) (106) - Development costs (1,364) (1,519) (1,370) (1,625) Costs charged to income statement - Land (57) (350) - Development costs (2,119) (2,760) (2,176) (3,110)

(3,546) (4,735)

At 30 September Land 3,824 3,838 Development costs 16,195 16,438 Accumulated costs charged to income statement (453) (316)

19,566 19,960

Included in Group’s property development costs is RM435,000 (2009 - RM441,000) being the borrowing cost capitalised.



1 3 . I NVE NTOR I ES

Group

2010 2009 RM’000 RM’000

At cost: Spare parts and consumables 139 127 Work in progress 193 73 Finished goods 43,165 37,143

43,497 37,343 At realisable value:

Spare parts and consumables 320 361 Finished goods 1,094 1,449 1,414 1,810 Developed properties held for sale 5,036 4,179

49,947 43,332

1 4 . CAS H AND CASH EQUIVALENTS

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Deposits placed with licensed banks 12,343 10,703 – – Cash and bank balances 13,885 13,790 148 154

26,228 24,493 148 154

Included in the cash and bank balances is an amount of RM247,000 (2009 - RM270,000), the utilisation of which is subject to the Housing Development (Housing Development Account) (Amendment) Regulations 2002.

In 2009, included in the deposits placed with licensed banks is an amount of RM12,000 being pledged by a subsidiary to a licensed bank for bank guarantee facilities granted to the subsidiary.

1 5 . E QUITY

Group and Company

Number Number Amount of shares Amount of shares 2010 2010 2009 2009 RM’000 ’000 RM’000 ’000

Authorised:

Ordinary shares of RM1 each 200,000 200,000 200,000 200,000

Issued and fully paid:

Ordinary shares of RM1 each At 1 October 125,149 125,149 85,845 85,845 Issued during the fi nancial year – – 39,304 39,304

At 30 September 125,149 125,149 125,149 125,149



1 5 . E QUI TY (CONT INUED)

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at

meetings of the Company. All shares rank equally with regard to the Company’s residual assets. In respect of the Company’s treasury shares

that are held by the Group (see below), all rights are suspended until those shares are reissued.

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the fi nancial statements of foreign

operations.

Revaluation reserve

The revaluation reserve relates to the revaluation of property, plant and equipment at interval of 5 years.

Treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 25 February 2010, approved the Company’s

plan to repurchase its own shares. The Directors of the Company are committed to enhancing the value of the Company to its shareholders

and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

For the fi nancial year ended 30 September 2010, the Company did not purchase any share from the open market. The total number of shares

repurchased from the open market as at balance sheet date is 7,234,900. These shares repurchased are retained as treasury shares.

Retained earnings

The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. Companies with credit

balance in the Section 108 account are given an irrevocable option to elect for the single tier tax system. The Company has elected to switch

over to the single tier system during the fi nancial year.

1 6 . BORROWINGS

This note provides information about the contractual terms of the Group’s interest-bearing borrowings. For more information about the

Group’s exposure to interest rate and foreign currency risk, see Note 25.

Group

2010 2009 RM’000 RM’000

Non-current

Secured:

Term loan – 8,460

Current

Unsecured:

Bankers’ acceptances 28,874 24,166

Trust receipts 1,394 1,431

Hire purchase liabilities – 75

30,268 25,672

Secured:

Revolving credit 8,000 9,000

Term loan – 3,201

38,268 37,873



1 6 . BORROWINGS (CONT INUED)

The bankers’ acceptances bear interest at rates ranging from 2.68% to 4.88% (2009 - 2.61% to 6.02%) per annum. The trust receipts bear interest at 5.75% to 6.00% (2009 - 6.00%) per annum. Term loan bears interest at rates ranging from 5.85% to 6.60% (2009 - 3.89% to 5.55%) per annum. Revolving credit bears interest at rates ranging from 3.91% to 4.45% (2009 - 3.69% to 3.91%) per annum. The hire purchase liabilities bear interest at rates ranging from 2.99% to 3.20% (2009 - 2.37% to 3.20%) per annum.

In 2009, bank overdraft interest was at 7.25% per annum.

16.1 Securities

The term loan and revolving credit are secured by a third party second fi xed charge over a leasehold land with a block of 11 storey offi ce building and one warehouse block erected thereon, held under HS(D) 51592, Lot No. PT44653 in the Mukim of Batu, Kuala Lumpur known as Wisma Fiamma, No.20, Jalan 7A/62A, Bandar Manjalara, 52200 Kuala Lumpur registered in the Company’s name.

In 2009, a term loan of RM1,661,000 was secured by a fi rst legal charge over a subsidiary’s 18 parcels of freehold land in Johor. The term loan was fully settled during the fi nancial year and the subsidiary is in the process of discharging the charge on these parcels of land.

16.2 Terms and debt repayment schedule

Year of Carrying Under 1 1 –2 2– 5 maturity amount year years years Group RM’000 RM’000 RM’000 RM’000

2009

Term loan 2014 11,661 3,201 2,460 6,000

The term loan facilities were fully settled during the fi nancial year. The bankers’ acceptances, trust receipts and revolving credit are payable within a year. 1 7 . PAYABLE S AND ACCRUALS

Group Company

2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Trade

Trade payables 6,585 11,742 – –

Non-trade

Amount due to subsidiaries – – 13,519 2,315 Provision for warranty 425 399 – – Other payables and accrued expenses 26,932 19,613 256 364

27,357 20,012 13,775 2,679

33,942 31,754 13,775 2,679 The amount due to subsidiaries is unsecured, interest free and has no fi xed term of repayment. The provision for warranties relates to electrical home appliances sold by the Group. The provision is based on estimates made from historical

warranty data associated with similar products and services. The Group expects to incur most of the liability over the next year.



