SUPERLON HOLDINGS · PDF fileSUPERLON HOLDINGS BERHAD ... Medan Syed Putra Utara 59200 Kuala...

SUPERLON HOLDINGS BERHAD

Soaring Through the Highest Expectations

A n n u a l R e p o r t

2 0 0 9

02 Corporate Information

03 – 05 Notice Of Annual General Meeting

06 Financial Highlights

07 Group Structure

08 – 09 Chairman’s Statement

10 – 12 Profile Of Directors

13 – 15 Audit Committee Report

16 – 22 Statement On Corporate Governance

23 – 24 Statement On Internal Control

25 – 67 Financial Statements

68 List Of Properties

69 – 70 Analysis Of Shareholdings

Proxy Form

contents

SUPERLON HOLDINGS BERHAD (740412-X)

SUPERLON HOLDINGS BERHAD (740412-X) (Incorporated in Malaysia)

2 Corporate Information

PRINcIPAL PLAcE Of BUSINESS

Lot 2736, Jalan Raja Nong41200 KlangSelangor Darul EhsanTel : 603-5161 7778Fax : 603-5162 7778

WEBSItE

www.superlon.com.my

AUDItORS

SC Lim, Ng & Co (AF 0681)A-11-3 (Suite 1), Northpoint OfficesMid Valley City1, Medan Syed Putra Utara59200 Kuala Lumpur

SOLIcItORS

Christina Chia, Ng & Partners

AUDIt cOmmIttEE

Lim E @ Lim Hoon Nam - ChairmanTan Sri Datuk Amar (Dr.) Haji Tommy bin Bugo @ Hamid bin BugoLim Wee Keong

NOmINAtION cOmmIttEE

Chun Kwong Pong - ChairmanLim E @ Lim Hoon NamLim Wee Keong

REmUNERAtION cOmmIttEE

Chun Kwong Pong - ChairmanTan Sri Datuk Amar (Dr.) Haji Tommy bin Bugo @ Hamid bin BugoLim Wee Keong

cOmPANy SEcREtARy

Pang Kah Man (MIA 18831)

REGIStERED OffIcE

A-11-3 (Suite 2), Northpoint OfficesMid Valley City1, Medan Syed Putra Utara59200 Kuala LumpurTel : 603-2287 3788Fax : 603-2287 2688

BOARD Of DIREctORS

tan Sri Datuk Amar (Dr.) Haji tommy bin Bugo @ Hamid bin Bugo Non-Independent Non-Executive Chairman

Liu Lee, Hsiu-Lin @ Jessica H. Liu Managing Director and Chief Executive Officer

Andrew tan Lyn San Executive Director

Liu Han-chao Executive Director

chun Kwong PongNon-Independent Non-Executive Director

Lim E @ Lim Hoon Nam Independent Non-Executive Director

Lim Wee Keong Independent Non-Executive Director

SHARE REGIStRARS

MIDF Consultancy & Corporate Services Sdn BhdLevel 8, Menara MIDF82 Jalan Raja Chulan50200 Kuala LumpurTel : 603-2173 8888Fax : 603-2173 8677

PRINcIPAL BANKERS

CIMB Bank BerhadHong Leong Bank BerhadMalayan Banking BerhadUnited Overseas Bank (Malaysia) Bhd

StOcK ExcHANGE LIStING

Main Market of Bursa Malaysia Securities BerhadStock Name : SuperlnStock Code : 7235

INvEStOR RELAtIONS

Shareholders, investors and members of the public are invited to access the Company’s website at www.superlon.com.my or Bursa’s website for announcements made at www.bursamalaysia.com for information on the Group’s operations and latest developments. For further details, please contact the following at our principal place of business :-

Mr Andrew Tan Lyn San Mr Lim E @ Lim Hoon NamExecutive Director Senior Independent Director

3


Notice Of Annual General Meeting

NOtIcE IS HEREBy GIvEN tHAt the Third Annual General Meeting of SUPERLON HOLDINGS BERHAD (“Superlon” or “the Company”) will be held at Putra Room, Kelab Golf Sultan Abdul Aziz Shah (KGSAAS), No 1, Rumah Kelab, Jalan Kelab Golf 13/6, 40100 Shah Alam, Selangor Darul Ehsan on Tuesday, 29 September 2009 at 2.30 p.m. for the following purposes:

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 30 April 2009 together with the Directors’ and Auditors’ Reports thereon.

(Ordinary Resolution 1) 2. To approve the payment of Directors’ fees for the financial year ended 30 April 2009. (Ordinary Resolution 2)

3. To re-elect the following Directors who retire in accordance with Article 96 of the Articles of Association of the Company.

(a) Liu Lee, Hsiu-Lin (also known as Jessica H. Liu) (Ordinary Resolution 3) (b) Lim E @ Lim Hoon Nam (Ordinary Resolution 4)

4. To re-appoint Messrs. SC Lim, Ng & Co. as Auditors of the Company for the ensuing year and to authorize the Directors to fix their remuneration. (Ordinary Resolution 5)

As Special Business

To consider and if thought fit, to pass the following resolution:-

5. Authority to Directors to allot and issue shares pursuant to Section 132D of the companies Act, 1965 “THAT, subject always to the Companies Act, 1965 (“the Act”), the Articles of Association of the Company and

approval and requirements of the relevant governmental and/or regulatory authorities (where applicable), the Directors be and are hereby empowered pursuant to Section 132D of the Act to allot and issue new ordinary shares of RM0.50 each in the Company, from time to time and upon such terms and conditions and for such purposes and to such persons whomsoever the Directors may, in their absolute discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of shares to be issued pursuant to this Resolution does not exceed ten (10) percent of the issued and paid-up share capital for the time being of the Company AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

(Ordinary Resolution 6)

6. Renewal of authority to purchase up to ten per cent (10%) of its own shares in the issued and paid-up share capital

“THAT, subject to compliance with the Companies Act, 1965 (“the Act”), the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and all other applicable laws, regulations and guidelines and the approvals of all relevant governmental and/or regulatory authorities, the Company be and is hereby authorised to allocate an amount not exceeding the total of audited share premium reserve and retained profit of the Company for the purpose of and to purchase such amount of ordinary


4 NOtIcE Of ANNUAL GENERAL mEEtING (cont’d)

shares of RM0.50 each (“Superlon Shares”) in the Company (“Proposed Share Buy-Back Renewal”) as may be determined by the Directors of the Company provided that the aggregate number of Superlon Shares purchased and/or held as treasury shares pursuant to this resolution does not exceed RM4,000,000 comprising 8,000,000 Shares in Superlon, representing ten percent (10%) of the total issued and paid-up capital of the Company.

THAT upon completion of the purchase by the Company of its own shares, the Directors are authorized to deal with the Superlon Shares in the following manner:-

i) cancel the Superlon Shares so purchased; or ii) retain the Superlon Shares so purchased as treasury shares; or iii) retain part of Superlon Shares so purchased as treasury shares and cancel the remainder; or iv) if held as treasury shares, to resell the treasury shares on the Bursa Securities and/or distribute the treasury

shares as dividends to the Company’s shareholders and/or subsequently cancel the treasury shares or any combination thereof;

and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of the Bursa Securities and any other relevant authority for the time being in force.

AND THAT the Directors be and are hereby empowered to carry out the above immediately upon the passing of this resolution and from the date of the passing of this resolution until:

i) the conclusion of the next annual general meeting of the Company following the general meeting at which this resolution was passed at which time it shall lapse unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

ii) the expiration of the period within which the next annual general meeting after that date is required by law to be held; or

iii) revoked or varied by ordinary resolution passed by the shareholders in general meeting;

whichever is the earliest and the Directors and/or any of them be and are hereby authorized to complete and do all such acts and things deem fit and expedient in the interest of the Company to give full effect to the Proposed Share Buy-Back Renewal contemplated and/or authorized by this resolution.”

(Ordinary Resolution 7)

7. To transact any other business for which due notice shall have been given in accordance with the Companies Act, 1965.

BY ORDER OF THE BOARD

PANG KAH mAN (MIA 18831)SECRETARY

Kuala Lumpur7 September 2009

5


NOtIcE Of ANNUAL GENERAL mEEtING (cont’d)

Notes:

(A) APPOINtmENt Of PROxy

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Companies Act, 1965 are complied with.

3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing. If the appointer is a corporation, the instrument must be executed under its Common Seal or under the hand of an attorney so authorised.

5. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney, must be deposited at the Registered Office of the Company at A-11-3 (Suite 2), Northpoint Offices, Mid Valley City, No.1, Medan Syed Putra Utara 59200 Kuala Lumpur not less than forty eight (48) hours before the time

appointed for holding this meeting or any adjournment thereof.

(B) ExPLANAtORy NOtE UNDER SPEcIAL BUSINESS

1. The proposed Ordinary Resolution no. 6 under Item 5, if passed, will grant general mandate (“General Mandate”) and empower the Directors of the Company, from the date of the above Annual General Meeting to allot and issue shares in the Company up to an amount not exceeding in total 10% of the issued and paid-up capital of the Company for the time being for such purposes as they may think fit and in the interest of the Company. This authority, unless revoked or varied at a general meeting, shall continue to be in full force until the conclusion of the next Annual General Meeting of the Company.

As at the date of this Notice, no new shares were issued by the Company pursuant to the previous mandate granted to the Directors since the last Annual General Meeting held on 15 October 2008.

The General Mandate, if granted will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisition.

2. The proposed Ordinary Resolution no. 7 under Item 6, if passed, will allow the Board of Directors to exercise the power of the Company to purchase not more than 10% of the issued and paid-up share capital of the Company at any time within the time period stipulated in the Listing Requirements of Bursa Malaysia Securities Berhad. This authority, unless revoked or varied by the Company at a general meeting, shall continue to be in full force until the conclusion of the next Annual General Meeting of the Company. Further details are set out in the Circular to Shareholders dated 7 September 2009.

(c) StAtEmENt AccOmPANyING NOtIcE Of ANNUAL GENERAL mEEtING

1. Directors standing for re-election and election

The respective profiles of the Directors standing for re-election under Article 96 are set out in the Section ‘Profile of Directors’ on pages 10 to 12 of this Annual Report.


6 Financial Highlights for the financial years ended 30 April 2005 to 2009

Note :The revenue, profit before taxation, profit after taxation for the financial years up to 2007 are based on the proforma audited consolidated income statement of the Superlon Group prepared on the assumption that the current structure of the Superlon Group has been in existence throughout the years. The proforma financial information are extracted from the prospectus of the Company dated 9 April 2007 and the audited accounts for the financial period ended 30 April 2007 and are presented for illustrative purposes only.

7


Investment holding and provision of management services

Group Structure

SUPERLON WORLDWIDE SDN BHD

Design, test and manufacture of thermal insulation materials mainly for the heating, ventilation, air-conditioning and refrigeration (“HVAC&R”) industry and trading of HVAC&R parts and equipments

100%

SUPERLON StEEL PIPES SDN BHD

Manufacturing of precise fine tubes

55%

SUPERLON HOLDINGS BERHAD


8 Chairman’s Statement

On behalf of the Board of Directors of Superlon Holdings Berhad, I

present to you the Annual Report of the Group and of the Company

for the financial year ended 30 April 2009.

INDUStRy tRENDS & PERfORmANcE REvIEW

For the financial year under review, the Group experienced a phase of great volatility in the prices of raw materials as well as a sudden global economic downturn brought about by the liquidity crisis in the United States of America and other parts of the world. Demand was dampened as customers adopted a wait-and-see attitude.

Superlon Group achieved a turnover of RM65.8 million for 2009 approximating the previous year’s turnover of RM66.8 million. However, the Group registered a net loss after tax of RM1.4 million for 2009 after incorporating a one-off expense for rectification of works of about RM2.8 million.

Superlon Worldwide Sdn Bhd (“SWSB”), a wholly-owned subsidiary which produces thermal insulation materials used mainly by the heating, ventilation, air-conditioning and refrigeration system, continues to be the main contributor to the Group. SWSB’s gross profit margins were substantially eroded as a result of higher raw material costs during the financial year under review.

Superlon Steel Pipes Sdn Bhd (“SSPSB”) a 55% subsidiary, had commenced production in September 2008. SSPSB manufactures precise fine tubes that are used in a variety of industries from manufacturing of bicycles to furniture. During the financial year under review, SSPSB faced erratic steel prices as well as a weak global economy. As such SSPSB has yet to achieve its optimal capacity.

DIvIDENDS

In view of the Group’s need to exercise greater prudence in these uncertain economic times, the Board of Directors does not recommend any dividend for the financial year ended 30 April 2009.

PROSPEctS & OUtLOOK

Moving forward, the world economy is trying to recover from the effects of the liquidity crisis aided by the co-ordinated fiscal stimulus efforts by countries around the world. There are already signs of global recovery. However, until a sustained recovery of the global economy is achieved, the Group is expecting a high degree of uncertainty and challenges ahead.

In anticipation of a tighter operating environment, the Group has since last year implemented more stringent cost-cutting measures. The Group has also embarked on a drive to improve quality and product range through greater emphasis on research and development. In addition, the Group continues to focus on improving production and operational efficiencies as well as more stringent management of financial resources.

9


cHAIRmAN’S StAtEmENt (cont’d)

PROSPEctS & OUtLOOK (cont’d)

Efforts are also continuously being made to acquire new clients both in existing markets and prospective markets. The Company believes that through increasing brand awareness and its strong focus on research and development, new and creative products for broader coverage of industries and the overall market share held by Superlon will increase.

It is hoped that the Group’s internal improvements efforts coupled with a sustained recovery of the global economy will allow the Group to return to profitability in the next financial year.

APPREcIAtION

On behalf of the Board of Directors of Superlon, I wish to express our appreciation to the management and staff for their continuing dedication and unwavering support of the Group. Our sincere appreciation is also extended to our valued customers, business associates, government authorities, bankers, suppliers, shareholders and other stakeholders.

My gratitude also goes to my fellow Board members for their support and contributions.

Whilst the challenges ahead of us are expected to be many as the industry catches up with the global events, the Board together with our committed and loyal team endeavour to deliver on our commitment to our shareholders.

tAN SRI DAtUK AmAR (DR.) HAJI tOmmy BIN BUGO @ HAmID BIN BUGOChairman


10

tAN SRI DAtUK AmAR (DR.) HAJI tOmmy BIN BUGO @ HAmID BIN BUGO(Non-Independent Non-Executive Chairman)

tan Sri Datuk Amar, a Malaysian aged 64, was appointed to the Board on 31 January 2007. He graduated from Canterbury University, New Zealand in 1969 with B. A and M. A. in Economics. In addition, he obtained a Postgraduate Diploma in Teaching in 1970 and a Postgraduate Certificate in business studies from Harvard Institute of Development Studies, USA. He was also honoured with Ph. D. (Honorary) degree from Lincoln University, New Zealand.

