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SANICHI TECHNOLOGY BERHAD(Incorporated in Malaysia under the Companies Act, 1965)

(Company No. 661826-K)

ANNUAL REPORT 2 0 1 1

Automotive Components

Oil & GasEngineeringComponents

Electronic Components

1

CONTENTS

NOTICE OF ANNUAL GENARAL MEETING

CORPORATE STRUCTURE

CORPORATE INFORMATION

DIRECTORS’ PROFILE

CHAIRMAN‘S STATEMENT

AUDIT COMMITTEE REPORT

CORPORATE GOVERNANCE STATEMENT

STATEMENT OF INTERNAL CONTROL

FINANCIAL STATEMENT

LIST OF PROPERTIES

ANALYSIS OF SHAREHOLDINGS

PROXY FORM

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9 - 11

12 - 18

19 - 20

21 - 68

69

70 - 71

ENCLOSED

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NOTICE OF SEVENTH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of the Company will be held at PLO 135 Jalan Cyber 5,Kawasan Perindustrian Senai Fasa 3, 81400 Senai, Johor on Thursday, 22 December 2011 at 11.00 a.m. to transact the following business:-

AGENDA

AS ORDINARY BUSINESS

To receive the Audited Financial Statements for the financial year ended 30 June 2011 together with the Reports of the Directors and Auditors thereon.

To approve the payment of Directors’ Fees for the financial year ended 30 June 2011.

To re-elect Tan Sri Dato’ Sri Abdul Halil bin Abd Mutalif, who retires pursuant to Article 127 of the Company’s Articles of Association and being eligible, offers himself for re-election.

To re-elect the following Directors, who retire pursuant to Article 132 of the Company’s Articles of Association and being eligible, offer themselves for re-election:

(i) Encik Zaki bin Awang Ahmad(ii) Mr Ong Tee Kein

To re-appoint Messrs Hasnan THL Wong & Partners as Auditors of the Company and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS:To consider and if thought fit, to pass the following resolution:

Ordinary Resolution – Authority to Issue SharesTHAT, subject always to the Companies Act, 1965, (“the Act”) (as may be amended, modified or re-enacted from time to time), the Articles of Association of the Company and the approvals of relevant government/regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Act, to issue ordinary shares from the unissued capital of the Company at any time at such price, upon such terms and conditions, for such purposes and to such persons whomsoever the Directors may in their discretion deem fit and that the Directors be empowered to obtain the approval for the listing and quotation of the additional shares so issued on the Bursa Malaysia Securities Berhad (“Bursa Securities”) provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that such author-ity shall continue to be in force until the conclusion of the next Annual General Meeting (“AGM”) of the Company.

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

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7.

By Order of the Board

SANICHI TECHNOLOGY BERHAD

Chuah Bee Hwa (MAICSA No.: 7056081)Company SecretaryKuala Lumpur30 November 2011

Resolution 1

Resolution 2

Resolution 3

Resolution 4Resolution 5

Resolution 6

Resolution 7

SANICHI TECHNOLOGY BERHAD (661826-K)

ANNUAL REPORT 2011�

NOTICE OF SEVENTH ANNUAL GENERAL MEETING

Note:

A member entitled to attend and vote at this meeting is entitled to appoint up to two (2) proxies to attend and vote in his stead. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under the hand of its attorney.

The instruments appointing a proxy must be deposited at the Registered Office of the Company, located at A-15-4 Northpoint Offices, Medan Syed Putra Utara, 1 Jalan Syed Putra, Mid Valley City, 59200 Kuala Lumpur, Malaysia, not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof.

Explanatory notes to Special Business

Resolution 7The proposed Ordinary Resolution 7 is a renewal of the general authority for the Directors to issue shares pursuant to Section 132D of the Companies Act, 1965. If passed, it will empower the Directors of the Company, from the conclusion of this Annual General Meeting to allot and issue shares in the Company up to and not exceeding in total 10% of the issued and paid-up share capital of the Company for the time being for such purposes as they consider would be in the interests of the Company. This authority will expire at the next Annual General Meeting of the Company, unless revoked or varied at a general meeting.

The general authority to issue shares will allow the Company to take advantage of any strategic opportunities, including but not limited to, issuance of new shares for purpose of funding investment project(s), working capital and/or acquisitions which require new shares to be allotted and issued speedily and would also save the cost involved in convening a general meeting to approve such issuance of shares.

Statement Accompanying Notice of Annual General Meeting(pursuant to Paragraph 8.29(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad)

There are no individuals who are standing for election as directors (other than directors standing for re-election).

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ANNUAL REPORT 2011 �

Corporate Structure

)K-628166.oNynapmoC()5691,tcAseinapmoCehtrednuaisyalaMnidetaroprocnI(

Sanichi PrecisionMould Sdn Bhd

Design and fabrication ofAdvanced Plastic Injection Mould and Conventional Plastic Injection Mould

Asia Pinnacle Sdn Bhd

Design and fabrication ofAdvanced Plastic Injection Mould

Sanichi Mould (Thailand)Co. Ltd

Design and fabrication ofAdvanced Plastic Injection Mould and Conventional Plastic Injection Mould

100% 100% 100%



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Corporate Information

Tan Sri Dato' Sri Abdul Halil bin Abd Mutalif

Dato' Dr Pang Chow Huat

Dato' Abd Halim bin Abd Hamid

Encik Zaki bin Awang Ahmad

Mr Ong Tee Kein

Chairman/Independent Non-Executive Director

Managing Director

Independent Non-Executive Director



Board of Directors:

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Tan Sri Dato' Sri Abdul Halil bin Abd Mutalif - Chairman/Independent Non-Executive Director

Dato' Abd Halim bin Abd HamidMember/Independent Non-Executive Director

Encik Zaki bin Awang AhmadMember/Independent Non-Executive Director

Mr Ong Tee KeinMember/Independent Non-Executive Director

Audit Committee:

Tan Sri Dato' Sri Abdul Halil bin Abd MutalifChairman/Independent Non-Executive Director

Dato' Dr Pang Chow HuatMember/Executive Director

Dato' Abd Halim bin Abd HamidMember/Independent Non-Executive Director

Remuneration and Nomination Committee:

Company Secretary

Auditors

Ms Chuah Bee Hwa (MAICSA No. 7056081)

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Websitewww.sanichimould.com

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Stock Exchange ListingACE Market of Bursa Malaysia Securities Berhad

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HASNAN THL WONG & PARTNERS (AF 0942)10, Lorong Universiti B,Section 16, 46350 Petaling JayaTel : 03 7956 5333Fax : 03 7958 6833

REGISTERED OFFICEA-15-4, Northpoint Offices,Medan Syed Putra Utara,No.1 Jalan Syed Putra, Mid Valley City59200 Kuala LumpurTel No. 03 2287 0080Fax No. 03 2287 0090

Share RegistrarShareworks Sdn Bhd10-1, Jalan Sri Hartamas 8Sri Hartamas50480 Kuala LumpurTel : 03 6201 1120Fax : 03 6201 3121

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Principal BankersUnited Overseas Bank (Malaysia) Berhad2 Jalan Wong Ah Fook80000 Johor BahruTel : 07 219 6300



2

Directors’ Profile

Tan Sri Dato’ Sri Abdul Halil bin Abd MutalifIndependent Non-Eexcutive ChairmanMalaysian, aged 65

Tan Sri Dato’ Sri Abdul Halil bin Abd Mutalif is the Audit Committee Chairman of Sanichi and was appointed to the Board on 20 June 2006. He was appointed Chairman of the Board of Sanichi on 9 May 2011.

He is also the Chairman of the Remuneration Committee and Nomination Committee of the Company. He was formerly the Director-General of the Royal Malaysian Customs for fi ve (5) years before he retired in October 2005. After graduating from University Malaya with B.A (Hons) in History in 1970, he began his career as an Administrative and Diplomatic Services Officer and served at various government departments and ministries, where he held key positions.

From 1990 to 2000, he was seconded to Langkawi Develop-ment Authority (“LADA”) which was under the purview of the Ministry of Finance as General Manager. During the secondment to LADA, he was responsible for the overall development of the Langkawi Islands. In 2000, he was subsequently seconded to the Royal Malaysian Customs to assume the position of Director-General of Customs. During his tenure as Director-General of the Royal Malaysian Customs, yearly revenue collections increased from RM16 billion prior to his appointment to RM25 billion upon his retirement. He also sits on the board of directors of several private limited companies.

Tan Sri Dato’ Sri Halil attended 6 out of 7 Board Meetings held during the financial year ended 30 June 2011.

Dato’ Dr. Pang Chow HuatManaging DirectorMalaysian, aged 38

Dato’ Dr. Pang Chow Huat is the founder and Managing Director of Sanichi and was appointed to the Board on 20 June 2006. He is also a member of the Remuneration Committee and Nomination Committee of the Company. Equipped with more than twenty (20) years of experience in precision engineering in the plastic mould and tool industry, he is currently responsible for the overall strategy and direction of the Group as well as client relationship management.

He was conferred a Doctor of Philosophy in Design Technol-ogy from the InterAmerican University, Washington D.C. in December 2005. He began his career in 1991 as an apprentice with a local company specializing in the fabrication of plastic moulds and dies as well as plastic injection moulding, and later joined a Singapore-based mould manufacturer as Head of the Mould Fabrication Department. In 1996, with his in-depth knowledge in plastic moulding and fabrication, he founded Sanichi Precision Mould Industries, specializing in the servicing and repairs of moulds and tools. He has experience exposure to advanced design and technology of high-quality precision moulds and parts.

In February 2000, he established Sanichi Precision Mould Sdn Bhd (“SPMSB”) and ventured into the design, engineer-ing and fabrication of plastic mould products through Research and Development (“R&D”). He is also the initiator for many of the in-house developed solutions in SPMSB, which is attributed to his hands-on technical know-how garnered in his years of working in the industry.

Dato’ Pang attended all Board Meetings held during the financial year ended 30 June 2011.

None of the Directors has any family relationship with any Director and/or Major Shareholder of the Company.None of the Directors has any conflict of interest with the Company.None of the Directors has been convicted for any offences (other than traffic offences) within the past 10 years save as disclosed underCorporate Governance Statement - Additional Compliance Information (Page 17).

Notes:



Directors’ Profile

Dato’ Abd Halim bin Abd HamidIndependent Non-Executive DirectorMalaysian, aged 62

Dato’ Abd Halim bin Abd Hamid is a member of the Audit Committee of Sanichi and was appointed to the Board on 28 May 2008. He is also a member of the Remuneration Committee and Nomination Committee of the Company.

He was formerly a senior police officer who had served over a span of 36 years in various parts of Malaysia since 1969. Throughout the period of service, he had served at various levels of commanding positions and gained wide range of experiences in management, criminal investigation, as well as administration in the police force.

He is a Diploma holder from the Malaysian Armed Forces Staff College and later obtained a Bachelor of Laws (Hons.) from the International Islamic University of Malaysia (IIUM). Besides the academic qualifications, he had also attended various training courses organized by the police force and Institut Tadbiran Awam Negara. Since his retirement as the Deputy Commissioner of Police (DCP) in Bukit Aman in September 2005, he was appointed as the Chief Executive Officer of UNIKOP College, a private institution of higher learning fully owned by the PDRM Cooperative with effect from October 2005 until today.

Dato’ Abd Halim attended all Board Meetings held during the financial year ended 30 June 2011.

En Zaki bin Awang Ahmad is an Independent Non-Executive Director of Sanichi and was appointed to the Board on 8 April 2011. He is also a member of Audit Commit-tee of Sanichi.

Encik Zaki bin Awang AhmadIndependent Non-Executive DirectorMalaysian, aged 46

Mr Ong Tee Kein is an Independent Non-Executive Director of Sanichi and was appointed to the Board on 3 November 2011. He is also a member of Audit Committee of Sanichi.

He has several years of experience in industry and consul-tancy practice. He holds a Master Degree in Business Administration and is a member of the Malaysian Institute of Accountants and an Associate of The Institute of Chartered Secretaries and Administrators. After qualifying as an accountant in the United Kingdom, Mr Ong joined a management consultancy practice based in United Kingdom specializing in providing consultancy services to governments and international funding agencies. Since 1994, he was a principal consultant in the corporate advisory division of an international accounting firm. He is also the director of Mlabs Systems Berhad and Advance Information Marketing Berhad.

Mr Ong Tee KeinIndependent Non-Executive DirectorMalaysian, aged 54

He is a fellow member of Association of Chartered Certified Accountants United Kingdom. He also holds an Interna-tional Diploma in Applied Finance and Investment from Financial Services Institute of Australasia. After graduating, he began his career as an accountant with Bank Simpanan Nasional from 1988 to 1990. He left Bank Simpanan Nasional and joined MMC Marketing Sdn. Bhd. in 1990 as an accountant. Currently, he is a Senior Manager in PFM Capital Sdn. Bhd. (a member of PNB Group of Companies).

En Zaki recorded 100% attendance at the Board Meetings since his date of appointment for the financial year ended 30 June 2011.

None of the Directors has any family relationship with any Director and/or Major Shareholder of the Company.None of the Directors has any conflict of interest with the Company.None of the Directors has been convicted for any offences (other than traffic offences) within the past 10 years save as disclosed underCorporate Governance Statement - Additional Compliance Information (Page 17).

Notes:



Chairman’s Statement

Dear Shareholders,

On behalf of the Board of Directors of Sanichi Technology Berhad (“Sanichi”

or “Group”), I would like to present the Annual Report, incorporating the

financial statements of the Group and the Company for the financial year

ended 30 June 2011.

INDUSTRY TRENDS AND DEVELOPMENT

OPERATIONAL REVIEW

TAN SRI DATO’ SRI ABDUL HALIL BIN ABD MUTALIFNOVEMBER 2011

It has been another difficult year where prolonged unfavorable market conditions continue to plague the sectors in which we operate. Even the overall weakness in the advanced econo-mies and the disruptions in the global manufacturing supply chain stemming from the disaster in Japan, were reflected in the slowdown in the manufacturing sector. Global manufac-turers, particularly those in the electrical and electronics sector, adopted a more cautionary approach when it comes to launching new products, hence also impacting the demand for design and fabrication of moulds.

Similarly, the automotive industry was also plagued with challenges of its own, experiencing a slowdown in demand. Albeit improving circumstances, automakers remain cautious for the moment.

PROSPECTS

In efforts to sustain sufficient working capital, Sanichi will continue to monitor operational efficiency with strict adherence to keeping a lean cost structure. The Board of Directors is also very eager to capture new market demands and is always vigilant in seeking out new opportunities. Simultaneously, the Board of Directors is also very enthusias-tic with the potential participation of Protev which will open new doors and opportunities for Sanichi.

APPRECIATION

In the past year, the Board of Directors has undergone changes including resignations and new appointments.

I would like to put on record my gratitude especially towards the contribution of Tan Sri Dato’ Seri Arshad bin Ayub for his guidance and support throughout his tenure as the Chairman of Sanichi. The following directors have also resigned:

i) Datuk Nik Ibrahim bin Nik Abdullahii) Datin Chen Choon Leeiii) Mansor Bin Aliiv) Teo Kong Wanv) Azrina Binti Arshadvi) Leong Choon Meng

I also wish to welcome En Zaki bin Awang Ahmad and Mr. Ong Tee Kein as new members to the Board of Directors of Sanichi.

On behalf of the Board of Directors, I would like to thank the management and staff for their dedication and perseverance in facing the challenges during the year under review. We would also like to record our appreciation to our shareholders, bankers, business associates and regulatory and government authorities for their continuing support to the Group.

