Annual Report 2009

ANNUAL REPORT 2009

CONTENTS

2 Corporate Structure3 Corporate Information

4 5-Year Group Financial Highlights5 Corporate Social Responsibility

6 Chairmans Statement8 Group Managing Directors Message

10 Directors Profile16 Senior Management

17 Statement On Corporate Governance23 Audit Committee Report

26 Syariah Panels Report28 Statement On Internal Control

30 Statement Of Directors Responsibility31 Financial Statements

80 Analysis Of Ordinary Shareholdings And Warrants86 Notice Of Annual General Meeting

88 Statement Accompanying Notice Of Annual General Meeting

Proxy Form

CORPORATE STRUCTUREOPERATING SUBSIDIARIES

2

Silver Bird Group Berhad

International Sdn Bhd100%

Foods (S) Pte Ltd 100%

Marketing Sdn Bhd 100%

Bakeries Sdn Bhd 100%Group Sdn Bhd

100%

Confectionery Sdn Bhd100%

CORPORATE INFORMATION

3


BOARD OF DIRECTORSDato Dr Gan Khuan Poh(Chairman/Independent Non-Executive Director)

Dato Jackson Tan Han Kook(Group Managing Director)

Ching Siew Cheong(Group Executive Director)

Lim Hock Chye(Independent Non-Executive Director)

Richard George Azlan bin Abas(Independent Non-Executive Director)

Dato Seri Talaat bin Husain (Independent Non-Executive Director)

Peter John McLoghlin(Non-Independent Non-Executive Director)

Dato Lee Kok Chuan(Non-Independent Non-Executive Director)

Adi Azuan bin Abdul Ghani(Non-Independent Non-Executive Director)

Vanda Russell Gould(Non-Independent Non-Executive Director)(Alternate Director to Peter John McLoghlin)

AUDIT COMMITTEERichard George Azlan bin Abas - ChairmanLim Hock Chye- MemberDato Lee Kok Chuan- Member

NOMINATION COMMITTEEDato Dr Gan Khuan Poh - ChairmanRichard George Azlan bin Abas - MemberDato Seri Talaat bin Husain - Member

REMUNERATION COMMITTEELim Hock Chye- ChairmanPeter John McLoghlin- MemberRichard George Azlan bin Abas- Member

SYARIAH PANELProf Dato Dr Abd Shukor bin Hj Husin- ChairmanDatuk Hj Wan Zahidi bin Wan Teh - MemberDato Hj Abdul Majid bin Omar- MemberDato Seri Talaat bin Husain - MemberProf Madya Chek Zaini bte Hassan- Member

COMPANY SECRETARYTan Fong Shian @ Lim Fong Shian(MAICSA 7023187)

REGISTERED OFFICESilver Bird ComplexLot 72, Persiaran Jubli PerakSeksyen 21, 40300 Shah AlamSelangor Darul EhsanTel : 03-5192 2888Fax : 03-5192 4293Email : investor@stanson-

high5.comWebsite: www.silverbird.com.my

AUDITORS Crowe Horwath Level 16, Tower CMegan Avenue II12 Jalan Yap Kwan Seng50450 Kuala Lumpur

PRINCIPAL BANKERSMalayan Banking BerhadG-Floor, Bangunan Yayasan SelangorJalan Bukit Bintang55100 Kuala Lumpur

CIMB Bank Berhad10th Floor, Bangunan CIMBJalan SemantanDamansara Heights50490 Kuala Lumpur

Hong Leong Bank BerhadWisma Hong LeongNo 18, Jalan Perak50450 Kuala Lumpur

United Overseas Bank (M) BerhadMenara UOBJalan Raja LautPO Box 1121250738 Kuala Lumpur

RHB Bank BerhadHead OfficeTower Two & Three RHB CentreJalan Tun Razak50400 Kuala Lumpur

SHARE REGISTRARBerjaya Registration Services Sdn BhdLot 06-03, Level 6 (East Wing)Berjaya Times SquareNo. 1 Jalan Imbi55100 Kuala LumpurTel : 03-2145 0533Fax : 03-2145 9702

STOCK EXCHANGE LISTING Main Board of Bursa Securities

5-YEAR GROUP FINANCIAL HIGHLIGHTS

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Financial Year Ended 31 OctoberRM000 2009 2008 2007 2006 2005

Restated

Revenue 588,890 638,563 606,484 597,991 484,712Revenue Growth (8%) 5% 1% 23% 33%Operating Profits 8,711 (14,431) 7,615 (26,299) 26,599(Loss) / Profit Before Tax 1,436 (23,134) (18,397) (49,548) 17,656(Loss) / Profit After Tax 1,433 (21,275) (16,077) (48,370) 22,151PAT Growth 107% (32%) 67% (318%) 32%Total Shareholders' Fund 142,399 141,810 112,612 119,665 171,027

No. of Share in Issue 314,180 314,117 235,538 210,638 210,521Net Margin (%) 0.2 (3.3) (2.7) (8.1) 4.6Net Assets Per Share (sen) 45.3 45.1 48.0 55.5 79.3Gearing (net of cash) 0.88 0.99 1.34 0.90 0.88

588,890

142,399 45.3

45.1

48.0

RM000

1,43

6

CORPORATESOCIAL

RESPONSIBILITY

5


WORLD CHILDRENS DAY

A Childrens Day celebration with focus on childnutrition was held at High5 Bread Town on 29October 2009. Ms Amanda Tan, an independentnutritionist, gave a talk on healthy eating to mediaand children from Precious Childrens Home. Thechildren were also given a chance to cream theirown bread.

Dato Jackson Tan (centre, back row) with the children from Precious ChildrensHome.

The boys and girls trying to decorate their own creamroll.

Amanda Tan explaining to the children on nutrition in daily diet.


Flour price had been volatile for most of the year andremained at an all time high in the previous year and thistrend has affected the companys input costs. Fortunatelyflour price has lowered slightly and with the Groupscontinued efforts at cost cutting measures it has managedto remain competitive in the market. For the financial yearunder review the Group registered a lower revenue ofRM589 million compared to RM639 million achieved inthe previous year. Despite this the Group managed toregister a profit after taxation and minority interest ofRM1.44 million compared to the previous years loss ofRM21 million. The Group was able to deliver a profitableresult after three consecutive financial year losses and thismarked a significant turning point for the Group.

On behalf of the Board of Directors, I ampleased to present to you the 2009 AnnualReport and the Audited Financial Statements of Silver Bird Group Berhad for the financial year ended 31 October 2009.

Chairman'sStatement

DATO DR GAN KHUAN POHChairman

Financial HighlightsThe financial year 2009 has been a verychallenging year following the globalfinancial crisis and economic downturn.

The Malaysian economic contracted by 6.2% in the first quarter of year 2009 while the manufacturing sector contracted 14.8% in the first eights months of 2009 on account of sharp deterioration in exports anddomestic oriented industries. However, there are signsthat the declining trend is bottoming out. This positivedevelopment is further reinforced by the Governmentsstimulus package spending as well as better consumersentiment and business confidence.

Chairman's Statement

7


A favourable trend of an increasing turnover is expectedto follow through into the next financial year. With thistrend there should be sales growth in daily fresh bakeryproducts. Coupled with the continuing cost reductionmeasures these developments augur well for prospectsin the coming year.

DIVIDEND

The Board of Directors is not recommending anydividend for the financial year under review.

OUTLOOK AND PROSPECTS

In the light of the prospects arising from theconsolidation of the bakery market, the Group willcontinue to focus on its core business and will strive tosustain and build on its current performance. In additionwith the removal of white bread from the price controllist by the Government and the continuous costreduction measures undertaken, the Group hopes thatthis will translate into better results in the comingfinancial year. The Group is also currently expandingaggressively into institutional sales and this strategycompliments well with the capacity expansion plan ofthe Group.

The Board of Directors is cautiously optimistic that withthe commitment to improve efficiencies in operations,efforts at cost cutting measures and marketing andpromotion the aspiration to be one of the nationsleading players in the consumer food market can beachieved.

APPRECIATION

On behalf of the Board of Directors, I would like to extend my sincerest appreciation to our valuedcustomers for their continuous support and ourbusiness partners, bankers, regulatory authorities fortheir trust, confidence and cooperation given to us.