He has served both in the private sector and the public service in Sarawak. He had various distinguished positions in the public service, including the first General Manager of Land Custody and Development Authority, Permanent Secretary of Ministry of Resource Planning and the State Secretary of Sarawak from 1992 until 2000.

Tan Sri Datuk Amar is also a board member of Sarawak Concrete Industries Bhd, Sapura Resources Bhd, SapuraCrest Petroleum Bhd and Permodalan Sarawak Bhd.

He does not have any family relationship with any of the other Directors of the Company. He is a major shareholder of the Company. He has no material conflict of interest with the Group other than that which has been disclosed to the Board of Directors. He has not been convicted of any offences within the past 10 years.

LIU LEE, HSIU-LIN @ JESSIcA H. LIU (Managing Director and Chief Executive Officer)

Jessica H. Liu, a Taiwanese & Australian aged 52, was appointed to the Board on 31 January 2007. She graduated from Ming Chuan Commercial and Management College, a local college in Taiwan with a Secretarial Science and Management degree qualification in 1978.

In 1983, she co-founded TransAsia Rubber Industrial Co Ltd, a Taiwanese company principally involved in the manufacturing of rubber thermal insulation products and she was a Director and shareholder of the company from 1983 to 1997. In 1992, she founded Villa Mutiara Sdn Bhd manufacturing rubber insulation and the company name has since been changed to Superlon Worldwide Sdn Bhd.

Jessica H. Liu has more than 26 years’ working experience in the rubber thermal insulation industry and has todate accumulated in-depth knowledge in management skills, and the business and market environment of the thermal insulation industry.

She does not hold any directorships in any other public companies. Apart from her son, Liu Han-Chao, who is also an Executive Director of the Company, she does not have any family relationship with any of the Directors of the Company. She is a major shareholder of the Company. She has no material conflict of interest with the Group other than that which has been disclosed to the Board of Directors. She has not been convicted of any offences within the past 10 years.

ANDREW tAN LyN SAN(Executive Director)

Andrew tan Lyn San, a Malaysian aged 40, was appointed to the Board on 24 October 2007. He is a fellow member of the Association of Chartered Certified Accountants, UK, a Chartered Accountant registered with the Malaysian Institute of Accountants and a member of the Malaysian Institute of Certified Public Accountants as well as the Institute of Certified Public Accountants in Singapore. He also holds a Master Degree in Education major in discipline management from a local university.

Profile of Directors

11


PROfILE Of DIREctORS (cont’d)

Andrew Tan Lyn San has over 16 years of working experience in public practice, commerce and industry. He was trained with KPMG in Singapore where he worked for over 7 years in audit and consultancy. He also held the position of Group Finance Manager with French multinational companies based in Singapore for 5 years. Upon returning to Malaysia, he took up the position as Finance Manager with a company listed on the Main Market of Bursa Malaysia Securities Berhad. He is currently the Finance and Administration Manager where he is responsible for finance, accounting, secretarial, administrative and human resource functions of the Superlon group.

Andrew Tan Lyn San does not hold any directorship in any public companies.

He does not have any family relationship with any of the other Directors and/or major shareholders of the Company. He has no material conflict of interest with the Group other than that which has been disclosed to the Board of Directors. He has not been convicted of any offences within the past 10 years.

LIU HAN-cHAO(Executive Director)

Liu Han-chao, an Australian aged 27, was appointed to the Board on 6 November 2007. He graduated with a Diploma in Business major in marketing and a Bachelor of Business degree with double major in Management and Marketing from Queensland University of Technology, Australia in 2005. He joined the Superlon group in November 2005 as Sales and Marketing Manager of Superlon Worldwide Sdn Bhd. He was subsequently appointed to the position of Senior Manager in January 2007.

Currently, Liu Han-Chao is the head of the Marketing Department where he is responsible for formulating marketing and business strategies for new markets, implementing marketing and business strategies and developing marketing programmes to measure and forecast market demand within the Superlon group.

Liu Han-Chao does not hold any directorship in any public companies.

Apart from his mother, Liu Lee, Hsiu-Lin @ Jessica H. Liu who is also the Managing Director and a major shareholder of the Company, he does not have any family relationship with any of the Directors of the Company. He has no material conflict of interest with the Group other than that which has been disclosed to the Board of Directors. He has not been convicted of any offences within the past 10 years.

cHUN KWONG PONG(Non-Independent Non-Executive Director)

chun Kwong Pong, a Malaysian aged 37, was appointed to the Board on 24 October 2007.

He graduated from Monash University, Australia in 1993 with a Bachelor of Business (Accounting) and is a Chartered Accountant registered with the Malaysian Institute of Accountants and a Certified Practising Accountant under CPA Australia. He is currently a Director of cfSolutions Sdn Bhd, a corporate finance advisory company licensed under the Capital Market and Services Act, 2007.

He was formerly with a property development company listed on the Main Market of Bursa Malaysia Securities Berhad from 2000 to 2005 and last held the position of General Manager, Corporate Planning. From 1997 to 2000, he worked with AmInvestment Bank Berhad’s Corporate Finance Department where he handled flotations, restructurings, fund raising as well as mergers and acquisitions. Prior to that, he was with Ernst & Young where he has audited companies from a spectrum of industries.


12

Chun Kwong Pong does not hold any directorship in any public companies.


LIm E @ LIm HOON NAm(Independent Non-Executive Director)

Lim Hoon Nam , a Malaysian aged 65, was appointed to the Board on 31 January 2007. He holds a Bachelor degree in Accountancy from National Chengchi University, Taiwan and Bachelor degree in Commerce from Otago University, New Zealand. He is a member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and New Zealand Institute of Chartered Accountants.

Lim Hoon Nam has been practising as an accountant since 1977 under his own audit firm, Lim Hoon Nam & Co. He is also a director of Metech Group Berhad.


LIm WEE KEONG(Independent Non-Executive Director)

Lim Wee Keong, a Malaysian aged 36, was appointed to the Board on 27 March 2008. He graduated from University of Sheffield, UK in 1996 with B. A. (Hons) in Accounting and Financial Management.

He has more than 11 years’ experience in business development, accounting and management. He started work with the banking industry for 3 years where he held a position as Credit and Marketing Executive. His main job scope included credit management, business analysis, evaluation and presentation of credit proposal. Subsequently, he worked with Villa Mutiara Sdn Bhd as Finance Manager from 1999 to 2002 where his main scope of responsibility was overseeing the financial planning and accounting operations of its group of companies. Currently, Lim Wee Keong is an Operations Director for Bacfree group of companies, a medium-sized water treatment equipment provider with business operations in Malaysia, Singapore and the United Kingdom. His main functions include the management of production and engineering operations, management system design, process engineering, strategic planning and implementation and research and development.

Lim Wee Keong does not hold any directorship in any public companies.


PROfILE Of DIREctORS (cont’d)

13


Audit Committee Report

OBJEctIvE

The objective of the Audit Committee is to assist the Board of Directors (“the Board”) in fulfilling its fiduciary responsibilities relating to the internal control, corporate accounting and reporting practices of Superlon Holdings Berhad (“the Company”) and its subsidiaries (“the Group”). The Audit Committee will endeavour to adopt various practices aimed at maintaining appropriate standards of responsibility, integrity and accountability to the shareholders of the Company.

cOmPOSItION

The Audit Committee members consist of the following directors:-

Designation in Name Directorship Audit committee

Lim E @ Lim Hoon Nam Independent Chairman

Tan Sri Datuk Amar (Dr.) Haji Tommy bin Non-Independent Bugo @ Hamid bin Bugo Non-Executive Member

Lim Wee Keong Independent Member

tERmS Of REfERENcE

The Audit Committee is appointed by the Board from amongst its Directors and consists of not less than three (3) Directors, all of whom are Non-Executive Directors and the majority of whom are Independent Directors.

At least one (1) member of the Audit Committee, i.e. Mr Lim E @ Lim Hoon Nam, is a member of the Malaysian Institute of Accountants. (An alternate director does not qualify as a member of the Audit Committee.)

The Chairman of the Audit Committee is an Independent Non-Executive Director and is appointed by its members.

If a member of the committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced to below 3, the Board shall within three (3) months appoint such number of new members as may be required to make up the shortfall.

Each and every member of the Audit Committee including the Chairman shall hold office until otherwise determined by the board or unless they cease to be a director of the Company.

The term of office of the committee members shall continue to run and be reviewed by the Board at least once in every three years.

The Company Secretary acts as secretary to the Audit Committee. Minutes of each meeting is distributed to each member of the board. The Chairman of the Committee reports on each meeting to the Board.

AUtHORIty

The Audit Committee is authorised to investigate ay activity of the Company within its terms and references and all employees shall be directed to co-operate with any request made by the Audit Committee. The Audit Committee shall have unrestricted access to any information pertaining to the Company and have direct communication channels with the external and internal auditors, when applicable and to the senior management of the Group. The Audit Committee shall be empowered to retain persons or experts having special competence as necessary to assist the Audit Committee in fulfilling its responsibilities.


14 AUDIt cOmmIttEE REPORt (cont’d)

DUtIES AND RESPONSIBILItIES

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

• Toconsiderandrecommendthenominationandappointmentoftheexternalauditors,theauditfees,thequestionsof resignation or dismissal and any other related matters;

• Tooverseeallmatterspertainingtoauditincludingthereviewoftheauditplanandauditreportwiththeexternalauditors;

• ToreviewthefinancialstatementsoftheCompany/Group,andtodiscussproblemsandreservationsarisingfromthe interim and final results, and any matters that the external auditors may wish to discuss (in the absence of the management, where necessary);

• TheChairmanoftheAuditCommittee,toengageonacontinuousbasiswithseniormanagement,suchastheChairman, the Chief Executive Officer, the Finance Director, the external auditors as well as the internal auditors in order to be kept informed of matters affecting the Company.

• Inrelationtotheinternalauditfunction: – Review the adequacy of the scope, function, competency and resources of the internal audit function, and

that it has the necessary authority to carry out its works; – Review the internal audit programme and results of the internal audit process, and where necessary, ensure

that appropriate actions are taken on the recommendations of the internal audit function;• ToreviewanyrelatedpartiestransactionsthatmayarisewithintheCompanyortheGroup;• ToreviewtheapplicationofcorporategovernanceprinciplesandtheextentoftheGroup’scompliancewiththe

best practices set out under the Malaysian Code on Corporate Governance;• Toconsiderallareasofsignificantfinancialriskandarrangementsinplacetocontainthoseriskstoacceptable

levels;• ToensurethattheGroupisincompliancewiththeregulationsoftheCompaniesAct,1965,theListingRequirements

of Bursa Malaysia Securities Berhad and other legislative and reporting requirements;• Toidentifyanddirectanyspecialprojectorinvestigateandtoreportonanyissuesorconcernsinregardstothe

management of the Group; and• SuchotherfunctionsasmaybeagreedbytheAuditCommitteeandtheBoard.

mEEtING AND mINUtES

Meetings of the Audit Committee is held not less than four (4) times a year. Further meetings may be called at any time at the request of any committee member, the company’s Managing Director, the external auditors or the internal auditors.

The Finance Director, a representative of the external auditors and internal auditors attends Audit Committee meetings. Other board members may attend the meetings upon the invitation of the Audit Committee. However, the Audit Committee meets with the external auditors, the internal auditors or both without the presence of executive directors at least twice a year. For the financial year ended 30 April 2009, the external auditors had met with the Audit Committee twice.

Minutes of each meeting are prepared and kept by the company secretary and are signed by the Chairman as correct record and distributed to all members of the Board.

15


AUDIt cOmmIttEE REPORt (cont’d)

mEEtING AND mINUtES (cont’d)

During the financial year ended 30 April 2009, 4 Audit Committee meetings were held. The record of attendance of its members during their membership is as follows:-

Name total

Lim E @ Lim Hoon Nam 4/4 Tan Sri Datuk Amar (Dr.) Haji Tommy bin Bugo @ Hamid bin Bugo 4/4 Lim Wee Keong 4/4

SUmmARy Of ActIvItIES Of tHE AUDIt cOmmIttEE DURING tHE fINANcIAL yEAR

During the financial year ended 30 April 2009, the main activities undertaken by the Audit Committee were as follows:-

• ReviewedtheunauditedquarterlyfinancialresultsoftheGroupwiththemanagementteampriortotheBoard’sapproval and subsequent announcements.

• Reviewedwiththeexternalauditorstheauditedfinancialstatementsforthefinancialyearended30April2009,theaudit planning memorandum, the results of the audit, audit report and recommendation prior to the approval of the Board and subsequent announcements.

• ReviewedanddiscussedthenewdevelopmentsonaccountingstandardsissuedbytheMalaysianAccountingStandards Board and its adoption and impact to the Group’s and Company’s financial statements.

• Reviewedtheinternalauditplanandprogrammeforthefinancialyearunderreview.• ReviewedthereportspreparedbytheoutsourcedinternalauditorsonthestateofinternalcontrolsoftheGroup;• Reviewedthedocumentspriortoitsreleasetotheshareholders;and• ReviewedtherelatedpartytransactionsenteredintobytheGroupandtheCompanyforcompliancewiththeListing

Requirements of Bursa Securities.

INtERNAL AUDIt fUNctION

The internal audit function is outsourced to an external consultant firm which reports to the Audit Committee and assists the Board of Directors in monitoring and managing risks and internal controls. The principal role of the internal audit includes:-

• AssistingtheBoardinthereviewoftheadequacy,integrityandeffectivenessofthesystemofinternalcontrolofthe Group to enable the Board to prepare the Statement on Internal Control in the Annual Report.

• Performinga riskassessmentof theGroupto identifyandevaluate theprincipal risk factorsandensuring theimplementation of appropriate internal control processes and procedures to mitigate these risks.

• Allocatingadequateauditresources,inaccordancewiththeinternalauditplanapprovedbytheAuditCommittee,to carry out internal audits on key operations of the Group so as to provide the Board with an effective and efficient audit coverage.

• Providingindependentandobjectivereportsonthestateofinternalcontrolsofthevariousoperatingunitswithinthe Group to the Audit Committee so that remedial actions can be taken in relation to any weaknesses noted in the systems and controls of the respective operating units.


16 Statement On Corporate Governance

tHE cODE Of cORPORAtE GOvERNANcE

The Board of Directors (“the Board”) of Superlon Holdings Berhad (“the Company”) acknowledges the importance of practising good corporate governance to focus the Company and its subsidiaries (“the Group”) towards enhancing business value and long term value for its stakeholders. The Board is fully committed to ensuring that high standards of corporate governance are practised within the Group as the underlying principle in discharging its responsibilities.