Revenue for the financial year ended 30 June 2011 was approximately RM9.5 million, which represents a reduction of 50.8% over the preceding year of RM19.3 million. Correspondingly, Sanichi posted a net loss after taxation of approximately RM14.6 million compared to a net profit after tax of RM0.13 million the preceding year. Included in the current year loss after taxation is an impairment loss on trade receivables amounting to RM6.5 million. The Board of Directors had deliberated at length on the financial impact of the current market conditions on the Group and accordingly adopted a prudent view towards the impairment on trade receivables.

CORPORATE DEVELOPMENTS

The Board of Directors had on 11 August 2011 announced that the subsidiaries of Sanichi Technology Berhad, namely Sanichi Precision Mould Sdn Bhd and Asia Pinnacle Sdn Bhd have been granted a Stay Order of all proceedings pursuant to Section 176 of the Companies Act 1965. With this in place, the Board of Directors is anticipative of a smooth and successful implementation of corporate exercises that will allow Sanichi to return back to a strong footing. Such corpo-rate exercises may include the participation of Projektarbelt Technische Beratung Venretung International (“Protev”) as a strategic shareholder and also a Proposed Private Placement exercise as announced on 8 June 2011 and 14 October 2011 respectively. The developments of these corporate exercises will be announced to Bursa Securities from time to time.





Audit Committee Report

The Board of Sanichi Technology Berhad is pleased to present the report on the Audit Committee (“AC “) for the financial year ended 30 June 2011.

COMPOSITION OF MEMBERS AND MEETINGS

noitisoPemaN

Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif

Mr Leong Choon Meng

During the financial year, 4 (four) AC meetings were held and details of the attendance of the AC members are as follows:

)i()ii()iii()vi(

(v)(vi)

Note: The number of meetings attended by each AC members vary according to their dates of resignation and appointment.

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

Objective

MembershipThe committee shall be appointed by the Board and fulfils the following requirements:

(1) The AC must compose of no fewer than 3 members;(2) Majority of the AC shall be independent; (3) At least one member of the AC must be a member of the MIA or any other equivalent qualifications recognized by the MIA;

and(4) All members should be non-executive directors.

The Audit Committee of Sanichi Technology Berhad (“the Committee”) comprise of four (4) Directors, all of whom are Indepen-dent Non-Executive Directors. During the financial year ended 30 June 2011, changes were made to the composition of the members of the Audit Committee as follows:-

The objective of the AC is to assist the Board to discharge its responsibilities by reviewing the adequacy and integrity of the Company and the Group’s financial statements as well as the internal control systems including compliance with applicable laws, regulations, directives and guidelines. The presence of the AC is also to reinforce the independence of both the internal and external auditors and thereby helps to assure that they will have rein in the audit process and to provide, by way of regular meet-ings and a line of communication between the Board and both the external and internal auditors.

Resigned as Directoron 16 February 2011

No ChangeChairman / Independent Non-Executive Director

Member / Independent Non-Executive Director

Datuk Nik Ibrahim bin Nik Abdullah Resigned as Directoron 21 March 2011

Member / Non Independent Non-Executive Director

Dato’ Abd Halim bin Abd Hamid Re-appointed as member of Audit Committee on 9 May 2011


En Zaki bin Awang Ahmad Appointed as member of Audit Committee on 9 May 2011


Mr Ong Tee Kein Appointed as member of Audit Committee on 3 November 2011


Tan Sri Dato’ Sri Abdul Halil bin Abd Mutalif Mr Leong Choon MengDatuk Nik Ibrahim bin Nik AbdullahDato’ Abd Halim bin Abd Hamid En Zaki bin Awang AhmadMr Ong Tee Kein (appointed on 3 November 2011)

[4/4][3/3][3/3][1/1][1/1][N/A]


ANNUAL REPORT 201110

Audit Committee Report (Cont’d)

Retirement and ResignationIn the event of any vacancy resulting in the number of members being reduced to below 3, the vacancy must be filled within 3months. The Chairman, who shall be elected by the AC, must be an Independent Director.

Attendance At Meeting1. The Company Secretary of Sanichi Technology Berhad shall be the secretary of the AC and will be responsible for the co-

ordination of administrative details including calling the meeting and the keeping of minutes.2. The agenda for AC meetings shall be circulated before each meeting to members of the committee. The committee may

require the internal and external auditors and any officer of the Company or Group to attend any of its meetings as it deemsfit.

3. The external auditors shall have the right to appear and be heard at any of the AC meeting and shall appear before thecommittee when required to do so by the committee. The external auditors normally attend meetings at the invitation of theAC.

4. In addition, the Chairman may call a meeting of the AC if a request is made by any committee member, the Group’s ManagingDirector or the internal or external auditors.

Duties and Responsibilities of Audit Committee (“AC”)The following are the main duties and responsibilities of the AC:1. To recommend to the Board on the appointment and annual reappointment of both the external and the internal auditors and

the review of their fees, after taking into consideration the independence and objectivity of the external and internal auditorsand cost effectiveness.

2. Discuss with the external auditors before the audit commences, the nature and scope of the audit.3. To review the quarterly interim results and annual financial statements of the Company and the Group prior to approval by the

Board whilst ensuring that they are prepared in a timely and accurate manner complying with all accounting and regulatoryrequirements and are promptly published.

4. Discuss issues arising from the interim and final audits and any matter the external auditors may wish to discuss in theabsence of the Management where necessary.

5. Review the external auditor’s management letter and management’s response.6. Evaluate the standards of internal controls and financial reporting of the Sanichi Group of Companies.7. Consider the major findings of internal audits and/or investigations and Management’s response.8. Review any related party transactions and conflict of interest situation that may arise within Sanichi Group, including any

transaction, procedure or source of conduct that raises questions of management integrity.9. Consider other issues as defined by the Board.

Power of Audit Committee 1. Have explicit authority to investigate any matter within its terms of reference.2. Have the resources required to perform its duties.3. Have full and unrestricted access to any information, records and personnel of Sanichi Technology Berhad and any of other

companies within the Group.4. Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or

activity.5. Be able to obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to

attend the AC’s meeting (if required) and to brief the AC.6. Be able to convene meetings with external auditors without the presence of the executive board members, whenever

deemed necessary.


ANNUAL REPORT 2011 11

Audit Committee Report (Cont’d)

Frequency of MeetingsThe AC shall hold a minimum of at least 4 meetings in a financial year. The number of AC meetings held during a financial yearand the details of attendance of each individual member in respect of meetings held shall be disclosed annually. The meeting shallbe chaired by the Chairman of AC or in the absence of the chairman, another committee member nominated by the committeemembers. The quorum of the meeting shall consist of at least 2 members. The Chairman also has the discretion to call foradditional meetings at any time.

Reporting ProceduresThe Company Secretary shall circulate the minutes of meetings of the AC to all members of the Board.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the financial year, the AC carried out the following activities to discharge their duties and responsibilities:1. Reviewed the unaudited quarterly financial results and the annual audited financial statements for the Board’s approval prior

to their release to Bursa Malaysia Securities Berhad.2. Reviewed the audit plan of the external auditors.3. Reviewed report and findings of the external auditor’s.4. Reviewed and recommended the reappointment of the external auditors for the Board’s consideration.5. Reviewed the AC Report and Statement on Internal Control before recommending for Board approval for the purpose of

inclusion in the Annual Report.6. Reviewed the status report of Internal Audit (“IA”) activities to ensure all the planned activities were properly carried out.

7. Reviewed the recommendations by the IA and correction action taken by management in addressing and resolving issues.

Internal Audit Function

The Group has engaged an external independent internal audit service provider to carry out the internal audit function to assistthe AC.

Amongst the responsibilities of the internal auditors were to assist the AC in reviewing and identifying and evaluating the existinginternal control system of the Groups.

Internal audit report, incorporating the audit recommendations and management responses with regards to audit findings relatingto the weaknesses in the internal control systems were issue to the AC.

This statement is made in accordance with a Board’s resolution adopted by the Board at its meeting held on 18/11/2011



Corporate Governance Statement

A. BOARD OF DIRECTORS

1. The Board

2. Board Composition and Balance

The Board of Director (“the Board”) of Sanichi Technology Berhad (“Group” or “Company”) recognizes the importance of good corporate governance is about commitment to values and ethical conduct and managing stakeholder expectations. Adopting good principles and practices in corporate governance as a fundamental in discharging its duties and responsibilities, to safeguard the interest of its shareholders as well and enhance shareholders’ value and the financial performance of the Group.

In implementing its governance system and ensuring compliance with the ACE Market Listing Requirements (“AMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Board has been guided by the measures and best practice recommended in the Malaysian Code on Corporate Governance (“Code”).

The Board affirms its overall responsibility for the direction, risk management, financial performance, internal control and investment decision of the Group.

The Board is led and managed by experienced members from diverse backgrounds with a wide range of expertise. The Board had delegated certain responsibilities to its Board committees which operates within clearly defined terms of reference and has full authority to examine and clarify issues delegated to them. The Board Committees comprises of a wide spectrum of skills, knowledge and experiences from various business and educational backgrounds vital to the continued success of the Group’s business.

The Executive Director has a direct responsibility for business operations as well as coordinating the business develop-ment and corporate strategies of the Group as a whole. The roles of the independent Non-Executive Directors are to provide advice and independent judgment the formulation of the policies and decision making, taking into account the best interest of all the stakeholders.

There is a clear division of responsibilities between Chairman and the Executive Director to ensure a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness and conduct whilst the Executive Director is responsible for Group’s operation and implementation of Board policies and making operational decisions.

The Board comprises various backgrounds and industries which are provide broader and independent views, advice and judgment and ultimately the enhancement of shareholders’ value.

A brief profile of each Director is set out on pages 6 to 7 of this Annual Report.

Appointment of Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif as Chairman of the Board of Sanichi on 9 May 2011.

Resignation of the following directors:

Appointment of the following directors:

(i) En Zaki Bin Awang Ahmad – appointed on 8/4/2011(ii) Mr Ong Tee Kein – appointed on 3/11/2011

(a)

(b)

(c)

The Board currently has five (5) members comprising one (1) Executive Director and four (4) Independent Non-Executive Directors. The number of Independent Directors fulfilled the prescribed requirement for one-third of the membership of the Board to be Independent Board Members.

During the financial year, the following changes were made to the Board’s composition and structure:

(i)(ii)(iii)(iv)(v)(vi)(vii)

Mr Leong Choon Meng – resigned on 16/2/2011Tan Sri Dato’ Seri Arshad Bin Ayub – resigned on 21/3/2011Datuk Nik Ibrahim Bin Nik Abdullah – resigned on 21/3/2011Datin Chen Choon Lee – resigned on 9/5/2011En Mansor Bin Ali – resigned on 24/8/2011Pn Azrina Binti Arshad – resigned on 24/8/2011Mr Teo Kong Wan – resigned on 24/8/2011


ANNUAL REPORT 2011 1�

Corporate Governance Statement (Cont’d)

3. Board Meetings

sgniteemdraoBtaecnadnettA

5/5

5/5

6/7

7/7

7/7

0/6

5/5

7/7

6/7

7/7

2/2

N/A

Tan Sri Dato’ Seri Arshad Bin Ayub

Datuk Nik Ibrahim Bin Nik Abdullah


Dato’ Dr. Pang Chow Huat

Dato’ Abd Halim Bin Abd Hamid

Datin Chen Choon Lee

Mr. Leong Choon Meng

En. Mansor Bin Ali

Puan Azrina Binti Arshad

Mr Teo Kong Wan

Encik Zaki Bin Awang Ahmad

Mr. Ong Tee Kein (appointed on 3 November 2011)

Note : Number of meetings attended by each Director vary according to their dates of resignation and appointment.

The Board meetings are scheduled with due notice in advance on a quarterly basis with additional meetings convened as and when significant issues arise relating to the Group and when necessary to review the progress of its operating subsidiaries in achieving their strategic goals.

Prior to each Board meeting, all Directors receive the agenda and Board papers encompassing qualitative and quanti-tative information relevant to the business of the meeting. This allows the Board to obtain further explanations in order to be properly briefly before each meeting. A record of the Board’s deliberations of the issues discussed and conclu-sion reached in discharging its duties and responsibilities is captured in the minutes of each meeting, prepared by the Company Secretary, who ensures that accurate and proper records of the proceedings of Board meetings are recorded and kept in the statutory register at the registered office of the Company.

During the financial year under review, the Board met seven (7) times and details of each Director’s attendance are tabled below:

4. Supply and Access to Information

All the Board members have fully, unrestricted and timely access to all information necessary for the discharge of its responsibilities. The Board is supplied with all relevant information and reports on Group’s financial result, strategic and business plan by way of board papers effective discharge of their duties.

The Board members have direct access to the advice and services of the Company Secretaries, senior management and where necessary, to seek independent professional advice if require.

5. Appointment and Re-election to the Board

The terms of reference of the Nomination Committee include the recommending of new candidates to the Board, Directors to fill the seats on Board and assessing the effectiveness of the Board. The Nomination Committee will assist the Board in reviewing the balance mix of skills and expertise of the Board.

The Company Secretary is responsible for ensuring that all appointments are properly made, and that all legal and regulatory obligations are met.

In accordance with the Company’s Articles of Association, an election of the Directors shall take place every year and all Directors shall retire from office once at least in every three (3) years at its Annual General Meetings but shall be eligible for re-election. Directors who are appointed by the Board during the financial year are subject to retirement and offer themselves for re-election by the shareholders at the Annual General Meeting following their appointment.




6. Directors’ Training

ranimeS/gniniarTsrotceriD

7. Board Committees

Remuneration and Nomination Committee:

All Directors have attended the Mandatory Accreditation Programme (MAP). The Board recognized the needs of continuing education and lifelong learning are critical for them to enable them to discharge their duties more effective. They will continue to evaluate and determine their training needs to equip themselves with necessary skills and knowledge to best serve the interest of the Group.

During the financial year under review, some of the Directors have undergone the following training / seminars programmes:


Dato’ Dr. Pang Chow Huat Nil

Dato’ Abd Halim Bin Abd Hamid

Encik Zaki Bin Awang Ahmad

One Day Training Programme for Directors and Senior Management on Financial Statements Review Process and Compliance with ACE Market Listing Requirements.

One Day Training Programme for Directors and Senior Management on Financial Statements Review Process and Compliance with ACE Market Listing Requirements.

i. The Board Responsibility for Corporate Culture-Selected Governance Concerns & Tools for addressing Corporate Culture and Board Performance.

ii. One Day Training Programme for Directors and Senior Management on Financial Statements Review Process and Compliance with ACE Market Listing Requirements.

i. Mandatory Accreditation Programme for Directors of Public Listed Companies

ii. One Day Training Programme for Directors and Senior Management on Financial Statements Review Process and Compliance with ACE Market Listing Requirements.

The Board has established and delegated specific responsibilities to three (3) Committees of the Board, which operate within clearly defined written terms of reference. The Board Committees deliberate issues on a broad and in-debt basis before putting up any recommendation to the Board for approval.

The Nomination Committee is delegated the responsibility to ensure a formal and transparent procedure for the appoint-ment of new directors to the Board.