To my fellow directors, management and staff, I wouldlike to express my gratitude and appreciation for theirhard work, dedication and commitment throughout theyear.

Last but not least, my heart-felt thanks to all our valued shareholders for your patience, confidence andcontinued support in Silver Bird Group Berhad.

DATO DR GAN KHUAN POHChairman

8Silver Bird Group Berhad

In spite of the challenging conditionsfor financial year ended 31 October2009, the Group continued to showimproved results.

FINANCIAL PERFORMANCE

Revenue dropped from RM638 million last year to RM589million in the current financial year. This was mainly due tolower revenue from our MultiCom Division as a result ofslowdown in the prepaid telecommunication industry.

However, the Group managed to register a profit aftertaxation of RM1.44 million compared with a loss aftertaxation of RM21 million in the previous year. This set ofcommendable results marks the Groups turnaround fromlosses amidst the backdrop of an economic recession andglobal credit crunch. The significant improvement wasattributed to a combination of sales growth and lower costsin our core business of Consumer Food Division.

We are continuously performing research and developmentfor new products and exploring other related businesssegments. Price of flour has lowered slightly compared to2008 and coupled with the Governments subsidy, theCompany was able to maintain its margin.

We also managed to secure thesupply contract to manufacturehouse brand confectioneryproducts for another leading retailchain in Singapore at the end of2009 which results will only bereflected in the financial year 2010.

Group ManagingDirectors Message

DATO JACKSON TAN HAN KOOKGroup Managing Director

Group Managing Directors Message

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The MultiCom Division on the other hand registered adrop in revenue but continued to make profit contributionsto the Group.

SINGAPORES OPERATION

In this segment, we had managed to turnaroundSingapores operation and will remain committed to thismarket and continue to seek innovative ways to expandour reach.

We also managed to secure the supply contract tomanufacture house brand confectionery products foranother leading retail chain in Singapore at the end of2009 which results will only be reflected in the financialyear 2010.

FUTURE PROSPECTS

The Malaysian economy is expected to return to positivegrowth next year and this should translate to strongerconsumer spending. With the downward trend of majormaterial costs and the various cost reduction initiativesundertaken by the Group, we are confident thesemeasures will translate into more positive results for theforthcoming quarters.

On 31 December 2009, the Government had announcedthe withdrawal of subsidy on white bread and the removalof price control on the product. This will liberalise theindustry with the flexibility for innovation and adjustments.We will continue to structure our approach to pursuegrowth, maintaining the Groups competitiveness andensuring the long term growth and profitability byexpanding into similar and/or complementary businesseswhenever opportunities arise. We are cautious over theuncertainties of fluctuation in the raw material priceswhich may impact the Companys performance for thenext financial year.

The Group is expanding aggressively into institutionalsales and coupled with favourable sales growth, theGroup had planned for capacity expansion. Barring anyunforseen circumstances, the Board is confident ofachieving a much better set of results in 2010.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I would like to placeon record our sincere gratitude and appreciation to themanagement team and all employees for their hard workand commitment throughout the challenging financialyear.

I would also like to express my deepest appreciation toall our valuable customers, business partners, bankers,shareholders and regulatory authorities for their continuedsupport and trust in the Group.

On 31 December 2009, the Government had announced thewithdrawal of subsidy on white bread and the removal of price controlon the product. This will liberalise the industry with the flexibility forinnovation and adjustments.

DATO JACKSON TAN HAN KOOKGroup Managing Director

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A Malaysian aged 64, is an Independent Non-ExecutiveChairman of Silver Bird Group Berhad. Dato Dr Gan wasappointed to the Board on 27 April 2006. He is also theChairman of the Nomination Committee. He holds a Ph.Dand M.A. in Economics from Duke University, NC, USA;M.B.A. in Finance from Cornell University, NY, USA andB.A. (Hons.) in Business Economics from University ofMalaya. He started his career as a Government ServiceOfficer in 1967 and had served in various positionsranging from the District level, the National Institute ofPublic Administration (INTAN) to the Prime MinistersDepartment as Senior Director responsible forMacroeconomics in the Economic Planning Unit for 31years. He later joined Pilecon Group of Companies in1997 as an Executive Director responsible for the GroupsFinance and Corporate Planning and the last position he held was as Managing Director before he left theCompany in year 2000.

He currently sits on the Board of Permodalan BSNBerhad, Time Engineering Berhad and PrudentialAssurance Malaysia Berhad.

He is not related to any director and/or major shareholdersof the Company and there is no business arrangementwith the Company in which he has a personal interest.

He has not been convicted for any offences within thepast 10 years other than traffic offences, if any.

DATO DR GAN KHUAN POH(Dato Dr Gan)

DirectorsProfile

DATO DR GAN KHUAN POH

CHING SIEW CHEONG

Directors Profile

11


A Malaysian aged 55, is the Group Managing Director ofSilver Bird Group Berhad. He was appointed to the Boardon 5 October 1993. He is the founder of StandardConfectionery Sdn Bhd (Standard Confectionery) andthe prime-mover in formulating, nurturing andimplementing Standard Confectionerys strategies sinceits incorporation in 1986. His exposure and involvement in the manufacturing and trading of bakery andconfectionery products since the 1970s assures theGroup of his experience in this field. The Group has grownfrom strength to strength under his leadership, foresightand inherent expertise, and this has earned him acommendable standing in the local and internationalbusiness communities in the bakery and confectioneryindustries. To keep abreast with business skills, he hadundergone the Harvard Business School Alumni Club ofMalaysias Senior Management Development Programmein 1994. In his continued efforts to contribute to theGroups expansion plans, he is at the forefront of theGroups marketing plans for the penetration of the Groupsproducts into the South East Asian countries. DatoJackson Tan is primarily responsible for the success ofthe Group and currently also holds directorships in severalprivate limited companies. Currently, Dato Jackson Tan isa council member of the General Council of MalaysianInstitute of Management.

DATO JACKSON TAN HAN KOOK(Dato Jackson Tan)

A Malaysian aged 47, is the Group Executive Director ofSilver Bird Group Berhad. He was appointed to the Boardon 10 June 1997. He joined Standard Confectionery in1990 as Finance and Administration Manager workingclosely with Dato Jackson Tan in transforming StandardConfectionery and other subsidiary companies intomodern organisation with proper operating systems,budgets and controls. During his 20 years of service withthe Group, he played an important and active role informulating and implementing business strategies toexpand the Group. He graduated from StrathclydeGraduate Business School with a Master in BusinessAdministration in 1996. He also holds directorships inseveral other private limited companies.



DATO JACKSON TAN HAN KOOK

CHING SIEWCHEONG

Apart from the Groups business activities, hisparticipation in and contribution to various organisationsand charities has earned him the Young OutstandingMalaysians Award given by Jaycees Malaysia in 1992.

Dato Jackson Tan is the spouse of Datin Ong Hooi Siang,a substantial shareholder of the Company. Apart from theaforesaid, he has no family relationship with any otherdirector and/or major shareholder of the Company andthere is no business arrangement with the Company inwhich he has a personal interest.


RICHARD GEORGE AZLAN BIN ABAS

Directors Profile

12


A Malaysian aged 54, is an Independent Non-ExecutiveDirector of Silver Bird Group Berhad. He is the Chairmanof the Remuneration Committee and also a member ofthe Audit Committee. He was appointed to the Board on20 April 2002. Mr Lim is a law graduate with a LLB (Hons)Degree from the University of London and holds aCertificate in Legal Practice. Mr Lim was one of thepioneer consultants with the Malaysian MinorityWatchdog Group, an initiative set up by the Ministry ofFinance in 2002 to protect the minority shareholdersinterest and promoting good corporate governance andpractices. Prior to that, he was a Deputy Editor with TheStar Newspaper, where he wrote for the Business section.

In addition, he was also a panel speaker for Bursatra SdnBhd. Mr Lim Hock Chye is currently the Group Director ofStrategic Planning & Corporate Affairs of HELP UniversityCollege, a position he has held since April 2008.