BOARD Of DIREctORS

The Board’s responsibilities are in setting the strategic direction of the Group, establishing goals and visions for the management and continuously improving its performance so as to protect and enhance shareholders’ value. They are hence responsible for the overall standards of strategic planning, conduct, risk management, succession planning, investor relations programme as well as the system of internal controls within the Group.

BOARD cOmPOSItION

The Board currently consists of seven (7) members comprising three (3) executive directors, two (2) non-independent non-executive directors and two (2) independent non-executive directors. The Board has a good balance of members who are executive, non-executive and independent directors such that no one individual or a small group of individuals can dominate the Board’s decision-making process.

With their difference backgrounds and specialisation, the directors bring along a wide range of experience, expertise and perspective in discharging their responsibilities and duties in managing the business affairs of the Group.

There is a clear and distinct division of roles and responsibilities between the Chairman and the Managing Director. The Chairman is primarily responsible for Board effectiveness and conduct whilst the Managing Director is responsible for the day-to-day running of the business overseeing the operating units, organisational effectiveness and implementation of Board policies and decisions.

With one-third of the Board independent, the minority shareholders in the Company are fairly represented by the independent non-executive directors. The independent directors fulfill a pivotal role in corporate accountability and provide unbiased, objective and independent views, advice and judgment by taking into account the interests of all stakeholders. A senior independent director is available to whom concerns of stakeholders may be conveyed.

BOARD cOmmIttEES

To assist the Board in fulfilling its roles, the board has three (3) committees, namely Audit Committee, Nomination Committee and Remuneration Committee, to support and assist in discharging its fiduciary duties and responsibilities. The respective functions and terms of reference of the board committees as well as authority delegated to these board committees have been defined by the Board. The committees report and make recommendations to the Board on matters delegated to them for deliberation. The ultimate responsibility for the final decisions on all matters lies with the Board.

17


StAtEmENt ON cORPORAtE GOvERNANcE (cont’d)

BOARD mEEtINGS

Board meetings are scheduled for every quarter with additional meetings to be convened as and when required. During the financial year under review, the Board met a total of 5 times. The attendance of the Directors who held office during the financial year is set out below:-

Name of Director Attendance at meetings Tan Sri Datuk Amar (Dr.) Haji Tommy bin Bugo @ Hamid bin Bugo 5/5 Liu-Lee, Hsiu Lin @ Jessica H. Liu 5/5 Lim E @ Lim Hoon Nam 5/5 Liu Han Chao 5/5 Andrew Tan Lyn San 5/5 Chun Kwong Pong 5/5 Lim Wee Keong 5/5

SUPPLy Of INfORmAtION

Prior to any Board meeting, every Director is given an agenda with the relevant documents and information on each agenda item to be deliberated on. The Chairman will lead the presentation of Board papers and discussion. All Directors are entitled to call for additional clarification and information to assist them in matters that require their decision-making.

All Directors have unrestricted access to the advice as well as services of the company secretary and external auditors whether as a full board or in their individual capacity, in the furtherance of their duties. They may obtain independent professional advice at their discretion at the Company’s expense.

APPOINtmENt AND RE-ELEctION Of DIREctORS

The Company has a transparent and formal procedure for the appointment of new directors to the Board.

Assessment and recommendation to the Board of new candidates for the appointment as directors is to be made by the Nomination Committee. The newly appointed directors will retire at the first Annual General Meeting (“AGM”) and are eligible for re-appointment.

Every director will be required by the Company’s Articles of Association to retire by rotation at intervals of not less than three years at each AGM. The directors to retire in each year are the directors who have been longest in office since their appointment or re-appointment. A retiring director is eligible for re-appointment.

The Nomination Committee comprises exclusively of non-executive directors, a majority of whom is independent. The members of the Nomination Committee are as follows:-

Chun Kwong Pong as Chairman Lim E @ Lim Hoon Nam as Member Lim Wee Keong as Member

The objectives and responsibilities of the Nomination Committee are to identify and recommend to the Board suitable nominees for appointment to the Board and Board Committees. In line with the best practices in corporate governance, the Board has adopted a methodology for the assessment of the effectiveness of the Board as a whole. During the financial year ended 30 April 2009, the Nomination Committee met once to determine the performance assessment methodology of the Board.


18 StAtEmENt ON cORPORAtE GOvERNANcE (cont’d)

Directors’ training

All the Directors have completed the Mandatory Accreditation Programme as required by Bursa Malaysia Securities Berhad. The Directors have from time to time attended various relevant training programmes, seminars and trades shows organised by the relevant regulatory authorities and professional bodies to broaden their knowledge and to keep abreast with the relevant changes in law, regulations and the business environment, including the following:-

tRAINING PROGRAmmE / SEmINAR/tRADE SHOWS

Communication in the Information Age 3 REVAC International Refrigertaion Ventilation and Air Conditioning Industry Show 08, Malaysia 3 3 3 Directors’ Development Programme 3 Bursa Securities’ Mandatory Directors training 3 3

SPOEX Sporting Goods Show 09, Korea 3 Main Market Listing Requirements/ Seminar 09 3 3 Consolidation Mastercourse – Preparation and Presentation of Consolidated Financial Statements in the Malaysia Context 3 Indirect Tax Facilities & Exemptions for Manufacturing Companies 3 FRS 121 Effects on Changes in Foreign Exchange Rates 3

FRE 3 Advanced Consolidation Principles 3 FRS 139 Financial Instruments : Recognition and Measurement 3 Technical Analysis and Investment Strategies for Malaysian Traders 3 Overview of the Bond Market 3 2008 Budget Seminar 3 2009 Schedular Tax Deductions 3 Global Credit Crunch 3 Limited Liability Partnership Bill and its impact on accounting practitioners and the public 3 Aquatech Amsterdam 2008, Amsterdam 3

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19



Directors’ Remuneration

The remuneration of the Executive Directors are recommended to the Board by the Remuneration Committee. The Remuneration Committee comprises 3 non-executive directors, namely the following:-

Chun Kwong Pong as Chairman Tan Sri Datuk Amar (Dr.) Haji Tommy bin Bugo @ Hamid bin Bugo as Member Lim Wee Keong as Member

The objective of the remuneration policies is to attract and retain suitable directors to lead and control the Group effectively. Generally, the remuneration of directors reflects the level of responsibility and commitment that goes with the Board’s membership. In the case of executive directors, the component parts of the remuneration are structured so as to incentivise the individual according to the performance of the Group. The Committee is to recommend to the Board the framework and remuneration package for each executive director. The Committee meets at least once a year to consider all aspects of the executive directors’ performance for recommendation of remuneration, drawing external advice when necessary.

For non-executive directors, the level of remuneration is based on their individual experience and level of responsibilities. The determination of remuneration packages of non-executive directors, including the non-executive chairman, is decided by the Board as a whole. The individuals concerned abstain from discussing and deliberating on their own remuneration.

The aggregate directors’ remuneration for the financial year under review is as follows:- Executive Directors Non-Executive Directors total Rm Rm Rm

Directors’ salaries 589,228 – 589,228 Employee Provident Fund 114,266 – 114,266 Directors’ fees – 114,000 114,000 Meeting allowance – 7,000 7,000 Bonus 18,000 – 18,000 Benefits in kind 33,250 – 33,250

TOTAL 754,744 121,000 875,744

The directors’ remuneration for the financial year under review analysed in bands is as follows:-

Executive Directors Non-Executive Directors total Rm Rm Rm

RM50,000 and below – 4 4 RM50,001 to RM150,000 – – – RM150,001 to RM200,000 2 – 2 RM200,001 to RM350,000 – – – RM350,001 to RM400,000 1 – 1

TOTAL 3 4 7


20 StAtEmENt ON cORPORAtE GOvERNANcE (cont’d)

SHAREHOLDER cOmmUNIcAtION AND INvEStORS RELAtIONS POLIcy

The Board believes in clear communication and acknowledges the importance of timely dissemination of relevant information to its shareholders. Announcements on the major events of the Company as well as the quarterly results and annual reports provide the shareholders and investors with a continuous overview of the Group’s businesses, activities and financial performances.

The AGM is the principal forum of dialogue with shareholders. Shareholders are notified of the meeting and provided with a copy of the Company’s Annual Report prior to the meeting. At each AGM, the Board presents the Group’s results and shareholders are given the opportunities to raise questions pertaining to the Group. Members of the Board and the auditors of the Company are available at the meeting to respond to all queries and to provide clarification on issues and concerns raised by the shareholders.

DIREctORS’ RESPONSIBILIty StAtEmENt

The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial year which have been made out in accordance with the applicable approved accounting standards and the provision of the Act. The Board of Directors is responsible for taking reasonable steps to ensure that the financial statements give a true and fair view of the state of affairs of the Group and the Company, and of their results and cash flows for the financial year under review.

In preparing the financial statements of the Group and the Company for the year ended 30 April 2009, the Board of Directors has adopted and applied appropriate accounting policies on a consistent basis, made judgements and estimates where applicable that are reasonable and prudent and ensured that applicable accounting standards have been followed.

The Directors have ensured that the Group and Company keep proper accounting and other records that will disclose with reasonable accuracy at any time the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Act and the applicable approved accounting standards.

AccOUNtABILIty AND AUDIt

financial ReportingThe Board is responsible for ensuring that the Company’s and Group’s financial statements are in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. The Board aims to present a true and fair assessment of the Group’s financial performance, position and prospects to the shareholders of the Company. The Board is also responsible for providing a high level of disclosure to ensure integrity and consistency of the financial reports.

The Audit Committee assists the Board in its responsibility to oversee and scrutinise the financial reporting and the effectiveness of the internal controls of the Group. The Audit Committee comprises three (3) directors, all of whom are non-executive and the majority of whom are independent. The terms of references and activities of the Audit Committee are detailed in the Audit Committee Report of this Annual Report.

Internal controlThe Directors acknowledge their responsibility to maintain a sound system of internal controls to safeguard the shareholders’ investment and the Company’s assets. The Board also recognises its overall responsibility for continuous reviewing and maintenance of the system of internal controls of the Group.

The Statement of Internal Control in this Annual Report herein details the state of internal controls within the Company.

21



Relationship with AuditorsThe Board has established a formal and transparent arrangement with the external auditors of the Company through the Audit Committee. The Audit Committee communicated directly and independently with the auditors once (1) a quarter where necessary and without the presence of the executive directors at least twice a year.

cORPORAtE SOcIAL RESPONSIBILIty (“cSR”)

The Group is mindful of the need to an organisation which is responsible social. Various steps are being undertaken by the Group to play its part in contributing to the welfare of the society and communities in the environment it operates.

The Group has thus far undertaken various CSR activities during the financial year under review, which efforts include:-

EnvironmentThe Group currently uses natural gas in its various heating production processes which is safer and causes less pollution. In addition, the Group has engaged an accredited laboratory and consultant to assist in the monitoring of the quality of its treated water, chimney emissions and factory air to ensure compliance with the regulatory requirements at all times.

Welfare of employeesThe Group believes in providing a safe, conducive and comfortable working environment for its employees. In pursuing continual improvements to safety and health management, the Group works together with its employees, government agencies and suppliers to promote the awareness of safety and health. A truly safe working environment will benefit everyone and a high level of safety can only be achieved through the co-operation from all parties.

Recreational activities are also organised to assist the employees in achieving a balanced work life and in enhancing the rapport between the management and the staff.

The management are also provided with opportunities to attend internal and external training programmes to enhance one’s knowledge and skills. The Group also conducted visits to and participate in international trade fairs / exhibitions locally and overseas, to broaden the knowledge base of the employees.

The management also increased the employees’ health awareness by holding a health programme with National Kidney Foundation. Aside from free health screenings were given to the employees, diet and health talks were also held.

communityEvery year, the Group provides opportunities for practical training for undergraduates from local universities to expose them to hands-on experience in the industry.

During the last financial year, some undergraduate students from the Chemical Engineering Faculty of University Sains Malaysia underwent industrial training with the Group.

The Group has in place plans to encourage its employees to organise and participate in assisting various charitable organisations, particular to the organisations for the unfortunate.


22

ADDItIONAL cOmPLIANcE INfORmAtION

Disclosure of Related Party transactionsThe Group has taken all necessary steps to ensure that transactions which were deemed to be related party transactions were appropriately disclosed in accordance with the Listing Requirements and good corporate governance.

Utilisation of proceedsNo proceeds were raised from the equity market in the financial year under review.

Share Buy-backThe approval of the shareholders for a share buy-back of up to 10% of the issued and paid-up share capital of the Company was obtained on 15 October 2008. During the financial year under review, the Company bought back the following shares:-

month No. of Highest Lowest Average total shares price price price consideration (Rm) (Rm) (Rm) (Rm)

May – Oct 08 – – – – – Nov 08 6,000 0.56 0.56 0.56 3,360 Dec 08 1,000 0.60 0.60 0.60 600 Jan – Mar 09 – – – – – Apr 09 34,000 0.365 0.50 0.413 14,025

The total number of treasury shares held as at 30 April 2009 was 41,000. The Company did not dispose or cancel any treasury shares during the financial year under review.

Options, warrants or convertible securitiesDuring the financial year under review, there were no options, warrants or convertible securities exercised.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) programmesThe Company did not sponsor any ADR or GDR programmes during the financial year.

Sanctions / PenaltiesThere were no sanctions and/or penalties imposed on the Company or its subsidiaries, directors or management by any relevant regulatory bodies during the financial year.

Non-audit feesNo non-audit fees were paid to the external auditors by the Group in respect of the financial year ended 30 April 2009 save for the fees of RM2,500 for the review of the Statement of Internal Control contained in the Annual Report 2008.

variation in resultsNo profit forecast was made for the financial year under review.

Profit guaranteeNo profit guarantee was given for the financial year.

material contractsThere were no contracts involving the interest of the Directors and/or major shareholders of the Company other than those disclosed in Note 29 of the audited accounts in this Annual Report.

Revaluation of Landed PropertiesThe Group did not adopt any revaluation policy on landed properties during the financial year under review.


23


Statement On Internal Control

INtRODUctION

The Board of Directors (“the Board”) acknowledges the importance of maintaining a sound system of internal controls to safeguard shareholders’ investment and the assets of the Company and its subsidiaries (“the Group”) as stipulated by the Malaysian Code of Corporate Governance.

BOARD’S RESPONSIBILIty

The Board affirms its overall responsibility for the system of internal control of the Group and for reviewing its effectiveness, adequacy and integrity. This includes:

• identifyingprincipalrisks;• ensuringimplementationofappropriateriskmanagementsystemtoidentifyandmanagetheserisksthatthreaten

the business; • reviewing the adequacyand integrity of the company’s internal control andmanagement information systems

including the systems for compliance with applicable laws, regulations, rules, directives and guidelines.