The Remuneration Committee is delegated the responsibility to develop the Group’s remuneration policy and to review and recommend to the Board the remuneration packages and the terms of employment for the Board and shareholders’ approval at the Annual General Meeting. No Directors will participate in the deliberation and decision in respect of their own remuneration.

a) Audit Committee

(1)

(2)

(3)

Tan Sri Dato’ Sri Abdul Halil Bin Abd Mutalif - Chairman / Independent Non-Executive Director

Dato' Dr Pang Chow Huat - Member/Executive Director

Dato' Abd Halim bin Abd Hamid - Member/Independent Non-Executive Director

The Audit Committee’s principal function is to assist the Board in maintaining a sound system of internal control. The Audit Committee member meets with the external auditors at least once a year. The Audit Committee Report is presented on page 9 to page 11 of this Annual Report.

b) Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises a majority of whom are Non-Executive Directors, are as follows:




latoTrotceriDevitucexE-noNrotceriDevitucexE000’MR000’MR000’MR

4714710seeF

04583205noitarenumerrehtodnayralaS

417212205latoT

Remuneration Band Executive Director Non-Executive Director Total

990000,05MRwoleB

101000,052MR–100,002MR

101000,003MR–100,052MR

1192latoT

1. Investors Relation and Shareholders Communication

2. Annual General Meeting (“AGM”)

B. DIRECTORS’ REMUNERATION

The Board established and with the assistance from the Remuneration Committee to review and recommend the appropriate level of remuneration for all the Directors. The proposed fees for the Company are presented to shareholders at its Annual General Meeting for their approval.

A summary of the Directors’ remuneration for the financial year under review, distinguishing between the Executive and Non-Executive Directors in aggregate with categorization into appropriate components and the number of Directors whose remu-neration falling into each successive band of RM50,000, is shown below:

C. SHAREHOLDERS AND INVESTORS

The Board is responsible to ensure that high quality and relevant information are made available to shareholders and investors to keep them abreast of all material business matters affecting the Group through appropriate announce-ment, quarterly announcements, relevant circulars and distribution of annual report.

Shareholders and investors can also obtain information from the Group’s official website at www.sanichimould.com as accessible by all its stakeholders and the public in general, which containing essential corporate information about the Group and its products.

The principal forum for dialogue with shareholders remains at AGM. The shareholders are encouraged to attend the AGM and participate in the proceedings and take the opportunity to raise questions in relation to the operation of the Group. The Directors and senior management are available to respond to those queries. It also serves as a platform for shareholders to have direct access to the Board. Shareholders who are unable to attend the AGM are allowed to appoint proxies to attend and vote on their behalf.

The Board is of the opinion that the non disclosure of the individual remuneration of each Director will not significantly affectthe understanding and evaluation of the Group’s corporate governance structure.




D. ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board acknowledges its responsibilities to ensure that there is a clear, balanced, understandable and meaningful assessment of the Group’s financial position and prospects primarily through the quarterly announcement of financial results to Bursa Securities, annual audited financial statements as well as the Chairman’s statement and review of operations in the Annual Report.

The Directors are also responsible to ensuring the annual financial statements are prepared in accordance with the provisions of the Companies Act, 1965 (“The Act”) and approved Financial Reporting Standards (“FRS”) in Malaysia.

The Directors are also responsible for safeguarding the assets of the Group and reasonable steps have been taken to prevent and detect fraud and other irregularities.

The Group’s quarterly and annual Audited Financial Statements are reviewed by Audit Committee and approved by the Board prior to their release to the Bursa Securities within the stipulated time frame.

2. Internal Control

During the year under review, the Board continued to enhance its system of internal control and risk management. The Board is responsible for the Group’s system of internal controls encompassing financial, operational and compliance controls in order to maintain a sound system of internal control to safeguard the shareholders’ investment and the Group’s assets.

However, the Board recognises that Group’s system of internal control is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. Accordingly, the system of internal control can only provide reasonable but not absolute assurance against material misstatement, fraud and loss.

The Statement on Internal Control is set out on pages 19 to 20 of this Annual Report, which provides an overview of the state of internal control within the Group.

3. Relationship with Auditors

The Board through the establishment of AC to maintains a formal and transparent relationship with both internal and external auditors. The auditors would highlight to the Audit Committee and the Board from time to time on matters that require the Board’s attention.

The Audit Committee meets the external auditors at least once a year to discuss on their audit plan, audit findings and the financial statements.

4. Statement Of Directors’ Responsibility In Relation To The Financial Statements

The Directors are required to prepare the financial statements of the Group and of the Company, are drawn up in accordance with the provision of the Companies Act, 1965 and requirement of the applicable approved accounting standards in Malaysia and the Bursa Securities’ Listing Requirement.

The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and Company at the end of the financial year, and of the results and cash flows for the financial year then ended.

• Applied the appropriate and relevant accounting policies on a consistent basis;

• Made reasonable and prudent judgments and estimates; and

• Applicable approved accounting standards in Malaysia have been followed.

The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the Group and comply with the Act. The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group, to prevent and detect fraud and other irregularities.

5. Corporate Social Responsibilities (“CSR”)

The Board acknowledges the significance of CSR and views it as an extension to the Group’s efforts in promoting a strong social relationship and responsibilities. The Group is committed to the welfare of its employees, the community and environment.




ADDITIONAL COMPLIANCE INFORMATION

Utilisation of ProceedsThere were no proceeds raised from any corporate exercise during the financial year ended 30 June 2011.

Recurrent Related Party TransactionThere were no recurrent related party transactions involved in the financial year ended 30 June 2011.

Share Buy-backsThere were no share buy-backs transactions involved in the financial year ended 30 June 2011.

Options, Warrants of Convertible Securities ExercisedThe Company has not issued any options, warrants or convertible securities in respect of the financial year ended 30 June 2011.

American Depository Receipt (“ADR”) of Global Depository Receipt (“GDR”)The Company has not sponsored any ADR or GDR programme for the financial year ended 30 June 2011.

Sanctions and/or PenaltiesBursa Malaysia Securities Berhad had on 7 April 2011, publicly reprimand the Company for breach of Rule 9.16(1)(a) of Bursa Malaysia Securities Berhad ACE Market Listing Requirements (“ACE LR”) and also publicly reprimands Dato’ Dr. Pang Chow Huat and Datin Chen Choon Lee (resigned on 9/5/2011) the Managing Director and Executive Director respectively for breach of Rule 16.13(b) of the ACE LR.Save as the above, the Company’s subsidiaries and the remaining Directors and management have not been imposed with any sanctions and/or penalties by regulatory bodies.

Material Contracts Involving Directors’ and Major Shareholders’ InterestThere were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major sharehold-ers’ interests.

Revaluation of Landed PropertiesThe Group does not revalue its landed properties as these are stated at cost less amortization, if applicable.

Non-Audit FeesDuring the financial year under review, there is no non-audit fee being paid to the external auditors of the Group.

Variation in resultsThere were no significance variance between the reported results for the financial year and the unaudited results previously announced by the Company for the financial year ended 30 June 2011.

Profit GuaranteeThere was no profit guarantee given by the Group in respect of the financial year.




COMPLIANCE STATEMENT

As at end of the financial year, the Board is of the opinion that the following Principles and Best Practices of the Code (“Code”)have not been complied with:

Reference tothe Code

Summary of the Principle / Best Practice Board Comments

Part Bill Disclosure of each Director’s remuneration Details of the remuneration of each Director are notdisclosed in the Annual Report as the Board is of the opinionthis infringes on the privacy of the individual Directors. Asan alternative, the Annual Report discloses the annualremuneration of Directors in bands of RM50,000 and thenumber of Executive / Non-Executive Directors receivingAnnual remuneration in that particular band.

Part 2 AA1Part 2 CCI

Board to develop, implement and maintainan investor relations programme andcommunications policy to communicateeffectively with shareholders, stakeholders andthe public.

The Board does not have a formal investor relationsprogramme and shareholder communications policy atpresent. Any important announcement is made throughBursa Securities which in the opinion of the Board isadequate.

Part 2 AAVIIIPart 2 AAIXPart AAX

Nomination Committee to comprise exclusivelyof non-executive Directors and to evaluate theeffectiveness of members of the Board

The Board is of the view that it is sufficient for theNomination Committee to assess the effectiveness of theBoard and the committees of the Board as a whole. Itis the Board’s opinion that individual Directors should beexempted from this process. The Board is also of theopinion that the participation of Dato’ Dr. Pang Chow Huatis important in the Nomination Committee meetings.

Part 2 AAXIII Company to provide orientation and educationprogramme for new Board members

The Group does not have a formal process for theorientation of newly appointed Board members asorientation is conducted on an informal basis by theExecutive Directors. The Board is of the opinion that theactivities of the Group are not complex as to require aformal training.

Part 2 AAXVII Provision for non-quantitative information At present, the Group’s information system generatesinformation which are predominantly financial based.

This statement is made in accordance with a Board’s resolution adopted by the Board at its meeting held on 18/11/2011.


ANNUAL REPORT 2011 1�SANICHI TECHNOLOGY BERHAD (661826-K)

ANNUAL REPORT

19

INTRODUCTION

The Board of Directors (“the Board”) of Sanichi Technology Berhad (“Group” or “Sanichi”) recognizes that it is responsible and continues reviewing its Group in relation to adequacy and integrity of the system of internal control. The Board’s responsibility of the system of internal control been extends to all subsidiaries of the Group and complies with Bursa Malaysia Securities Berhad (“Bursa Securities”) ACE Market Listing Requirements (“AMLR”). The Board is committed to maintaining a sound system of internal controls to safeguard shareholders’ investment and the Group’s assets.

During the financial year under review, Sanichi continued to enhance the system of internal controls in order to better quantify its compliance with the Malaysian Code on Corporate Governance (“Code”). The Board of Sanichi is pleased to provide the following Statement on Internal Controls (“Statement”) which outlines the nature and scope of internal controls of Sanichi and its subsidiary companies.

BOARD RESPONSIBILITY

The Board acknowledges that it has overall responsibility for the adequacy and integrity of the Group’s system of internal controls including the review of its effectiveness. The Board is responsibilities for the Group’s internal control system, which is designed to protect shareholders’ investment and the assets entrusted under their custody.

However, the Board recognizes that reviewing the Group’s system of internal controls is a continuing process, designed to minimize the likelihood of fraud and error, and to manage rather than eliminate the risk of failure. The system of internal controls can only provide reasonable but not absolute assurance against material misstatement, fraud and financial loss.

RISK MANAGEMENT FRAMEWORK

Risk management is an ongoing process to identify any principal risks hindering the achievement of the Group’s business objective. The Board to evaluate the nature and extend of these risks, to manage them with efficient, effectively and economically review for any improvement in constant with Group’s existing business environment.

The Board is committed in strengthening the Group’s risk management and process. The Board is ultimately responsible for identifying the Group’s risks, the implementation of risk management system and the establishment of the Group’s internal controls framework. The risk management process involves all business and functional units of the Group in identifying the significant risks affecting their business and functional units as well as in assessing the impact and likelihood of these risks and the effectiveness of controls currently in place to manage them.

The other key features of the Group’s internal controls system are as follows:

•

•

•

•

•

The AC comprises solely of Independent Non-Executive Directors. The Committee has full access to both the internal and external auditors and meets with the external auditors without any executives present at least once in a financial year.

Regular Board meetings which require important matters to be highlighted and discussed, thus ensuring that the Board maintains an effective supervision over appropriate controls and risk issue. Moreover, the Board is kept updated on the Group’s activities during the meetings.

The Group maintains a set of clearly defined and structured lines of responsibility and delegation of authority is in place. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability.

Clearly defined and structured responsibilities within the organization, including segregation of duties and authorization levels for all divisions within the Group.

Assets are safeguarded from unauthorized and improper use. Adequate insurance and physical security of major assets are in place to ensure that the assets of the Group are sufficiently covered against any mishap that will result in material losses to the Group.

INTERNAL AUDIT FUNCTION

The review of the adequacy and effectiveness of the Group’s internal controls system is delegated to the Audit Committee(“AC”) on behalf of the Board. The Group has an internal audit function which reports directly to the Audit Committee, which previously was outsourced to an independent professional consulting firm which reviews the Group’s system of internal controls. Internal audits are carried out in accordance with the approved internal audit plan and the results of the internal audit reviews are tabled at the AC meeting.

The cost incurred for the outsource internal audit fee in respect of the financial year was approximately RM9,500.

REVIEW MECHANISM

The Group has adequately resourced the internal audit function whose primary responsibility is to assure the Board, that the internal control systems function with efficient and economically. In providing this assurance, the internal audit carries out internal control reviews of the respective business units within the Group.

Independent review of system of internal controls is essential in order to provide an objective assurance to the Board. The existing review mechanism is overseen by the AC which supports by the presence of the internal audit functions. The AC also reviews the financial information and reports produced by the management including quarterly financial results, annual report and audited financial statements. Upon consultation with the management, deliberates on the integrity of the information and data before recommending to the Board for presenting to the shareholders and public investors.

OTHER KEY ELEMENTS OF INTERNAL CONTROLS

Statement on Internal Control


ANNUAL REPORT 2011�0

Statement on Internal Control (Cont’d)

WEAKNESS IN INTERNAL CONTROL THAT RESULT IN MATERIAL LOSSES

There were no material losses incurred during the current financial year as a result of weaknesses internal control system. The Board and management continue to take measures to strengthen the internal control environment within the Group.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

The external auditors have reviewed this Statement for the inclusion in the Annual Report for the financial year ended 30 June 2011, and reported to the Board that nothing has come to their attention that cause them to believe that this Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls within the Group in compliance with Paragraph 15.23 of Bursa Securities ACE Market Listing Requirements.

CONCLUSION

Overall, the Board is satisfied that the process of identifying and evaluating risks of the Group’s business is in place to provide reasonable assurance on the adequacy and effectiveness of the risk, control and governance framework of the Group. The Board remains committed towards continuous improvement and effectiveness of the Group’s internal controls system and risk manage-ment framework in order to meet its corporate objective and maximize the returns to the shareholders.

This statement is made in accordance with a Board’s resolution adopted by the Board at its meeting held on 18/11/2011.

20

22 - 24 DIRECTORS’ REPORT

25 STATEMENT BY DIRECTORS

25 STATUTORY DECLARATION

26 - 27 INDEPENDENT AUDITORS’ REPORT

28 STATEMENTS OF FINANCIAL POSITION

29 STATEMENTS OF COMPREHENSIVE INCOME

30 STATEMENTS OF CHANGES IN EQUITY

31 - 32 STATEMENTS OF CASH FLOWS

33 - 68 NOTES TO THE FINANCIAL STATEMENTS

FinancialStatement


ANNUAL REPORT 2011 �1

20

22 - 24 DIRECTORS’ REPORT

25 STATEMENT BY DIRECTORS

25 STATUTORY DECLARATION

26 - 27 INDEPENDENT AUDITORS’ REPORT

28 STATEMENTS OF FINANCIAL POSITION

29 STATEMENTS OF COMPREHENSIVE INCOME

30 STATEMENTS OF CHANGES IN EQUITY

31 - 32 STATEMENTS OF CASH FLOWS

33 - 68 NOTES TO THE FINANCIAL STATEMENTS

FinancialStatement


ANNUAL REPORT 2011��SANICHI TECHNOLOGY BERHAD (661826-K)

ANNUAL REPORT

DIRECTORS’ REPORT

The Directors hereby submit their report together with the audited financial statements of the Group and Company for the financialyear ended 30th June 2011.

PRINCIPAL ACTIVITIES

The Company is principally an investment holding company and a provider of management services.

The principal activities of the subsidiaries are set out in Note 9 to the financial statement.

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

FINANCIAL RESULTSGroup Company

RM RM

Loss before taxationTaxation

Net loss for the year

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year and the Directors do notrecommend the payment of any dividend for the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year other than those disclosed in thestatements of changes in equity.