LIM HOCK CHYE

A Malaysian aged 46, is an Independent Non-ExecutiveDirector of Silver Bird Group Berhad. He is theChairman of the Audit Committee and also a memberof the Remuneration Committee. He was appointed tothe Board on 21 May 2004. He holds a Bachelor ofCommerce from the University of Western Australia. Heworked for Arthur Andersen & Co. from 1984 to 1989and subsequently served Arab-Malaysian CorporationBerhad from 1989 to 1996. From 1997 to 2002, he wasthe Group Chief Executive of Yayasan Pelajaran JohorHoldings Sdn Bhd. He is presently a partner of Azlan &Co., Chartered Accountants. He is a Fellow of theInstitute of Chartered Accountants in Australia and a Chartered Accountant of the Malaysian Institute ofAccountants. In 1995, he attended the Asian Institute ofManagement, Management Development Program.

He is not related to any director and/or majorshareholders of the Company and there is no businessarrangement with the Company in which he has apersonal interest.


LIM HOCK CHYE

He is a director of TSM Global Berhad, Tamco CorporateHoldings Berhad and Nylex (Malaysia) Berhad.



Directors Profile

13


A Malaysian aged 59, is an Independent Non-ExecutiveDirector of Silver Bird Group Berhad. Dato Seri Talaatwas appointed to the Board on 5 March 2007 and he is amember of the Nomination Committee. He holds aMasters in Professional Studies from Cornell University,USA majoring in International Planning. Dato Seri Talaathas attended Senior Executive Program, LondonBusiness School, United Kingdom and AdvancedManagement Program, Harvard Business School, U.S.A.

He started his civil service career as an Assistant StateSecretary in Penang and had since then held several vitalposts in the Malaysian Centre for Development Studies,Socio-Economics Research Unit, National Institute forPublic Administration, National Palace, the Ministry ofEducation and as Mayor of Ipoh City, Perak.

He also held the position of the Secretary General of theMinistry of Youth and Sports and later appointed as theSecretary General of the Ministry of Domestic Trade andConsumer Affairs. Whilst in the government service, hewas the Chairman of Company Commission of Malaysiaand Board Member of Malaysia Communication andMultimedia Corporation, Sepang International Circuit andIntellectual Property Corporation of Malaysia.

Currently, he is a director of Shell Refining Company(Federation of Malaya) Berhad, Konsortium LogisticBerhad and Outward Bound Trust of Malaysia.



DATO SERI TALAATBIN HUSAIN

DATO SERI TALAAT BIN HUSAIN

RICHARD GEORGE AZLAN BIN ABAS

A Malaysian aged 51, was appointed to the Board on 3January 2008 as a Non-Independent Non-ExecutiveDirector of Silver Bird Group Berhad and also a memberof the Audit Committee. He graduated with a Bachelor ofEconomics (Accounting Major) from Monash University,Melbourne in 1983 and is a Fellow Member of the Instituteof Chartered Accountants in Australia.

He has over 10 years of working experience in the fieldsof accounting, auditing and corporate services with majorinternational accounting firms including Messrs Ernst &Whinney (Kuala Lumpur) (now known as Ernst & Young),Messrs Arthur Young (Melbourne) and subsequentlyMessrs Ernst & Young (Melbourne). He joined BerjayaLand Berhad as Senior Manager, Internal Audit in 1994and was responsible for its internal audit functions. He was an Executive Director of Berjaya Group Berhadfrom January 2000 to September 2001.

He is currently a Director of Berjaya Capital Berhad andMOL Accessportal Berhad. He also holds directorships inseveral other private limited companies in the BerjayaCorporation group of companies. Dato Lee Kok Chuanis a representative of Berjaya Corporation Berhad on theBoard of Silver Bird Group Berhad.



DATO LEE KOK CHUAN

A Malaysian aged 39, was appointed to the Board on 3January 2008 as a Non-Independent Non-ExecutiveDirector of Silver Bird Group Berhad. He graduated witha BSc (Honours) Accounting from Queens University ofBelfast, United Kingdom in 1993 and Association ofChartered Certified Accountants (ACCA) from EmileWoolf College, London, United Kingdom in 1995. He is aFellow Member of the ACCA and also a member of theMalaysian Institute of Accountants (MIA).

He started his professional career in the auditing andaccounting fields with Messrs PricewaterhouseCoopers,Kuala Lumpur in year 1996. He was then promoted to theposition of Manager in year 2002 and involved in theprovision of audit and accounting services mainly tobanking and financial institutions before joining LembagaTabung Haji as the Divisional Head of Group Finance in July 2002. Presently, he is the Deputy Group ChiefFinancial Officer of Lembaga Tabung Haji.

He is currently also a Director of Lityan Holdings Berhadand Y.S.P Southeast Asia Holding Berhad. Adi Azuan BinAbdul Ghani is a representative of Lembaga Tabung Hajion the Board of Silver Bird Group Berhad.



ADI AZUAN BIN ABDUL GHANI

DATO LEE KOK CHUAN

ADI AZUAN BIN ABDUL GHANI


14

Directors Profile

An Australian aged 65, was appointed to the Board on 3January 2008 as a Non-Independent Non ExecutiveDirector of Silver Bird Group Berhad and a member of theRemuneration Committee. He holds a Bachelor ofEngineering (Electrical) from Melbourne University,Australia in 1966 and obtained a Master of BusinessAdministration from Monash University, Australia in 1973.

He has an extensive Fast Moving Consumer Goods(FMCG) experience with Australian and Multinationalcompanies including Mars Confectionary, Kimberly-ClarkAustralia and the Goodman Fielder group. Prior to hiscurrent appointment, he joined Greens Foods Limited(Greens) as Chief Operating Officer in May 2002 andwas Managing Director from September 2002 until July2004. He remained as non executive director in theGreens Board until early 2007. Peter John McLoghlin is arepresentative of CVC Limited on the Board of Silver BirdGroup Berhad.



PETER JOHNMCLOGHLIN

An Australian aged 62, was appointed as an alternateDirector to Peter John McLoghlin on 3 January 2008. Heholds a Bachelor of Commerce Degree in Accountancy(UNSW) and Master of Commerce Degree in Accountingand Financial Management (UNSW).

He is a fellow of The Institute of Chartered Accountants inAustralia and a Fellow of CPA, Australia. He is also anAssociate Fellow of the Australian Financial Institute ofManagement and holds Australian Financial ServicesLicences issued under the Financial Services Reform Act.

He commenced work as a Chartered Accountant in 1969and worked for Messrs Ernst & Young and GreenwoodChalloner. He has established a firm of CharteredAccountants as a sole practitioner (now known as GouldRalph) in May 1976. He has extensive experience incorporate restructuring and turn-around situations withspecialised knowledge in taxation and law. He is aRegistered Liquidator and Registered Trustee. He was thefounder and executive chairman of CVC Limited (CVC)in 1985. CVC was one of only two venture capitalcompanies not associated with a major financialinstitution which were awarded Australian GovernmentManagement and Investment Companies Licenses in1985. He had established a number of commercialbusinesses and initiated more than ten successful publiccompany flotations, including CVC and Sunland GroupLimited.



VANDA RUSSELLGOULD

PETER JOHNMCLOGHLIN VANDA RUSSELL

GOULD


15

Directors Profile

16


SENIORMANAGEMENT

Lai Poh MeiGeneral ManagerAccounts & Finance

Ong Choon WahGeneral ManagerProduction

George TanGeneral Manager Corporate Finance, Banking & Administration

Goh Wei HorSenior General Manager Consumer Food

Edmond TanHead of MultiCom Division

STATEMENT ON CORPORATE GOVERNANCE

17


The Board of Directors (Board) of Silver Bird Group Berhad remains committed towards maintaining good corporategovernance practices throughout the Company and its subsidiaries (the Group).

The Board is pleased to report to the shareholders the manner in which the Group has applied these principles and bestpractices, and where these best practices of Malaysian Code on Corporate Governance (the Code) were not adoptedduring the financial year if any, they are explained in the relevant paragraphs.

THE BOARD OF DIRECTORS

(a) Composition and Balance

The Company is led by an effective and experienced Board, encompassing of 9 members, made up of 4 Independent Non-Executive Directors including the Chairman, 3 Non-Independent Non-Executive Directors and 2 Executive Directors. This composition satisfies the Bursa Securities Listing Requirements that requires at least 3 Directors or 1/3 of the Board whichever is higher, are Independent Directors. The profiles of the members of the Board are set out on page 10 to page 15 of this Annual Report.