The Board strives to ensure that appropriate controls, encompassing those that are financial, operational and compliance in nature, are in place and working as intended. Nonetheless, due to the limitations that are inherent in any system of internal control, the Board is aware that such system is designed to manage rather than eliminate the risk of failure to achieve the business objectives of the Group, and can provide only reasonable and not absolute assurance against material misstatement or loss.

RISK mANAGEmENt fRAmEWORK

The Board regards risk management as an integral part of the business operations. The Group implements an on-going process of identifying, evaluating, monitoring and managing significant risks that may affect the Group in achieving its business objectives throughout the financial year under review. This process is regularly reviewed by the Board and the Audit Committee.

The respective Head of each business unit participates in the identification of risks as part of the management’s risk management initiatives. Significant risks identified and the corresponding internal controls implemented are discussed during periodic management meetings. In addition, significant risks identified are also brought to the attention of the Board at their scheduled meetings. The Group’s key risk profile is updated regularly by management. Risks identified are prioritised in terms of possibility of occurrence and the potential impact to the Group’s operation should the risks materialise.

INtERNAL AUDIt

The outsourced Internal Auditors periodically reviews the Group’s system of internal controls to address the related internal control weaknesses, if any. The Internal Audit team independently reviews the risk identification procedures and control processes implemented by the management. Any significant weaknesses identified during the reviews together with the improvement measures to strengthen the internal controls were directly reported to the Audit Committee. The Management is then responsible to ensure the rectification measures with due follow-up by the Internal Auditors and updates to the Audit Committee.


24 StAtEmENt ON INtERNAL cONtROL (cont’d)

OtHER KEy ELEmENtS Of INtERNAL cONtROL

Other key elements of the system of internal control of the Group are as follows:-

• TheGrouphasanappropriateorganisationalstructure,whichenablesadequatemonitoringoftheactivitiesandensures effective flow of information across the Group. In addition, lines of responsibility and delegations of authority are clearly defined.

• ThemanufacturingactivitiesoftheGroup’smainsubsidiary,SuperlonWorldwideSdnBhdareaccreditedwithISO9001 : 2000 international quality system standard and such quality management system provides the Group with improved control of key processes and a foundation for improving quality and customer satisfaction.

• KeyprocessesoftheGrouparegovernedbywrittenpoliciesandprocedures.• TheManagingDirectorandExecutiveDirectorsactivelyparticipateintheday-to-dayrunningoftheoperationsof

the Group. This enables material issues to be effectively resolved on a timely basis.• TheManagementmonitors theperformanceof theGroup through keyperformance indicators andprepares

quarterly management reports. Risk management is embedded in the Group’s management system and is every employee’s responsibility.

• TheBoardreceivesandreviewsinformationoftheCompany’sfinancialstatusandperformance.• TheAuditCommitteemeetsatleastonceeveryquarterandreviewstheadequacy,integrityandeffectivenessof

the system of internal control of the Group. The Audit Committee receives and reviews quarterly management reports.

SUmmARy

Overall, the Board of Directors is satisfied that the process of identifying, evaluating and managing significant risks that may affect achievement of the Group’s business objectives is in place to provide reasonable assurance. The Group will strive to ensure that the system of internal control will be continuously enhanced and will seek regular assurance on the effectiveness and soundness of the internal control systems through appraisals by the internal as well as external auditors.

In consideration of the Internal Auditors’ report and management representations, the Board is pleased to report that there were no significant internal control deficiencies for areas that have been reviewed.

In addition, in accordance with the paragraph 15.23 of the Listing Requirements of Bursa Malaysia, the external auditors have reviewed this Statement on Internal Control and reported that nothing has come to their attention that causes them to believe that the contents of this Statement is inconsistent with their understanding of the actual processes carried out in the Group.

26 – 29 Directors’ Report

30 Statement By Directors

30 Statutory Declaration

31 – 32 Independent Auditors’ Report

33 Balance Sheets

34 Income Statements

35 – 36 Statements Of Changes In Equity

37 – 38 Cash Flow Statements

39 – 67 Notes To The Financial Statements

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26 Directors’ Report

The Directors submit this report together with the audited financial statements of the Group and of the Company for the financial year ended 30 April 2009.

PRINcIPAL ActIvItIES

The Company is principally engaged in investment holding and provision of management services. The principal activities of its subsidiary companies are as described in Note 8 to the financial statements.

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

RESULtS

Group company Rm Rm

Net (loss) /profit for the finanical year (1,404,609) 2,167,258

Attributable to:Equity holders of the Parent (1,092,657) 2,167,258Minority interest (311,952) –

(1,404,609) 2,167,258

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature save as disclosed in the notes to the financial statements.

DIvIDENDS

Since the end of the previous financial year, the Company declared on 15 October 2008 a final tax exempt dividend of6% on 80,000,000 ordinary shares of RM 0.50 each amounting to RM 2,400,000 in respect of the financial year ended 30 April 2008 and paid on 28 November 2008.

The Directors do not recommend the payment of any dividend for the financial year ended 30 April 2009.

RESERvES AND PROvISIONS

There was no material transfer to or from reserves and provisions during the financial year save as disclosed in the notes to the financial statements.

ISSUE Of SHARES AND DEBENtURES

There was no issue of shares or debentures during the financial year.

27


DIREctORS’ REPORt (cont’d)

tREASURy SHARES

During the financial year, the Company repurchased 41,000 of its ordinary shares from the open market at an average price of RM 0.44 per share. The total consideration paid for the repurchase was RM 17,985. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Treasury shares have no rights to voting, dividends and participation in other distribution.

Out of the total 80,000,000 issued and fully paid ordinary shares of RM 0.50 each as at 30 April 2009, 41,000 are held as treasury shares by the Company. As at 30 April 2009, the number of outstanding ordinary shares in issued and fully paid is therefore 79,959,000 ordinary shares of RM 0.50 each.

Further relevant details are disclosed in Note 14 to the financial statements.

OPtIONS GRANtED OvER UNISSUED SHARES

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

DIREctORS Of tHE cOmPANy

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

(a) Tan Sri Datuk Amar (Dr.) Haji Tommy Bin Bugo @ Hamid Bin Hugo (b) Liu Lee, Hsiu-Lin @ Jessica H. Liu (f)(c) Lim E @ Lim Hoon Nam(d) Andrew Tan Lyn San (e) Chun Kwong Pong (f) Liu Han-Chao (g) Lim Wee Keong

DIREctORS’ INtERESt IN SHARES

According to the register of directors’ shareholdings, none of the Directors holding office at the end of the financial year had any interest in the shares of the Company and its subsidiary companies other than as follows:

Ordinary shares of Rm 0.50 each Balance Balance as at as at 01.05.08 Bought Sold 30.04.09

Tan Sri Datuk Amar (Dr.) Haji Tommy Bin Bugo @ Hamid Bin Hugo - Direct 10,066,500 – (1,250,000) 8,816,500Liu Lee, Hsiu-Lin @ Jessica H. Liu (f) - Direct 28,178,700 200,000 (7,300,000) 21,078,700

By virtue of her interest in the shares of the Company, Ms Liu Lee, Hsiu-Lin @ Jessica H. Liu is also deemed to have an interest in the shares of the subsidiary companies to the extent that the Company has an interest.


28 DIREctORS’ REPORt (cont’d)

DIREctORS’ BENEfItS

Since the end of the previous financial year, none of the Directors has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors shown as disclosed Note 25 to the financial statements, or the fixed salary of a full-time employee of the Group and of the Company, if any) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than those disclosed in Note 30 (b) to the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company or any other body corporate was a party, whereby Directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

OtHER StAtUtORy INfORmAtION

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

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

(ii) To ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances:

(i) That would render the amount written off for bad debts or the amount of the allowance for doubtful debts of the Group and of the Company inadequate to any substantial extent; or

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

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

(iv) Not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

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

(i) Any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

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

29


DIREctORS’ REPORt (cont’d)

OtHER StAtUtORy INfORmAtION (cont’d)

(d) In the opinion of the Directors:

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

(ii) No item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

SIGNIfIcANt EvENtS DURING tHE fINANcIAL yEAR

Significant events during the financial year are disclosed in Note 35 to the financial statements.

AUDItORS

The auditors, Messrs. SC Lim, Ng & Co., have expressed their willingness to continue in office.

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

LIU LEE, HSIU-LIN @ JESSIcA H. LIU (f)DIRECTOR

LIU HAN-cHAODIRECTOR

Kuala Lumpur27 August 2009


30 Statement By DirectorsPursuant to Section 169(15) of the companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the companies Act, 1965

We, the undersigned, being two of the Directors of Superlon Holdings Berhad, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 33 to 67 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia so as to exhibit a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2009 and of the results and the cash flows of the Group and of the Company for the financial year ended on that date.

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

LIU LEE, HSIU-LIN @ JESSIcA H. LIU (f) DIRECTOR

LIU HAN-cHAODIRECTOR


I, ANDREW tAN LyN SAN, being the Director primarily responsible for the financial management of Superlon Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 33 to 67 are to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed ) ANDREW tAN LyN SAN at Kuala Lumpur in the state of )Wilayah Persekutuan on 27 August 2009 )

ANDREW tAN LyN SAN MIA 14462 Chartered AccountantBefore me: Commissioner for Oaths yAP LEE cHIN (No. W 591)

31


Independent Auditors’ Report to the members Of Superlon Holdings Berhad

REPORt ON tHE fINANcIAL StAtEmENtS

We have audited the financial statements of Superlon Holdings Berhad, which comprise the balance sheets as at 30 April 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 33 to 67.

Directors’ responsibility for the financial statements

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

Auditors’ responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with applicable Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 April 2009 and of their financial performance and the cash flows of the Group and of the Company for the financial year then ended.


32 INDEPENDENt AUDItORS’ REPORt (cont’d)

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

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

(c) Our auditors’ reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OtHER mAttERS

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

Sc LIm, NG & cO. NG KIm KIAtNo. AF 0681 No. 2074/10/10 (J)Chartered Accountants Partner


33


Balance SheetsAS At 30 APRIL 2009

GROUP cOmPANy Note 2009 2008 2009 2008 Rm Rm Rm RmASSEtSNon-current assetsProperty, plant and equipment 6 43,861,942 34,454,052 – –Intangible assets 7 1,808,940 1,491,250 – –Investment in subsidiary companies 8 – – 37,588,990 34,838,990Other investments 9 68,667 46,667 – –

45,739,549 35,991,969 37,588,990 34,838,990current assetsInventories 10 7,112,475 7,670,638 – –Trade and other receivables 11 15,466,435 18,269,136 4,665,532 7,592,517Deposits, cash and bank balances 12 3,765,210 6,270,205 72,680 81,361

26,344,120 32,209,979 4,738,212 7,673,878

tOtAL ASSEtS 72,083,669 68,201,948 42,327,202 42,512,868

EQUIty AND LIABILItIESShare capital 13 40,000,000 40,000,000 40,000,000 40,000,000Treasury shares 14 (17,985) – (17,985) –Reserves 15 11,035,956 14,528,613 2,143,495 2,376,237

Equity attributable to equity holders of the Parent 51,017,971 54,528,613 42,125,510 42,376,237Minority interest 1,938,048 – – –

total equity 52,956,019 54,528,613 42,125,510 42,376,237

Non-current liabilitiesBank borrowings 16 3,180,909 308,756 – –Finance leases 17 536,419 663,570 – –Sundry payable 18 1,317,600 – – –Deferred tax liability 19 2,470,498 2,256,291 – –

7,505,426 3,228,617 – –

current liabilitiesBank borrowings 16 4,387,176 770,744 – –Trade and other payables 20 6,932,453 7,727,243 179,456 125,997Finance leases 17 280,359 1,567,856 – –Tax liability 22,236 378,875 22,236 10,634

11,622,224 10,444,718 201,692 136,631

total liabilities 19,127,650 13,673,335 201,692 136,631

tOtAL EQUIty AND LIABILItIES 72,083,669 68,201,948 42,327,202 42,512,868

The accompanying notes form an integral part of the financial statements


34 Income StatementsfOR tHE fINANcIAL yEAR ENDED 30 APRIL 2009

GROUP cOmPANy Note 2009 2008 2009 2008 Rm Rm Rm Rm

REVENUE 21 65,836,458 66,783,703 2,640,000 2,640,000

COST OF SALES (56,846,249) (48,613,033) – –

GROSS PROFIT 8,990,209 18,170,670 2,640,000 2,640,000

OTHER OPERATING INCOME 1,160,959 232,999 – 4,453

SELLING AND DISTRIBUTION EXPENSES (4,363,734) (3,723,255) – –

ADMINISTRATIVE EXPENSES (3,660,355) (3,580,863) (373,989) (275,031)

OTHER OPERATING EXPENSES (2,857,583) (1,255,782) – –

FINANCE COSTS 22 (488,713) (440,671) (1,902) (120)

(LOSS) / PROFIT BEFORE TAX 23 (1,219,217) 9,403,098 2,264,109 2,369,302

TAX EXPENSE 26 (185,392) (1,632,061) (96,851) (26,016)

NET (LOSS) / PROFIT FOR THE FINANCIAL YEAR (1,404,609) 7,771,037 2,167,258 2,343,286

Attributed to:Equity holders of the Parent (1,092,657) 7,771,037Minority interest (311,952) –

(1,404,609) 7,771,037

(Loss) / Earnings Per Ordinary Shares 27 (1.37) 9.71


35


Statements Of Changes In EquityfOR tHE fINANcIAL yEAR ENDED 30 APRIL 2009

GR

OU

P

Att

rib

utab

le t

o E

qui

ty H

old

ers

of

the

Par

ent

No

n-

D

istr

ibut

able

Dis

trib

utab

le

N

ote

S

hare

S

hare

t

reas

ury

Ret

aine

d

m

ino

rity

t

ota

l

cap

ital

P

rem

ium

S

hare

s P

rofi

ts

to

tal

Inte

rest

E

qui

ty

Rm

R

m

Rm

R

m

Rm

R

m

Rm

As

at 1

May

200

7

40,0

00,0

00

2,23

9,39

1 –

6,7

08,4

31

48,9

47,8

22

– 48

,947

,822

Sha

re is

sue

expe

nses

writ

ten

off

agai

nst s

hare

pre

miu

m

–

(190

,246

) –

– (1

90,2

46)

– (1

90,2

46)

Net

exp

ense

s re

cogn

ised

dire

ctly

i

n eq

uity

–

(190

,246

) –

– (1

90,2

46)

– (1

90,2

46)

Div

iden

d

28

–

– –

(2,0

00,0

00)

(2,0

00,0

00)

– (2

,000

,000

)