1 8 . RE VE NUE

Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Sales 197,322 174,968 – –

Rental income from investment property 727 767 2,033 2,043

Property development 2,639 2,456 – –

Dividends – – 5,339 3,896

200,688 178,191 7,372 5,939

1 9 . OP E RAT ING PROF IT

Group Company

2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000

Operating profi t is arrived at after charging:

Allowance for doubtful debts - trade 609 400 – –

Allowance for doubtful debts

on subsidiaries – non-trade – – 57 –

Amortisation on:

Prepaid lease payments 5 222 222 – –

Auditors’ remuneration:

- Statutory audit

Auditors of the Company

- current year 141 131 23 21

- under accrued in prior year 2 – – –

Other auditors 25 22 – –

- Other services by

Auditors of the Company 7 7 7 7

Bad debts written off 5 242 – –

Depreciation 3 3,770 3,300 298 300

Direct operating expenses of investment property:

- Did not generate rental income 22 22 – –

- Generated rental income 367 621 1,063 955

Impairment loss:

- Goodwill 4 – 476 – –

Inventory written down and written off 2,138 2,381 – –



1 9 . OP E RAT ING PROF IT (CONT INUED)

Group Company

2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000

Interest expense on:

– Bank overdraft – 53 – –

– Bankers’ acceptance 799 965 – –

– Hire purchase 4 16 – –

– Other fi nance charges 377 389 – –

– Revolving credit 357 442 – –

– Term loan 737 839 – –

– Trust receipts 129 219 – –

Loss on disposal of property, plant and equipment 1 16 – –

Property, plant and equipment written off 34 25 – –

Personnel expenses (including key management personnel):

– Contributions to Employees Provident Fund 2,178 2,053 – –

– Wages, salaries and others 20,462 17,299 – –

Provision for warranties 26 70 – –

Rental expenses on property leases 663 498 – –

Rental of plant and machinery 1 2 – –

Realised foreign exchange loss 94 346 – –

Unrealised foreign exchange loss 7 – – –

and after crediting:

Excess of fair value of net assets over acquisition costs 29 – 233 – –

Bad debts recovered – 4 – –

Dividend income from:

– subsidiaries (unquoted) – – 5,339 3,896

Gain on disposal of property, plant and equipment – 35 – –

Gain on disposal of investment property 206 1,750 – –

Realised foreign exchange gain 512 194 – –

Rental income from property 778 867 2,033 2,043

Reversal of allowance for doubtful debts – trade 166 107 – –

Reversal of allowance for doubtful debts – non-trade – – 549 365

Unrealised foreign exchange gain 8 4 – –



2 0 . KE Y MANAGEMENT PERSONNEL COMPENSAT ION

The key management personnel compensations are as follows:

Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Directors of the Company

– Fees 702 622 204 214

– Remuneration 1,276 1,174 48 48

– Other short term employee benefi ts 60 60 – –

(including estimated monetary

value of benefi ts-in-kind)

2,038 1,856 252 262

Directors of the subsidiaries

– Fees 242 152 – –

– Remuneration 294 286 – –




2,687 2,334 252 262

Other key management personnel:

– Remuneration 1,031 992 – –




1,641 1,376 – –

4,328 3,710 252 262

Other key management personnel comprises persons other than the Directors of Group entities, having authority and responsibility for

planning, directing and controlling the activities of the entity either directly or indirectly.



2 1 . TAX E XP E NSE

Recognised in the income statement

Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Tax expense 7,793 6,038 28 1,191

Major components of tax expense include:

Current tax expense

Malaysian – current fi nancial year 7,221 5,192 97 1,024

– prior fi nancial year (51) (118) 4 21

Overseas – current fi nancial year 132 298 – –

– prior fi nancial year – (3) – –

Total current tax 7,302 5,369 101 1,045

Deferred tax expense

Origination and reversal of temporary differences 517 1,024 (47) 172

Crystallisation of deferred tax liability

on revaluation surplus of properties (26) (355) (26) (26)

Total deferred tax 491 669 (73) 146

Total tax expense 7,793 6,038 28 1,191



2 1 . TAX E XP ENSE (CONT INUED)

Reconciliation of effective tax expense

Group Company

2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000


Tax at Malaysian tax rate* 7,563 5,449 1,389 994

Effect of change in tax rate* (108) 85 (108) –

Effect of tax rates in foreign jurisdictions** (88) (174) – –

Non-deductible expenses 855 1,148 76 177

Tax exempt income (62) (546) (1,335) (74)

Effect of deferred tax assets not

recognised in current fi nancial year – 350 – –

Effect of deferred tax not recognised

in prior fi nancial year, now recognised (260) 200 24 99

Other items (30) 2 4 –

7,870 6,514 50 1,196

(Over)/Under provision in prior fi nancial years (51) (121) 4 21

Crystallisation of deferred tax liability

on revaluation surplus of properties (26) (355) (26) (26)

7,793 6,038 28 1,191

* With effect from year of assessment 2009, corporate tax rate is at 25%. Consequently deferred tax assets and liabilities are measured

using this rate.

** A subsidiary acquired in 2007 operates in a tax jurisdiction with lower tax rates.

2 2 . E ARNI NGS PER ORDINARY SHARE

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 30 September 2010 was based on the profi t attributable to ordinary shareholders and

a weighted average number of ordinary shares outstanding calculated as follows:

Group

2010 2009

RM’000 RM’000

Profi t for the fi nancial year attributable to shareholders 20,482 14,504



2 2 . E ARNI NGS PER ORDINARY SHARE (CONT INUED)

Group

2010 2009

’000 ’000

Weighted average number of ordinary shares:

Issued ordinary shares at 1 October net of treasury shares 117,914 78,610

Effect of Rights Issue – 32,064

Weighted average number of ordinary shares as at 30 September 117,914 110,674

Group

2010 2009

Sen Sen

Basic earnings per ordinary share 17.37 13.11

Diluted earnings per ordinary share

The effect on the earnings per ordinary share arising from the assumed exercise of warrants is anti-dilutive. Accordingly, diluted earnings per

ordinary share have not been presented.

2 3 . DIV IDE NDS

Dividends recognised in the current fi nancial year by the Company are:

Sen Total

per share amount

RM’000 Date of payment

2010

Final 2009 ordinary (single tier) 4.0 4,716 9 April 2010

2009

Final 2008 ordinary (less 25% tax) 3.0 2,653 10 April 2009

The following dividend was proposed by the Directors after the balance sheet date. The dividend will be recognised in subsequent fi nancial

statements upon approval by the shareholders.

Sen Total

per share amount

RM’000

Final 2010 ordinary (single tier) 5.5 6,485



2 4 . S E GME NTAL REPORT ING

The Group comprises the following reportable segments:

Investment holding and The long term investment in unquoted shares and property investment.

property investment

Property development Property development

Trading and services Distribution and servicing of electrical home appliances, sanitaryware, other household products,

pre-fabricated kitchen cabinets, medical devices and healthcare products.

Management has determined the operating segments based on the reports reviewed by the Group’s chief operating decision-maker that

are used to make strategic decisions.