The role of the Independent Non-Executive Directors is to provide objective and independent inputs to the decision making process of the Board so as to provide an effective check and balance. The Board composition brings together group of extensively experienced Directors who are from diverse backgrounds and have a wide range of skills and experiences in areas relevant to managing and directing the Groups operations.

The Executive Directors are primarily responsible for the implementation of policies and decisions of the Board, overseeing the Groups operations and developing the Groups business strategies.

The Board did not appoint a Senior Independent Non-Executive Director to whom concerns maybe conveyed as the Chairman of the Board encourages the active participation of each and every Board member in the decision making process.

(b) Duties and Responsibilities

The main focus of the Board is on the overall strategic leadership, identification and management of principal risks and development and control of the Group. The Board has delegated specific responsibilities to Board Committees, all of which discharge the duties and responsibilities within their respective Terms of Reference.

The roles of the Chairman and Group Managing Director are clearly distinct to ensure that there is a balance of power and authority. The Chairman is primarily responsible for the effective and efficient conduct and working of the Board whilst the Group Managing Director is responsible for the daily management of the Groups operations and implementation of the policies and strategies adopted by the Board.

THE BOARD OF DIRECTORS (cont`d)

(c) Board Meetings

The Board meets regularly on a quarterly basis with additional meetings being convened when necessary. In the meetings, the Board will deliberate on and consider matters relating to the Groups financial performance, significant investments, corporate development, strategic issues and business plan. For the financial year ended 31 October 2009 the Board met 7 times. The meeting attendance records of the Directors who held office are set out below:

No. of meetings

Name of Director Designation attended

Dato Dr Gan Khuan Poh Independent Non-Executive Director 7/7(Chairman)

Dato Jackson Tan Han Kook Group Managing Director 7/7

Ching Siew Cheong Group Executive Director 7/7

Lim Hock Chye Independent Non-Executive Director 7/7

Richard George Azlan Bin Abas Independent Non-Executive Director 7/7

Dato Seri Talaat Bin Husain Independent Non-Executive Director 7/7

Adi Azuan Bin Abdul Ghani Non-Independent Non-Executive Director 6/7

Dato Lee Kok Chuan Non-Independent Non-Executive Director 6/7

Peter John McLoghlin Non-Independent Non-Executive Director 6/7

Vanda Russell Gould Non-Independent Non-Executive Director(Alternate Director to Peter John McLoghlin)

Board meetings are structured with a pre-set agenda which encompass all aspects of matters under discussion. The Board papers are circulated to directors well in advance of the board meetings for their deliberation. All meetings of the Board are duly recorded in the Board Minutes.

Senior management may be invited to attend these meetings to explain and clarify matters being tabled.

In furtherance of their duties, the Board has unrestricted access to any information pertaining to the Group as well as to the advice and services of the Company Secretary and independent professional advisers whenever appropriate at the Groups expense.

(d) Appointment and Re-election of Directors

Any new appointments to the Board will require deliberation by the full Board guided by formal recommendations by the Nomination Committee. Board members who are appointed by the Board are subject to retirement at thefirst Annual General Meeting (AGM) of the Company subsequent to their appointment. Article 97 of the Companys Article of Association also provides that at least one-third (1/3) of the Directors shall retire by rotation at each AGM and that all Directors shall retire once every three (3) years. A retiring Director shall be eligible for re-election.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965 (the Act).

Statement On Corporate Governance

18



19


THE BOARD OF DIRECTORS (cont`d)

(e) Directors Training

Throughout the year, the Directors have attended various conferences, seminars and programmes, including speaking engagements, to enhance their skills and knowledge. The Board will continue to evaluate and determine the training needs of its Directors on an ongoing basis.

For new Directors, the Nomination Committee ensures that they undergo an orientation program so that they are familiar with the Groups operation and current business issues.

BOARD COMMITTEES

Apart from the Audit Committee, there are two other additional committees established to assist the Board in theexecution of its responsibilities. All the committees are provided with written terms of reference. Details of the Boardcommittees are provided overleaf.

(a) Nomination Committee

The Nomination Committee has three (3) members, all of whom are Independent Non-Executive Directors. The members of the Nomination Committee are:

i) ChairmanDato Dr Gan Khuan Poh - Independent Non-Executive Director

ii) MembersRichard George Azlan Bin Abas - Independent Non-Executive DirectorDato Seri Talaat Bin Husain - Independent Non-Executive Director

The Nomination Committee is empowered by the Board of Directors and its terms of reference to assist the Board of Directors in their responsibilities in nominating new directors to the Board and Board Committees. The Committee also reviews the Board of Directors composition and balance as well as considering the Board of Directors succession planning.

Members met twice during the financial year.

The Board considers that the current mix of skills and experience of its members is sufficient for the discharge of its duties and responsibilities effectively.

(b) Remuneration Committee

The Remuneration Committee comprises three (3) members with the majority being Independent Directors. The Remuneration Committee is to assist the Board of Directors in their responsibilities in reviewing and assessing the remuneration packages of the executive directors. The members of the Remuneration Committee are:

i) ChairmanLim Hock Chye - Independent Non-Executive Director

ii) MembersRichard George Azlan Bin Abas - Independent Non-Executive DirectorPeter John McLoghlin - Non-Independent Non-Executive Director

The Remuneration Committee is responsible for recommending to the Board the remuneration framework for the remuneration package of each Executive Director.

This includes recommending remuneration packages necessary to attract, retain and motivate the Directors, and is reflective of the Directors experience and level of responsibilities.

None of the Executive Directors participate in any way in determining their individual remuneration. The remuneration of the Executive Directors is to be reviewed annually. The remuneration and entitlements of the Non-Executive Directors shall be a matter to be decided by the Board as a whole.

The Remuneration Committee met once during the financial year. The meeting was attended by all its members to discuss the remuneration package of Directors that commensurate with corporate and individual performance.

20



BOARD COMMITTEES (cont`d)

(c) Audit Committee

The Board had complied with the changes to the Code which recommends that the Audit Committee should comprise wholly Non Executive Directors.

The detailed report of the Audit Committee is set out on pages 23 to 25.

DIRECTORS REMUNERATION

The details of the remuneration of each Director during the financial year ended 31 October 2009 are as follows:

(a) Total Remuneration

Executive Non-Executive Directors Directors TotalRM 000 RM 000 RM 000

Basic Salary 1,478 0 1,478Fees 0 264 264Attendance fee 0 39 39Benefit-in kind 26 0 26

Total 1,504 303 1,807

(b) Directors remuneration by bands

The number of Directors whose total remuneration falls within the following bands during the financial year ended 31 October 2009 is as follows:

Directors Executive Non-Executive Remuneration Directors Directors Total

RM1 to RM50,000 - 6 6RM50,001 to RM100,000 - 1 1RM350,001 to RM400,000 1 - 1RM950,001 to RM1,000,000 1 - 1

Details of individual Directors Remuneration are not disclosed in this report as the Board considers that the above Remuneration disclosures by band and analysis between Executive and Non Executive Directors satisfies the accountability and transparency aspects of the Code.

SHAREHOLDERS

(a) Shareholders and Investors Relations

The Board acknowledges the importance of accountability to the shareholders. Timely release of the financial results on a quarterly basis, press releases and announcements provide an overview of the Groups performance and operations to its shareholders.

Information disseminated to the investment community is in accordance to Bursa Malaysia disclosure rules and regulations. The Board has taken steps to ensure that no market sensitive information is disclosed to any party prior to making an official announcement to Bursa Securities.

The Group has also established a website at www.silverbird.com.my from which shareholders as well as members of the public may access for the latest information on operations and activities of the Group.

During the year, the Executive Director and senior management hold regular dialogues and briefings with existing and prospective investors and analysts to keep them updated on various announcements relating to the Groups financial performance, major corporate proposals and pertinent issues.


21


SHAREHOLDERS (cont`d)

(b) Annual General Meeting

The Annual General Meeting (AGM) is the principal platform for dialogue with the shareholders. At the AGM, the Board presents the progress and performance of the Group to provide shareholders with the opportunity to question the business issues, concerns and operations in general. The Board will also ensure that each item of special business is included in the notice of the AGM and will be accompanied by an explanation of the effects of the proposed resolutions.