ISSUE OF SHARES AND/OR DEBENTURES

No Shares and/or debentures were issued during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.

INFORMATION ON THE FINANCIAL STATEMENTS

Before the Statements of Comprehensive Income and Statements of Financial Position of the Group and Company were made out, theDirectors took reasonable steps :-

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtfuldebts and satisfied themselves that there were no known bad debts and that adequate allowance had been made for doubtfuldebts; and

(b) to ensure that any current assets which were unlikely to realise in the ordinary course of business including their value as shownin the accounting records of the Group and Company have been written down to an amount which they might be expected soto realise.

(14,423,638)(142,321)

(14,565,959)

(128,221)(70,990)

(199,211)

22


ANNUAL REPORT

DIRECTORS’ REPORT (Cont’d)

23


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

(a) which would render it necessary to write off any bad debts or the amount of the allowance for doubtful debts in the financialstatements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to the current assets in the financial statements of the Group and Company misleading;or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Companymisleading or inappropriate.

No contingent or other liability of the Group and Company has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect theability of the Group and Company to meet its obligations as and when they fall due.

At the date of this report, there does not exist:- (a) any charge on the assets of the Group and Company which has arisen since the end of the financial year which secures the

liability of any other person; or

(b) any contingent liability of the Group and Company which has arisen since the end of the financial year other than as disclosedin Note 35 of the Notes to the Financial Statements.

OTHER STATUTORY INFORMATION

The Directors state that :-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statementsof the Group and Company which would render any amount stated in the financial statements misleading. In their opinion:- (a)

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction orevent of a material and unusual nature likely to affect substantially the results of the operations of the Group and Company for

DIRECTORS

The Directors who have held office during the year since the date of the last report are as follows:-

the results of the operations of the Group and Company during the financial year were not substantially affected by any item,transaction or event of a material and unusual nature other than as disclosed in Note 38 of the Notes to the Financial Statement ; and

the financial year in which this report is made, other than as disclosed in Note 39 of the Notes to the Financial Statement.

Dato’ Dr. Pang Chow HuatTan Sri Dato’ Sri Abdul Halil Bin Abd MutalifDato’ Abd Halim Bin Abd HamidZaki Bin Awang Ahmad (Appointed on 08.04.11)Mansor Bin Ali (Appointed on 08.04.11 and resigned on 24.08.11)Teo Kong Wan (Alternate Director to Mansor Bin Ali) (Appointed on 08.04.11 and resign on 24.08.11)Azrina Binti Arshad (Resigned on 24.08.11)Datin Chen Choon Lee (Resigned on 09.05.11)Datuk Nik Ibrahim Bin Nik Abdullah (Resigned on 21.03.11)Teo Kong Wan (Alternate Director to Datuk Nik Ibrahim Bin Nik Abdullah) (Resigned on 21.03.11)Tan Sri Dato‘ Seri Arshad Bin Ayub (Resigned on 21.03.11)Mansor Bin Ali (Alternate Director to Tan Sri Dato’ Seri Arshad Bin Ayub) (Resigned on 21.03.11)Leong Choon Meng (Resigned on 16.02.11)


ANNUAL REPORT 2011 ��SANICHI TECHNOLOGY BERHAD (661826-K)

ANNUAL REPORT


23


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

(a) which would render it necessary to write off any bad debts or the amount of the allowance for doubtful debts in the financialstatements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to the current assets in the financial statements of the Group and Company misleading;or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Companymisleading or inappropriate.

No contingent or other liability of the Group and Company has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect theability of the Group and Company to meet its obligations as and when they fall due.

At the date of this report, there does not exist:- (a) any charge on the assets of the Group and Company which has arisen since the end of the financial year which secures the

liability of any other person; or

(b) any contingent liability of the Group and Company which has arisen since the end of the financial year other than as disclosedin Note 35 of the Notes to the Financial Statements.

OTHER STATUTORY INFORMATION

The Directors state that :-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statementsof the Group and Company which would render any amount stated in the financial statements misleading. In their opinion:- (a)

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction orevent of a material and unusual nature likely to affect substantially the results of the operations of the Group and Company for

DIRECTORS

The Directors who have held office during the year since the date of the last report are as follows:-

the results of the operations of the Group and Company during the financial year were not substantially affected by any item,transaction or event of a material and unusual nature other than as disclosed in Note 38 of the Notes to the Financial Statement ; and

the financial year in which this report is made, other than as disclosed in Note 39 of the Notes to the Financial Statement.

Dato’ Dr. Pang Chow HuatTan Sri Dato’ Sri Abdul Halil Bin Abd MutalifDato’ Abd Halim Bin Abd HamidZaki Bin Awang Ahmad (Appointed on 08.04.11)Mansor Bin Ali (Appointed on 08.04.11 and resigned on 24.08.11)Teo Kong Wan (Alternate Director to Mansor Bin Ali) (Appointed on 08.04.11 and resign on 24.08.11)Azrina Binti Arshad (Resigned on 24.08.11)Datin Chen Choon Lee (Resigned on 09.05.11)Datuk Nik Ibrahim Bin Nik Abdullah (Resigned on 21.03.11)Teo Kong Wan (Alternate Director to Datuk Nik Ibrahim Bin Nik Abdullah) (Resigned on 21.03.11)Tan Sri Dato‘ Seri Arshad Bin Ayub (Resigned on 21.03.11)Mansor Bin Ali (Alternate Director to Tan Sri Dato’ Seri Arshad Bin Ayub) (Resigned on 21.03.11)Leong Choon Meng (Resigned on 16.02.11)



ANNUAL REPORT


DIRECTORS (Cont’d)

The shareholdings in the Company and its related corporations during the financial year of those who were Directors at the end ofthe financial year are as follows:- No. of Ordinary Shares of RM 0.10 each At AtDirect interest 01.07.10 Bought Sold 30.06.11

Dato’ Dr. Pang Chow Huat 20,085,020 - (20,085,000) 20 Other than as disclosed above, no other Directors in office at the end of the financial year held any interest in shares in, or debenturesof its related corporations during the year. DIRECTORS’ BENEFITS During and at the end of the financial year, no arrangement subsisted to which the Group and Company was a party, with the objector objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of theCompany or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than asdisclosed in the Notes to the Financial Statements) by reason of a contract made by the Company or a related corporation with theDirector or with a firm of which he is a member, or with a company in which he has substantial financial interest.

GOING CONCERN

AUDITORS Messrs Hasnan THL Wong & Partners, the retiring Auditors, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors dated 27th October 2011

)DATO’ DR. PANG CHOW HUAT ) ) ) ) DIRECTORS ) ) )TAN SRI DATO’ SRI ABDUL )HALIL BIN ABD MUTALIF Kuala Lumpur

The financial statements of the Group and Company have been prepared on a going concern basis. The Group and Company incurred net losses of RM 14,565,959 and RM 199,211 respectively during the financial year ended 30th June 2011 and as at that date, the accumulated losses of the Group and Company was RM 16,878,762 and RM 246,285 respectively. In addition, certain subsidiary companies have defaulted in their borrowings and the interest payment obligations as disclosed in Note 21 to the Finan-cial Statements. These conditions indicate the existance of a material uncertainty which may cast significant doubt on the ability of the Group and Company to continue as going concerns.

The financial statements of the Group and Company do not include any adjustments relating to the amounts and reclassification of assets and liabilities that might be necessary should the Group and Company be unable to continue as going concern. The ability of the Group and Company to continue as going concern is dependent on the timely and successful implementation of the proposed restructuring scheme towards the profitability and the cash flows of the Group.

24



ANNUAL REPORT

25

STATEMENT BY DIRECTORS

Signed on behalf of the Board in accordance with a resolution of the Directors DATO’ DR. PANG CHOW HUAT

Kuala Lumpur27th October 2011

STATUTORY DECLARATION

I, DATO’ DR. PANG CHOW HUAT, I/C No. 731218-01-5205, the Director primarily responsible for the financial management ofSANICHI TECHNOLOGY BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 28 to 68 are,to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true,and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the )abovenamed DATO’ DR. PANG CHOW HUAT, )I/C No. 731218-01-5205, )at Kuala Lumpur ) )on 27th October 2011 ) DATO’ DR. PANG CHOW HUAT

Before me:

STATEMENT BY DIRECTORS’/ STATUTORY DECLARATION

We, DATO' DR. PANG CHOW HUAT and TAN SRI DATO' SRI ABDUL HALIL BIN ABD MUTALIF, being two of the Directors of SANICHI TECHNOLOGY BERHAD, do hereby state, in the opinion of the Directors, the financial statements set out on pages 28 to 68 are drawn up so as to give a true and fair view of the state of affairs of the Group and Company as at 30th June 2011 and of the results of the operations, changes in equity and cash flows of the Group and Company for the financial year ended onthat date in accordance with the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 in Malaysia.

TAN SRI DATO’ SRI ABDULHALIL BIN ABD MUTALIF



ANNUAL REPORT

26

We have audited the financial statements of Sanichi Technology Berhad, which comprise the statements of financial position of the Group and Company as at 30th June 2011, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 28 to 68.

Report on the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the directors deter-mine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Directors’ Responsibility for the Financial Statements

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

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

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith approved Standards on Auditing in Malaysia. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and theCompanies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and Company as of 30thJune 2011 and of its financial performance and cash flows for the financial year then ended.

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF SANICHI TECHNOLOGY BERHAD (Incorporated in Malaysia)

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 2 (a) (i) to the Financial Statements, which indicates that the Group and Company incurred net losses of RM 14,565,959 and RM 199,211 respectively during the financial year ended 30th June 2011 and as at that date, the accumulated losses of the Group and Company was RM 16,878,762 and RM 246,285 respectively. In addition, certain subsidiary companies have defaulted in their borrowings and the interest payment obligations as disclosed in Note 21 to the Financial Statements. These conditions indicate the existance of a material uncertainty which may cast significant doubt on the ability of the Group and Company to continue as going concerns.

The financial statements of the Group and Company do not include any adjustments relating to the amounts and reclassification of assets and liabilities that might be necessary should the Group and Company be unable to continue as going concern. The ability of the Group and Company to continue as going concern is dependent on the timely and successful implementation of the proposed restructuring scheme towards the profitability and the cash flows of the Group.


ANNUAL REPORT 2011 ��

HASNAN THL WONG & PARTNERS


ANNUAL REPORT

27

Report on Other Legal and Regulatory Requirements

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

subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of theAct.

b) We have considered the financial statements of the subsidiary company of which we have not acted as auditors, which are

indicated in Note 9 of the Notes to the Financial Statements.

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

d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adversecomment made under Section 174(3) of the Act.

Other Matters

GNOESKOKGNOWTNATNUOCCADERETRAHC)2490FA.ON(

))J(21/80/1972:ON(STNATNUOCCADERETRAHC

Petaling Jaya 27th October 2011

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF SANICHI TECHNOLOGY BERHAD (Incorporated in Malaysia) (Cont’d)

The supplementary information set out in Note 40 of the Notes to the Financial Statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

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.


ANNUAL REPORT 2011��

The above statements of financial position are to be read in conjunction with the notes to the financial statements set out onpages 33 to 68.

STATEMENTS OF FINANCIAL POSITION AS AT 30TH JUNE 2011

23,002,860---

6,711-

23,009,571

6789

1011

12131415

1617

26,608,005-

33,177-

6,711-

26,647,893

28,354,359-

148,139-

6,711-

28,509,209

97--

11,657,600--

11,657,697

146--

11,657,600--

11,657,746

3,939,58113,489,000

332,727-

634,560524,325216,281

19,136,474

6,373,95819,092,991

417,089-

760,891501,03463,483

27,209,446

4,959,37914,441,5421,313,895

-781,719741,20092,055

22,329,790

--

14,30016,759,521

--

660

16,774,481

--

14,80016,653,630

55,000-

1,796

16,725,226

42,146,045 53,857,339 50,838,999 28,432,178 28,382,972

181920151721

3,112,8843,766,979

898,350-

1,579,37822,772,161

16,740

32,146,492

2,616,3962,020,803

794,044-

1,121,20613,482,986

-

20,035,435

3,868,2783,926,5151,481,117

-1,766,004

13,115,50210,290

24,167,706

-430,696

-1,294,709

--

16,740

1,742,145

-178,102

-1,315,626

---

1,493,728

21 44,002 9,217,458 7,192,326 - -

32,190,494 29,252,893 31,360,032 1,742,145 1,493,728

Note 30.06.2011

RM

30.06.2010(Restated)

RM

Group Company

01.07.2009(Restated)

RM

30.06.2011

RM

30.06.2010

RM

2223

16,350,000(6,394,449)

9,955,551

42,146,045

16,350,0008,254,446

24,604,446

53,857,339

11,350,0008,128,967

19,478,967

50,838,999

16,350,00010,340,033

26,690,033

28,432,178

16,350,00010,539,244

26,889,244

28,382,972

EQUITY ATRIBUTABLE TO OWNERS OF THE PARENT

ASSETS



Group Company Note 2011 2010 2011 2010 RM RM RM RM Revenue 24 9,469,376 19,262,435 480,000 480,000 Cost of sales (12,333,894) (10,761,645) - - Gross (loss)/profit (2,864,518) 8,500,790 480,000 480,000 Other income 1,170,860 7,326 - -

(1,693,658) 8,508,116 480,000 480,000 Sales and distribution costsAdministrative expensesOther operating expensesFinance costs 25 (Loss)/profit before taxation 26 Taxation 27 Net (Loss)/profit for the year

The above statements of comprehensive income are to be read in conjunction with the notes to the financial statements set out onpages 33 to 68.

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30TH JUNE 2011

(Loss)/Earnings per share attributable to owners of the parent (sen per share) : Basic 28 (8.91) 0.12 Diluted 28 NA NA

(310,070)(9,848,188)

(638,362)(1,933,360)

(35,336)(5,412,812)

(469,192)(2,361,647)

-(608,221)

--

-(601,768)

--

(14,423,638) 229,129 (128,221) (121,768)

(14,565,959) 203,246 (199,211) (123,651)

(142,321) (25,883) (70,990) (1,883)

Total (Loss)/Profit for the year attributable to: Owners of the parent Non-controlling interest

(14,565,959)-

(14,565,959)

203,246-

203,246

(199,211)-

(199,211)

(123,651)-

(123,651)

Total comprehensive (expense)/income attributable to: Owners of the parent Non-controlling interest

(14,648,895)-

(14,648,895)

125,479-

125,479

(199,211)-

(199,211)

(123,651)-

(123,651)

(14,648,895) 125,479 (199,211) (123,651)

(82,936) (77,767) - -Other comprehensive expenseForeign exchange translation

Total comprehensive (expense)/incomefor the year



The above statement of changes in equity are to be read in conjunction with the notes to the financial statements set out on pages33 to 68.