Investment holding, Trading and Property and property investment Development services Eliminations Consolidated 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Operating Segments Revenue from external customers 728 775 2,639 2,456 197,321 174,960 – – 200,688 178,191 Inter-segment revenue 8,116 6,729 – – 32,233 21,889 (40,349) (28,618) – –

Total revenue 8,844 7,504 2,639 2,456 229,554 196,849 (40,349) (28,618) 200,688 178,191

Segment result (490) 1,464 (492) (923) 33,637 24,177 – – 32,655 24,718

Financing costs (2,403) (2,923) Profi t before taxation 30,252 21,795 Tax expense (7,793) (6,038) Minority interests (1,977) (1,253)

Net profi t for the

fi nancial year 20,482 14,504

Assets 152,749 146,716 86,357 84,297 173,198 150,569 (134,029) (113,836) 278,275 267,746 Unallocated assets 470 1,204

Total assets 278,745 268,950

Liabilities 18,197 13,535 76,709 73,145 69,192 68,264 (91,888) (76,857) 72,210 78,087

Unallocated liabilities 8,652 10,170

Total liabilities 80,862 88,257

Capital expenditure 19 115 – 1 1,077 1,445 – – 1,096 1,561 Depreciation and amortisation of assets 1,165 1,167 5 6 2,822 2,349 – – 3,992 3,522 Other non-cash expenses 11 1 5 2 2,796 3,591 – – 2,812 3,594



2 5 . F INANCIAL INSTRUMENTS

The Group is exposed to a variety of fi nancial risks, including interest rate risk, foreign currency risk, credit risk, liquidity and cash fl ows

risks. The Group’s overall risk management objective is to ensure that the Company creates value for its shareholders whilst minimising the

potential adverse effects on the performance of the Group. The Group does not trade in fi nancial instruments or engage in speculative

transactions.

Interest rate risk

The Group’s primary interest rate risk relates to interest-bearing debts. The Group borrows for operations at variable rates using its term loan,

fi nance lease, overdraft and trade line facilities. The Group adopts a practice to continuously seek for alternative banking facilities, which

provide competitive interest rates to fi nance and/or refi nance its fi xed and working capital requirements.

Foreign currency risk

The objective of the Group’s foreign exchange policies is to allow the Group to manage exposures that arise from trading activities within a

framework of controls that does not expose the Group to unnecessary foreign currency risk.

The Group incurs foreign currency risk on sales and purchases that are denominated in a currency other than Ringgit Malaysia. The currency

giving rise to this risk is primarily the US Dollar. The Group’s exposure to foreign currency risk is monitored on an ongoing basis and exposure

is limited by the availability of trade fi nancing facilities granted by the fi nancial institutions.

Credit risk

The Group is exposed to credit risk mainly from trade receivables. Credit risk is controlled by the application of credit approvals, limits and

monitoring procedures. Trade receivables are monitored on an ongoing basis via the Group’s management reporting procedures and reviewed

on a monthly basis by senior management. The maximum exposure to credit risk is represented by the carrying amount of each fi nancial

asset presented in the balance sheet.

Liquidity and cash fl ow risks

The Group actively manages its debt maturity profi le, operating cash fl ows and the availability of funding so as to ensure that all repayment

and funding needs are met. As part of its overall prudent liquidity management, the Group maintains suffi cient level of cash or highly liquid

investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable

level to its overall debt position.

Financial assets

The Group and the Company’s principal fi nancial assets are cash and cash equivalents, trade and other receivables and amount due from

subsidiaries.

Financial liabilities

Debts and equity instruments are classifi ed as either liabilities or equity in accordance with the substance of the contractual arrangement.

The Group and the Company’s principal fi nancial liabilities are trade and other payables, amount due to subsidiaries and borrowings.

Effective interest rates and repricing analysis

In respect of interest-bearing fi nancial assets and fi nancial liabilities, the following table indicates the effective interest rates at the balance

sheet date and the periods in which the fi nancial instruments reprice or mature, whichever is earlier.



2 5 . F INANCIAL INSTRUMENTS (CONT INUED)

Effective interest rates and repricing analysis (Continued)

Effective

interest

Within 1-5 rate per

Group 1 year years Total annum

RM’000 RM’000 RM’000 %

2010

Financial asset

Deposits placed with licensed banks 12,343 – 12,343 1.52


Secured:

Revolving credit 8,000 – 8,000 4.45

Unsecured:

Bankers’ acceptances 28,874 – 28,874 4.11

Trust receipts 1,394 – 1,394 5.75

38,268 – 38,268

2009

Financial asset

Deposits placed with licensed banks 10,703 – 10,703 1.05


Secured:

Term loan 11,661 – 11,661 5.38

Revolving credit 9,000 – 9,000 3.91

Unsecured:

Bankers’ acceptances 24,166 – 24,166 3.47

Trust receipts 1,431 – 1,431 6.00

Hire purchase liabilities 75 – 75 3.12

46,333 – 46,333



2 5 . F INANCIAL INSTRUMENTS (CONT INUED)

Fair values of recognised and unrecognised fi nancial assets and liabilities

The fair values of the Group and Company’s fi nancial assets and liabilities, except for long term amount due from subsidiaries and long term

borrowing, which are considered short term in nature, are estimated to approximate their carrying amounts.

In respect of long term amount due from subsidiaries, it is not practical to estimate the fair values as specifi c repayment terms have not

been established.

In respect of long-term borrowing, the carrying amounts approximate its fair values as it is fl oating rate and reprice to market interest rates

for liabilities with similar risk profi les.

The Company provides fi nancial guarantees to banks for credit facilities extended to certain subsidiaries. The fair value of such fi nancial

guarantees is not expected to be material as the probability of the subsidiaries defaulting on the credit lines is remote.

Fair values of unrecognised fi nancial instruments

The notional amount and net fair value payable for fi nancial instruments not recognised in the balance sheet of the Group as at end of the

fi nancial year is as follows:

Notional Net fair

Currency amount value

USD’000 RM’000 RM’000

Group

2010

Foreign currency forward contracts 3,294 10,233 (68)

2 6 . OP E RAT ING LEASES

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Group

2010 2009

RM’000 RM’000

Less than one year 412 449

Between one and fi ve years – 197

412 646

The Group leased commercial properties under operating leases. The leases typically run for an initial period of one year, with an option to

renew the leases after the date of expiration. None of the leases include contingent rentals.



2 6 . OP E RAT ING LEASES (CONT INUED)

Leases as lessor

The Group leases out its investment property under operating leases (Note 6). The future minimum lease payments under non-cancellable

leases are as follows:

Group

2010 2009

RM’000 RM’000

Less than one year 533 669

Between one and fi ve years 378 926

911 1,595

2 7 . CONT INGENCIES

Company

2010 2009

RM’000 RM’000

Guarantees for banking facilities granted to subsidiaries (Note 16) 109,112 110,455

2 8 . RE LATE D PART IES

Identity of related parties

For the purposes of these fi nancial statements, parties are considered to be related to the Group if the Group has the ability, directly or

indirectly, to control the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice versa, or

where the Group and the party are subject to common control or common signifi cant infl uence. Related parties may be individuals or other

entities.