ACCOUNTABILITY AND AUDIT

(a) Financial Reporting

In presenting the annual financial statements and quarterly announcements to shareholders, the Directors aim to ensure that the financial statements and quarterly announcements are prepared in accordance with the Companies Act, 1965 and applicable approved accounting standards so as to offer a balanced and comprehensive assessment of the Groups financial position and prospects.

A Responsibility Statement by the Directors is set out on page 30 of this Annual Report.

(b) Internal Control

The Groups Statement on Internal Control is set out on pages 28 to 29 of the annual report to provide an overview on the state of internal control throughout the year.

In relation to the internal audit function, having considered the Groups operational requirements, the Board is of the view that the Group should still continue to outsource its internal audit function to external consultants. Nevertheless, this outsourcing arrangement shall be reviewed annually to ensure that it continues to meet the Groups requirements. The outsourced internal auditors assist the Board and the Audit Committee in providing independent assessment of the adequacy, efficiency and effectiveness of the Groups internal control systems. They report directly to the Audit Committee.

(c) Relationship with Auditors

The Group maintains a professional and transparent relationship with its external auditors. The external auditors will, from time to time, highlight to the Audit Committee and the Board of Directors matters that require their attention.

The role of the Audit Committee in relation to the external auditors is explained in the Audit Committee Report set out on pages 23 to 25 of the annual report.

(d) Non-Audit Fees

There was no non-audit fees paid to external auditors by the Group for the financial year ended 31 October 2009.


OTHER INFORMATION

(a) Share Buy-Back

During the financial year, there were no share buy-backs by the Company.

(b) Options, Warrants or Convertible Securities

During the financial year, the Company had issued 62,722 new ordinary shares of RM0.50 each pursuant to the conversion of RM42,690 nominal value of 1% Irredeemable Convertible Unsecured Loan Stocks 2004/2009 at a conversation price of RM0.68 per new ordinary share.

(c) Material Contracts involving Directors Interests

There were no contracts involving directors interests which are or may be material, not being contracts entered into in the ordinary course of business, which have been entered into by the Company and its subsidiary companies since the end of the previous financial year.

(d) Recurrent Related Party Transactions

The details of the transactions with related parties undertaken by the Company during the financial period are disclosed in note 40 on page 74 of the notes to the financial statements.

(e) American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programmes

During the financial year, the Company did not sponsor any ADR or GDR programme.

(f) Imposition of Sanctions/Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the authorities during the financial year.

(g) Profit Guarantees

During the financial year, there were no profit guarantees given by the Company.

(h) Variation of Results

There were no material variations between the audited results for the financial year ended 31 October 2009 against the unaudited results for the fourth quarter ended 31 October 2009.

(i) Utilisation of Proceeds

The Company did not implement any fund raising exercise during the financial year.

(j) Contracts Relating to Loans

There was no contract relating to loans by the Company.

(k) Revaluation of Landed Properties

The Group does not have any revaluation policy on landed properties.


22

AUDIT COMMITTEE REPORT

The Board of Directors of Silver Bird Group Berhad is pleased to present the report of the Audit Committee for thefinancial year ended 31 October 2009.

Composition and Meetings

The members of the Audit Committee and details of their attendance at meetings during the financial year ended 31October 2009 are as follows:

Number Attendanceof meetings of meetings

Chairman : Richard George Azlan Bin Abas 4 4(Independent Non-Executive Director)

Members : Lim Hock Chye 4 4(Independent Non-Executive Director)

Dato Lee Kok Chuan 4 4(Non-Independent Non-Executive Director)

Senior Management staff and the external consultants, to whom the internal audit function was outsourced to, attendedthe meetings at the invitation of the Audit Committee. The agenda of the meetings and relevant information aredistributed to its members with sufficient notice. The proceedings of the meetings are formalised in the form of meetingminutes by the Secretary, who is appointed by the Board, during the Audit Committee meetings.

Summary of Activities of the Audit Committee

The following activities were undertaken by the Audit Committee during the financial year ended 31 October 2009:-

(a) Reviewed the unaudited quarterly report on the consolidated results of the Group for the quarters ended 31 October 2008, 31 January 2009, 30 April 2009 and 31 July 2009.

(b) Reviewed and approved the internal audit plan prepared by the Internal Audit Function.

(c) Reviewed the internal audit reports and ensured the implementation of the action plans are carried out by Management on a timely basis.

(e) Reviewed the audit plan of the external auditors.

(f) Reviewed the annual audited financial statements, external auditors reports and their audit findings.

(g) Reviewed related party transactions and considered conflict of interest situation that may arise within the Group.

Summary of Activities of the Internal Audit Function

The activities of the Internal Audit Function during the financial year were as follows:

(a) develop the internal audit plan for year 2009;

(b) execution of the approved internal audit plan;

(c) presentation of the internal audit findings at the quarterly Audit Committee meetings. All findings raised by the Internal Audit Function have been appropriately addressed by Management; and

(d) conducted follow up reviews to ensure that action plans are properly and appropriately implemented by Management.

The internal audits conducted did not reveal weaknesses which would result in material losses, contingencies oruncertainties that would require disclosure in the annual report.

The Internal Audit function is outsourced to external consultants and the cost incurred for the Internal Audit function inrespect of the financial year was approximately RM56,000.


23

Audit Committee Report

TERMS OF REFERENCE OF AUDIT COMMITTEE

1. Composition

The Committee shall be appointed from amongst the Board and shall comprise no fewer than three (3) members. All the audit committee members must be non-executive directors with a majority of whom shall be independent directors and at least one (1) member must be a member of the Malaysian Institute of Accountants or possess such other qualifications and/or experience as approved by Bursa Malaysia Securities Berhad (Bursa Securities).

No alternate director shall be appointed as a member of the Audit Committee.

In the event of any vacancy with the result that the number of members is reduced to below three (3), the vacancy must be filled within three (3) months.

2. Chairman

The Chairman, who shall be elected by the Audit Committee, shall be an independent non executive director.

3. Secretary

The Company Secretary shall be the Secretary of the Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee Members.

4. Meetings

The Committee shall meet at least four (4) times in each financial year. The quorum for a meeting shall be two (2) members, provided that the majority of members present at the meeting shall be independent.

The Committee Members may call for a meeting as and when required with reasonable notice as the Committee Members deem fit. The Committee Members may participate in a meeting by means of conference telephone, conference videophone or any similar or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at such meeting.

The internal auditors and external auditors have the right to appear at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee. The internal auditors and external auditors may also request a meeting if they consider it necessary.

5. Rights

The Audit Committee shall:

(a) have authority to investigate any matter within its terms of reference;

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

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

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

(e) have the right to obtain independent professional or other advice at the Companys expense;

(f) have the right to convene meetings with the internal auditors and external auditors, excluding the attendance of the executive directors or employees of the Group, whenever deemed necessary;

(g) promptly report to the Bursa Securities matters which has not been satisfactorily resolved by the Board of Directors resulting in a breach of the listing requirements;

(h) the Chairman shall call for a meeting upon the request of the internal auditors and external auditors; and

(i) have the right to pass resolutions by a simple majority vote from the Committee and that the Chairman shall have the casting vote should a tie arise.


24

Audit Committee Report

6. Duties

(a) To review with the external auditors on:

the audit plan, its scope and nature; the audit report; the results of their evaluation of the accounting policies and systems of internal accounting controls within

the Group; and the assistance given by the officers of the Company to external auditors, including any difficulties or

disputes with Management encountered during the audit.

(b) To do the following, in relation to internal audit function:

review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;

review the internal audit 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;

review any appraisal or assessment of the performance of members of the internal audit function; approve any appointment or termination of senior staff members of the internal audit function; and take cognisance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.

(c) To provide assurance to the Board of Directors on the effectiveness of the system of internal controls and risk management practices of the Group.

(d) To review with management:

audit reports and management letter issued by the external auditors and the implementation of audit recommendations;

interim financial information; and the assistance given by the officers of the Company to external auditors.