Opening balance at 01.07.10Total comprehensive expense

Closing balance at 30.06.11

2010

Opening balance at 01.07.09Issuance of sharesTotal comprehensive (expense)/incomeClosing balance at 30.06.10

Opening balance at 01.07.10Total comprehensive expense

Closing balance at 30.06.11

2010

Opening balance at 01.07.09Issuance of sharesTotal comprehensive (expense)/incomeClosing balance at 30.06.10

Attributable to owners of the parent

16,350,000-

16,350,000

10,586,318-

10,586,318

(19,069)(82,936)

(102,005)

(2,312,803)(14,565,959)

(16,878,762)

24,604,446(14,648,895)

9,955,551

11,350,0005,000,000

-

16,350,000

10,586,318--

10,586,318

58,698-

(77,767)

(19,069)

(2,516,049)-

203,246

(2,312,803)

19,478,9675,000,000

125,479

24,604,446

16,350,000-

16,350,000

10,586,318-

10,586,318

(47,074)(199,211)

(246,285)

26,889,244(199,211)

26,690,033

11,350,0005,000,000

-

16,350,000

10,586,318--

10,586,318

76,577-

(123,651)

(47,074)

22,012,8955,000,000(123,651)

26,889,244

(246,285)(16,632,477)

(16,878,762)

(47,074)(2,265,729)

(2,312,803)

2011 2010

22

22

:-



31

Group Company 2011 2010 2011 2010

Note RM RM RM RM OPERATING ACTIVITIES

CHANGES IN WORKING CAPITAL

STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 30TH JUNE 2011

(Restated)

(Loss)/profit before taxationAdjustment for:-Amortisation of development expenditureDepreciation of property, plant and equipmentImpairment loss on property, plant and equipmentImpairment loss on trade receivablesInterest expenses(Gain)/loss on foreign currency exchange - unrealisedLoss on disposal of property, plant and equipmentInterest incomePenaltyReversal of impairment loss on trade receivables

Total adjustments

Operating (loss)/profit before working capitalchanges

(14,423,638)

33,1772,685,023

163,8896,464,7881,933,360

(1,105,738)239,954(23,310)

750(408,150)

9,983,743

(4,439,895)

229,129

114,9622,598,118

-1,323,7662,361,6471,013,595

370,597--

(1,205,457)

6,577,228

6,806,357

(128,221)

-49

------

750-

799

(127,422)

(121,768)

-49

--------

49

(121,719)

Decrease/(increase) in inventoriesDecrease/(increase) in receivablesDecrease in amount due from subsidiary companiesIncrease/(decrease) in payablesIncrease/(decrease) in amount due to a Director(Decrease)/increase in amount due to subsidiary companies

Total changes in working capital

2,432,707865,691

-2,302,719

242,306

-

5,843,423

(1,414,579)(5,031,529)

-(3,012,611)

(687,073)

-

(10,145,792)

-500

(105,891)252,594

-

(20,917)

126,286

-(500)

(3,915,560)89,771

-

1,315,626

(2,510,663)

1,403,528(1,933,356)

-

(529,828)

(3,339,435)(2,361,647)

(15,345)

(5,716,427)

(1,136)--

(1,136)

(2,632,382)-

(67,173)

(2,699,555)

-

927,669(554,731)

372,938

-

460,000(1,715,149)

(1,255,149)

-

--

-

(2,300,000)

--

(2,300,000)

--

389,256(150,000)(311,637)

(72,381)

5,000,000(500,000)

3,975,253(414,000)

(1,168,637)

6,892,616

-----

-

5,000,000----

5,000,000

Cash generated from operationsInterest paid ncome tax paid

Net cash flows used in operating activities

INVESTING ACTIVITIES

Additional investment in subsidiaryProceeds from disposal of property, plant and equipmentPurchase of property, plant and equipment

Net cash flows from/(used in) investing activities

FINANCING ACTIVITIES

Proceeds from issuance of sharesPledge of fixed depositNet increase of term loanNet repayment of bankers’ acceptancesRepayment of hire purchase creditors

Net cash flows (used in)/from investing activities

2930

22



ANNUAL REPORT

32

Group Company 2011 2010 2011 2010 Note RM RM RM RM

NET (DECREASE)/INCREASE IN AND CASH EQUIVALENTS Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS AT 1 JULY

17

The above cash flow statements are to be read in conjunction with the notes to the financial statements set out on pages 33 to 68.

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2011 (Cont’d)

(229,271)

(76,118)

(1,056,689)

(1,362,078)

(78,960)

(44,980)

(932,749)

(1,056,689)

(1,136)

-

1,796

660

445

-

1,351

1,796CASH AND CASH EQUIVALENTS AT 30 JUNE



ANNUAL REPORT

33

1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

2. SIGNIFICANT ACCOUNTING POLICIES

b) Subsidiary companies and basis of consolidation

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

The Company is principally an investment holding company and a provider of management services. There have been no signifi-cant changes in the nature of these activities during the financial year.

The Company is a public limited company, incorporated and domiciled in Malaysia. The registered office of the Company is located at A-15-4 Northpoint Offices, Medan Syed Putra Utara, No 1 Jalan Medan Putra, Mid Valley City, 59200 Kuala Lumpur. The principal place of business of the Company is located at PLO 135, Jalan Cyber 5, Kawasan Perindustrian Senai Fasa 3, 81400 Senai, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors dated 27th October 2011.

Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are consid-ered material in relation to the financial statements.

The financial statements are presented in Ringgit Malaysia (RM), unless otherwise indicated.

The financial statements of the Group and Company have been prepared on a going concern basis. The Group and Company incurred net losses of RM 14,565,959 and RM 199,211 respectively during the financial year ended 30th June 2011 and as at that date, the accumulated losses of the Group and Company was RM 16,878,762 and RM 246,285 respectively. This raises substantial doubt that the Group and the Company will be able to continue as going concerns;

in accordance with the applicable approved Financial Reporting Standards (FRS) issued by the Malaysian Account-ing Standards Board (MASB) and the provisions of the Companies Act, 1965 in Malaysia; and

under the historical cost convention, unless otherwise indicated.

(i)

(ii)

(iii)

Subsidiary companies

Subsidiary companies are entities over which the Group or the Company has the ability to control the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company's separate financial statements, investments in subsidiary companies are stated at cost less impair-ment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in statements of comprehensive income.

(i)

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiary compa-nies made up to the end of the financial year. The financial statements of the subsidiary companies are prepared for the same reporting date as the Company.

Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group or the Company obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

(ii)

Basis of preparationa)



ANNUAL REPORT

34

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Cont’d)

Acquisitions of subsidiary companies are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill.

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

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the non-controlling interests' share of the fair value of the subsidiary companies' identifiable assets and liabilities at the acquisition date and the non-controlling interests' share of changes in the subsidiary companies' equity since then.

2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(ii) Basis of consolidation (cont'd)

Subsidiary companies and basis of consolidation (cont'd)

b)

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

Intangible assets - Goodwillc)

Property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and mainte-nance are charged to the statements of comprehensive income during the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

The principal annual rates of depreciation used are as follows:-

Property, plant and equipmentd)

Long-term leasehold land BuildingsPlant and machinery Furniture and fittings, office equipment and motor vehicles

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

Over 60 years2%

36 to 180 months15% to 20%




2. SIGNIFICANTACCOUNTINGPOLICIES(CONT’D)

d) Property,plantandequipment(cont’d) Building under construction represents assets which are not ready for commercial use at the end of the financial year.

It is stated at cost and are depreciated accordingly when the building is completed and ready for commercial use. Building under construction includes direct costs, related expenditures and interest cost on borrowing taken to finance the construction of the assets to the date that the assets are completed and put into use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in the statements of comprehensive income and the unutilised portion of the revaluation surplus on that item is taken directly to retained earnings.

e) Developmentexpenditure

Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits.

Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-

i) its ability to measure reliably the expenditure attributable to the asset under development;

ii) the product or process is technically and commercially feasible;

iii) its future economic benefits are probable;

iv) its ability to use or sell the developed asset;

v) the availability of adequate technical, financial and other resources to complete the asset under development; and

vi) its intention to complete the intangible asset and use or sell.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense are not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 3 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

f) Inventories

Inventories are valued at the lower of cost and net realisable value on the first-in, first-out method. The cost of inventories comprises costs of purchase and other direct cost and appropriate proportions of manufacturing overheads. Cost of work-in-progress includes the cost of materials, labour and an appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and applicable variable selling expenses.





g) FinancialAssets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include loans and receivables.

Loans and Receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and

receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statements of comprehensive income when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in statements of comprehensive income.

h) ImpairmentofFinancialAssets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in the statements of comprehensive income.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the statements of comprehensive income.





i) Cashandcashequivalents

Cash comprises of cash at bank and cash in hand including bank overdraft and deposits. Cash equivalents comprises of investments maturing within three months from the date of acquisition and which are readily convertible to known amount of cash which are subject to an insignificant risk of change in value.

j) FinancialLiabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. The Group and Company’s financial liabilities are classified as other financial liabilities.

Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction cost incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in the statements of comprehensive income when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statements of comprehensive income.

k) Operatingleases

Leases where substantially all the risks and rewards incidental to ownership of the assets remain with the lessor are accounted for as operating leases. Operating lease rentals payable are recognised as an expense on a straight line basis over the lease term.

l) ImpairmentofNon-FinancialAssets

The carrying values of assets (other than inventories, deferred tax assets and financial assets) are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of an asset’s net selling price and its value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash-generating unit.

An impairment loss is charged to the statements of comprehensive income immediately, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset.





l) ImpairmentofNon-FinancialAssets(cont’d)

In respect of assets other than goodwill, when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the statements of comprehensive income immediately, unless the asset is carried at revalued amount.

A reversal of an impairment loss on a revalued asset is credited to other comprehensive income. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the statements of comprehensive income, a reversal of that impairment loss is recognised as income in the statements of comprehensive income.

m) Equityinstrument

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

n) Revenuerecognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and Company, and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Interest income

Interest income and management fees are recognised on an accruals basis.

Rental income

Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreement.

o) Borrowingcost All interest and other costs incurred in connection with borrowings are recognised in the statements of comprehensive

income in the period they are incurred.

p) Taxation

Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the end of the financial year.

Deferred tax is provided in the financial statements, using the liability method, on temporary differences at the end of the financial year between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax credits and losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against the temporary differences and unused tax credits and losses.





p) Taxation(cont’d)

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted at the end of the financial year.

Unutilised reinvestment allowance is treated as tax base of assets and is recognised as a reduction of tax expense as and when they are utilised. Any unutilised portion of the tax incentive is recognised as deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

q) Foreigncurrencies

Transactions in foreign currencies are recorded in Ringgit Malaysia at rates of exchange ruling at the time of the transactions. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at the end of the financial year.

Gains and losses from conversion of short term assets and liabilities, whether realised or unrealised are included in operating profit as they arise.

The assets and liabilities of the foreign entities, if any, are translated at financial year end rates and operating results are translated at the rates ruling at the end of each month. Gains and losses arising on translation are taken directly to the foreign exchange translation reserve.

All other foreign exchange differences are taken to the statements of comprehensive income in the financial year in which they arise.

The principal closings rates used are as follows:- 2011 2010 RM RM 1 Euro 4.382 3.984 1 US Dollar 3.021 3.272 1 Singapore Dollar 2.458 2.328 1 Chinese Yuan 0.467 0.480 1 Macau Pataca 0.376 N/A 1 Pound Sterling 4.865 4.907 100 Thai Baht 10.173 10.085 100 Hong Kong Dollar 38.810 41.839 100 Indian Rupee 6.749 6.984 100 Indonesian Rupiah 0.035 0.036

r) Employeebenefits i) Short term benefits

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

ii) Defined contribution plan

Defined contribution plans are post-employment benefit plans under which the Group and Company pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the statements of comprehensive income as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).





s) Segmentalinformation Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and

expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of property, plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax assets, whilst segment liabilities do not include income tax liabilities and borrowings from financial institutions.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax assets, whilst segment liabilities do not include income tax liabilities and borrowings from financial institutions.

Segment revenue, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. There transfers are eliminated on consolidation.

t) Relatedparties

Related parties are entities with common directors/shareholders wherein one party has the ability to control or exercise significant influence over the other parties in financial or operating policy decision.

3. CHANGESINACCOUNTINGPOLICIESANDEFFECTSARISINGFROMADOPTIONOFNEWANDREVISEDFRSs

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting Standards (FRSs) and the Companies Act, 1965 in Malaysia.

During the financial year, the Group and Company has adopted the following new and amended FRS and IC Interpretations.

Effectiveforfinancialperiodsbeginningonorafter1January2010

Amendments to FRS 1, First-time Adoption of Financial Reporting Standards and FRS 127, Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2, Share-based Payment - Vesting Conditions and Cancellations FRS 7, Financial Instruments: Disclosures Amendments to FRS 7, Financial Instruments: Disclosures FRS 101, Presentation of Financial Statements FRS 123, Borrowing Costs Amendments to FRS 132, Financial Instruments: Presentation FRS 139, Financial Instruments: Recognition and Measurement Improvements to FRS issued in 2009 IC Interpretation 9, Reassessment of Embedded Derivatives Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives IC Interpretation 10, Interim Financial Reporting and Impairment IC Interpretation 11, FRS 2 - Group and Treasure Share Transactions IC Interpretation 13, Customer Loyalty Programmes IC Interpretation 14, FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction

Effectiveforfinancialperiodsbeginningonorafter1March2010 Amendments to FRS 132, Financial Instruments: Presentation (Paragraphs 11, 16 and 97E relating to Classification of Rights Issues)




3. CHANGESINACCOUNTINGPOLICIESANDEFFECTSARISINGFROMADOPTIONOFNEWANDREVISEDFRSs(CONT’D)

Effectiveforfinancialperiodsbeginningonorafter1July2010 FRS 1, First-time Adoption of Financial Reporting Standards Amendments to FRS 2, Share-based Payment FRS 3, Business Combinations (revised) Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations FRS 127, Consolidation and Separate Financial Statements (revised) Amendments to FRS 138, Intangible Assets Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives IC Interpretation 12, Service Concession Arrangements IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation IC Interpretation 17, Distribution of Non-cash Assets to Owners

Amendments to FRS 2, Share-based Payment Vesting Conditions and Cancellations, Amendments to FRS 2, Share-based Payment (revised), FRS 4, Insurance Contracts, Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations, Amendments to FRS 138, Intangible Assets, IC Interpretation 9, Reassessment of Embedded Derivatives, Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives, IC Interpretation 11, FRS 2, Group and Treasury Share Transactions, IC Interpretation 12, Service Concession Agreements, IC Interpretation 13, Customer Loyalty Programmes, IC Interpretation 14, FRS 119, The Limit on a Defined Benefit Asset, Minimum funding Requirements and their Interaction, IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation, IC Interpretation 17, Distribution of Non-cash Assets to Owners and TR i-3, Presentation of Financial Statements of Islamic Financial Institutions are, however, not applicable to the Group and the Company.

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company except those discussed below:

FRS3:BusinessCombinations

FRS 3 (revised) introduces a number of changes to the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results. Changes in significant accounting policies resulting from early adoption of the revised FRS 3 include:

i) Transaction costs would no longer be capitalised as part of the cost of acquisition but will be expensed immediately;

ii) Consideration contingent on future events are recognised at fair value on the acquisition date and any changes in

the amount of consideration to be paid will no longer be adjusted against goodwill but recognised in statements of comprehensive income;

iii) the Group elects, for each acquisition of a business, whether to measure non-controlling interest at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets, and this impacts the amount of goodwill recognised; and

iv) When a business is acquired in stages, the previously held equity interests in the acquiree are re-measured to fair value at the acquisition date with any corresponding gain or loss recognised in the statements of comprehensive income, and this impacts the amount of goodwill recognised.





FRS3:BusinessCombinations(cont’d)

According to its transitional provisions, the revised FRS 3 has been applied prospectively. Assets and liabilities that arose from business combinations whose acquisition dates are before 1 July 2010 are not adjusted.

There is no impact upon adoption of this Standard during the financial year.