The Group has a related party relationship with its subsidiaries (Note 8), associates, Directors and other key management personnel.

Transactions with key management personnel

Key management personnel compensation

Key management personnel compensation is disclosed in Note 20.

Transactions with key management personnel other than compensation

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or

signifi cant infl uence over the fi nancial or operating policies of these entities.

A number of these entities transacted with the Group in the reporting period. The terms and conditions of the transactions with key

management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to

be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.



2 8 . RE LATE D PART IES (CONT INUED)

Other related party transaction Transaction value fi nancial year ended 30 September

2010 2009 Company RM’000 RM’000

Dividends from subsidiaries 5,339 3,896 Rental from subsidiaries 2,033 2,043

2 9 . ACQUI S I T I ONS OF SUBS ID IAR IES AND MINORITY INTEREST

There is no acquisition of subsidiaries and minority interest during the fi nancial year.

2009

On 9 December 2008, Fiamma completed its acquisition of:

(i) 5,000,000 ordinary shares of RM1.00 each representing 100% of the issued and paid-up capital of Uniphoenix Jaya Sdn Bhd for a cash consideration of RM12,809,000;

(ii) 250,000 ordinary shares of RM1.00 each representing 100% of the issued and paid-up capital of Oaksvilla Sdn Bhd for a cash consideration of RM3,774,000.

The acquisitions had the following effect on the Group’s assets and liabilities on acquisition date:

Recognised fair values Note on acquisition RM’000 Property, plant and equipment 3 18 Land held for property development 7 16,804 Property development cost 12 19,473 Inventories 2,310 Receivables, deposits and prepayments 5,009 Cash and cash equivalents 684 Borrowings (2,680) Taxation (48) Deferred tax liabilities 11 (2,415) Payable and accruals (22,815)

Group’s share of net assets 16,340 Goodwill on acquisition 4 476 Excess of fair value of net assets over acquisition costs 19 (233)

Consideration paid, satisfi ed in cash 16,583 Cash acquired (684)

Net cash outfl ow 15,899

Pre-acquisition carrying amounts were determined based on applicable FRSs immediately before the acquisition. The values of assets and liabilities recognised on acquisition are their estimated fair values.

Goodwill arising from the acquisition of Oaksvilla Sdn Bhd was written off in the fi nancial year ended 30 September 2009.



3 0 . S I GNIF I CANT EVENT DUR ING THE F INANCIAL YEAR

(a) Disposal of property

i) Disposal of property located in Negeri Sembilan by Itatech Sdn Bhd

On 30 November 2009, Itatech Sdn Bhd (“Itatech”), a 100% owned subsidiary of Fiamma, entered into a Sale and Purchase

Agreement (“SPA”) with a third party for the disposal of the remaining parcel of its investment property comprising a piece

of freehold land for a cash consideration of RM2,493,372. The disposal consideration was arrived at on a willing buyer-willing

seller basis. The transaction was completed on 2 March 2010.

3 1 . S UBS E QUENT EVENT

Disposal of Haustern Sdn Bhd (formerly known as Arif Industries Sdn Bhd), a wholly owned subsidiary of Fiamma Sdn Bhd

to Fiamma Trading Sdn Bhd, a 70% owned subsidiary

On 1 December 2010, Fiamma Sdn Bhd, a wholly owned subsidiary of the Company disposed 200,000 ordinary shares of RM1.00 each

representing 100% of the issued and paid-up capital of Haustern Sdn Bhd (formerly known as Arif Industries Sdn Bhd) to Fiamma Trading

Sdn Bhd, a 70% owned subsidiary of the Group for a cash consideration of RM201,184.

3 2 . MATE R I AL L I T IGAT ION

On 11 June 2007, the shareholders of Hoklian Holdings Berhad (“HHB”), took legal action against HHB, Hoklian Properties Sdn Bhd (“HPSB”)

6 other individuals, who are the directors of HHB and/or HPSB (“collectively referred to as other Defendants”), for inter alia the following

reliefs:-

(a) a declaration that the EGM held on 30 April 2007 is ineffective, invalid and null and void;

(b) a declaration that the other Defendants are estopped from proceeding with the sale and the transfer of the properties in Section 44,

Bandar Kuala Lumpur, Wilayah Persekutuan to Fiamma Land Sdn Bhd (“FLSB”), which is referred to as “Subject Properties” in the

following paragraphs;

(c) a declaration that the other Defendants are restrained from proceeding with the sale and transfer of the Subject Properties pending

determination of the suit herein or the outcome of another EGM to be convened (as per (d) below); and

(d) an order that the HHB and HPSB do convene a duly constituted EGM to consider the sale of the Subject Properties to FLSB, with full

disclosure of the material facts and a duly constituted notice to be issued to the shareholders.

FLSB was allowed to intervene in the proceedings by Order dated 17 September 2007 and was added as the 9th Defendant to the Suit.

The plaintiff’s application for interim injunction was not allowed by the Court. Following that, the sale and transfer of the Subject Properties

had been completed and the Subject Properties are now registered in the name of FLSB.

The case is now fi xed for case management on 12 January 2011 for the parties to comply with directions for trial. No trial date has been

fi xed for the Suit as yet.

FLSB’s solicitors are of the view that FLSB has a good arguable defence to the case.



In the opinion of the Directors, the fi nancial statements set out on pages 34 to 80 are drawn up in accordance with Financial Reporting Standards

and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as of

30 September 2010 and of their fi nancial performance and cash fl ows for the year then ended.

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

Lim Choo Hong


Kuala Lumpur,

3 December 2010

I, Chin Mee Foon, the offi cer primarily responsible for the fi nancial management of Fiamma Holdings Berhad, do solemnly and sincerely declare

that the fi nancial statements set out on pages 34 to 80 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 above named in Kuala Lumpur on 3 December 2010.

Chin Mee Foon

Before me:

P. Saroja PPN

Registered No.: W402

Commissioner for Oaths

Statement by Directorspursuant to Section 169(15) of the Companies Act, 1965

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


R e p o r t o n t h e F i n a n c i a l S t a t e m e n t s

We have audited the fi nancial statements of Fiamma Holdings Berhad, which comprise the balance sheets as at 30 September 2010 of the Group

and of the Company, and the income statements, statements of changes in equity and cash fl ow statements of the Group and of the Company

for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set out on pages 34 to 80.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation and fair presentation of these fi nancial 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 fi nancial statements that are free from material misstatement, whether due to fraud or

error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement.

