Ar 2011

(Incorporated in Bermuda under the Companies Act, 1981 of Bermuda - Registration No.
42425) (Registered as a foreign company in Malaysia under the Companies Act, 1965 of Malaysia - Company No. 995199-H)
MULTI SPORTS HOLDINGS LTD ANNUAL REPORT 2011
2011
annual report
Annual R eport 2011
Multi Sports H oldings Ltd
CONTENTS
2 3 4 5 6 7 8 9
Financial Highlights Corporate Information Our Group Structure Our Milestones Press Releases TDR Listing Our Products Profile of Directors
12 Statement from the Executive Chairman 16 Corporate Governance Statement 27 Statement on Internal Control 29 Audit Committee Report 32 Financial Statements 75 Statistics of Shareholdings 77 List of Properties 78 Notice of Annual General Meeting for Year 2012 81 Appendix I - Proposed Amendments to the Bye-Laws of the Company Form of Proxy
M u l t i S p o r t s Ho ld in g s L t d
An n u a l Re p o r t 2 011
Financial Highlights
Revenue (RMB Million)

1000 800 600 400 200 0 385 307 862 500 400 613 474 300 200 100
Cash and Cash Equivalent (RMB Million)

462
CA
GR
29
.5%
243 161
24 2007 2008 2009 2010 2011 0 2007
30 2008 2009 2010 2011
Revenue by Product (RMB Million)

800 700 614 600 500 400 300 200 100 0 34 148 6 2007 181 119 46 9 2008 148 48 11 2009 181 54 234 346
191 57
168 23 2011
22 2010
Shareholders Equity (RMB Million)

800 700 250 600 500 400 300 200 100 0 53 2007 56 2008 2009 2010 2011 50 0 307 519 200 150 100 704 300
Gross Profit (RMB Million) / Margins (%)
CA
3 GR
2.1
%
199 161
260
116 85 27.8% 30.0% 33.9% 32.4% 30.2% 2011 161 139 114 2011 18.7%
2007
2008
2009
2010
Operating Profit (RMB Million) / Margins (%)

