(Incorporated in Malaysia)
                                                                                                                                                              Appendix A
The 25th Annual General Meeting (AGM)
Discussion on Agenda 1

A few of the members present at the AGM sought clarifications from the Board of Directors on the following matters :

(1)    Warrants Reserves
(Page 78 – Note 18(e) of the of the Audited Financial Statements for year ended 31 March 2017)

A shareholder pointed out as per the Audited Financial Statements for year ended 31 March 2017, none of the shareholders exercise the warrants. He enquired what would be the accounting treatment if there were warrants being exercised.

The Board of Directors informed that at the moment the Company’s share price was around the range of RM1.25 to RM1.27 and the warrant exercise price was fixed at RM1.30 which is higher than the current market price. This may be one of the reason why there were no shareholders exercise their warrants at the moment.

In answer to a query if the Directors with shareholding in the Company would exercise the warrants, the Board informed that the exercise of warrants would depends on their individual decision.

In answer to a query if the Company has any strategy to increase the share price. The CEO, Mr Owee Geok Choon replied that the Directors are running the operation of the Company in a professional way and there were no speculation of shares. It would be a long term investment and hoping the shareholders are looking for long term growth together with the Company.

He added that the Directors were trying their best to perform well in sales, revenue and profit. In financial year ended 31 March 2017, the Company had achieved historical high turnover and profit. The Company had never failed to pay out dividends for the past 14 years since quoted and listed in year 2003. The overall dividends paid during the financial year 2017 including the final dividend to be paid is 37% of the Profit After Tax of the Company. The Company always try to strike a balance between shareholders’ benefit and future growth of the Company.

(2)    Growth Strategies
(Page 13 - Management Discussion & Analysis)

In answer to a shareholder’s enquiry on the current production capacity of the Company, Mr. Owee Geok Choon on behalf of the Board informed that the production for flat lamination were about 15,000 cubic meter/ month, moulding 3,000 cubic meter/month and distribution division was about 30,000 cubic meter/month for all the cannel product.

The new warehouse in Bukit Mertajam was expected to improve the production capacity by 5% and more than 5% for the turnover.

The Company would try trying to further enhance the export market from 15% to 19%. The Company’s overseas customers covered Singapore, Australia, Vietnam and Thailand. Going forward, the Group is looking into further expanding coverage to South Africa, Philippines and Middle East.    

In answer to a question why the Company was focusing more on domestic market while other listed company in the same field were focusing in export market, Mr. Owee answered  that the Company has operation in major cities in Malaysia. Although the sales are local sales but most of the local customers ie. Furniture manufacturer are export oriented whereby their end products were exported.                              
A shareholder enquired update of the status of land in Dengkil. The Management informed that the land for the proposed new factory has been converted into Industrial Land and earthwork is expected to commence in the month of September upon receive the approval from the Authorities. The completion expected by 2020. It were targeted to serve the customers in Central Peninsular as well as export market. The production capacity generated is about 5% of the total production capacity.

(3)    Positive factors to sustain the good performance momentum in financial year ended 31 March 2017 and negative factors which impale the momentum in future, which were stronger?

Management informed on the following :

Negative factors

•    Labours risk – The Company has implemented automation in production but it has limitation up to certain stage and human labour is still required to a certain extend.

•    Exchange rate risk – 40% to 50% of the material are imported and the currency fluctuation may affect the profit of the Company. Trying to minimise the risk via close monitor to the exchange rate, buy forward contract and export sales for hedge of the currency.

•    Construction industries – The slow growth of local construction industries may affect the Company’s sales. Hence, the Company has expanded the market to overseas countries such as Vietnam and Thailand, with growing economy.

Positive Factors

•    The Company’s raw material need not be fully labour intensive. They can easier for automation as compared to solid wood and can be easily used as a substitute product to solid wood furniture. This is an advantage over the solid wood material manufacturer who is the Company’s competitor.

•    With the strong support of the Management team, the Company is always looking to overcome the negative effect and yet maintain the growth of the Company’s business and to give good return to the shareholders.

(4)    Trade & Other Receivables amounting to RM4.3 million
(Page 73 - Note 14 of the Audited Financial Statements for year ended 31 March 2017)

The impairment loss of RM4.3 million consisted mainly carry forward amount of RM3.6 million (debts from a customer of Akati Impex Pte. Ltd. (AKATI), the Company’s subsidiary in Singapore) plus the RM431,000 incurred in financial year 2017 which is only around  0.05% of the total turnover.

Management updated the shareholders on the RM3.6 million debts from AKATI customer. As at the last year scheme creditors meeting hold, the debts restructuring manager, Messrs Deloitte Singapore informed that the total debts involved amounted to SGD120 million which included bank borrowings, debts of raw material suppliers, service providers, sub-contractors and other creditors. With Deloitte’s co-ordination, majority debtors agreed and concluded the following ways of repayment :

(i)    With new investors to join
(ii)    creditors be paid partially by cash and partially by shares to be allotted.
However, the new Investor due diligence exercise has identified certain liabilities amounted to SGD7.6 million which was not included in the debts restructuring scheme. The new Investors has request for such liabilities to be resolved.  In the Scheme of Creditors meeting held in July, the scheme creditors approved the extension of the effective date of the Scheme from 3 July 2017 to 28 September 2017.  Management would try their best to collect the debts.