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

selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial 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 fi nancial

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 fi nancial statements.

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

Opinion

In our opinion, the fi nancial 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 fi nancial position of the Group and of the Company as of 30 September 2010 and of

their fi nancial performance and cash fl ows for the year then ended.

Independent Auditors’ Reportto the members of Fiamma Holdings Berhad


R e p o r t o n O t h e r L e g a l a n d R e g u l a t o r y R e q u i re m e n t s

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 of

which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the accounts and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated

in Note 8 to the fi nancial statements.

c) We are satisfi ed that the accounts of the subsidiaries that have been consolidated with the Company’s fi nancial statements are in form and

content appropriate and proper for the purposes of the preparation of the fi nancial statements of the Group and we have received satisfactory

information and explanations required by us for those purposes.

d) The audit reports on the accounts of the subsidiaries did not contain any qualifi cation or any adverse comment made under Section 174(3)

of the Act.

O t h e r M a t t e r s

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.

KPMG Chew Beng Hong

Firm Number: AF 0758 Approval Number: 2920/02/12(J)

Chartered Accountants Chartered Accountant

Petaling Jaya,

3 December 2010

INDEPENDENT AUDITORS’ REPORT

to the members of Fiamma Holdings Berhad


Analysis of Shareholdingsas at 30 December 2010

Authorised Share Capital : RM200,000,000Issued and Paid-up Share Capital : RM125,149,300Class of Shares : Ordinary Shares of RM1.00 eachVoting Rights : One vote per share

Holdings

No. of

Shareholders

% of

Shareholders

No. of

Shares held

% of

Issued Capital

Less than 100 shares 148 7.02 1,543 0.00

100 to 1,000 shares 874 41.46 778,295 0.66

1,001 to 10,000 shares 850 40.32 3,384,374 2.87

10,001 to 100,000 shares 200 9.49 6,703,400 5.69

100,001 to less than 5% of issued shares 32 1.52 26,002,308 22.05

5% and above of issued shares 4 0.19 81,044,480 68.73

TOTAL 2,108 100.00 117,914,400* 100.00

* Excluding a total of 7,234,900 shares bought-back by the Company and retained as treasury shares

SUBSTANTIAL SHAREHOLDERS

Direct Interest Indirect Interest

Name No. of Shares Held % of Issued Capital * No. of Shares Held % of Issued Capital *

Casa Holdings Limited 32,301,000 27.39 – –

Lim Choo Hong 27,090,000 22.97 32,301,000 # 27.39

Ngo Wee Bin 12,115,000 10.27 – –

Perdana Padu Sdn Bhd 9,538,480 8.09 – –

Kok Sau Chun – – 59,391,000 ^ 50.36

Lim Soo Kong 2,131,100 1.81 32,301,000 # 27.39

Hu Zhong Huai – – 32,301,000 # 27.39# Deemed interested by virtue of their interests in Casa Holdings Limited^ Deemed interested through shares held by spouse, Mr Lim Choo Hong* Excluding a total of 7,234,900 shares bought-back by the Company and retained as treasury shares

D I R E C T O R S ’ S H A R E H O L D I N G S


Name No. of Shares Held % of Issued Capital * No. of Shares Held % of Issued Capital *

Tan Sri Dato’ Azizan Bin Husain – – – –

Lim Choo Hong 27,090,000 22.97 32,301,000 1 27.39

Lim Soo Kong 2,131,100 1.81 32,301,000 1 27.39

Dato’ Bahar Bin Ahmad 90,000 0.08 – –

Kok Sau Chun – – 59,391,000 2 50.36

Teh Chee Ghee – – – –

Margaret Chak Lee Hung – – – –1 Deemed interested by virtue of their interests in Casa Holdings Limited2 Deemed interested through shares held by spouse, Mr Lim Choo Hong* Excluding a total of 7,234,900 shares bought-back by the Company and retained as treasury shares


ANALYSIS OF SHAREHOLDINGS

as at 30 December 2010

T H I R T Y L A R G E S T S H A R E H O L D E R S

Holdings

Name of Shareholders No. of Shares% of Issued

Capital *

1. Casa Holdings Limited 32,301,000 27.39

2. Lim Choo Hong 27,090,000 22.97

3. Ngo Wee Bin 12,115,000 10.27

4. Perdana Padu Sdn Bhd 9,538,480 8.09

5. Ng Hook 5,625,383 4.77

6. Yap Seng Kuan 5,165,000 4.38

7. Corak Kukuh Sdn Bhd 4,127,760 3.50

8. Ng Chuei Yeen 2,431,200 2.06

9. Lim Soo Kong 2,131,100 1.81

10. TA Nominees (Tempatan) Sdn Bhd (Pledged securities account for Chua Eng Ho Waa @ Chua Eng Wah)

676,700 0.57

11. Chung Shan Kwang 600,000 0.51

12. Ng Ah Leong 484,000 0.41

13. Affi n Nominees (Tempatan) Sdn Bhd (Pledged securities account for Tan Kian Ser) 315,000 0.27

14. HLB Nominees (Tempatan) Sdn Bhd (Pledged securities account for Lee Seak Sung @ Lee Seak Song) 304,865 0.26

15. Lee Eng Kok 303,900 0.26

16. Teo Kwee Hock 289,200 0.25

17. Lim York Lai 283,500 0.24

18. Tan Kian Kok 245,100 0.21

19. Loo Soo Lan 238,100 0.20

20. Ng Lay Ping 237,000 0.20

21. TA Nominees (Tempatan) Sdn Bhd (Pledged securities Account for Chua Eng Kui) 223,300 0.19

22. Thong Yuet Keong 217,500 0.18

23. Mayban Nominees (Tempatan) Sdn Bhd (Pledged securities account for Chua Eng Ho Wa’a @ Chua Eng Wah)

211,200 0.18

24. Mayban Nominees (Tempatan) Sdn Bhd (Pledged securities account for Chua Eng Ho Wa’a @ Chua Eng Wah)

197,000 0.17

25. Yong Tian Sian 189,000 0.16

26. HDM Nominees (Tempatan) Sdn Bhd (Pledged securities account for Ng Chooi Guan)

168,900 0.14

27. Ho Hong Seng 161,100 0.14

28. Hoo Ting Yen 149,500 0.13

29. Chua Eng Ho Wa’a @ Chua Eng Wah 146,900 0.13

30. Lim Chin Peek 145,400 0.12

TOTAL 106,312,088 90.16

Note :* Excluding a total of 7,234,900 shares bought-back by the Company and retained as treasury shares