Net

pro

fit fo

r the

fina

ncia

l yea

r

– –

– 7

,771

,037

7,

771,

037

–

7,7

71,0

37

As

at 3

0 A

pril

2008

4

0,00

0,00

0 2

,049

,145

–

12,

479,

468

54,

528,

613

–

54,

528,

613

Aris

ing

from

acq

uisi

tion

of a

s

ubsi

diar

y co

mpa

ny

–

– –

– –

2,2

50,0

00

2,25

0,00

0

Sha

res

buy

back

14

– –

( 17

,985

) –

(17,

985)

–

(17,

985)

Div

iden

d

28

–

– –

(2,4

00,0

00)

(2,4

00,0

00)

– (2

,400

,000

)

Net

(los

s) fo

r the

fina

ncia

l yea

r

– –

– (1

,092

,657

) (1

,092

,657

) (3

11,9

52)

(1,4

04,6

09)

As

at 3

0 A

pril

2009

40

,000

,000

2

,049

,145

( 1

7,98

5)

8,98

6,81

1 5

1,01

7,97

1

1,93

8,04

8

52,9

56,0

19

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts


36 StAtEmENtS Of cHANGES IN EQUIty (cont’d)c

Om

PA

Ny

No

n-

D

istr

ibut

able

Dis

trib

utab

le

N

ote

S

hare

S

hare

t

reas

ury

Ret

aine

d

m

ino

rity

t

ota

l

cap

ital

P

rem

ium

S

hare

s P

rofi

ts

to

tal

Inte

rest

E

qui

ty

Rm

R

m

Rm

R

m

Rm

R

m

Rm

As

at 1

May

200

7

40,0

00,0

00

2,23

9,39

1

– (1

6,19

4)

42,2

23,1

97

– 4

2,22

3,19

7

Sha

re is

sue

expe

nses

writ

ten

off

agai

nst s

hare

pre

miu

m

–

(190

,246

) –

– (1

90,2

46)

– (1

90,2

46)

Net

exp

ense

s re

cogn

ised

dire

ctly

i

n eq

uity

–

(190

,246

) –

–

(190

,246

) –

(190

,246

)

Div

iden

d

28

–

– –

(2,0

00,0

00)

(2,0

00,0

00)

– (2

,000

,000

)

Net

pro

fit fo

r the

fina

ncia

l yea

r

– –

– 2

,343

,286

2,

343,

286

–

2,34

3,28

6

As

at 3

0 A

pril

2008

4

0,00

0,00

0

2,04

9,14

5

– 3

27,0

92

42,3

76,2

37

– 4

2,37

6,23

7

Sha

res

buy

back

14

– –

(17,

985)

–

(17,

985)

–

(17,

985)

Div

iden

d

28

– –

– (2

,400

,000

) (2

,400

,000

) –

(2,4

00,0

00)

Net

pro

fit fo

r the

fina

ncia

l yea

r

– –

– 2

,167

,258

2,

167,

258

–

2,1

67,2

58

As

at 3

0 A

pril

2009

40

,000

,000

2,

049,

145

(1

7,98

5)

94,3

50

42,1

25,5

10

–

42,1

25,5

10

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts

37


Cash Flow StatementsfOR tHE fINANcIAL yEAR ENDED 30 APRIL 2009


cASH fLOWS fROm OPERAtING ActIvItIES

Profit / (Loss) before tax (1,219,217) 9,403,098 2,264,109 2,369,302

Adjustments for :Allowance for doubtful debts, specific 126,973 70,046 – –Bad debts written off 29,790 – – –Depreciation of property, plant and equipment 3,522,178 2,867,880 – –Dividend income – – (2,400,000) (2,400,000)Gain on disposal of property, plant and equipment (36,916) (9,998) – –Interest expense 334,090 279,189 – –Interest income (118,071) (161,601) – (4,453)Allowance for obsolete inventories 250,151 – – –Unrealised (gain) / loss on foreign exchange (348,957) 43,081 – –

OPERtING PROfIt BEfORE WORKING cAPItAL cHANGES 2,540,021 12,491,695 (135,891) (35,151)

changes in working capitalInventories 308,013 (1,105,448) – –Trade and other receivables (784,125) (492,366) 2,926,985 (7,591,517)Trade and other payables 4,301,829 2,240,558 53,459 (1,103,733)

cASH GENERAtED fROm / (ABSORBED INtO) OPERAtING ActIvItIES 6,365,738 13,134,439 2,844,553 (8,730,401)

Interest paid (334,090) (279,189) – –Tax paid (327,824) (992,054) (85,249) (15,382)

NEt cASH fROm / (USED IN) OPERAtING ActIvItIES 5,703,824 11,863,196 2,759,304 (8,745,783)

cASH fLOWS fROm INvEStING ActIvItIES

Dividend received – – 2,400,000 2,400,000Interest received 118,071 161,601 – 4,453Net cash flow from acquisition of subsidiary – – (2,750,000) –companyPurchase of quoted shares (22,000) – – –Product development expenditure (317,690) (491,250) – –Proceeds from disposal of property, plant 257,550 10,000 – –and equipmentPurchase of property, plant and equipment 29(b) (12,904,402) (4,853,320) – –

NEt cASH (USED IN) / fROm INvEStING ActIvItIES (12,868,471) (5,172,969) (350,000) 2,404,453

fORWARD (7,164,647) 6,690,227 2,409,304 (6,341,330)



38 cASH fLOW StAtEmENtS (cont’d)


fORWARD (7,164,647) 6,690,227 2,409,304 (6,341,330)

cASH fLOWS fROm fINANcING ActIvItIES

Dividend paid 28 (2,400,000) (2,000,000) (2,400,000) (2,000,000)Purchase of treasury shares (17,985) – (17,985) –Net movement in trade bills 319,000 (364,000) – –Proceeds from term loan 3,560,000 – – –Proceeds from issuance of new shares to 2,250,000 – – –minority shareholders in a subsidiary companyRepayment of listing expenses – (190,246) – (190,246)Repayment of finance leases (1,660,948) (1,521,053) – –Repayment of term loan (873,246) (5,810,000) – –

NEt cASH fROm / (USED IN) fINANcING ActIvItIES 1,176,821 (9,885,299) (2,417,985) (2,190,246)

NEt (DEcREASE) IN cASH AND cASH EQUIvALENtS (5,987,826) (3,195,072) (8,681) (8,531,576)

cASH AND cASH EQUIvALENtS At BEGINNING Of fINANcIAL yEAR 6,270,205 9,465,277 81,361 8,612,937

cASH AND cASH EQUIvALENtS At END Of fINANcIAL yEAR 29 (a) 282,379 6,270,205 72,680 81,361


39


Notes To The Financial StatementsfOR tHE fINANcIAL yEAR ENDED 30 APRIL 2009

1. cORPORAtE INfORmAtION

The Company is principally engaged in investment holding and provision of management services. The principal activities of its subsidiary companies are as described in Note 8 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

The Company is a public company limited by shares incorporated and domiciled in Malaysia, and listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are as follows:-

(a) Registered office: A-11-3, (Suite 2), Northpoint Offices, Mid Valley City, No. 1, Medan Syed Putra Utara, 59200 Kuala Lumpur.

(b) Principal place of business: Lot 2736, Jalan Raja Nong, 41200 Klang, Selangor Darul Ehsan.

These financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 27 August 2009.

2. BASIS Of PREPARAtION Of fINANcIAL StAtEmENtS

(a) The financial statements of the Group and of the Company have been prepared in accordance with applicable Financial Reporting Standards issued by the Malaysian Accounting Standards Board (“MASB”) and the provisions of the Companies Act, 1965 in Malaysia.

(b) The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise disclosed in significant accounting policies.

3. SIGNIfIcANt AccOUNtING POLIcIES

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and all its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company using consistent accounting policies.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full. Unrealised losses are also eliminated unless cost cannot be recovered. Thus the consolidated financial statements reflect external transactions only. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, continue to be consolidated until the date that such control ceases.

Acquisition of subsidiaries is accounted for using the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represent 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 business combination is recognised in the income statement on the date of acquisition.


40 NOtES tO tHE fINANcIAL StAtEmENtS (cont’d)

3. SIGNIfIcANt AccOUNtING POLIcIES (cont’d)

(a) Basis of consolidation (cont’d)

Minority interest represents the portion of profit or loss and net assets in subsidiary companies not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiary companies identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in subsidiary companies equity since then.

(b) Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses, Note 3(i).

Freehold land has an unlimited useful life and therefore is not depreciated, whilst other property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the asset as follows:

Factory buildings and staff quarters 5 - 33 years Plant, machinery, tools and equipment 10 years Motor vehicles 7 years Office equipment, renovation, furniture and fittings 5 - 10 years

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

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.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

Fully depreciated property, plant and equipment are retained in the books of accounts at nominal value of RM1 until they are no longer in use, and no further charge for depreciation is made in respect of these assets.

(c) Inventories

Inventories comprising raw materials, work-in-progress and finished goods are stated at the lower of cost and net realisable value. Cost is determined on the weighted average and first-in-first-out basis, as applicable. Cost of finished goods and work-in-progress includes direct materials, direct labour, other direct costs and appropriate production overheads. In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.

(d) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

41


NOtES tO tHE fINANcIAL StAtEmENtS (cont’d)


(d) Provisions (cont’d)

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

(e) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses, Note 3(i). The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised on straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.

The amortisation expense on intangible assets with finite useful lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the useful life assessment continues to be supportable.

(i) trademark

Acquired trademark is stated at cost less any impairment losses, Note 3(i). Trademark with indefinite useful lives are tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying value may be impaired either individually or at cash generating unit level.

(ii) Research and development expenditure

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is expensed to the income statement as incurred.

Development expenditure is stated at cost less accumulated amortisation and impairment losses, Note 3(i), if any. It is assessed annually for any indication that the intangible assets may be impaired.

Expenditure on development activities, for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is expensed to the income statement as incurred.

Development expenditure is amortised on an individual product and straight-line basis, and over the period of probable estimated future economic benefits being recovered. Amortisation commences from the date when the individual product is available for sale. The amortisation period is no more than five years.




(f) Investments

(i) Subsidiaries

Subsidiary companies are entities over which the Group 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.

The Company’s investment in subsidiaries is stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(i).

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statements.

(ii) Other investments

Investment in golf club membership held on a long-term basis is stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(i). On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement.

Marketable securities are carried at the lower of cost and market value, determined on a aggregate portfolio basis by category of investment. Market value is calculated by reference to quoted market selling price at the close of business on the balance sheet date.

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

(g) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or reserve on consolidation or from the initial recognition of an asset or liability in a transaction which is not a business combination and at that time of the transaction, affects neither accounting profit nor taxable profit.

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 or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.

43




(h) Lease

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases.

(i) finance leases

Asset acquired by way of finance lease are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses, Note 3(i).

Finance lease payments are apportioned between finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant lease so as to produce a constant periodic rate of change on the remaining balance of the obligations for each accounting period.

The depreciation policy for finance lease assets is consistent with that for depreciable property, plant and equipment as described in Note 3(b).

(ii) Operating leases

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease.

(i) Impairment of assets

The carrying amounts of the Group’s assets except for inventories subject to impairment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

If it is not possible to estimate the recoverable amount of the individual asset, then the recoverable amount of the cash-generating unit to which the assets belongs will be identified. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation.

An impairment loss is charged to the income statement 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.

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 income statement immediately, unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.




(j) financial instruments

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments. Financial instruments carried on the balance sheet include receivables, cash and cash equivalents, payables, interest-bearing bank borrowings, equity instruments, derivatives and other non-current investments. The particular recognition methods and accounting policy adopted associated with each item are set forth below:

(i) Receivables

Receivables are carried at anticipated realisable values. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due to the original terms of receivables. The amount of the provision is recognised in the income statement.

(ii) cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances, short-term deposits and other short-term, highly liquid investments that are readily convertible to a known amount of cash with an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management. For the purpose of the cash flow statement, cash and cash equivalents are presented net of bank overdrafts.

(iii) Payables

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

(iv) Interest-bearing bank borrowings

Interest-bearing bank borrowings are recorded at the fair value of the consideration received, net of transaction costs. After initial recognition, interest-bearing bank borrowings are subsequently measured at amortised cost using the effective interest method.

(v) Equity instrument

Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination is included in the cost of acquisition.

When the share capital of the Company is repurchased, the consideration paid, including any attributable transaction costs, is presented as a change in equity. Repurchased shares are classified as treasury shares and presented as deduction from equity. No gain or loss is recognised in the income statements on the sales, re-issuance or cancellation of treasury shares. Consideration received is presented in the financial statements as a change in equity.

When the treasury shares are distributed as share dividends, the cost of the treasury shares will be reduced against the share premium account or the distributable reserves, or both.

45




(vi) Derivatives

Derivative financial instruments are used by the Group to manage its exposure to foreign currency risk arising from operating, investing and financing activities. The Group does not use derivative financial instruments for speculative and trading purposes.

Derivative financial instruments are initially recognised at cost, and are subsequently re-measured at fair value. Changes in the fair value that do not qualify for hedge accounting are recognised in the profit or loss. The fair value of forward exchange contracts is determined based on the quoted market rate at the balance sheet date.

(k) Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

(i) Sales of goods

Revenue from sales of goods is recognised upon transfer of significant risk and rewards of ownership of the goods to the customer, which generally coincides with delivery and acceptances of goods sold.

(ii) Interest income

Interest income is recognised on a time proportion basis that reflects the effective yield on the asset.

(iii) Dividend income

Dividend income from investments is recognised when the shareholder’s right to receive payment is established.

(iv) management fee income

Management fee income from subsidiary companies is recognised on accrual basis. (l) Employee benefits

(i) Short term employee benefits

Wages, salaries, social security contributions, paid annual leave, sick leave, bonuses and non-monetary benefits are recognised in the income statement in the period in which the associated services are rendered by the employees of the Group.

(ii) Defined contribution plan

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

(m) functional and foreign currency

(i) functional and presentation currency

The management has determined the currency of the primary economic environment in which the Group operates i.e. functional currency, to be presented in Ringgit Malaysia (“RM”), which is also the Group’s functional and presentation currency.




(m) functional and foreign currency (cont’d)

(ii) foreign currency transactions

Transactions in foreign currencies are translated into RM using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the retranslation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

The principal closing rates used in translation of foreign currency are as follows:

2009 2008 Rm Rm

1 United States Dollar 3.53 3.16 1 Singapore Dollar 2.40 2.32 100 Japanese Yen 0.03657 –

(n) contingent liabilities and assets

Contingent liabilities are disclosed in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstances where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group discloses the existence of contingent assets where inflows of economic benefits are probable, but not virtually certain.