(e) To monitor related party transactions entered into by the Company or the Group and to determine if such transactions are to be undertaken on an arms length basis and normal commercial terms and on terms not more favourable to the related parties than those generally available to the public, and to ensure that the Directors report such transactions annually to shareholders via the annual report and to review conflict of interest that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.

(f) To review the quarterly reports on consolidated results and annual financial statements prior to submission to the Board of Directors, focusing particularly on:

changes in or implementation of major accounting policy and practices; significant and/or unusual issues arising from the audit; the going concern assumption; compliance with accounting standards and other legal requirements; and major judgemental areas.

(g) To consider the appointment and/or re-appointment of internal and external auditors, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as auditors.

(h) To verify any allocation of options in accordance with the employees share scheme of the Company, at the end of the financial year.


25

INTRODUCTION

The halal industry has developed rapidly as more consumers including non-muslim are aware of the halal concept thatpromotes wholesome and healthy food. Silver Bird is committed to halal standards and halal certification of its productsand towards this end has initiated the formation of an independent adviser known as Syariah Panel on 1 November 2008.The initiative is to enhance the halal integrity of its products.

a) Composition

Currently the Panel has five (5) members made up of three (3) experts in Islamic jurisdiction, a member of the Board of Directors and an expert in food technology. The Panel is led by a prominent and experienced individual Y.Bhg Prof Dato Dr. Abdul Shukur bin Hj Husin, Director of World Fatwa Management & Research Institute, Islamic Science University Malaysia who is also the Chairman for National Fatwa Council. The term of service of the Panel is for two years and they are eligible for re-appointment. The list of members is as follows:

Prof. Dato Dr Abd Shukor bin Hj Husin (Chairman)Chairman National Fatwa Council.Director of World Fatwa Management & Research Institute, Islamic Science University Malaysia (USIM)

Datuk Hj Wan Zahidi bin Wan Teh (Member)Mufti Wilayah Persekutuan Kuala Lumpur

Dato Hj Abdul Majid bin Omar (Member)Vice Mufti Negeri Selangor Darul Ehsan

Dato Seri Talaat bin Hj Husain (Member)Member of the Board of Directors Silver Bird Group Berhad

Prof Madya Chek Zaini bte Hassan (Member)Prof. Madya in Food Technology, Islamic Science University Malaysia (USIM)

b) Duties & Responsibilities

The focus of the Panel is to advise the Board of Directors and management on halal matters in order to ensure adherence to halal policy and standards by the Company. The Panel also monitors the business through inspection of the premises in ensuring the process conforms to Syariah.

SYARIAH PANELS REPORT


26

c) Meetings

The Panel shall meet at least twice a year to deliberate on the reports by the Internal Halal Committee. The Internal Halal Committee is made up of Muslim employees from relevant departments in the company who plays a veryimportant role in ensuring the halal standards are applied on a continuous basis as drawn up in the halal manual of the company. For the financial year ended 31 October 2009, the Panel met 2 times. The meeting attendance records of the Panel are set out below.

Name Designation No. of meeting attended

Prof. Dato Dr Abd Shukor bin Hj Husin Independent Chairman 2/2

Datuk Hj Wan Zahidi bin Wan Teh Independent member 2/2

Dato Hj Abdul Majid bin Omar Independent member 2/2

Dato Seri Talaat bin Hj Husain Independent 2/2Non-Executive Director

Prof. Madya Chek Zaini bte Hassan Independent member 2/2

The quorum for a meeting shall be two (2) members.

d) Secretary

The Secretary of the Panel is the Chairman of the Internal Halal Committee of the company who is responsible for drawing up the meeting agenda with the consent of the Chairman. The secretary is responsible to keep the minutes of the meeting of the Syariah Panel.

e) Halal Policy

Silver Bird shall always conform to the Malaysian Halal Standards MS1500:2009 in ensuring that products produced are halal, clean and safe for consumption. The integrity of the process starts from sourcing of raw materials to manufacturing, packing, storing and distributing of the products. Silver Bird also ensures that product manufactured for the Group either made locally or imported conforms to Halal standards of the country of origin, of which is also recognized by JAKIM.

f) Summary of activities

i. Reviewed the halal certificates issued by JAKIM to the company and halal certificates of the suppliers;

ii. Reviewed the report on new products manufactured by the company;

iii. Reviewed the customers complaints on the products;

iv. Reviewed the audit report on suppliers;

v. Reviewed the minutes of the Internal Halal Committee meetings;

vi. Approved the advertorial on Syariah Panel in major newspapers;

vii. Approved the pamphlet Silver Bird - Our Halal Promise for circulation to the public; and

viii. Approved the Halal Manual as guidelines and management system of halal standards adopted by the company.

Syariah Panels Report


27

STATEMENT ON INTERNAL CONTROL

28


The Board of Directors (the Board) of Silver Bird Group Berhad is pleased to include a statement on the state of theGroups internal controls in the annual report.

RESPONSIBILITY

The Board acknowledges that it has a responsibility to maintain a sound system of internal control to safeguardshareholders investments and the Groups assets as well as reviewing the adequacy and integrity of the system ofinternal control.

However, as there are inherent limitations in any system of internal controls, such systems put into effect byManagement can only reduce but cannot eliminate all risks that may impede the achievement of the Groups businessobjectives. Therefore, the internal control system can only provide reasonable and not absolute assurance againstmaterial misstatement or loss.

KEY FEATURES OF THE GROUPS INTERNAL CONTROL SYSTEM

1. CONTROL ENVIRONMENT

* Organisation Structure & Authorisation Procedures

The Group maintains a formal organisation structure with well-defined delegation of responsibilities and accountability within the Groups Senior Management. It sets out the roles and responsibilities, appropriate authority limits, review and approval procedures in order to enhance the internal control system of the Groups various operations.

* Periodical and/or Annual Budget

Budgetary control for every operations of the Group, where actual performance is closely monitored against budgets to identify and to address significant variances.

* Group Policies and Procedures

The Group has adequate documented policies and procedures that are regularly reviewed and updated to ensure that it maintains its effectiveness and continues to support the Groups business activities at all times as the Group continues to grow.

* Human Resource Policy

Comprehensive guidelines on the employment and retention of employees are in place, to ensure that the Group has a team of employees who are well trained and equipped with all the necessary knowledge, skills and abilities to carry out their responsibility effectively.

2. RISK MANAGEMENT FRAMEWORK

Risk Management is regarded by the Board to be an integral part of the business operations. The Board maintains an on-going commitment to enhance the Groups control environment and processes. The key risks relating to the Groups operations and strategic and business plans are addressed at Managements periodic meetings. Significant risks identified are brought to the attention of the Board at their scheduled meetings.

During the financial year ended 31 October 2009, Management with the assistance of external consultants has updated the Groups key risk profile which has been presented to the Audit Committee in June 2009. Risks identified were prioritised in terms of likelihood of their occurrence and the impact on the achievement of the Groups business objectives/goals. The key risk profile shall be updated on a regular basis to ensure that all key risks are identified and adequate responses are devised and continue to be relevant in mitigating these risks.

The abovementioned practices/initiatives by Management serves as the on-going process used to identify, evaluate and managed significant risks.

Statement On Internal Control

29


3. INTERNAL AUDIT FUNCTION

The Groups internal audit function is outsourced to external consultants. The outsourced internal auditors assist the Board and the Audit Committee in providing independent assessment of the adequacy, efficiency and effectiveness of the Groups internal control systems. They report directly to the Audit Committee and internal audit plans are tabled to the Audit Committee for review and approval to ensure adequate coverage.

On a quarterly basis, the Groups internal auditors table the results of their review of the business processes of different operating units to the Audit Committee at their scheduled meetings. The status of the implementation of corrective actions to address control weaknesses are also followed up by the internal auditors to ensure that these actions have been satisfactorily implemented.

During the financial year under review, identified weaknesses in internal controls have been appropriately addressed and Senior Management will continue to ensure that appropriate action is taken to enhance and strengthen the internal control environment.

4. INFORMATION AND COMMUNICATION

Information critical to the achievement of the Groups business objectives are communicated through established reporting lines across the Group. This is to ensure that matters that require the Board and Senior Managements attention are highlighted for review, deliberation and decision on a timely basis.