Analysis of Warrantholdingsas at 30 December 2010

No. of warrants in issue : 52,406,400

Exercise of warrants : Nil

Expiry date of the warrants : 26 November 2018

Exercise price of the warrants : RM1.00

Holdings

No. of

Warrant

holders

% of

Warrant

holders

No. of

Warrants

held

% of

Issued

Warrants

Less than 100 warrants – – – –

100 to 1,000 warrants 120 71.01 21,757 0.04

1,001 to 10,000 warrants 30 17.75 94,082 0.18

10,001 to 100,000 warrants 13 7.69 389,998 0.74

100,001 to less than 5% of issued warrants – – – –

5% and above of issued warrants 6 3.55 51,900,563 99.04

TOTAL 169 100.00 52,406,400 100.00

D I R E C T O R S ’ W A R R A N T H O L D I N G S


Name

No. of

Warrants Held

% of Issued

Warrants

No. of

Warrants Held

% of Issued

Warrants

Tan Sri Dato’ Azizan Bin Husain – – – –

Lim Choo Hong 12,040,056 22.97 14,356,000 1 27.39

Lim Soo Kong 2,800,000 5.34 14,356,000 1 27.39

Dato’ Bahar Bin Ahmad 40,000 0.08 – –

Kok Sau Chun – – 26,396,056 2 50.36

Teh Chee Ghee – – – –

Margaret Chak Lee Hung – – – –

1 Deemed interested by virtue of their interests in Casa Holdings Limited

2 Deemed interested through warrants held by spouse, Mr Lim Choo Hong


ANALYSIS OF WARRANTHOLDINGS

as at 30 December 2010

T H I R T Y L A R G E S T W A R R A N T H O L D E R S

Holdings

Name of Warrantholders No. of Warrants% of Issued

Warrants

1. Casa Holdings Limited 14,356,000 27.39

2. Lim Choo Hong 12,040,056 22.97

3. Ngo Wee Bin 10,293,332 19.64

4. Ng Hook 8,337,843 15.91

5. Yap Seng Kuan 4,073,332 7.77

6. Lim Soo Kong 2,800,000 5.34

7. Ng Ah Leong 94,000 0.18

8. OSK Nominees (Tempatan) Sdn Bhd (Pledged securities account for Chin Kiam Hsung) 60,000 0.12

9. Dato’ Bahar Bin Ahmad 40,000 0.08

10. Ching Wooi Kong 32,000 0.06

11. Yong Tian Sian 28,000 0.05

12. Chin Kian Fong 24,000 0.05

13. Lim Tep Peow 20,000 0.04

14. Teck Trading Company Sendirian Berhad 18,000 0.03

15. Er Kek Siong 16,666 0.03

16. TA Nominees (Tempatan) Sdn Bhd (Pledged securities account for Koko Yong Yin Peng) 16,000 0.03

17. Firomaz Sdn Bhd 14,666 0.03

18. Khew Yit Len 14,666 0.03

19. Ling Tung Ming 12,000 0.02

20. Tan Kian Kok 10,000 0.02

21. Chee Meng Chuan 6,666 0.01

22. Ngoe Wee Min 6,666 0.01

23. Low Kim Hua @ Low Siow Hoon 6,000 0.01

24. See Cheng Chong 5,333 0.01

25. Almuhsin Bin Haji Abdul Khohar 4,000 0.01

26. Citigroup Nominees (Tempatan) Sdn Bhd (Pledged securities account for Sarifah Majimah Bte Mohd Nursin)

4,000 0.01

27. HDM Nominees (Tempatan) Sdn Bhd (Pledged securities account for Lee Chee Keong) 4,000 0.01

28. Ooi Keng Long 4,000 0.01

29. Tan Ah Loon 4,000 0.01

30. Thang Hooi Chiew 4,000 0.01

TOTAL 52,349,226 99.89


Location

Existing

Use Tenure

Age of

Building

Date of Last

Revaluation

Built up

Area

(Sq. Metres)

Fair

Value

(RM’000)


1. Lot 13, Jalan E1/5

Usaha Ehsan Industrial Area

52100 Kepong

Selangor Darul Ehsan

Offi ce cum

service centre

Leasehold

(99 years

expiring on

09/07/2078)

27 years 30/09/08 1,843.6 3,590

2. No. 20, Jalan 7A/62A

Bandar Manjalara

52200 Kuala Lumpur

11 storey offi ce

building and one

warehouse block

Leasehold

(99 years

expiring on

25/08/2077)

6 years

10 months

30/09/08 26,792.6 51,610

Active Edge Sdn Bhd

3. No. 18, Jalan Temenggong 2

Kawasan Perindustrian

Temenggong

81100 Johor Bahru, Johor

Vacant offi ce

cum factory

Freehold 9 years

1 month

30/09/08 2,580.2 3,300

Fiamma Trading Sdn Bhd

4. No. 5, Jalan Enau 14

Taman Teratai

81110 Skudai, Johor

Intermediate

double storey

shop offi ce

rented to third

party

Freehold 11 years

4 months

30/09/08 298.8 270

List of Propertiesas at 30 September 2010


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Twenty-Eighth Annual General Meeting of the Company will be convened and held at the Main Board Room,

Level 10, Wisma Fiamma, No. 20, Jalan 7A/62A, Bandar Manjalara, 52200 Kuala Lumpur on Thursday, 24 February 2011 at 11.30 a.m.

A G E N D A

As Ordinary Business

1. To receive the Audited Financial Statements for the fi nancial year ended 30 September 2010 together with the Reports of the Directors and

the Auditors thereon. Ordinary Resolution 1

2. To declare a fi nal single tier dividend of 5.5% in respect of the fi nancial year ended 30 September 2010. Ordinary Resolution 2

3. To approve the payment of Directors’ fees for the fi nancial year ended 30 September 2010. Ordinary Resolution 3

4. To re-elect Dr Teh Chee Ghee who is retiring pursuant to Article 89 of the Articles of Association of the Company. Ordinary Resolution 4

5. To re-elect Ms Margaret Chak Lee Hung who is retiring pursuant to Article 89 of the Articles of Association of the Company.

Ordinary Resolution 5

6. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fi x their remuneration. Ordinary Resolution 6

As Special Business

To consider and, if thought fi t, to pass the following Resolutions:-

7. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares.

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the

Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes

as the Directors may, in their absolute discretion, deem fi t, provided that the aggregate number of shares to be issued does not exceed

ten per centum (10%) of the issued share capital of the Company for the time being, subject always to the approval of all relevant regulatory

bodies being obtained for such allotment and issue.” Ordinary Resolution 7

8. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed

Shareholders’ Mandate”).