FRS127:ConsolidatedandSeparateFinancialStatements(revised)

Changes in significant accounting policies resulting from the adoption of the revised FRS 127 include:

i) A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss;

ii) Losses incurred by a subsidiary are allocated to the non-controlling interest even if the losses exceed the non-controlling interest in the subsidiary’s equity, and

iii) When control over a subsidiary is lost, any interest retained is measured at fair value with the corresponding gain or loss recognised in the statements of comprehensive income.

According to its transitional provisions, the revised FRS 127 has been applied prospectively, and does not impact the Group’s consolidated financial statements in respect of transactions with non-controlling interest, attribution of lossed to non-controlling interest and disposal of subsidiaries before 1 July 2010. These changes would only affect future transactions with non-controlling interest.

FRS7,FinancialInstruments:Disclosures

Prior to 1 July 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132, Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the year ended 30 June 2011.

FRS101,PresentationofFinancialStatements

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statements of comprehensive income, with all items of income and expense recognised in the statements of comprehensive income, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements.

The revised FRS 101 was adopted retrospectively by the Group and the Company.





AmendmentstoFRS117,Leases

Prior to 1 July 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the end of the lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership. Hence, all leasehold land held for own use was classified by the Group as operating lease and where necessary, the minimum lease payments or up-front payments made were allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represented prepaid lease payments and were amortised on a straight-line basis over the lease term.

The amendments to FRS 117, Leases clarify that leases of land and buildings are classified as operating or finance lease in the same way as leases of other assets. They also clarify that the present value of the residual value of the property in a lease with a term of several decades would be negligible and accounting for the land element as a finance lease in such circumstances would be consistent with the economic with the economic position of the lessee. Hence, the adoption of the amendments to FRS 117 has resulted in certain unexpired land leases to be reclassified as finance leases. The Group has applied this change in accounting policy retrospectively and certain comparatives have been restated. The following are effects to the statement of financial positions as at 30 June 2010 arising from the above change in accounting policy:

RM Increase/(decrease) in: Property, plant and equipment 1,659,444 Prepaid land leases (1,659,444)

The following comparatives have been restated: As previously As stated Adjustments restated Statements of financial position 30June2010 Property, plant and equipment 24,948,561 1,659,444 26,608,005 Prepaid land leases 1,659,444 (1,659,444) -

1July2009 Property, plant and equipment 26,664,728 1,689,631 28,354,359 Prepaid land leases 1,689,631 (1,689,631) -

FRS139,FinancialInstruments:RecognitionandMeasurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 July 2010 in accordance with the transitional provisions.

The effects arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 July 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS 139 are discussed below:

Impairmentoftradereceivables Prior to 1 July 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon the adoption

of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate. As at 1 July 2010, the Group has remeasured the allowance for impairment losses as at that date in accordance with FRS 139 but no adjustments is required to be made to the opening balance of retained earnings as at that date.





The MASB has issued the following new FRSs and IC Interpretations that are yet to be effective and have not been adopted by the Group and Company in preparing these financial statements.

Forfinancialperiods beginningonorafter FRSs/Interpretations Amendments to IC Interpretation 15, Agreements for the Construction of Real Estate 30 August 2010 Technical Release 3, Guidance on Disclosures on Transition to IFRSs 31 December 2010 Amendments to FRS 1, First-time Adoption of Financial Reporting Standards - Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters 1 January 2011 - Additional Exemptions for First-time Adopters 1 January 2011 Amendments to FRS 2, Group Cash-settled Share Based Payment Transactions 1 January 2011 Amendments to FRS 7, Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments 1 January 2011 Improvements to FRSs (2010) 1 January 2011 IC Interpretation 4, Determining whether an Arrangement contains a Lease 1 January 2011 IC Interpretation 18, Transfers of Assets from Customers 1 January 2011 Technical Release 4, Shariah Compliant Sale Contracts 1 January 2011 Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement 1 July 2011 IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments 1 July 2011 FRS 124, Related Party Disclosures 1 January 2012 IC Interpretation 15, Agreements for the Construction of Real Estate 1 January 2012

The new and revised FRSs and Interpretations above are expected to have no significant impact on the financial statements of the Group and the Company upon their initial application.

4. SIGNIFICANTACCOUNTINGESTIMATESANDJUDGEMENTS

Estimates and judgements are continually evaluated by the Directors and Management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that effect the application of the Group and Company’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

i) DepreciationofProperty,PlantandEquipment

The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment are based on commercial and production factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group and Company anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

ii) IncomeTaxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group and Company recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.




4. SIGNIFICANTACCOUNTINGESTIMATESANDJUDGEMENTS(CONT’D)

iii) ImpairmentofNon-FinancialAssets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

iv) AmortisationofDevelopmentCosts

Changes in the expected level of usage and technological development could impact the economic useful lives therefore future amortisation charges could be revised.

v) ImpairmentonLoansandReceivables

An impairment loss is recognised when there is objective evidence that a financial asset is impaired. Management specifically reviews its loans and receivables financial assets and analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

vi) WrittendownofInventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

5. FINANCIALRISKMANAGEMENTPOLICIES

The Group’s financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-

a) MarketRisk

i) Foreign Currency Risk

The Group is exposed to foreign exchange risk on sales and purchases that are denominated in currencies other than Ringgit Malaysia.

Foreign currency risk is closely monitored and kept at an acceptable level.

ii) Interest Rate Risk

The Group obtains financing through bank borrowings and hire purchase facilities. Its policy is to obtain the most favourable interest rates available.

Information relating to the Group’s borrowings is disclosed in their respective notes.




5. FINANCIALRISKMANAGEMENTPOLICIES(CONT’D)

a) MarketRisk(cont’d)

iii) Price Risk

The Group does not have any quoted investments and hence is not exposed to price risks.

b) CreditRisk

Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised by monitoring receivables regularly and by mostly trading with creditworthy customers.

The carrying amounts of cash and cash equivalents, trade receivables and other receivables represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

c) LiquidityandCashFlowRisks

The Group manages its liquidity risk by maintaining sufficient cash and the availability of funding through certain committed credit facilities to meet estimated commitments arising from operational expenditure and financial liabilities.




6. PROPERTY, PLANT AND EQUIPMENTCOST

As previously Effect of thereported at adopting the As restated Foreign At 30.06.10/ amendments 01.07.10/ exchange 30.06.11/

Group 30.06.09 to FRS 117 01.07.09 translation Additions Disposals Impaired 30.06.102011 RM RM RM RM RM RM RM RM

Buildings 2,816,303 - 2,816,303 - - - - 2,816,303 Long-term leasehold land - 1,811,273 1,811,273 - - - - 1,811,273 Plant and machinery 30,770,342 - 30,770,342 (11,065) 1,459,573 (2,929,917) (500,000) 28,788,933 Furniture and fittings,office equipments and 4,109,009 - 4,109,009 (4,664) 43,258 (1,059,259) - 3,088,344 motor vehiclesBuilding underconstruction 2,168,528 - 2,168,528 - - - - 2,168,528

39,864,182 1,811,273 41,675,455 (15,729) 1,502,831 (3,989,176) (500,000) 38,673,381 (Note 7)

30.06.2010

Buildings 2,816,303 - 2,816,303 - - - - 2,816,303 Long-term leasehold land - 1,811,273 1,811,273 - - - - 1,811,273 Plant and machinery 30,789,678 - 30,789,678 (27,151) 1,799,250 (1,791,435) - 30,770,342 Furniture and fittings,office equipments andmotor vehicles 4,040,847 - 4,040,847 (19,537) 87,699 - - 4,109,009 Building under construction 1,681,528 - 1,681,528 - 487,000 - - 2,168,528

39,328,356 1,811,273 41,139,629 (46,688) 2,373,949 (1,791,435) - 41,675,455

6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)ACCUMULATED DEPRECIATION

As previously Effect of thereported at adopting the As restated Foreign Depreciation At 30.06.10/ amendments 01.07.10/ exchange charge for 30.06.11/

Group 30.06.09 to FRS 117 01.07.09 translation the year Disposals Impaired 30.06.10 2011 RM RM RM RM RM RM RM RM

Buildings 304,344 - 304,344 - 56,326 - - 360,670 Long-term leasehold land - 151,829 151,829 - 30,187 - - 182,016 Plant and machinery 12,315,415 - 12,315,415 (4,902) 2,140,081 (969,324) (336,111) 13,145,159 Furniture and fittings,office equipments andmotor vehicles 2,295,862 - 2,295,862 (3,386) 458,429 (768,229) - 1,982,676 Building under construction - - - - - - - -

14,915,621 151,829 15,067,450 (8,288) 2,685,023 (1,737,553) (336,111) 15,670,521 30.06.2010

Buildings 248,018 - 248,018 - 56,326 - - 304,344 Long-term leasehold land - 121,642 121,642 - 30,187 - - 151,829 Plant and machinery 10,704,717 - 10,704,717 (7,061) 1,919,797 (302,038) - 12,315,415 Furniture and fittings,office equipments andmotor vehicles 1,710,893 - 1,710,893 (6,839) 591,808 - 2,295,862 Building under construction - - - - - - - -

12,663,628 121,642 12,785,270 (13,900) 2,598,118 (302,038) - 15,067,450




6. PROPERTY,PLANTANDEQUIPMENT(CONT’D)

NETCARRYINGAMOUNT

At At Group 2011 2010 RM RM

Buildings 2,455,633 2,511,959 Long-term leasehold land 1,629,257 1,659,444 Plant and machinery 15,643,774 18,454,927 Furniture and fittings, office equipments and motor vehicles 1,105,668 1,813,147 Building under construction 2,168,528 2,168,528 23,002,860 26,608,005

COST At At Company 01.07.10/ 30.06.11/ 30.06.2011 01.07.09 Additions Disposals 30.06.10 RM RM RM RM

Office equipment 325 - - 325

30.06.2010 Office equipment 325 - - 325

ACCUMULATEDDEPRECIATION At Depreciation At Company 01.07.10/ chargefor 30.06.11/ 30.06.2011 01.07.09 theyear Disposals 30.06.10 RM RM RM RM

Office equipment 179 49 - 228

30.06.2010

Office equipment 130 49 - 179

NETCARRYINGAMOUNT

At At Company 2011 2010 RM RM Office equipment 97 146 97 146




6. PROPERTY,PLANTANDEQUIPMENT(CONT’D)

Group 2011 2010 RM RM Detailsofassetsunderhirepurchasefinancing:-

Motor vehicle - cost 72,881 890,881 - net carrying amount at year end 4,859 312,568

Plant and machinery - cost 5,357,641 8,044,381 - net carrying amount at year end 3,622,170 5,785,815 The net carrying amount of assets pledged as security for bank borrowings are as follows:- Group 2011 2010 RM RM

Buildings 2,455,633 2,511,959 Long-term leasehold land 1,629,257 1,659,444 Plant and machinery 3,609,746 3,943,286 Building under construction 2,168,528 2,168,528

9,863,164 10,283,217

Included in plant and machinery of the Group are machines with net carrying amount of RM Nil (2010: RM 491,111) which are not in the relevant subsidiaries’ premises as they are held for safe keeping by the machinery supplier on the Group’s behalf.

Included in the disposal of motor vehicles is an aggregate cost of RM 818,000 (2010: RM Nil) with net carrying amounts of RM 224,966 (2010: RM Nil) disposed to two Independent Non-Executive Directors for a total consideration of RM 331,000 (2010: RM Nil). The disposals were approved by the board of Directors.

During the financial year, a subsidiary of the Group had fully impaired three units of machineries which was damaged due to fire.




7. PREPAIDLANDLEASES

Group 2011 2010 01.07.2009 (Restated) (Restated) RM RM RM Atcost At beginning/end of the year - 1,811,273 1,811,273 As previously reported - 1,811,273 1,811,273 Effect of the adopting the amendments - (1,811,273) (1,811,273) to FRS 117 As restated at 30th June 2011/2010 - - - Accumulatedamortisation At beginning of the year - 121,642 91,454 Charge for the financial year - 30,187 30,188 At end of the year - 151,829 121,642 As previously reported - 151,829 121,642 Effect of the adopting the amendments - (151,829) (121,642) As restated at 30th June 2011/2010 - - - Net carrying amount - - -

The Group has adopted the amendments made to FRS 117 Leases during the financial year. The Group has reassessed and determined that the long-term leasehold land of the Group is in substance a finance lease and has reclassified it as property, plant and equipment. This change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendments.

8. DEVELOPMENTEXPENDITURE Group 2011 2010 RM RM At beginning of the year 33,177 148,139 Amortisation during the year (33,177) (114,962) At end of the year - 33,177

The development expenditure relates to costs incurred for the development of the injection mould project.

9. INVESTMENTINSUBSIDIARYCOMPANIES Company 2011 2010 RM RM InMalaysia Unquoted shares, at cost 10,800,000 10,800,000

OutsideMalaysia Unquoted shares, at cost 857,600 857,600

11,657,600 11,657,600




9. INVESTMENTINSUBSIDIARYCOMPANIES(CONT’D)

Details of subsidiary companies are as follows:- Countryof NameofCompany Effectiveinterest(%) incorporation Principalactivities 2011 2010

Sanichi Precision 100 100 Malaysia Design and fabrication of precision Mould Sdn. Bhd. moulds and tooling Asia Pinnacle Sdn. Bhd. 100 100 Malaysia Design and fabrication of precision moulds and tooling *Sanichi Mould 100 100 Thailand Design and fabrication of precision (Thailand) Co., Ltd. moulds and tooling * Subsidiaries not audited by Hasnan THL Wong & Partners.

10. GOODWILLONCONSOLIDATION Group 2011 2010 RM RM

At beginning/end of the year 6,711 6,711

11. DEFERREDTAXASSET The tax effects of temporary differences which would give rise to future net tax benefits are generally recognised only where

there is a reasonable expectation of realisation. As at the end of the financial year, the estimated amount of deferred taxation benefits calculated at the current tax rate, that had not been recognised in the financial statements are as follows:-

Group Company 2011 2010 2011 2010 RM RM RM RM Tax effect of:- - Excess of property, plant and equipment’s net carrying amount over its tax written down value (1,260,900) (1,149,300) - - - Unrealised foreign exchange (gain)/loss (276,400) 155,000 - - - Unutilised capital allowance 2,106,200 1,643,200 - - - Unutilised industrial building allowances 68,000 50,200 - - - Unabsorbed tax losses 1,867,900 56,800 - - - Unutilised reinvestment allowances 2,017,100 2,094,800 - - Deferred tax asset 4,521,900 2,850,700 - -

Deferred tax asset has not been recognised in the financial statements as it is not probable that sufficient taxable profit will be available against which the deductible temporary differences, unutilised allowances and unabsorbed losses, stated above can be utilised.




12. INVENTORIES Group 2011 2010 RM RM Raw materials 1,382,655 1,015,915 Work-in-progress - 5,142,721 Finish goods 2,556,926 215,322 3,939,581 6,373,958

All inventories are carried at cost.

13. TRADERECEIVABLES Group 2011 2010 RM RM Third parties 23,422,766 22,970,119

Less: Allowance for impairment (9,933,766) (3,877,128)

13,489,000 19,092,991

The Group’s normal trade credit terms range from 30 to 60 days. Other credit terms are assessed and approved on a case-by-case basis.

Ageing analysis

The ageing analysis of the Group’s trade receivables are as follows:-

Group 2011 2010 RM RM Neither past due nor impaired 388,241 2,963,916

1 to 30 days past due not impaired 97,455 76,700

31 to 60 days past due not impaired 824,252 1,614,971

61 to 90 days past due not impaired 220,646 2,307,765

91 to 120 days past due not impaired - 89,548

More than 121 days past due not impaired 11,958,406 12,040,091 13,100,759 16,129,075 Impaired 9,933,766 3,877,128

23,422,766 22,970,119




13. TRADERECEIVABLES(CONT’D)

Trade receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group and have not been renegotiated during the financial year.