(o) Segment reporting

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

4. ADOPtION Of NEW fINANcIAL REPORtING StANDARDS (“fRSS”)

At the date of authorisation of these financial statements, the following FRSs, amendments to FRSs and IC Interpretations have been issued but not yet effective, and therefore have not been applied by the Group and the Company :

Effective for financial period beginning on or after

FRS 4 Insurance contracts 1 January 2010 FRS 7 Financial Instruments: Disclosures 1 January 2010 FRS 8 Operating Segments 1 July 2009 FRS 123 Borrowing Costs 1 January 2010 FRS 139 Financial Instruments: Recognitionand Measurement 1 January 2010 Amendments to FRS 1 First-time Adoption of Financial Reporting Standards 1 January 2010 Amendments to FRS 2 Share-based Payment - Vesting Conditions and 1 January 2010 Cancellations

47



4. ADOPtION Of NEW fINANcIAL REPORtING StANDARDS (“fRSS”) (cont’d)

Effective for financial period beginning on or after

Amendments to FRS 127 Consolidated and Separate Financial Statements: Cost of an Inestment in a Subsidiary, Jointly Controlled 1 January 2010 Entity or Associate IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010 IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010 IC Interpretation 11 FRS 2 - Group and Treasury Shares Transactions 1 January 2010 IC Interpretation 13 Customer Loyalty Programmes 1 January 2010 IC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, 1 January 2010 Minimum Funding Requirements and their Interaction

The Company plans to apply the above applicable FRSs, amendments to FRSs and/or IC Interpretations when effective.

FRS 4, Amendments to FRS 1 and FRS 2, IC Interpretation 9, 13 and 14 are not relevant to the financial statements of the Group and of the Company. The possible impact of applying FRS 7 and FRS 139 on the financial statements upon their initial application is not disclosed by virtue of the exemptions given in the respective standards.

The initial applications of the above applicable FRSs, amendments to FRSs and/or IC Interpretations are not expected to have any material impact on the financial statements of the Group and the Company.

5. cRItIcAL AccOUNtING JUDGEmENtS AND KEy SOURcES Of EStImAtION UNcERtAINty

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

Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet

date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within next financial year, are discussed below:

(a) Intangible assets

The assessment of the useful lives of intangible assets requires judgement.

(i) trademark

The management assessed that trademark of the Group to have indefinite useful life when, based on the analysis of all the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group.

(ii) Product development expenditure

The management assessed that the useful lives of product development expenditure incurred for the production of new or substantially improved products and processes, to be finite. It is amortised on a straight line basis over the time period of probable estimated future economic benefits being recovered and assessed for impairment whenever there is an indication that the intangible assets may be impaired. Amortisation only commences when the product is available for sale.



5. cRItIcAL AccOUNtING JUDGEmENtS AND KEy SOURcES Of EStImAtION UNcERtAINty (cont’d)

(a) Intangible assets (cont’d)

The management determines whether intangible assets are impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the intangible assets is allocated. Estimating the value in use requires the management to make an estimate of the expected future cash flows from the cash-generating unit and also choose a suitable discount rate in order to calculate the present value of those cash flows.

Based on the estimated value in use calculated using the discounted cash flow methodology, the recoverable amount of the intangible assets is higher than the carrying value. Therefore, no impairment loss was recognised for the financial year ended 30 April 2009.

(b) Depreciation of property, plant and equipment

Property, plant and equipment are depreciated in a straight-line method over their useful lives. The management estimated the useful lives of these assets to be within 5 to 10 years except for those of buildings which is 33 years.

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

(c) Income taxes

Significant judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(d) Allowance for doubtful debts The allowance is established when there is objective evidence that the Group will not be able to collect all

amounts due according to the original terms of receivables. This is determined based on the ageing profile, expected collection patterns of individual receivable balances, credit quality and credit losses incurred. Management carefully monitors the credit quality of receivable balances and makes estimates about the amount of credit losses that have been incurred at each financial statement reporting date. Any changes to the ageing profile, collection patterns, credit quality and credit losses can have an impact on the allowance recorded.

(e) Allowance for obsolete inventories

Allowance for obsolete inventories are made based on an analysis of the ageing profile and expected sales patterns of individual items held in inventory. This requires an analysis of inventory usage based on expected future sales transactions taking into account current market prices, useful lives of products and expected cost to sell. Changes in the inventory ageing and expected usage profiles can have an impact on the allowance recorded.

critical judgments made in applying accounting policies Management is of the opinion that the instances of application of judgment are not expected to have a significant

effect on the amounts recognised in the financial statements, apart from those involving estimates.

49



6. PROPERty, PLANt AND EQUIPmENt

GROUP Office factory Plant, equipment, buildings machinery, renovation, freehold and staff tools and motor furniture land quarters equipment vehicles and fittings total Rm Rm Rm Rm Rm Rm At cost As at 1 May 2008 6,612,720 11,741,170 32,168,813 2,151,271 1,453,851 54,127,825 Additions 6,001,460 378,660 6,019,108 674,907 76,567 13,150,702 Disposals – – – (490,760) – (490,760)

As at 30 April 2009 12,614,180 12,119,830 38,187,921 2,335,418 1,530,418 66,787,767

Less : Accumulated Depreciation As at 1 May 2008 – 2,088,542 15,975,491 604,088 1,005,652 19,673,773 Charge for the financial year – 381,163 2,716,595 333,499 90,921 3,522,178 Disposals – – – (270,126) – (270,126)

As at 30 April 2009 – 2,469,705 18,692,086 667,461 1,096,573 22,925,825

Net Book value As at 30 April 2009 12,614,180 9,650,125 19,495,835 1,667,957 433,845 43,861,942

Office factory Plant, equipment, buildings machinery, renovation, freehold and staff tools and motor furniture land quarters equipment vehicles and fittings total Rm Rm Rm Rm Rm Rm At cost As at 1 May 2007 6,612,720 10,575,095 28,782,805 1,469,983 1,535,516 48,976,119 Additions – 791,039 3,386,008 932,902 293,371 5,403,320 Disposals – – – (251,614) – (251,614) Reclassification – 375,036 – – (375,036) –

As at 30 April 2008 6,612,720 11,741,170 32,168,813 2,151,271 1,453,851 54,127,825

Less: Accumulated Depreciation As at 1 May 2007 – 1,747,488 13,822,669 566,406 920,942 17,057,505 Charge for the financial year – 341,054 2,152,822 289,294 84,710 2,867,880 Disposals – – – (251,612) – (251,612)

As at 30 April 2008 – 2,088,542 15,975,491 604,088 1,005,652 19,673,773

Net Book value As at 30 April 2008 6,612,720 9,652,628 16,193,322 1,547,183 448,199 34,454,052



6. PROPERty, PLANt AND EQUIPmENt (cont’d)

(a) The following property, plant and equipment are charged against bank borrowings (Note 16) :

GROUP 2009 2008 Rm Rm At Net Book value Freehold land 12,614,180 6,612,720 Factory buildings 9,349,333 9,637,461

21,963,513 16,250,181

(b) The following property, plant and equipment are acquired under finance lease instalments plan (Note 17):

GROUP 2009 2008 Rm Rm At Net Book value Motor vehicles 948,334 1,192,036 Plant and machinery 3,337,588 3,902,333

4,285,922 5,094,369

(c) There were no property, plant and equipment in the Company throughout the current and previous financial year.

7. INtANGIBLE ASSEtS

GROUP 2009 2008 Rm Rm At cost Trademark 1,000,000 1,000,000 Product development expenditure 808,940 491,250

1,808,940 1,491,250

(a) trademark

The trademark “Superlon” is registered in Malaysia and acquired for a cash consideration of RM 1.0 million in August 2000.

Trademark is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount of the cash generating unit (“CGU”) based on value-in-use. Value-in-use is determined by discounting the future cash flows to be generated from the continuing use of the CGU based on the following assumptions:

(i) Cash flows are projected based on the management’s five-year business plan.

(ii) Discount rates used for cash flows discounting purpose are the management’s estimate of cost of capital plus a reasonable risk premium at the date of assessment of the CGU. The discount rate applied for cash flow projections is 6.0%.

(iii) Growth rate for the CGU is determined based on the management’s estimate of the industry trends and past performances of the CGU.

(iv) Profit margins are projected based on the industry trends and historical profit margin achieved.

The management is not aware of any reasonably possible change in the above key assumptions that would cause the carrying amounts of the CGU to materially exceed their recoverable amounts.

51



7. INtANGIBLE ASSEtS (cont’d)

(b) Product development expenditure

The Company has a continuous program of product development initiatives to obtain various code listings for its insulation materials, and to develop special new products for overseas market according to specific requirements of each respective country or region. The code listings, once obtained, will increase selling opportunities for its insulation materials by making it easier for designers, architects and specifiers of heating, ventilation, air-conditioning and refrigeration systems to incorporate these products in their plans. Deferred product development expenditure are amortised over a three (3) years period commensurate with the availability of the sales of the developed products.

The carrying amount of product development costs is as follows:

GROUP 2009 2008 Rm Rm At cost Balance as at 1 May 491,250 – Additions 317,690 491,250

Balances as at 30 April 808,940 491,250

The Company’s policy for product development costs requires the periodic review of the carrying values to determine if there has been impairment in value-based expected future cash flows. If it is determined that the carrying value exceeds the recoverable amount, the net asset is written down to the net recoverable amount.

8. INvEStmENt IN SUBSIDIARy cOmPANIES

cOmPANy 2009 2008 Rm Rm Unquoted shares - at Cost As at 1 May 34,838,990 34,838,990 Add: Addition 2,750,000 –

As at 30 April 37,588,990 34,838,990

(a) The principal activities of the subsidiary companies, which are incorporated in Malaysia and the equity interest held by the Company are shown below:

Effective Equity Interest Name of subsidiaries Principal Activities 2009 2008

Superlon Worldwide Design, test and manufacture of insulation 100% 100% Sdn. Bhd. materials for the heating, ventilation, air- conditioning and refrigeration (“HVAC&R”) industry; and trading of HVAC&R parts and equipments Superlon Steel Pipes Manufacture, import and export of various 55% – Sdn. Bhd. kinds of steel pipes and tubes



8. INvEStmENt IN SUBSIDIARy cOmPANIES (cont’d)

(b) On 19 September 2008, the Company subscribed for 2,749,997 new ordinary shares of RM1 each, representing 55% equity interest in a new subsidiary company, Superlon Steel Pipes Sdn Bhd (“SSPSB”) at par for cash. Consequently, SSPSB became a subsidiary of the Company.

The addition of the above subsidiary company has resulted in an increase in the Group’s net loss for the financial year by RM 622,580 and increase in net assets by RM 3,506,219.

9. OtHER INvEStmENtS

GROUP 2009 2008 Rm Rm At cost Golf club membership 140,000 140,000 Less: portion borne by co-owners (93,333) (93,333)

46,667 46,667 Quoted shares in Malaysia corporations 22,000 –

68,667 46,667

market value Golf club membership 46,667 46,667 Quoted shares in Malaysia corporations 14,960 –

61,627 46,667

(a) Golf club membership

Investment in golf club membership which is assessed to have indefinite useful life because there are no foreseeable limit to the period over which the asset are expected to generate net cash inflows for the Company and the contractual or legal right of these assets can be renewed without incurring significant costs.

The recoverable amount for such golf club membership is determined by reference to current market price of such similar membership. As at 30 April 2009, the price applying for a new corporate membership is RM 140,000. Therefore, no impairment loss is recognised during the financial year.

(b) Investment in quoted shares

No provision for diminution in value was made for the carrying amount of the investment in quoted shares as the declining market value was temporary in nature.

10. INvENtORIES

GROUP 2009 2008 Rm Rm At cost Raw materials 3,979,701 4,640,314 Work-in-progress 167,673 31,108 Finished goods 1,868,292 1,836,831 Trading stock 1,346,960 1,162,385

7,362,626 7,670,638 Less: Allowance for obsolete inventories (250,151) –

7,112,475 7,670,638

53



11. tRADE AND OtHER REcEIvABLES

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm

trade receivables 12,290,146 15,312,081 – – Less : Allowance for doubtful debts, specific (197,732) (70,759) – –

12,092,414 15,241,322 – – Other receivables Amount due from a subsidiary company – – 4,664,532 7,591,517 Deposits 2,377,607 2,110,264 1,000 1,000 Prepayments 328,956 785,274 – – Sundry receivables 667,458 132,276 – –

15,466,435 18,269,136 4,665,532 7,592,517

(a) The Group’s trade receivables are non-interest bearing and are generally on credit terms ranging from 30 to 90 days (2008: 30 to 90 days). Other credit terms are assessed and approved on a case-by-case basis.

(b) The amount due from a subsidiary company is unsecured, interest free and repayable on demand.

12. DEPOSItS, cASH AND BANK BALANcES


Cash and bank balances 3,235,483 950,455 72,680 81,361 Fixed deposits with a licensed bank 529,727 5,319,750 – –

3,765,210 6,270,205 72,680 81,361

(a) The effective interest rates of deposit placed with a licensed bank of the Group as at the end of financial year are ranging from 1.8% - 3.6% (2008: 1.8% - 3.6%) per annum.

(b) The maturity periods for deposit placed with a licensed bank of the Group as at the end of financial year are between 7 to 365 days (2008: 7 to 365 days).

13. SHARE cAPItAL

GROUP AND cOmPANy 2009 2008 Rm Rm Authorised : 200,000,000 ordinary shares of RM 0.50 each 100,000,000 100,000,000

Issued and fully paid : 80,000,000 ordinary shares of RM 0.50 each 40,000,000 40,000,000



14. tREASURy SHARES

On 15 October 2008, the shareholders approved the Company’s proposal to repurchase its own shares up to 10% of its issued and paid up share capital (“Share Buy Back”).

The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

During the financial year, the Company repurchased its ordinary shares of RM 0.50 each from the open market as follows:

Average purchase price cost Highest Lowest per share No. of Shares Rm Rm Rm Rm Purchases during the financial year November 2008 6,000 3,360 0.56 0.56 0.56 December 2008 1,000 600 0.60 0.60 0.60 April 2009 34,000 14,025 0.50 0.37 0.41

At end of financial year 41,000 17,985 0.60 0.50 0.44

The transactions of share buy back were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A Subsection 3 (A)(b) of the Companies Act, 1965. None of the treasury shares held were resold or cancelled during the financial year ended 30 April 2009.

15. RESERvES

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm Non-distributable Share premium 2,049,145 2,049,145 2,049,145 2,049,145

Distributable Retained profits 8,986,811 12,479,468 94,350 327,092

11,035,956 14,528,613 2,143,495 2,376,237

(a) Share premium

Share premium arose from issue of ordinary shares in excess of its par value. The movements of share premium of the Group and Company during the financial year prior to offsetting are as follows:

GROUP AND cOmPANy 2009 2008 Rm Rm

At beginning of the financial year 2,049,145 2,239,391 Share issue expenses – (190,246)

As at end of the financial year 2,049,145 2,049,145

55



15. RESERvES (cont’d)

(a) Share premium (cont’d)

During the previous financial year, share issue expenses amounting RM 190,246 have been offset against the share premium account. Included in the share issue expenses is an amount of RM 18,000 paid to the auditors for professional services rendered in connection with the Group’s listing on the Second Board of Bursa Malaysia Securities Berhad.