“THAT, subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby

given for the Company and its subsidiaries, to enter into recurrent related party transactions of a revenue or trading nature with the related

parties as specifi ed in Section 2.1 of the Circular to Shareholders dated 28 January 2011 which are necessary for the day-to-day operations

and/or in the ordinary course of business of the Company and its subsidiaries on terms not more favourable to the related parties than those

generally available to the public and are not detrimental to the minority shareholders of the Company and that such mandate shall continue

to be in force until:-

i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the forthcoming AGM at which the Proposed

Shareholders’ Mandate will be approved, at which time it will lapse, unless by a resolution passed at the AGM, the mandate is again

renewed;

ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Companies

Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or


NOTICE OF ANNUAL GENERAL MEETING

iii) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is earlier.

THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient

or necessary to give effect to the Proposed Shareholders’ Mandate.” Ordinary Resolution 8

9. Proposed Renewal of Authority for Share Buy-Back

“THAT subject to the Companies Act, 1965 (“Act”), the Memorandum and Articles of Association of the Company, the Main Market Listing

Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory

authorities (if any), the Company be and is hereby authorised to utilise an amount not exceeding the audited retained profi ts and/or

share premium of the Company as at 30 September 2010 to purchase such amount of ordinary shares of RM1.00 each in the Company

(“Proposed Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon

such terms and conditions as the Directors may deem fi t and expedient in the interest of the Company provided that the aggregate

number of shares purchased and/or held pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up

share capital of the Company;

AND THAT an amount not exceeding the Company’s retained profi ts and share premium accounts be allocated by the Company for the

Proposed Share Buy-Back;

AND THAT authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either retain the shares

so purchased as treasury shares (as defi ned in Section 67A of the Act) and/or to cancel the shares so purchased and if retained as treasury

shares, may resell the treasury shares and/or to distribute them as share dividend and/or subsequently cancel them;

AND THAT the authority conferred by this Resolution will be effective immediately upon the passing of this Resolution and will expire at:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company (being the Twenty-Ninth (“29th”) AGM of the Company),

at which time the said authority will lapse unless by an ordinary resolution passed at a general meeting of the Company, the authority is

renewed, either unconditionally or subject to conditions;

(ii) the expiration of the period within which the 29th AGM of the Company is required by law to be held; or

(iii) revoked or varied by an ordinary resolution passed by the shareholders in a general meeting;

whichever is the earlier but not so as to prejudice the completion of the purchase(s) by the Company before the aforesaid expiry date and

in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and/or any other relevant governmental and/or

regulatory authorities (if any);

AND THAT the Directors of the Company be authorised to take all steps necessary to implement, complete and do all such acts and things

(including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Share

Buy-Back as may be agreed or allowed by any relevant governmental and/or regulatory authority.” Ordinary Resolution 9

10. Proposed amendments to the Articles of Association of the Company

“THAT the amendments to the Articles of Association of the Company as set out in Appendix I attached in the Annual Report for the fi nancial

year ended 30 September 2010 be and are hereby approved.” Special Resolution 1


NOTICE OF ANNUAL GENERAL MEETING

N O T I C E O F D I V I D E N D PAY M E N T

NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Twenty-Eighth Annual General Meeting, a fi nal single tier

dividend of 5.5% in respect of the fi nancial year ended 30 September 2010 will be paid to shareholders on 8 April 2011. The entitlement date for

the said dividend shall be 14 March 2011.

A Depositor shall qualify for entitlement to the Dividend only in respect of:

a) Shares transferred to the Depositor’s securities account before 4.00 p.m. on 14 March 2011 in respect of ordinary transfers.

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

CHIN MEE FOON (MIA 2191)

TAI YIT CHAN (MAICSA 7009143)

CHAN SU SAN (MAICSA 6000622)

Secretaries

28 January 2011

Notes:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company.

2. A member of the Company may appoint two (2) proxies to attend at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifi es the proportion of his shareholdings to be represented by each proxy.

3. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an offi cer or attorney duly authorised.

4. The instrument appointing a proxy or the power of attorney or other authority (if any) under which it is signed or notarially certifi ed copy of such power or authority, shall be deposited at the Registered Offi ce of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

5. EXPLANATORY NOTES ON SPECIAL BUSINESS

(i) Ordinary Resolution 7 - Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

The Company had, at the Twenty-Seventh Annual General Meeting (“AGM”) held on 25 February 2010, obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”). The Company did not issue any new shares pursuant to this mandate obtained as at the date of this notice.

The Ordinary Resolution 7 proposed under item 7 of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. The Ordinary Resolution 7, if passed, will empower the Directors to allot and issue shares in the Company up to an amount not exceeding in total ten per centum (10%) of the Issued Share Capital of the Company for purpose of working capital or provide funding for future investments or undertakings. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM.

At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is obtained, the Company will make an announcement in respect of the purpose and utilisation of proceeds arising from such issue.

(ii) Ordinary Resolution 8 - Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

The explanatory notes on Ordinary Resolution 8 is set out in the Circular to Shareholders dated 28 January 2011.

(iii) Ordinary Resolution 9 - Proposed Renewal of Authority for Share Buy-Back

The explanatory notes on Ordinary Resolution 9 is set out in the Statement to Shareholders dated 28 January 2011.

(iv) Special Resolution 1 – Proposed amendments to the Articles of Association of the Company

The Special Resolution 1, if passed, will render the Articles of Association of the Company to be consistent with eDividend requirements set out in paragraph 8.26A of the Main Market Listing Requirements, to facilitate the issuance of Annual Report in the form of compact disc and to streamline the requirement with regard to corporate governance.

Appendix I

Proposed Amendments to the the Articles of Association

The Articles of Association of the Company are proposed to be amended in the following manner:-

1. To delete the following existing Article 152 and replace with the new Article 152:-

Existing Article 152 New Article 152

Mode of payment of dividend Mode of payment of dividend

Any dividend, interest or other money payable in cash in respect

of shares may be paid by cheque or warrant and sent through the

post directed to the registered address of the holder or to such

person and to such address as the holder may in writing direct or,

if several persons are entitled thereto in consequence of the death

or bankruptcy of the holder, to any one of such persons or to such

person and to such address as such persons may by writing direct,

subject to the Rules. Every such cheque or warrant shall be made

payable to the order of the person to whom it is sent or to such

person as the holder or person or persons 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 shall operate as a good

discharge to the Company in respect of the dividend represented

thereby. Every such cheque or warrant shall be sent at the risk of the

person entitled to the money thereby represented.