Trade receivables that are past due but not impaired

The Group has trade receivables amounting to RM 13,100,759 (2010: RM 16,129,075) that are past due at the reporting date but not impaired.

The trade receivables that are past due but not impaired are unsecured in nature. The management is confident that the amounts are recoverable as these accounts are still active.

Trade receivables that are impaired

Trade receivables that are impaired as at the year end and the movement of the allowance accounts used to record the impairment are as follows:

Group 2011 2010 RM RM Individually impaired Trade receivables - nominal amounts 15,395,137 5,851,671 Less: Allowance for impairment (9,933,766) (3,877,128) 5,461,371 1,974,543

Movement in allowance accounts: Group 2011 2010 RM RM At 1 July 3,877,128 3,758,819 Charge for the year (Note 26) 6,464,788 1,323,766 Reversal of impairment losses (408,150) (1,205,457)

At 30 June 9,933,766 3,877,128

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

The net foreign currency exposure profile of trade receivables is as follows:- Group 2011 2010 RM RM

Euro 905,192 1,023,908 Singapore Dollar - 30,547 Thai Bath 534,904 448,544 United States Dollar 6,084,440 7,064,834

14. OTHERRECEIVABLES Group Company 2011 2010 2011 2010 RM RM RM RM Analysed to:- Other receivables 50,259 96,985 2,500 3,000 Deposits 204,572 213,070 1,000 1,000 Prepayments 77,896 107,034 10,800 10,800 332,727 417,089 14,300 14,800




15. AMOUNTDUEFROM/(TO)SUBSIDIARYCOMPANIES

Company Amount due from/(to) related companies arose mainly from inter-company advances which bear no interest, unsecured and no

scheme of repayment has been arranged.

16. FIXEDDEPOSITS

Group 2011 2010 RM RM

Fixed deposits with licensed banks 524,325 501,034 Fixed deposit amounting to RM 523,306 (2010: RM 500,000) has been pledged as security for banking facilities granted to the

Group.

The effective interest rate per annum of the fixed deposits at the end of the financial year is 4.45% (2010: 3.12%). The fixed deposits have a maturity of 365 days (2010: 365 days).

17. CASHANDCASHEQUIVALENTS

Cash and cash equivalents included in the statements of cash flows comprise the following amounts:-

Group Company 2011 2010 2011 2010 RM RM RM RM Fixed deposit with licensed bank 1,019 1,034 - - Cash and bank 216,281 63,483 660 1,796 Bank overdrafts - secured (1,579,378) (1,121,206) - - (1,362,078) (1,056,689) 660 1,796

The bank overdrafts are secured by way of:- a) facilities Agreements; b) open all monies first party legal charge over a land and building of the Group; c) corporate guarantee by the Company; d) lien on fixed deposit of the Group; e) letter of authorisation; f) joint and several guarantee by certain Directors of the Company; g) third party forth and sixth legal charge over a leasehold industrial land with a factory building of a third party; h) loan and advances given to subsidiary companies by the Company; i) specific debenture over two units of machineries; and j) guarantee from Syarikat Jaminan Pembiayaan Perniagaan Berhad.

The bank overdrafts with limit of RM 1,921,000 (2010: RM 1,921,000) are payable on demand and interests are charged at rates ranging from 7.60% to 8.60% (2010: 7.35% to 8.30%) per annum.




18. TRADEPAYABLES


Third parties 3,112,884 2,616,396

The normal trade credit terms granted to the Group in respect of trade payables range from 60 to 90 days.

The net foreign currency exposure profile of trade payables is as follows:- Group 2011 2010 RM RM

Euro 159,514 36,053 Singapore Dollar 77,440 25,612 Thai Bath 261,792 10,893 United States Dollar - 5,467

19. OTHERPAYABLES

Group Company 2011 2010 2011 2010 RM RM RM RM Analysed to: Other payables 1,681,267 1,260,944 208,925 42,150 Accrued expenses 1,491,431 383,733 205,374 118,988 Payroll liabilities 594,281 376,126 16,397 16,964

3,766,979 2,020,803 430,696 178,102

20. AMOUNTDUETODIRECTORS

Group Amount due to Directors bears no interest, unsecured and no scheme of repayment have been arranged.




21. BORROWINGS

Group 2011 2010 RM RM Non-current Secured Hire purchase creditors 44,002 2,542,762 Term loans - 6,674,696 44,002 9,217,458

Current Secured Banker acceptances 8,970,000 9,120,000 Hire purchase creditors 3,578,805 1,203,582 Term loans 10,223,356 3,159,404 22,772,161 13,482,986

22,816,163 22,700,444

Banker acceptances amounting to RM 8,970,000 (2010: RM 9,120,000) bear interest at rates ranging from 4.04% to 10.74% (2010: 2.24% to 4.75%) per annum.

Term loans amounting to RM 10,223,356 (2010: RM 9.834,100) bear interest at rates ranging from 5.20% to 8.65% (2010: 5.82% to 7.76%) per annum.

Certain subsidiary companies of the Group have defaulted in the repayment of the bank borrowings and hire purchase instalments and legal action have been instituted by the lenders for recovery of the principal, interest and other costs. Acordingly, all the term loans and a majority of the hire purchase creditors have been reclassified to short term borrowings.

The banker acceptances and term loans are secured by way of:-

a) facilities Agreements; b) open all monies first party legal charge over a leasehold land and building of the Group;

c) corporate guarantee by the Company; d) joint and several guarantee by the certain Directors of the Company; e) first party first legal and second legal charge over the building of the Group; f) third party forth and sixth legal charge over a leasehold industrial land with a factory building of a third party; g) loan and advances given to subsidiary companies by the Company; h) specific debenture creating fixed charge over the assets financed; and i) guarantee from Syarikat Jaminan Pembiayaan Perniagaan Berhad.




21. BORROWINGS(CONT’D)

Group Repaymentterms 2011 2010 Bankborrowingsandloans RM RM (excluding hire purchase creditors) - not later than 1 year 19,193,356 12,279,404 - later than 1 year and not later than 2 years - 2,924,209 - later than 2 years and not later than 5 years - 3,580,451 - later than 5 years - 170,036

19,193,356 18,954,100

Hirepurchasecreditors Minimum instalment payments :- - not later than 1 year 4,064,037 1,469,653 - later than 1 year and not later than 5 years 44,903 1,069,341 - later than 5 years - 1,715,955 4,108,940 4,254,949

Future finance charges on hire purchase creditors (486,133) (508,605) Present value of hire purchase creditors 3,622,807 3,746,344 Present value of hire purchase creditors - not later than 1 year 3,578,805 1,203,582 - later than 1 year and not later than 5 years 44,002 931,266 - later than 5 years - 1,611,496

3,622,807 3,746,344

The effective interest rates per annum of the hire purchase creditors ranges from 6.44% to 6.46% (2010: 4.24% to 6.69%).

22. SHARECAPITAL

Numberofordinarysharesof RM0.10each GroupandCompany GroupandCompany 2011 2010 2011 2010 RM RM Authorised:-

At beginning of the year 163,500,000 113,500,000 16,350,000 11,350,000

Created during the year - 50,000,000 - 5,000,000

At end of the year 163,500,000 163,500,000 16,350,000 16,350,000




22. SHARECAPITAL(CONT’D)

Numberofordinarysharesof RM0.10each GroupandCompany GroupandCompany 2011 2010 2011 2010 RM RM Issued and fully paid:- At beginning of the year 163,500,000 113,500,000 16,350,000 11,350,000

Issued during the year - 50,000,000 - 5,000,000

At end of the year 163,500,000 163,500,000 16,350,000 16,350,000

During the previous financial year, the Company increased its issued and paid-up share capital from RM 11,350,000 to RM 16,350,000 by allotment of RM 5,000,000 ordinary shares of RM 0.10 each at par for cash consideration. The new ordinary shares rank pari passu in all respects with existing ordinary shares.

23. RESERVES

Group Company 2011 2010 2011 2010 Non-distributable RM RM RM RM Share premium At beginning/end of the year 10,586,318 10,586,318 10,586,318 10,586,318 Foreign exchange reserve Exchange difference of translation of overseas subsidiary companies (102,005) (19,069) - -

Distributable:- Accumulated losses (16,878,762) (2,312,803) (246,285) (47,074)

(6,394,449) 8,254,446 10,340,033 10,539,244

The share premium reserve arose from the issue of shares by way of private placement and public offer less amount incurred for listing expenses. The share premium is not distributable by way of cash dividends and may be utilised in the manner set out in Section 60(3) of the Companies Act, 1965.

24. REVENUE Group Company 2011 2010 2011 2010 RM RM RM RM Management fees - - 480,000 480,000 Sale of moulds 9,469,376 19,262,435 - -

9,469,376 19,262,435 480,000 480,000

25. FINANCECOSTS Group 2011 2010 RM RM Banker acceptance interest 715,601 416,492 Bank overdraft interest 122,188 106,382 Hire purchase interest 215,147 292,233 Other interest - 943,206 Term loan interest 880,424 603,334

1,933,360 2,361,647




26. (LOSS)/PROFITBEFORETAXATION

(Loss)/profit before taxation has been determined after charging/(crediting) amongst other items the following:-

Group Company 2011 2010 2011 2010 (Restated) RM RM RM RM Amortisation of development expenditure 33,177 114,962 - - Audit fees 40,508 50,174 13,000 15,000 Depreciation of property, plant and equipment 2,685,023 2,598,118 49 49 Directors’ remuneration - fees 173,625 132,000 173,625 132,000 - EPF contributions 53,760 61,660 - - - other emoluments 485,500 507,500 37,500 19,500 Impairment loss on property, plant and equipment 163,889 - - - Impairment loss on trade receivables 6,464,788 1,323,766 - - Past Director’s emolument - fees - 15,000 - 15,000 - other emoluments - 1,750 - 1,750 Loss on disposal of plant and equipment 239,954 370,597 - - Loss on foreign currency exchange - realised 358,901 343,398 - - - unrealised - 1,013,595 - - Rental charges 208,658 225,488 - - Reversal of impairment loss on trade receivables (408,150) (1,205,457) - - Gain on foreign exchange - unrealised (1,105,738) - - - Interest income (23,310) - - -

27. TAXATION Group Company 2011 2010 2011 2010 RM RM RM RM Malaysian taxation: Current year tax expenses 25,500 24,000 25,500 - Under provision in prior years: Tax expenses 116,821 1,883 45,490 1,883 142,321 25,883 70,990 1,883



NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Cont’d) 27. TAXATION(CONT’D)

As at 30th June 2011, the Group and Company have unutilised allowances and unabsorbed tax losses carried forward as follows:-

Group Company 2011 2010 2011 2010 RM RM RM RM Unabsorbed tax losses 7,471,600 227,200 - - Unutilised reinvestment - - allowances 8,068,400 8,379,200 - - Unutilised industrial building allowances 272,000 200,800 - - Unutilised capital allowances 8,424,800 6,572,800 - - The amounts are subject to the agreement of the Inland Revenue Board.

Group

There is no current year tax expense for Thailand operations as those operations have no chargeable income.

Income tax of the Malaysian subsidiary companies is calculated at the rate of 25% on the estimated taxable profit. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

As at 30th June 2011, the Group has a tax exempt account of approximately RM 11,815,600 (2010: RM 11,815,600) to frank the payment of tax exempt dividends, which are subject to the agreement of the Inland Revenue Board.

Company

Income tax is calculated at the rate of 25% on the estimated taxable profit. A reconciliation of average effective tax rate applicable to (loss)/profit before taxation to effective statutory tax rate is as follows:-

Group Company 2011 2010 2011 2010 RM RM RM RM

(Loss)/profit before taxation (14,423,638) 229,129 (128,221) (121,768) % % % % Average effective tax rate for the year (1.0) 11.3 (55.4) (1.5) Deferred tax asset not recognised during the year 11.6 (9.6) - 18.1 Utilisation of previously unrecognised deferred tax asset - 36.0 - - Under provision in prior year 0.8 (0.8) 35.5 1.5 Tax effect on income exempted from income tax (0.7) 199.3 - - Tax effect of expenses not deductible for tax purpose 13.8 (211.2) 44.9 6.9 Tax effect of reinvestment allowances 0.5 - - - Effective statutory tax rate for the year 25.0 25.0 25.0 25.0




28. EARNINGSPERSHARE

Basic earning per share

The basic earnings per share for the financial year is based on profit attributable to equity holders of the Company divided by the weighted average number of ordinary shares in issue during the financial year.


(Loss)/profit attributable to equity holders of the Company (14,648,895) 125,479

Weighted average number of ordinary shares of RM 0.10 each 163,500,000 163,500,000

Basic (loss)/earnings per share (sen) (8.91) 0.12

Diluted earning per share

No ESOS option has been granted as at the end of the financial year, therefore the disclosure of diluted loss per share is not applicable.

29. PROCEEDSFROMDISPOSALOFPROPERTY,PLANTANDEQUIPMENT

During the financial year, the proceeds from disposal of property, plant and equipment are as follows:-

Group 2011 2010 RM RM Cash consideration 927,669 460,000 Set-off against other payables 186,000 - Set-off against amount due to Directors 138,000 - Trade in 760,000 658,000 2,011,669 1,118,000

30. PURCHASEOFPROPERTY,PLANTANDEQUIPMENT

During the financial year, the Group acquired property, plant and equipment as follows:- Group 2011 2010 RM RM Cash payment 123,481 1,715,149 Cost adjustment 431,250 - Hire purchase financing 188,100 - Trade in 760,000 658,800 1,502,831 2,373,949




31. DIRECTORS’REMUNERATION

The aggregate amount of emoluments received and receivable by the Directors of the Group and of the Company during the financial year were as follows:-

Group Company 2011 2010 2011 2010

RM RM RM RM Executive Directors:- -Salaries, bonus and EPF

contribution 501,760 549,660 - -

Non-Executive Directors:- - fees 173,625 132,000 173,625 132,000

- other emoluments 37,500 19,500 37,500 19,500

Past Non-Executive Director:- - fees - 15,000 - 15,000

- other emoluments - 1,750 - 1,750

Total 712,885 717,910 211,125 168,250

The number of Directors of the Group where total remuneration during the financial year fall within the following bands are as follows:-

NumberofDirectors 2011 2010 Executive Directors :- RM 200,001 - RM 250,000 1 - RM 250,001 - RM 300,000 1 2 2 2 Non-Executive Directors Below RM 50,000 9 6 11 8

32. SIGNIFICANTRELATEDPARTYTRANSACTIONS Company 2011 2010 RM RM

Management fees charged to subsidiary companies 480,000 480,000




33. SEGMENTALINFORMATION

The Group is principally engaged in designing and fabrication of precision moulds and tooling for use in automobile, home appliance, audio visual, computer peripheral, electrical and telecommunication industry.