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.

(b) Retained profits

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act, 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the balance under Section 108 of the Income Tax Act, 1967 (“108 balance”) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act, 2007.

As at 30 April 2009, the Company has sufficient credit in the 108 balance to pay franked dividends out of its entire retained earnings.

16. BANK BORROWINGS

GROUP 2009 2008 Rm Rm current Secured - Bank overdrafts 3,482,831 – - Trade bills 319,000 – - Term loans 585,345 770,744

4,387,176 770,744 Non-current Secured - Term loans 3,180,909 308,756

7,568,085 1,079,500

(a) The bank borrowings are secured against:

(i) A registered first party charge over the Group’s freehold land and factory buildings (Note 6); and

(ii) Corporate guaranteed provided by the Company.



16. BANK BORROWINGS (cont’d)

(b) The bank overdrafts are interest bearing at 7.8% (2008: 7.8%) per annum on a monthly rest basis whilst the trade bills are interest bearing at 3.7% to 5.5% (2008: 3.7% to 5.5%) per annum.

(c) The term loans are interest bearing at 5.5% (2008: 5.5%) per annum on a monthly rest basis and repayable by 120 equal monthly instalments. As at the end of financial year, they are repayable are as follows:

GROUP 2009 2008 Rm Rm current Not later than one year 585,345 770,744

Non-current Later than one year and not later than two years 329,533 308,756 Later than two years and not later than five years 1,076,790 – Later than five years 1,774,586 –

3,180,909 308,756

3,766,254 1,079,500

17. fINANcE LEASES

As at the end of the financial year, the outstanding finance lease obligations are repayable as follows:

GROUP 2009 2008 Rm Rm minimum finance lease payments: Not later than one year 307,919 1,646,350 Later than one year and not later than five years 584,290 715,515

892,209 2,361,865 Less: Unexpired term charges (75,431) (130,439)

816,778 2,231,426

Principal amounts outstanding: Current portion 280,359 1,567,856 Non-current portion 536,419 663,570

816,778 2,231,426 The effective interest rates of the finance lease obligations are ranging from 4.2% to 6.1% (2008: 4.6% to 6.1%)

per annum.

18. ScHEDULED PAyABLE

Scheduled payable represents the remaining amount of JPY 45 million (approximately RM 1,647,000) due to a foreign buyer arising from one-off rectification works claim (Note 35 (c)). The amount shall be payable in 60 equal monthly instalments. As at year end, the payment schedule is analysed as follows:

57



18. ScHEDULED PAYABLE (cont’d) GROUP 2009 2008 Rm Rm current Not later than one year (Note 20) 329,400 –

Non-current Later than one year and not later than two years 329,400 – Later than two years and not later than five years 658,800 – Later than five years 329,400 –

1,317,600 –

1,647,000 –

19. DEfERRED tAX LIABILItY

GROUP 2009 2008 Rm Rm (a) movement of deferred tax liability Balance as at 1 May 2,256,291 1,834,712 Deferred tax expense relating to origination of temporary differences 200,306 421,579 Underprovision in prior year 13,901 – Balance as at 30 April 2,470,498 2,256,291

(b) component of the deferred tax liability Excess of capital allowances over corresponding book depreciation 2,470,498 2,256,291

20. tRADE AND OtHER PAYABLES

GROUP cOmPANY 2009 2008 2009 2008 Rm Rm Rm Rm current Trade payables 4,387,475 6,019,351 – –

Other payables - Accruals 1,432,510 1,210,783 153,000 97,615 - Scheduled payable (Note 18) 329,400 – – – - Sundry payables 783,068 497,109 26,456 28,382

2,544,978 1,707,892 179,456 125,997

6,932,453 7,727,243 179,456 125,997

The normal trade credit terms granted to the Group ranging from 30 days to 120 days (2008: 30 days to 120 days).



21. REvENUE


Dividend income – – 2,400,000 2,400,000 Management fee income – – 240,000 240,000 Net invoiced value of goods sold 65,836,458 66,783,703 – –

65,836,458 66,783,703 2,640,000 2,640,000

22. fINANcE cOStS

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm Interest on: Bank overdrafts 75,110 7,439 – – Finance charges under finance leases 84,028 162,703 – – Trade bills 90,818 3,901 – – Term loans 84,134 105,146 – –

334,090 279,189 – – Bank charges 154,623 161,482 1,902 120

488,713 440,671 1,902 120

23. (LOSS) / PROfIt BEfORE tAx

(Loss) / profit before tax is arrived at:


After charging: Allowance for doubtful debts, specific 126,973 70,046 – – Allowance for obsolete inventories 250,151 – – – Auditors’ remuneration - Statutory audit - Current 47,500 37,000 12,500 12,500 - (Over) / provision in prior year (2,500) – (2,500) – - Other services – 2,500 – 2,500 Bad debts written off 29,790 – – – Claim for rectification works (Note 35 (c)) 2,835,750 – – – Depreciation of property, plant and equipment 3,522,178 2,867,880 – – Loss on foreign exchange - realised – 1,005,471 – – - unrealised – 43,081 – – Loss on stolen inventories – 184,447 – – Preliminery expenses 9,500 – – –

59



23. (LOSS) / PROfIt BEfORE tAx (cont’d)


Rental of: - Factory 259,200 – – – - Hostel 2,000 – – – - Office equipment 1,760 1,840 – – - Premises 29,500 17,400 – –

And crediting: Fixed deposits interest income (118,071) (161,601) – (4,453) Gain on disposal of property, plant and equipment (36,916) (9,998) – – Gain on foreign exchange - realised (720,997) – – – - unrealised (348,957) – – – Insurance claims – (61,400) – –

24. EmPLOyEES’ BENEfItS


(a) Executive directors’ remuneration (Note 25) 721,494 786,585 – –

(b) Other staff costs - Wages, salaries and bonuses 3,277,547 2,612,788 – – - Defined contribution plan (EPF) 295,829 230,216 – – - Other benefits 729,876 961,634 – –

5,024,746 4,591,223 – –

25. DIREctORS’ REmUNERAtION

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm Executive directors - Salaries, allowance and bonuses 607,228 676,545 – – - Defined contribution plan (EPF) 114,266 110,040 – –

721,494 786,585 – – - Benefit-in-kind 33,250 37,600 – –

754,744 824,185 – –



25. DIREctORS’ REmUNERAtION (cont’d)

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm Non-executive directors - Fees 114,000 84,500 114,000 84,500 - Allowances 7,000 650 7,000 650

121,000 85,150 121,000 85,150

875,744 909,335 121,000 85,150

26. tAx ExPENSE


(a) component of the tax expenses: Current tax expense 74,594 1,238,620 58,121 21,884 Deferred tax expenses relating to origination of temporary differences 200,306 421,579 – – (Over) / underprovision of current tax in prior year (103,409) (28,138) 38,730 4,132 Underprovision of deferred tax in prior year 13,901 – – –

Tax expense for the financial year 185,392 1,632,061 96,851 26,016 (b) Reconciliation of tax expense with statutory tax rates

(Loss) / profit before tax (1,219,217) 9,403,098 2,264,109 2,369,302

Tax at statutory income tax rate at 25% (2008: 26%) (304,804) 2,444,806 566,027 616,019 Tax effects of: - non-deductible expenses 493,103 92,830 116,094 29,865 - non-taxable income (14,350) – (624,000) (624,000) Tax savings arising from: - double deduction expenses (67,423) (166,900) – – - utilisation of reinvestment allowance – (710,537) – – Deferred tax assets not recognised during the financial year 168,374 – – – (Over) / underprovision of current tax in prior year (103,409) (28,138) 38,730 4,132 Underprovision of deferred tax in prior year 13,901 – – –

Tax expense for the financial year 185,392 1,632,061 96,851 26,016

61



26. tAx ExPENSE (cont’d)

(c) As at the end of financial year, the Group has estimated unabsorbed losses, unutilised reinvestment allowances and capital allowances amounting to approximately RM 4,866,000 (2008: Nil) available for setting off against future taxable profits, subject to agreement by the Inland Revenue Board.

27. (LOSS) / EARNINGS PER ORDINARy SHARE

(a) The (loss) / earnings per share is calculated by dividing the net (loss) / profit for the financial year attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the financial year:

GROUP 2009 2008 Rm Rm

(Loss) / profit attributable to ordinary equity holders of the Parent (RM) (1,092,657) 7,771,037 Weighted average number of ordinary shares in issue 79,959,000 80,000,000

(Loss) / earnings per share (sen) (1.37) 9.71

(b) The diluted earnings per share of the Group were not presented as there were no dilutive potential ordinary shares during the financial year.

28. DIvIDEND

GROUP AND cOmPANy 2009 2008 Rm Rm In respect of financial year ended 30 April A final dividend of tax exempt dividend of 6% (2008: 5%) on 80,000,000 ordinary shares of RM0.50 each 2,400,000 2,000,000

29. cASH AND cASH EQUIvALENtS

(a) Cash and cash equivalents included in the cash flow statements comprise the following amounts:


Deposit, cash and bank balances (Note 12) 3,765,210 6,270,205 72,680 81,361 Less : Bank overdrafts (Note 16) (3,482,831) – – –

282,379 6,270,205 72,680 81,361

(b) During the year, the Group acquired property, plant and equipment with an aggregate cost of RM 13,150,702 (2008: RM 5,403,320) of which RM 246,300 (2008: RM 550,000) was acquired by means of finance leases. Cash payments of RM 12,904,402 (2008: RM 4,853,320) were made to purchase property, plant and equipment.



30. RELAtED PARty DIScLOSURES

(a) Related party relationship

An entity or individual is considered a related party of the Group for the purposes of the financial statements if the Group has the ability, directly or indirectly, to control or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence.

The Group has related party relationship with its subsidiary companies and company in which certain directors and their close family members have substantial financial interest.

(b) Related party transactions

The following are aggregate value of transactions between the Group and related parties that took place during the financial year at terms that are not more favourable to the related party than those arranged with independent third parties:

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm (i) transactions with companies in which certain directors and their close family members have substantial financial interest - Professional fees paid to cfSolutions Sdn. Bhd. 100,200 28,400 100,200 28,400

(ii) transaction with a subsidiary company - Dividend income – – 2,400,000 2,400,000 - Management fee income – – 240,000 240,000

(c) Remunerations of key management personnel


Salary, allowance and bonuses 1,174,198 1,300,730 Defined contribution plans (EPF) 177,945 181,360

1,352,143 1,482,090

Comprise amounts paid to: - Directors of the Group 721,494 786,585 - Other key management personnel 630,649 695,505

1,352,143 1,482,090

The remunerations of key management personnel are determined by the Remuneration Committee having regard to the performance of individuals and market trends.

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31. cAPItAL cOmmItmENt

As at year end, the capital expenditure contracted for but not provided for in the financial statements are as follows:

GROUP 2009 2008 Rm Rm Approved and contracted for: Purchase of plant and machinery 2,726,318 2,726,318

32. cONtINGENt LIABILIty

GROUP cOmPANy 2009 2008 2009 2008 Rm Rm Rm Rm Secured: Bank guarantees issued to third parties 670,047 262,000 – –

Unsecured: Corporate guarantee to: - financial institution for banking facilities granted to a subsidiary company – – 18,822,000 17,422,000 - a foreign buyer for claim for rectification works against a subsidiary company – – 1,647,000 –

670,047 262,000 20,469,000 17,422,000

The bank guarantees are secured against the Group’s freehold land and factory buildings (Note 6). As at the end of financial year, a subsidiary company has bank overdraft and trade facilities (“banking facilities”) from a licensed bank amounting to RM 18,822,000 (2008: RM 17,422,000) which are guaranteed by the Company. Accordingly, the Company is contingently liable to the extent of the outstanding banking facilities of the said subsidiary company.

33. SEGmENtAL REPORtING

The primary segment reporting format is determined to be business segments as the Group’s risks and rate of return are affected by differences in the products and services produced. Secondary information is reported geographically by location of customers.

The Directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

The Group comprises the following main business segments as follow:

Business segments Business activities

Insulation materials Manufacturing of insultion materials for the heating, ventilation, airconditioning and refrigeration (“HVAC&R”) industry

HVAC&R parts and equipment Trading of HVAC&R parts and equipments

Steel pipes Manufacture, import and export of various kinds of steel pipes and tubes



33. SEGmENtAL REPORtING (cont’d)

(a) Business segments (cont’d)

HvAc&R Insulation parts and materials equipment Steel pipes Eliminations consolidated Rm Rm Rm Rm Rm financial year ended 30 April 2009 REvENUE - External sales 55,765,525 6,340,026 3,730,907 – 65,836,458 - Inter-segment sales – 38,600 – (38,600) –

total revenue 55,765,525 6,378,626 3,730,907 (38,600) 65,836,458 Cost of goods sold (46,580,298) (6,154,970) (4,110,981) – (56,846,249)

Gross profit 9,185,227 223,656 (380,074) (38,600) 8,990,209

Other income 1,160,959 Unallocated corporate expenses (10,881,672)

(Loss) from operations (730,504) Finance costs (488,713)

(Loss) before tax (1,219,217) Tax expense (185,392)

Net (loss) for the financial year (1,404,609)

HvAc&R Insulation parts and materials equipment Steel pipes Eliminations consolidated Rm Rm Rm Rm Rm financial year ended 30 April 2008

REvENUE - External sales 54,683,483 12,100,220 – – 66,783,703 - Inter-segment sales – – – – –

total revenue 54,683,483 12,100,220 – – 66,783,703 Cost of goods sold (39,128,366) (9,484,667) – – (48,613,033)

Gross profit 15,555,117 2,615,553 – – 18,170,670

Other income 232,999 Unallocated corporate expenses (8,559,900)

Profit from operations 9,843,769 Finance costs (440,671)

Profit before tax 9,403,098 Tax expense (1,632,061)

Net profit for the financial year 7,771,037

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33. SEGmENtAL REPORtING (cont’d)

(b) Geographical segments

The Group operates principally in Malaysia, therefore geographical segment is analysed based on geographical location of its customers. The analysis of segment results is not presented because it is not practicable to allocate operating expenses as the basis for making these allocations is arbitrary. The Group’s segment revenue from external customers by geographical area based on the geographical location of its customers is shown as follows:


Africa 1,443,290 2,376,499 Americas 6,403,797 1,402,512 Asia (excluding Malaysia) 38,781,553 34,386,297 Europe 2,395,309 4,644,416 Malaysia 15,596,735 22,815,549 Oceania 1,215,774 1,158,430

65,836,458 66,783,703

34. fINANcIAL INStRUmENtS

(a) financial risk management

The operations of the Group are subject to various financial risks, including foreign currency risk, interest rate risk, credit risk, liquidity and cash flow risk, in connection with its use or holding of financial instruments. The Group has adopted a financial risk management framework with the principal objective of effectively managing these risks and minimising any potential adverse effects on its financial performance.