5. MONITORING AND REVIEW

Scheduled management meetings are held to discuss and review the business planning, budgeting, financial and operational performances.

* Financial and Operational Review

The monthly management accounts and the quarterly financial statements containing key financial results, operational performance results and comparisons of performance against budget are presented to the Board for their review, consideration and approval.

* Business Planning and Budgeting Review

The Board plays an active role in discussing and reviewing the business plans, strategies, performance and risks faced by the Group.

6. CONCLUSION

The Board is of the view that the Groups system of internal controls is adequate to safeguard shareholders investments and the Groups assets. However, the Board is also cognizant of the fact that the Groups system of internal control and risk management practices must continuously evolve to meet the changing and challenging business environment. Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the system of internal controls.

This statement was approved by the Board of Directors on 11 February 2010.

STATEMENT OF DIRECTORS RESPONSIBILITY30


The Board is fully accountable to ensure that the financial statements are drawn up in accordance with Companies Act,1965 and the applicable approved accounting standards set by Malaysian Accounting Standards Board so as to givea true and fair view of the state of affairs of the Group and the Company as at 31 October 2009 and of the results andcash flows of the Group and Company for the financial year ended on that date.

In the process of preparing these financial statements, and other than as disclosed in the notes to the financialstatements, the Directors have reviewed the accounting policies and practices to ensure that they were consistentlyapplied throughout the year. In cases where judgment and estimates were made, they were based on reasonablenessand prudence.

Additionally, the Directors have relied on the system of internal controls to ensure that the information generated for thepreparation of the financial statements from the underlying accounting records is accurate and reliable.

This statement is made in accordance with a resolution of the Board of Directors dated 11 Febuary 2010.

Financial Statements32 Directors Report37 Statement By Directors37 Statutory Declaration38 Independent Auditors Report39 Balance Sheets41 Income Statements42 Statements Of Changes In Equity45 Cash Flow Statements47 Notes To The Financial Statements

DIRECTORS REPORT

The directors hereby submit their report and the audited financial statements of the Group and of the Company for thefinancial year ended 31 October 2009.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding whilst the principal activities of thesubsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature ofthese activities during the financial year.

RESULTS

THE GROUP THE COMPANYRM000 RM000

Profit/(Loss) after taxation for the financial year 1,433 (2,164)Minority interests 6 -

Profit/(Loss) attributable to equity holders of the Company 1,439 (2,164)

DIVIDENDS

No dividend was declared or paid since the end of the previous financial year and the directors do not recommend thepayment of any dividend for the current financial year.

RESERVES AND PROVISIONS

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

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorised share capital of the Company.

(b) the Company increased its issued and paid-up share capital from RM157,058,717.50 to RM157,090,078.50 by the conversion of RM42,690 nominal value of 1% Irredeemable Convertible Unsecured Loan Stocks into 62,722 ordinary shares of RM0.50 each, at a conversion price of RM0.68 per new ordinary share. The new shares issued during the financial year rank pari passu in all respects with the existing shares of the Company; and

(c) there were no issues of debentures by the Company during the financial year.

1% IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS 2004/2009 (ICULS)

Pursuant to a Trust Deed dated 6 February 2004, the Company issued RM20,500,000 nominal value ICULS 2004/2009as partial discharge of the purchase consideration for the acquisition of a subsidiary. The principal terms of the ICULSare disclosed in Note 21 to the financial statements.

The movements of the ICULS during the financial year are as follows:-

NUMBER OF ICULS OF RM0.50 EACHAT AT

1.11.2008 ISSUED CONVERTED 31.10.2009

ICULS 2004/2009 85,380 - 85,380 -

During the financial year, all the ICULS had matured and were converted into ordinary shares.


32

Directors Report (contd)

OPTIONS GRANTED OVER UNISSUED SHARES

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

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable stepsto ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance fordoubtful debts, and satisfied themselves that there are no known bad debts and that adequate allowance had beenmade for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would require the writing off of bad debts,or the additional allowance for doubtful debts in the financial statements of the Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable stepsto ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course ofbusiness, including their value as shown in the accounting records of the Group and of the Company, have been writtendown to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed tothe current assets in the financial statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherenceto the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

The contingent liability of the Company is disclosed in Note 41 to the financial statements. At the date of this report,there does not exist:-

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

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

No contingent or other liability of the Group and of the Company has become enforceable or is likely to becomeenforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors,will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or thefinancial statements of the Group and of the Company which would render any amount stated in the financial statementsmisleading.

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of thedirectors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transactionor event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of theoperations of the Group and of the Company for the financial year.


33


DIRECTORS

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

DATO PROF. DR. GAN MIEW CHEE @ GAN KHUAN POHDATO TAN HAN KOOKCHING SIEW CHEONG LIM HOCK CHYERICHARD GEORGE AZLAN BIN ABASDATO SERI TALAAT BIN HUSAINADI AZUAN BIN ABDUL GHANIDATO LEE KOK CHUANPETER JOHN MCLOGHLINVANDA RUSSELL GOULD (ALTERNATE DIRECTOR TO PETER JOHN MCLOGHLIN)

DIRECTORS INTERESTS

According to the register of directors shareholdings, the interests of directors holding office at the end of the financialyear in shares in the Company and its related corporations during the financial year are as follows:-

NUMBER OF ORDINARY SHARES OF RM0.50 EACHAT AT

1.11.2008 BOUGHT SOLD 31.10.2009

DIRECT INTERESTS

DATO TAN HAN KOOK 46,040,866 50,000 - 46,090,866CHING SIEW CHEONG 5,329,291 - - 5,329,291RICHARD GEORGE AZLAN BIN ABAS 133,333 - - 133,333

INDIRECT INTERESTS

DATO TAN HAN KOOK (1) 8,076,079 - - 8,076,079VANDA RUSSELL GOULD (2) 36,876,666 - - 36,876,666

(1) Deemed interests through spouses shareholdings.

(2) Deemed interests through CVC Limited by virtue of Section 6A of the Companies Act 1965.

NUMBER OF WARRANTSAT AT

1.11.2008 BOUGHT SOLD 31.10.2009

WARRANTS A - 2005/2010

DIRECT INTEREST

CHING SIEW CHEONG 155,617 - - 155,617

INDIRECT INTEREST

DATO TAN HAN KOOK (1) 331,598 - - 331,598


34


DIRECTORS INTERESTS (CONTD)

NUMBER OF WARRANTSAT AT

1.11.2008 BOUGHT SOLD 31.10.2009

WARRANTS B - 2009/2013

DIRECT INTERESTS

DATO TAN HAN KOOK 3,657,330 - - 3,657,330CHING SIEW CHEONG 372,640 - - 372,640RICHARD GEORGE AZLAN BIN ABAS 12,499 - - 12,499

INDIRECT INTERESTS

DATO TAN HAN KOOK (2) 757,425 - - 757,425VANDA RUSSELL GOULD (3) 3,757,187 - (1,485,300) 2,271,887

(1) Deemed interests through spouses shareholdings as well as through Dato Tan Han Kooks interests in Amble Appeal Sdn. Bhd. and Tahako Sdn. Bhd. by virtue of Section 6A of the Companies Act 1965 in Malaysia.

(2) Deemed interests through spouses shareholdings.

(3) Deemed interests through CVC Limited by virtue of Section 6A of the Companies Act 1965.

By virtue of his interest in shares in the Company, Dato Tan Han Kook is deemed to have interests in shares in itsrelated corporations to the extent of the Companys interest, in accordance with Section 6A of the Companies Act 1965in Malaysia.

The other directors holding office at the end of the financial year did not have any interests in shares in the Companyor its related corporations during the financial year.

DIRECTORS BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (otherthan a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shownin the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract madeby the Company or a related corporation with the director or with a firm of which the director is a member, or with acompany in which the director has a substantial financial interest.

Neither during nor at the end of the financial year was the Group or the Company a party to any arrangements whoseobject is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of theCompany or any other body corporate.

SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

The significant event subsequent to the balance sheet date is disclosed in Note 46 to the financial statements.