The Group’s business segment is categorised according to the product segments as follows:-

a) Advanced Plastic Injection Mould (APIM); and b) Conventional Plastic Injection Mould (CPIM). i) BusinessSegments 2011 APIM CPIM Elimination Total RM RM RM RM REVENUE External sales 5,304,123 4,165,253 - 9,469,376 Inter-segment sales 590,605 - (590,605) - Total revenue 5,894,728 4,165,253 (590,605) 9,469,376

Results

Segment results (6,990,707) (5,489,704) - (12,480,411) Financing costs (1,933,360) Interest revenue 23,310 Amortisation of development cost (33,177)

Loss before taxation (14,423,638) Taxation (142,321)

Loss for the year (14,565,959)

2011 APIM CPIM Elimination Total RM RM RM RM Asset Segment assets 23,252,010 18,259,475 - 41,511,485 Tax assets 634,560 42,146,045

Liabilities

Segment liabilities 18,021,627 14,152,127 - 32,173,754 Tax credit 16,740 32,190,494 OtherSegmentInformation

Amortisation of development costs 18,584 14,593 - 33,177 Capital expenditure 841,786 661,045 - 1,502,831 Depreciation 1,503,974 1,181,049 - 2,685,023 Impairment loss on trade receivables 3,621,151 2,843,637 - 6,464,788 Reversal of impairment loss on trade receivables (228,618) (179,532) - (408,150)




33. SEGMENTALINFORMATION(CONT’D)

i) BusinessSegments

2010 APIM CPIM Elimination Total RM RM RM RM REVENUE External sales 11,951,802 7,310,633 - 19,262,435

Inter-segment sales 2,950,123 - (2,950,123) - Total revenue 14,901,925 7,310,633 (2,950,123) 19,262,435 Results

Segment 1,536,173 939,641 - 2,475,814 Financing costs (2,361,647)

Interest revenue - Amortisation of development cost 114,962

Profit before taxation 229,129 Taxation (25,883) Profit for the year 203,246

2010 APIM CPIM Elimination Total RM RM RM RM Assets Segment results 32,944,860 20,151,588 - 53,096,448 Tax assets 760,891

53,857,339 Liabilities

Segment liabilities 18,150,603 11,102,290 - 29,252,893

OtherSegmentInformation

Amortisation of development costs 71,331 43,631 - 114,962 Capital expenditure 1,472,969 900,980 - 2,373,949

Depreciation 1,612,059 986,059 - 2,598,118 Impairment loss on trade receivables 821,360 502,406 - 1,323,766 Reversal of impairment loss on

trade receivables (747,952) (457,505) - (1,205,457)




33. SEGMENTALINFORMATION(CONT’D)

ii) GeographicalSegment Businesss contribution by geography is as follows:-

Revenuecontribution Segmentassets 2011 2010 2011 2010

RM RM RM RM

Malaysia 4,996,566 8,289,014 40,030,969 51,864,496 Other Asia pacific countries 3,673,806 3,466,067 2,115,076 1,992,843 European countries 799,004 7,507,354 - -

9,469,376 19,262,435 42,146,045 53,857,339

Capitalexpenditure 2011 2010

RM RM

Malaysia 1,502,321 2,373,949 Other Asia pacific countries 510 -

1,502,831 2,373,949

iii) Information about major customers

The Group has 3 (2010:3) major local customers contributing approximately RM 4,613,000 (2010: RM 6,707,000) of total sales revenue.

34. CAPITALCOMMITMENTS

Authorised capital expenditure not provided for in the financial statement:-

Group 2011 2010

RM RM Contracted for:- Construction of building 4,318,000 4,318,000

35. CONTINGENTLIABILITIES

Company 2011 2010

RM RM Corporate guarantees given to licensed banks for banking facilities granted to subsidiary companies 33,960,000 33,960,000



NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Cont’d) 36. EMPLOYEESINFORMATION

Group Company 2011 2010 2011 2010

RM RM RM RM Directors’ other emoluments 712,885 701,160 211,125 151,500

Past Directors’ other emoluments - 16,750 - 16,750 EPF 151,445 247,057 11,526 10,254 Salaries, bonus, allowances and

wages 2,945,370 3,878,312 100,311 85,120 SOCSO 23,710 25,007 1,185 978

Other personnel cost 98,851 150,957 30 3,287 3,932,261 5,019,243 324,177 267,889

The total number of employees of the Company, including the Directors, as at the end of the financial year was 8 (2010: 12).

The total number of employees of the Group, including the Directors, as at the end of the financial year was 56 (2010: 118).

37. FAIRVALUESOFFINANCIALASSETSANDFINANCIALLIABILITIES Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between

knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of financial assets and liabilities:-

a) Cash and bank balances and other liquid funds and short term receivables

The carrying amount approximated their fair values due to the relatively short-term maturity of these instruments.

b) Short term bank borrowings and other current liabilities

The carrying amount approximated their fair values because of the short period to maturity of these instruments.

c) Long term bank borrowings

The carrying amount of floating rate term loans approximates its fair values as its effective interest changes accordingly to movements in the market. The carrying amount of fixed rates term loans approximates its fair value as the changes in the interest charged on similar kind of borrowings in the market have no material impact on the fair value of these loans.

d) Amount owing by subsidiaries

The carrying amount approximated their fair values at the end of the financial year.

e) Contingent liabilities

The nominal amount and net fair value of contingent liabilities not recognised in the statements of financial position of the Company are as follows:-.

Company

Nominal NetFair Amount Value

Note RM RM At 30.06.2011 Corporate guarantees 35 33,960,000 33,960,000

At 30.06.2010 Corporate guarantees 35 33,960,000 33,960,000




38. SIGNIFICANTEVENTSDURINGTHEFINANCIALYEAR

a) On 8 November 2010, the Company (as Corporate Guarantor) and the Company’s wholly-owned subsidiaries, Asia Pinnacle Sdn. Bhd. (“AP”) and Sanichi Precision Mould Sdn. Bhd. (“SPM”), received Notices of Demand in respect of the defaulted payment of principal and interest in credit facilities amounting to RM 5,647,383 in respect of Overdraft and Tradelines Facility granted by EON Bank Berhad.

b) On 8 November 2010, the Company (as Corporate Guarantor) and the Company’s wholly-owned subsidiary, AP, received Notices of Demand in respect of the defaulted monthly instalments amounting to RM 25,745 in respect of a Hire-Purchase Facility granted by Orix Credit Leasing Sdn. Bhd.

c) On 11 November 2010, the Company’s wholly-owned subsidiary, AP, received a Notice of Demand in respect of the defaulted payment of Islamic Multi Trade Line-i (MTL-i) Facility totalling RM 2,179,788 granted by RHB Islamic Bank Berhad.

d) On 11 November 2010, the Company’s wholly-owned subsidiary, SPM, received a Notice of Demand in respect of the defaulted payment of Term Loan Facilities totalling RM 805,105 granted by OCBC Bank (Malaysia) Berhad.

e) On 20 December 2010, the Company (as Corporate Guarantor) and the Company’s wholly-owned subsidiary, SPM, received Notices of Demand in respect of the defaulted monthly instalments amounting to RM 3,665,713 in respect of a Hire-Purchase Facilities granted by RHB Bank Berhad (“RHB”).

f) On 14 January 2011, the Company’s wholly-owned subsidiary, SPM, received a Notice of Demand in respect of the defaulted payment of the Fixed Loan 1, 2, 3 and 4 Facilities totalling RM 8,440,126 granted by United Overseas Bank (Malaysia) Bhd (“UOB”).

g) On 21 February 2011, the Company announced that its wholly-owned subsidiary, SPM defaulted in payment of the banking facilities granted by UOB. On 24 June 2011, SPM had received a Saman Pemula No: MT-24-F1508-2011 from UOB’s solicitors, Messrs Raja Darryl & Loh.

h) On 25 March 2011, the Company’s wholly-owned subsidiary, SPM, received a Notice of Demand in respect of the defaulted payment of the banking facilities amounting to RM 1,979,657 granted by RHB, as of that date.

i) On 8 June 2011, the Company announced that on 6 June 2011, they have entered into a Memorandum of Understanding with Projektarbelt Technische Beratung Venretung International (“PROTEV”) of Germany with the intention to form an alliance with PROTEV for a one-stop plastic injection mould fabrication solution centre.

39. EVENTSUBSEQUENTTOTHEFINANCIALYEAREND

On 12th October 2011, the Company appointed PM Securities Sdn. Bhd. as the Adviser and Placement Agent in relation to the proposed private placement of up to 16,350,000 new ordinary shares of RM0.10 each in the Company at a price to be determined upon obtaining all relevant approvals on the proposal. The proposal is expected to be completed by the first quarter of 2012.




40. SUPPLEMENTARYINFORMATION-BREAKDOWNOFRETAINEDPROFITSINTOREALISEDANDUNREALISED

The breakdown of the retained profits of the Group and of the Company as at 30 June 2011 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company

2011 2011 RM RM

Accumulated losses analysed into: - Realised (10,020,769) (246,285)

- Unrealised 1,105,738 - (8,915,031) (246,285) Less: Consolidation adjustments (7,963,731) - Accumulated losses as per financial statement (16,878,762) (246,285)



LIST OF PROPERTIES AS AT 30 JUNE 2011

Registered

Owner

Sanichi

Precision

Mould

Sdn. Bhd

Sanichi

Precision

Mould

Sdn. Bhd

Title/Location

Address

HS(D)370623

PTD 88552

Mukim of

Senai-Kulai

PLO 135, Kawasan

Perindustrian

Fasa 3 , 81400 Senai

Johor.

HS(D)290337

PTD 65201

Description/

ExistingUse

Warehouse

& Factory

Building In

Progress

Tenure

Leasehold

15.06.2064

Leasehold

23.11.2059

AgeofBuilding

(Years)

6

-

TotalLandArea(Square

feet)

65,340

65,340

TotalBuiltUpArea(Squarefeet)

43,924

-

NBV30.06.2010(RM)

3,235,632.62

3,017,783.35

YearofAcquisition

2004

2007

Mukim of Senai-Kulai

PLO 136, Kawasan

Perindustrian Fasa 3,

81400 Senai Johor.



SHARECAPITAL

Authorized Share Capital : RM25,000,000Paid-up Share Capital : RM16,350,000Class of Share : Ordinary Shares of RM0.10 eachVoting Rights : 1 Vote per Ordinary Share

A. Distributionofshareholdings

No.of TotalSizeofshareholdings holders Holdings %

Less than 100 shares 6 296 0.00100 - 1,000 shares 125 96,004 0.061,001 to 10,000 shares 509 3,306,600 2.0210,001 to 100,000 shares 685 33,082,100 20.23100,001 to less than 5% of issued shares 255 117,615,000 71.945% and above of issued shares 1 9,400,000 5.75 Total 1,581 163,500,000 100.00

B. ListofThirty(30)LargestShareholders

%serahSfo.oNsredloherahsfoemaN

ANALYSIS OF SHAREHOLDINGS As At 31 October 2011

123456

7891011121314

15

161718

1920

Abdul Aziz Bin Mohamed HussainNg Kit HengKaren Lee Hoon YinWan Sara Binti Mohd SaidSyed Sobri Bin Syed IsmailCimsec Nominees (Tempatan) Sdn BhdCIMB Bank for Yong Shu KongLau Heng LoonNg Kee LeenTan Kin ChooFong Kok Mun @ Pong Kok MunLee Kuan ChenNg Keong WeeLim Swee BoonPublic Nominees (Tempatan) Sdn BhdPledged Securities Account for Wong Pong LenCimsec Nominees (Tempatan) Sdn BhdPledged Securities Account for Yap Choon TiongSheik Sharufuddin Bin Sheik MohdEllyna Merican Binti Zulzurin MericanAlliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account for Lee Guat YeeTan Kok MinChin Ban Hin

9,400,0003,427,5002,500,0002,500,0002,410,0002,369,000

2,015,0002,000,0002,000,0002,000,0001,752,6001,738,9001,600,0001,357,000

1,324,200

1,300,0001,300,0001,127,000

1,100,0001,100,000

5.752.101.531.531.481.45

1.231.221.221.221.071.060.980.83

0.81

0.800.800.70

0.670.67



B. ListofThirty(30)LargestShareholders(Cont’d)

%serahSfo.oNsredloherahsfoemaN

TOTAL

C. Substantialshareholders(asshownintheRegisterofSubstantialShareholders)

Nameofsubstantialshareholder Direct%Indirect%

Abdul Aziz Bin Mohamed Hussain 9,400,000 5.75 - -

D. Directors’shareholdings(asshownintheRegisterofDirectors’Shareholding)

Noof.SharesHeld

Noof.SharesHeld

NameofDirectors Direct%Indirect%

Note:* Deemed interested by virtue of the direct interest of his spouse’s shareholdings.

ANALYSIS OF SHAREHOLDINGS As At 31 October 2011 (Cont’d)

21222324252627282930

Metro Bina Resources Sdn BhdJagjit Singh A/L G S SambhiKoay Phaik SimSivanandam A/L NarayanasamyWong Lai FunWong Bao ChnanMulti-Purpose Insurans BhdLiew Nyuk ChonHoon Ly MeiHDM Nominees (Tempatan) Sdn BhdPledged Securities Account for Teh Eng Huat

1,100,0001,050,0001,030,0001,009,5001,001,0001,000,0001,000,0001,000,0001,000,0001,000,000

54,511,700

0.670.640.630.620.610.610.610.610.610.61

33.34

Tan Sri Dato’ Sri Abdul Halil bin Abd MutalifDato’ Dr Pang Chow HuatDato’ Abd Halim bin Abd HamidZaki bin Awang Ahmad

-20--

-0.00

--

-145,000*

--

-0.09

--

or failing him/her, the Chairman of the meeting as *my/our proxy to attend and vote for *me/us and on *my/ our behalf at the Seventh Annual General Meeting of the Company to be held at the PLO 135 Jalan Cyber 5, Kawasan Perindustrian Senai Fasa 3, 81400 Senai, Johor on 22 December 2011 at 11.00 a.m. or any adjournment thereof.

Mark either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting

My/our proxy/proxies is/are to vote as indicated below

PROXYFORM Number of Ordinary Shares Held

(Company No: 661826-K)(Incorporated In Malaysia)

Notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint up to two (2) proxies to attend and vote in his stead. Where a member by each proxy.

2. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

3. Where the Form of Proxy is executed by a corporation, it must be executed under its seal or under the hand of its attorney.

Syed Putra Utara, 1 Jalan Syed Putra, Mid Valley City, 59200 Kuala Lumpur, Malaysia, not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof.

I/We, _______________________________________________________________________________________________________________(FULL NAME AND NRIC/PASSPORT NO)

of _________________________________________________________________________________________________________________(FULL ADDRESS)

being a member ofSANICHITECHNOLOGYBERHAD hereby appoint_____________________________________________________

____________________________________________________________________________________________________________________(FULL NAME AND NRIC/PASSPORT NO)

of _________________________________________________________________________________________________________________ (FULL ADDRESS)

Signed this ………… day of ….…………………………… 2011

FORAGAINST

Resolution1 To receive the Audited Financial Statements

To approve the payment of Directors’ Fees

To re-elect Tan Sri Dato’ Sri Abdul Halil bin Abd Mutalif

To re-elect Encik Zaki bin Awang Ahmad

To re-elect Mr Ong Tee Kein

To re-appoint Messrs Hasnan THL Wong & Partners as Auditors

Authority to Directors to issue and allot shares

Resolution2

Resolution3

Resolution4

Resolution5

Resolution6

Resolution7

…………………………………………….Signature of Member/Common Seal

* Strike out whichever not applicable

Then fold here

1st fold here

AFFIX

STAMP

THECOMPANYSECRETARY

SANICHITECHNOLOGYBERHAD(661826-K)

1 Jalan Syed Putra, Mid Valley City, 59200 Kuala Lumpur, Malaysia.

(Company No: 661826-K)

(Incorporated In Malaysia)

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