(i) foreign currency risk

The Group operate principally in Malaysia but is exposed to various currencies, mainly United States Dollar (“USD”), Singapore Dollar (“SGD”) and Japanese Yen (“JPY”) arising from its imports and exports. Foreign currency denominated assets and liabilities together with expected cash flows from highly probably purchases and sales give rise to foreign exchange exposures. The Group has a natural hedge to the extent that payments for foreign currency payables will be matched against receivables denominated in the same foreign currency or whenever possible, by intra group arrangements and settlements. As at year end, the Group do not have any derivative financial instruments used to hedge foreign currency risk.

As at 30 April 2009 JPy SGD USD tOtAL Rm Rm Rm Rm

Cash and cash equivalents – – 2,218,926 2,218,926 Trade receivables – 120,742 8,581,135 8,701,877 Trade payables – – (856,993) (856,993) Scheduled payable (1,976,400) – – (1,976,400)



34. fINANcIAL INStRUmENtS (cont’d)

(a) financial risk management (cont’d)

(ii) Interest rate risk

The Group’s primary interest rate risk relates to the interest-bearing debts obtained from financial institutions in Malaysia. It has no substantial long term interest-bearing assets as at 30 April 2009. The investments in financial assets, i.e. deposits placed with a licensed bank, are short term in nature and are not held for speculative purposes. The Group does not hedge interest rate risk but ensures that it obtains borrowings at competitive interest rates under the most favourable terms and conditions.

(iii) credit risk

The credit risk with respect to trade and other receivables are managed through the application of credit approvals, credit limits and monitoring procedures. Credit is extended to the customers based upon careful evaluation of the customer’s financial condition and credit history.

The Group’s normal credit term is ranging from 30 to 90 days. Any other credit terms are assessed and approved on a case-by-case basis depending on the length of trading relationship, the volume of trade and other management considerations. Notwithstanding the credit terms granted to customers, it is the industry norm to begin counting the credit period from the first day of the immediate following month after sales transactions occurred.

As at balance sheet date, the two (2) (2008: two) largest customers account for 27% (2007: 28%) of total trade receivables. Except for the above, there was no significant concentration of credit risk. The maximum exposure to credit risk for the Group is represented by the carrying amount of the receivables presented in balance sheet.

(iv) Liquidity and cash flow risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position.

(b) fair values

The methodologies used in arriving at the fair values of the principal financial assets and financial liabilities of the Group are as follows:

(i) The carrying amounts of cash and cash equivalents, receivables, payables and trade bills are considered to approximate their carrying amounts as they are either payable on demand or within the normal credit term or they have short maturity.

(ii) The fair value of finance leases approximates its carrying amount as the Group does not anticipate the carrying amount recorded at the balance sheet date to be significantly different from the value that would eventually be required for settlement.

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34. fINANcIAL INStRUmENtS (cont’d)

(b) fair values (cont’d)

(iii) The fair values of investment in golf club membership approximate its carrying amounts by reference to golf club membership market price.

(iv) The fair value of quoted shares in Malaysia is determined by reference to their quoted market prices at the balance sheet date.

(v) The fair value of term loans approximates its carrying amount as the interest rate is on floating rate basis.

The fair values of financial assets and liabilities of the Group approximate their carrying amounts as at 30 April 2009 except that it is not practicable to estimate reliably the fair value of contingent liabilities due to uncertainty of timing, costs and eventual outcome.

35. SIGNIfIcANt EvENt DURING tHE fINANcIAL yEAR

(a) On 22 May 2008, the Company entered into a Joint Venture cum Shareholders’ Agreement with Super Will Holdings Limited (“SWHL”), a company incorporated in Samoa, and Mr. Huang, Hsin-Yueh to set up a company, namely Superlon Steel Pipes Sdn Bhd (“SSPSB”) to carry out the business of manufacturing of welded steel pipes and other steel related products wherein the Company shall hold 55% and SWHL shall hold the remaining 45% of the share capital in SSPSB.

SSPSB was incorporated on 26 May 2008 with an authorised share capital of RM 5,000,000 represented by 5,000,000 ordinary shares of RM 1 each. Upon incorporation, 3 ordinary shares of RM 1 each were issued as subscribers’ shares at par for cash. On 19 September 2008, the issued and paid-up capital of SSPSB was increased from RM 3 to RM 5,000,000 through the allotment of 4,999,997 new ordinary shares of RM 1 each at par for cash. The Company subscribed for 2,749,997 new ordinary shares of RM1 each, representing 55% equity interest in the issued and paid-up share capital of SSPSB. Consequently, SSPSB became a subsidiary of the Company.

(b) On 7 October 2008, Superlon Worldwide Sdn Bhd (“SWSB”) entered into a sale and purchase agreement with Mr. Lee Yew Hock for the acquisition of a piece of freehold land for a total cash consideration of RM 5,700,000. The transaction was completed on 8 January 2009.

(c) On 27 March 2009, SWSB entered into a deed of settlement agreement with a foreign buyer. The Company agreed to make a total payment of JPY 78,975,337 or RM 2,835,750 as the claim for rectification works by the foreign buyer. The Company has settled the claim of JPY 33,975,337 or RM 1,188,750 during the financial year. The remaining of JPY 45 million (equivalent to RM 1,647,000 based on the exchange rate of JPY 100 = RM 0.03657) shall be payable by 60 equal monthly instalments.


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Approximate Built up Age of Net Book Area type Date of Building / value (squareProperty / title Details (Existing Use) Acquisition tenure (Rm’000) feet)

30/03/1996 12 years / 6,744 60,000 Freehold

08/01/2009 Freehold 6,001 126,080

13/10/2004 4 years / 9,217 66,000 Freehold

Land and Building (Factory)

Land

Land and Building (Factory

and Office)

factory 1 Lot 2567, Jalan Sungai Jati, Kampung Jawa, 41200 Klang, Selangor/ Geran 397, Lot 2567,Tempat Sungei Jaty,Mukim KlangDaerah Klang, Selangor

Lot 2568, Jalan Sungai Jati, Taman Klang Jaya, 41200 Klang, Selangor / GM 1393, Mukim Klang, Daerah Klang, Selangor

factory 2 Lot 2736, Jalan Raja Nong, Kampung Jawa, 41200 Klang, Selangor/ H.S.M. 42634 PT118211(formerly under Geran Mukim 1058 Lot 2736)Tempat Sungei JatyMukim KlangDaerah Klang, Selangor

List Of PropertiesAS At 30 APRIL 2009

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Authorised Share capital : RM100,000,000.00Issued and fully Paid-up Share capital : RM40,000,000.00class of Shares : Ordinary shares of RM0.50 eachNumber of Shareholders : 1,024

(The percentages detailed below are based on the issued and fully paid-up share capital after excluding the total treasury shares held)

ANALySIS Of SHAREHOLDINGS

No. ofSize of Shareholdings Shareholders % No. of Shares %

Less than 100 3 0.29 150 0.00100 - 1,000 694 67.77 124,500 0.161,001 - 10,000 220 21.49 1,257,350 1.5710,001 - 100,000 83 8.11 2,887,639 3.61100,001 - less than 5% 17 1.66 13,902,800 17.395% and above 7 0.68 61,767,561 77.27 Total 1,024 100.00 79,940,000 100.00

SUBStANtIAL SHAREHOLDERS’ SHAREHOLDINGS

Direct Interest Indirect Interest No Names No. of shares % No. of shares % Liu Lee, Hsiu Lin @ Jessica H. Liu 21,078,700 26.37 – –Tommy bin Bugo @ Hamid bin Bugo 7,500,237 9.38 – –Lok Huey Yen 12,510,000 15.65 – –Liu, Man-Tien 6,047,361 7.57 – –Ting Ming Hoi Enterprise Sdn Bhd 5,000,063 6.25 – –Tina Yu-Chen Lee 4,843,700 6.06 – –Koperasi Permodalan Felda Berhad 4,787,500 5.99 – –

DIREctORS’ SHAREHOLDINGS

Direct Interest Indirect Interest No Names No. of shares % No. of shares % Liu Lee, Hsiu Lin @ Jessica H. Liu 21,078,700 26.37 – –Tommy bin Bugo @ Hamid bin Bugo 7,500,237 9.38 – –Lim E @ Lim Hoon Nam – – – – Chun Kwong Pong – – – –Andrew Tan Lyn San – – – –Liu Han-Chao – – – –Lim Wee Keong – – – –

Analysis Of ShareholdingsAS At 10 AUGUSt 2009


70

LISt Of tHIRty (30) LARGESt SHAREHOLDERS

No. Names No. of Shares %

1 LIU LEE, HSIU LIN 20,808,000 26.032 M.I.T NOMINEES (TEMPATAN) SDN BHD 12,510,000 15.65 PLEDGED SECURITIES ACCOUNT FOR LOK HUEY YEN 3 TOMMY BIN BUGO @ HAMID BIN BUGO 7,500,237 9.384 F.I.T NOMINEES (ASING) SDN BHD 6,047,361 7.56 PLEDGED SECURITIES ACCOUNT FOR LIU, MAN-TIEN 5 TING MING HOI ENTERPRISE SDN BHD 5,000,063 6.256 F.I.T NOMINEES (ASING) SDN BHD 4,843,700 6.06 PLEDGED SECURITIES ACCOUNT FOR TINA YU-CHEN LEE 7 KOPERASI PERMODALAN FELDA BERHAD 4,787,500 5.998 HO SEE CHAI 3,057,500 3.839 HSBC NOMINEES (ASING) SDN BHD 2,730,000 3.42 KIRBY INTERNATIONAL PRIVATE LTD 10 CIMSEC NOMINEES (ASING) SDN BHD 2,071,000 2.59 PLEDGED SECURITIES ACCOUNT FOR KENWIN INVESTMENT LIMITED 11 M.I.T NOMINEES (TEMPATAN) SDN BHD 1,001,100 1.25 PLEDGED SECURITIES ACCOUNT FOR LOK HUEY MING 12 LIM CHAI BENG 829,500 1.0413 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 800,000 1.00 PLEDGED SECURITIES ACCOUNT FOR CHEN KHAI VOON 14 CITIGROUP NOMINEES (ASING) SDN BHD 768,000 0.96 UBS AG SINGAPORE FOR EPIRUS LTD 15 LIN,RONG-MAO 471,400 0.5916 CHENG LING MU 400,000 0.5017 HSBC NOMINEES (ASING) SDN BHD 369,900 0.46 EXEMPT AN FOR CREDIT SUISSE 18 CHAN WAI KHEONG 362,973 0.4619 RAHIMI BIN AB WAHAB 361,427 0.4520 LIU LEE, HSIU LIN 270,700 0.3421 THAM CHOY CHIN 250,000 0.3122 M.I.T NOMINEES (TEMPATAN) SDN BHD 200,000 0.25 PLEDGED SECURITIES ACCOUNT FOR SALBIAH BINTI SHUIB 23 SIAU HUAT LIAN 120,000 0.1524 ER KOK LEONG @ ER CHAI TUAN 110,000 0.1425 WANG, CHUN-CHENG 100,000 0.1326 CUSTODEV SDN BHD 95,000 0.1227 CIMSEC NOMINEES (TEMPATAN) SDN BHD 92,000 0.12 PLEDGED SECURITIES ACCOUNT FOR KHOO YAP HOCK CHENG 28 CHIA LI ENG 90,500 0.1129 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 90,000 0.11 PLEDGED SECURITIES ACCOUNT FOR CHAU POH YEE 30 NG KOON SAN @ AK AH TIN 90,000 0.11

ANALySIS Of SHAREHOLDINGS (cont’d)

No. of ordinary shares held

Proxy Form

(Company No.: 740412-X) (Incorporated in Malaysia)

I/We_____________________________________________________________________________(Please use Block Letters)

of ____________________________________________________________________________________________________

being a member/members of SUPERLON HOLDINGS BERHAD, hereby appoint________________________________

of ____________________________________________________________________________________________________

or failing him,___________________________________________________________________________________________

of ____________________________________________________________________________________________________

as my/our proxy to vote for me/ us and on my/ our behalf at the tHIRD ANNUAL GENERAL mEEtING of the Company to be held on at Putra Room, Kelab Golf Sultan Abdul Aziz Shah (KGSAAS), No 1, Rumah Kelab, Jalan Kelab Golf 13/6, 40100 Shah Alam, Selangor D.E. on friday, 29 September 2009 at 2.30 p.m. and at any adjournment thereof in respect of my/our shareholding in the manner indicated below:-

No. RESOLUtIONS fOR AGAINSt

1. Receipt of Audited Financial Statements for the financial year ended 30 April 2009 together with the Directors’ and Auditors’ Report thereon

2. Approval of the payment of Directors’ fees for the financial year ended 30 April 2009.

3. Re-election of Liu Lee, Hsiu-Lin @ Jessica H. Liu who retires in accordance with

Article 96 of the Articles of Association of the Company.

4. Re-election of Lim E @ Lim Hoon Nam who retires in accordance with Article 96 of the Articles of Association of the Company.

5. Re-appointment of Messrs. SC Lim, Ng & Co. as Auditors and Authorization for the Directors to fix their remuneration

6. Authority to Directors to allot and issue shares pursuant to Section 132D of the

Companies Act, 1965

7. Renewal of authority to purchase up to ten per cent (10%) of its own shares in the

issued and paid-up share capital of the Company

Please indicate with an “X” in the appropriate box against each resolution how you wish your vote to be cast. In the absence of specific direction as to voting is indicated, your proxy will vote or abstain as he/ she thinks fit.

Dated this ____________ day of ________________________ 2009.

................................................................. Signature of Shareholder/Common SealNotes :1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need

not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)

(c) of the Companies Act, 1965 are complied with.3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be

represented by each proxy.4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing. If the appointer is a

corporation, the instrument must be executed under its Common Seal or under the hand of an attorney so authorised.5. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that

power of attorney, must be deposited at the Registered Office of the Company at A-11-3 (Suite 2), Northpoint Offices, Mid Valley City, No.1, Medan Syed Putra Utara 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for holding this meeting or any adjournment thereof.

To: Company Secretary

SUPERLON HOLDINGS BERHAD (740412-X) A-11-3 (Suite 2), Northpoint Offices Mid Valley City 1, Medan Syed Putra Utara 59200 Kuala Lumpur

AffIxStAmP HERE

FOLD HERE

FOLD HERE

Annual R

epo

rt 2009www.superlon.com.my

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