Any dividend, interest or other money payable in cash in respect

of shares may be paid by cheque or warrant and sent through the

post directed to the registered address of the holder who is named

in the Record of Depositors or paid by way of electronic transfer or

other methods of funds transfer or remittance to the bank account

provided by the holder or to such person and to such address as the

holder may in writing direct or, if several persons are entitled thereto

in consequences of the death or bankruptcy of the holder, to any

one of such persons or to such person and to such address as such

persons may by writing direct, subject to the Rules. Every such cheque

or warrant or electronic transfer or remittance shall be made payable

to the order of the person to whom it is sent or to such person as the

holder or person or persons 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 or electronic transfer or remittance

shall operate as a good and full discharge to the Company in respect

of the dividend represented thereby. Every such cheque or warrant

or electronic transfer or remittance shall be sent at the risk of the

person entitled to the money thereby represented.


2. To delete the following existing Article 157 and replace with the new Article 157:-

Existing Article 157 New Article 157

Financial Statements to be made-up and laid before the Company Financial Statements to be made-up and laid before the Company

The Directors shall from time to time in accordance with Section 169

of the Act, cause to be prepared and laid before the Company in

general meeting such fi nancial statements and report as are referred

to in the section. The interval between the close of a fi nancial year

of the Company and the issue of the annual audited fi nancial

statements, the directors’ and auditors’ reports relating to it shall

not exceed 4 months. A copy of each such documents shall not less

than 21 days (or such other shorter period as may be agreed by

all members entitled to attend and vote at the meeting) before the

date of the general meeting, be sent to every member of, and to

every holder of debentures of the Company under the provisions of

the Act or of these Articles. The requisite number of copies of each

such documents as may be required by the Exchange and Securities

Commission shall at the same time be likewise sent to the Exchange

and Securities Commission provided that this Article shall not require

a copy of these documents to be sent to any person of whose address

the Company is not aware but any member to whom a copy of these

documents has not been sent shall be entitled to receive a copy free

of charge on application at the Offi ce.

The Directors shall from time to time in accordance with Section 169

of the Act, cause to be prepared and laid before the Company in

general meeting such fi nancial statements and report as are referred

to in the said section. The interval between the close of a fi nancial

year of the Company and the issue of the annual audited fi nancial

statements, the directors’ and auditors’ reports relating to it shall

not exceed four (4) months. A copy of each of the aforesaid such

documents shall, not less than twenty-one (21) days (or such other

shorter period as may be agreed by all members entitled to attend

and vote at the meeting) before the date of the general meeting, be

sent to every member of, and to every holder of debentures of the

Company and to every other person who is entitled to receive notice

of general meetings from the Company under the provisions of the

Act or of these Articles in printed form or in compact disc read-only

memory (CD-ROM) format or digital versatile disc read-only format

or in any other format through which images, data, information or

other material may be viewed where electronically or digitally or

howsoever subject to the compliance of the Listing Requirements

and any other relevant authorities. The requisite number of copies

of each such documents as may be required by the Exchange and

Securities Commission shall at the same time be likewise sent to the

Exchange and Securities Commission provided that this Article shall

not require a copy of these documents to be sent to any person of

whose address the Company is not aware but any member to whom

a copy of these documents has not been sent shall be entitled to

receive a copy free of charge on application at the Offi ce.

3. To insert a new Article 99.8 immediately after the existing Article 99.7 as follows:-

New Article 99.8

The offi ce of Director shall, ipso facto, be vacated:-

If he is convicted by a court of law, whether in Malaysia or elsewhere, in relation to an offence under the Act or the securities laws as defi ned

in the Capital Markets and Services Act 2007.


CDS account no. of authorised nominee

Notes:1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company.

2. A member of the Company may appoint two (2) proxies to attend at the same meeting. Where the member of the Company appoints two (2) proxies, the appointment shall be invalid unless the member specifi es the proportion of his shareholdings to be represented by each proxy.

3. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an offi cer or attorney duly authorised.

4. The instrument appointing a proxy or the power of attorney or other authority (if any) under which it is signed or notarially certifi ed copy of such power or authority, shall be deposited at the Registered Offi ce of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

FIAMMA HOLDINGS BERHADCompany No. 88716-W

(Incorporated in Malaysia)

Proxy Form

I/We

IC No./ID No./Company No. / of

being a member(s) of the Company, hereby appoint

IC No. / of

and/or failing him/her

IC No. / of

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us

on my/our behalf at the Twenty-Eighth Annual General Meeting of the Company to be held at the Main Board Room, Level 10, Wisma Fiamma, No. 20, Jalan 7A/62A, Bandar Manjalara, 52200 Kuala Lumpur on Thursday, 24 February 2011 at 11.30 a.m. and at each and every adjournment thereof.

Signature/Common Seal

Number of shares held:

Date:

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

Percentage

Proxy 1 %

Proxy 2 %

Total 100%

(name of shareholder as per NRIC, in capital letters)

(new) / (old)

(full address)

(name of proxy as per NRIC, in capital letters)

(new) / (old)

(full address) (name of proxy as per NRIC, in capital letters)

(new) / (old)

(full address)

My/our proxy is to vote as indicated below.

Resolutions For Against

1. To receive the Audited Financial Statements for the fi nancial year ended 30 September 2010 and Directors’ and Auditors’ Reports

Resolution 1

2. Declaration of a fi nal single tier dividend of 5.5% in respect of the fi nancial year ended 30 September 2010

Resolution 2

3. Approval of payment of Directors’ Fees for the fi nancial year ended 30 September 2010 Resolution 3

4. Re-election of Dr Teh Chee Ghee as Director Resolution 4

5. Re-election of Ms Margaret Chak Lee Hung as Director Resolution 5

6. Re-appointment of Messrs KPMG as Auditors of the Company and to authorise the Directors to fi x the Auditors’ remuneration

Resolution 6

7. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

Resolution 7

8. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Resolution 8

9. Proposed Renewal of Authority for Share Buy-Back Resolution 9

10. Proposed amendments to the Articles of Association of the Company Special Resolution 1

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

Fold Here

Fold Here

Affi xStamp

The Secretary

Fiamma Holdings Berhad (88716-W)

Lot 6.05, Level 6

KPMG Tower

8, First Avenue

Bandar Utama

47800 Petaling Jaya

Selangor Darul Ehsan

www.fi amma.com.my


Wisma Fiamma, No. 20, Jln 7A/62A,

Bandar Manjalara, 52200 Kuala Lumpur.

Tel: 603- 6279 8888 Fax: 603- 6279 8933

fiamma holdings berhad - malaysiastock.biz currently, he also sits on the board of central sugars...

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