35


AUDITORS

The auditors, Messrs. Crowe Horwath (formerly known as Messrs. Horwath), have expressed their willingness tocontinue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 11 FEBRUARY 2010

Dato Prof. Dr. Gan Miew Chee @ Gan Khuan Poh

Dato Tan Han Kook


36

STATEMENT BY DIRECTORS

We, Dato Prof. Dr. Gan Miew Chee @ Gan Khuan Poh and Dato Tan Han Kook, being two of the directors of Silver BirdGroup Berhad, state that, in the opinion of the directors, the financial statements set out on pages 39 to 79 are drawnup in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true andfair view of the state of affairs of the Group and of the Company at 31 October 2009 and of their results and cash flowsfor the financial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 11 FEBRUARY 2010

Dato Prof. Dr. Gan Miew Chee @ Gan Khuan Poh Dato Tan Han Kook

STATUTORY DECLARATION

I, Ching Siew Cheong, I/C No. 620521-10-7055, being the director primarily responsible for the financial managementof Silver Bird Group Berhad, do solemnly and sincerely declare that the financial statements set out on pages 39 to 79are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing thesame to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared byChing Siew Cheong, I/C No. 620521-10-7055, at Kuala Lumpur in the Federal Territoryon this 11 February 2010

Ching Siew CheongBefore meDatin Hajah Raihela WanchikNo: W 275Commissioner for Oaths


37

INDEPENDENT AUDITORS REPORT TO THE MEMBER OF SILVER BIRD GROUP BERHAD

Report on the Financial Statements

We have audited the financial statements of Silver Bird Group Berhad., which comprise the balance sheets as at 31October 2009 of the Group and of the Company, and the income statements, statements of changes in equity andcash flow statements of the Group and of the Company for the financial year then ended, and a summary of significantaccounting policies and other explanatory notes, as set out on pages 39 to 79.

Directors Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements inaccordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includesdesigning, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriateaccounting 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 auditin accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgement, including the assessment of risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considerinternal control relevant to the Companys preparation and fair presentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overallpresentation of the financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standardsand the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and ofthe Company as of 31 October 2009 and of their financial performance and cash flows for the financial year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:-

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

(b) We have considered the financial statements and the auditors report of the subsidiary of which we have not acted as auditors, which is indicated in Note 6 to the financial statements.

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

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

Other Matters

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

Crowe Horwath Lee Kok WaiFirm No: AF 1018 Approval No: 2760/06/10 (J)Chartered Accountants Partner

Kuala Lumpur11 February 2010

(INCORPORATED IN MALAYSIA)COMPANY NO : 277977 - X


38

THE GROUP THE COMPANY2009 2008 2009 2008

NOTE RM000 RM000 RM000 RM000

ASSETSNON-CURRENT ASSETSInvestments in subsidiaries 6 - - 205,605 105,428Property, plant and equipment 7 187,505 155,412 - -Other receivable 8 7,546 14,842 7,546 14,842Intangible assets 9 36,731 36,733 - -Long-term loan to subsidiaries 10 - - 25,373 130,067

231,782 206,987 238,524 250,337

CURRENT ASSETSInventories 11 12,475 18,841 - -Trade receivables 12 47,024 45,826 - -Other receivables, deposits

and prepayments 13 10,729 35,397 481 840Amount owing by subsidiaries 14 - - 6 816Tax refundable 1 136 - -Short-term deposits with a

financial institution 15 12,524 882 12,524 882Fixed deposits with licensed banks 16 2,435 227 - -Cash and bank balances 23,133 16,640 61 76

108,321 117,949 13,072 2,614

TOTAL ASSETS 340,103 324,936 251,596 252,951

EQUITY AND LIABILITIESEQUITYShare capital 17 157,090 157,059 157,090 157,059Share premium 18 36,077 36,066 36,077 36,066Merger deficit 19 (5,326) (5,326) - -Capital reserve 20 277 277 - -1% Irredeemable ConvertibleUnsecured Loan Stocks (ICULS) 21 - 42 - 42Warrants reserve 22 7,363 7,363 7,363 7,363Accumulated losses (49,962) (51,401) (7,198) (5,034)Exchange translation reserve 23 (3,120) (2,270) - -

142,399 141,810 193,332 195,496

MINORITY INTERESTS 271 277 - -

TOTAL EQUITY 142,670 142,087 193,332 195,496

BALANCE SHEETSAT 31 OCTOBER 2009


39

The annexed notes form an integral part of these financial statement.



NON-CURRENT LIABILITIESLong-term borrowing 24 7,392 1,056 - -Bonds 25 8,576 26,373 8,576 26,373

15,968 27,429 8,576 26,373

CURRENT LIABILITIESTrade payables 26 25,851 16,837 - -Other payables and accruals 27 8,018 7,662 739 1,028Amount owing to subsidiaries 14 - - 45 49Provision for taxation 173 173 5 5Commercial Papers 28 30,000 30,000 30,000 30,000Short-term borrowings 29 93,016 94,782 - -Bonds 25 18,899 - 18,899 -Bank overdrafts 30 5,508 5,966 - -

181,465 155,420 49,688 31,082

TOTAL LIABILITIES 197,433 182,849 58,264 57,455

TOTAL EQUITY AND LIABILITIES 340,103 324,936 251,596 252,951

NET ASSETS PER SHARE 31 45.32 sen 45.14 sen

Balance Sheets (contd)at 31 October 2009



40

INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 OCTOBER 2009



REVENUE 33 588,890 638,563 - -

COST OF SALES (508,303) (579,520) - -

GROSS PROFIT 80,587 59,043 - -

OTHER INCOME 2,842 4,405 5,221 6,745

83,429 63,448 5,221 6,745

ADVERTISING ANDPROMOTION EXPENSES (3,394) (3,780) - -

ADMINISTRATIVE EXPENSES (23,492) (20,485) (3,362) (3,741)

SELLING AND DISTRIBUTION EXPENSES (43,402) (48,472) - -

OTHER EXPENSES (4,430) (5,142) - -

PROFIT/(LOSS) FROMOPERATIONS 8,711 (14,431) 1,859 3,004

FINANCE COSTS (7,275) (8,703) (4,020) (4,974)

PROFIT/(LOSS) BEFORE TAXATION 34 1,436 (23,134) (2,161) (1,970)

INCOME TAX EXPENSE 35 (3) 1,859 (3) 1,239

PROFIT/(LOSS) AFTER TAXATION 1,433 (21,275) (2,164) (731)

ATTRIBUTABLE TO:-Equity holders of the Company 1,439 (21,209) (2,164) (731)Minority interests (6) (66) - -

1,433 (21,275) (2,164) (731)

EARNINGS/(LOSS)PER SHARE- Basic 36 0.5 sen (7.3sen)- Diluted 36 N/A N/A

N/A - Not applicable



41

AT

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RM

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RM

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RM

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RM

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RM

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Bal

ance

at 1

.11.

2007

117,

769

24,3

25(5

,326

)27

776

7,36

3(3

0,75

7)(7

92)

(323

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2,61

234

311

2,95

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pur

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of 1

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--

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issu

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12,5

64-

--

--

--

51,8

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51,8

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ase

of o

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--

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(1)

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--

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565

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488

9-

889

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on re

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sets

of a

n ov

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as

subs

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--

--

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(1,4

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sue

expe

nses

incu

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-(8

32)

--

--

--

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32)

-(8

32)

Inco

me

and

expe

nses

re

cogn

ised

dire

ctly

in

equ

ity-

(832

)-

--

-56

5(1

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)32

4(1

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)-

(1,4

21)

Loss

afte

r tax

atio

n fo

r th

e fin

anci

al y

ear

--

--

--

(21,

209)

--

(21,

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(66)

(21,

275)

Tota

l rec

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inco

me

and

expe

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fo

r the

fina

ncia

l yea

r-

(832

)-

--

-(2

0,64

4)(1

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4(2

2,63

0)(6

6)(2

2,69

6)

Bal

ance

at

31.1

0.20

08/1

.11.

2008

(b

alan

ce c

arrie

d fo

rwar

d)15

7,05

936

,066

(5,3

26)

277

427,

363

(51,

401)

(2,2

70)

-14

1,81

027

714

2,08

7

STATEMENTS OF CHANGES IN EQUITYFOR THE

Annual Report 2009

Documents

Transcript of Annual Report 2009