250 200 220 168 133 105 100 50 0 76 24.8% 27.3% 28.1% 27.4% 25.5% 24.8% 100 76 200
Profit after Tax / Margins (%)
C
150
AG
0 R3
.5%
150
R AG
92
20.
7%
23.9%
24.0%
2007
2008
2009
2010
2011
2007
2008
2009
2010
22.7%
50
Annual R eport 2011
Corporate Information
BOARD OF DIRECTORS Lin Huozhi (Executive Chairman cum Chief Executive Officer) Lin Liying (Executive Director) Chan Chiu Hung Alex (Independent Non-Executive Director) Gong Ane (Independent Non-Executive Director) Lee Kian Hu (Independent Non-Executive Director)
AUDIT COMMITTEE Chan Chiu Hung Alex (Chairman) Gong Ane (Member) Lee Kian Hu (Member) NOMINATION COMMITTEE Chan Chiu Hung Alex (Chairman) Gong Ane (Member) Lee Kian Hu (Member) REMUNERATION COMMITTEE Gong Ane (Chairperson) Chan Chiu Hung Alex (Member) Lee Kian Hu (Member) Lin Liying (Member) COMPANY SECRETARIES Secretarius Services Sdn. Bhd. Codan Services Limited - Assistant Company Secretary AGENT IN MALAYSIA PFA Corporate Consultants Sdn. Bhd. Level 18, The Gardens North Tower, Mid Valley City Lingkaran Syed Putra, 59200 Kuala Lumpur Tel : +603-2264 8888 Fax : +603-2282 2733 REGISTERED OFFICE IN BERMUDA Clarendon House, 2 Church Street Hamilton HM11, Bermuda Tel : +1 (441) 295 1422 Fax : +1 (441) 292 4720 REGISTERED OFFICE OF MALAYSIA BRANCH Level 18, The Gardens North Tower, Mid Valley City Lingkaran Syed Putra, 59200 Kuala Lumpur Tel : +603-2264 8888 Fax : +603-2282 2733 BUSINESS ADDRESS No. 18, Yongjun Road, Xibin Farm, Xibin Town Jinjiang City, Fujian Province, China Tel : +86 (595) 85082299 / 82058888 Fax : +86 (595) 85092030 e-mail : admin@baixingshoes.com
AUDITORS Foo Kon Tan Grant Thornton LLP 47, Hill Street #05-01, Singapore Chinese Chamber of Commerce & Industry Building, Singapore 179365 Tel : +65 6336 3355 Fax : +65 6337 2197 SHARE REGISTRAR IN BERMUDA Codan Services Limited Clarendon House, 2 Church Street Hamilton HM11, Bermuda Tel : +1 (441) 295 1422 Fax : +1 (441) 292 4720 SHARE REGISTRAR IN MALAYSIA Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North Tower, Mid Valley City Lingkaran Syed Putra, 59200 Kuala Lumpur Tel : +603-2264 3883 Fax : +603-2282 1886 SOLICITORS Conyers Dill & Pearman Pte. Ltd 9 Battery Road, #20-01, Straits Trading Building Singapore 049910 Tel : +65 6223 6006 Fax : +65 6223 7887 PRINCIPAL BANKER Industrial and Commercial Bank of China Chongde Road, Qingyang, Jinjiang City Fujian Province China 362200 Tel: + 86 (595) 8586 2680 STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad (Listed since 19 August 2009) Stock name : MSPORTS Stock Code : 5150 WEBSITE www.multi-sports.com.cn
Our Corporate Structure
The structure of our Group is set out below:
Annual R eport 2011
Our Milestones
1993 1995 1999 2000 2000 2003 2003 2003 2005 2006 2006 2008 2008 2008 2009 2010 2011
Production of Rubber (RB) shoe soles Production of Thermoplastic Rubber (TPR) shoe soles Jinjiang Huoxing Investment Co. Ltd (JHX) took over entire business of developing, manufacturing and selling shoe soles built by Mr Lin Huozhi In-house production of TPR compound pellets to improve raw material quality control, lower production costs and eliminate reliance on third party suppliers Established internal Research and Development (R&D) department to strengthen shoe-sole R&D and design efforts Production of Ethylene Vinyl Acetate model (EVA MD) I shoe soles In-house Production of TPU and RB components JHX received Enterprise of Credit Rating AA+ in recognition of credit worthiness Jinjiang Baixing took over the entire business of JHX Production of EVA MD II shoe soles Successfully developed EVA MD I and MD II shoe soles with enhanced elasticity and shock-absorbing characteristics In-house production of EVA compound pellets to reduce production costs, increase profit margin and eliminate reliance on third party suppliers Jinjiang Baixing received Quality Reliable Products award Jinjiang Baixings production process accredited ISO 9001:2000 Quality Management System Listed on Bursa Malaysia Construction of New Production Centre completed Listing of the Taiwan Depository Receipts on the Taiwan Stock Exchange
Press Releases
Annual R eport 2011
TDR Listing
Our Products
EVA MD II shoe soles series
EVA MD I shoe soles series
The EVA foam used in our production: is light in weight, soft, flexible and elastic; has excellent cushioning and shock-absorbance abilities; has good breathability; is resistant to wear and tear; is dimensionally stable; can be dyed to create shoe soles of various colours; is easily mouldable into various shapes; has good tensile strength; is waterproof; is resistant to ultraviolet radiation; and is non-toxic. Ideal for: running shoes; tennis shoes; basketball shoes; ping pong shoes; climbing shoes; skateboarding shoes; cross-training shoes; general-purpose sports shoes; and casual-wear sports shoes.
Although EVA is used in the production of both EVA MD II and EVA MD I shoe soles, our EVA MD II shoe soles are produced using a distinct production process with equipment that are technologically more advanced. As such, EVA MD II shoe soles have greater variability in designs and improved quality control.
TPR shoe soles series
RB shoe soles series
Our TPR shoe soles: are lighter than RB shoe soles; have good cushioning abilities; are durable; have good abrasion resistance; are flexible; provide good traction even under cold conditions; can be dyed into various colours; are easily mouldable into various shapes; have good tensile strength; have good tear strength; and are waterproof. Ideal for: running shoes; climbing shoes; skateboarding shoes; general-purpose sports shoes; casual-wear sports shoes; and is non-toxic.
Our RB shoe soles: are highly durable; are highly resistant to wear and tear; have good abrasion resistance; provide good traction; have excellent tensile strength; are weatherproof and waterproof; are oil-resistant; and are anti-static. Ideal for: skateboarding shoes; and casual-wear sports shoes. RB shoe-sole components are also incorporated into our EVA MD II and MD I shoe soles.
Annual R eport 2011
Profile of Directors
LIN HUOZHI Executive Chairman cum Chief Executive Officer (CEO) (Peoples Republic of China national) Age 49 Lin Huozhi was appointed to Multi Sports Board on 14 October 2008 as the Executive Chairman and CEO. He is the founder of the Group and has been instrumental in the Groups development, growth and success. He has more than 20 years of experience in the shoe-soleproduction industry and is responsible for the formulation and execution of the overall business strategies and policies of the Group. He is also responsible for implementing the management policies and overseeing the production and operation, marketing, quality control, public relations and Research and Development (R&D) of the Group. Mr Lin took up the trade of shoe manufacturing as a production worker in 1989. From 1991 to 1993, he partnered with a business partner to manufacture generic shoes soles. From 1993 to 1999, he began his own venture in the manufacturing of sports shoe soles. Mr Lin started Jinjiang Huoxing Investment Co. Ltd (JHX) in 1999, and his reputation allowed JHX to successfully procure orders from locally-renowned sports-footwear manufacturers such as Fujian Guohui Shoe Industry Co., Ltd. and 3610 (Fujian) Goods Co., Ltd. within a few months after its establishment. Mr Lin propelled JHXs growth until the transfer of JHXs business to Baixing in 2005. Mr Lin attended four (4) out of the five (5) Board meetings held in the financial year ended 31 December 2011.
LIN LIYING Executive Director (Peoples Republic of China national) Age 29 Lin Liying was appointed to Multi Sports Board on 14 October 2008 and is currently the Executive Director. She is also a member of the Remuneration Committee. She graduated from Huaqiao University with a Degree in Accounting and Information Technology in 2004. Upon her graduation, she joined JHX as deputy finance manager and was responsible for its accounting, finance and general administration. Ms Lin joined Baixing in 2005 and assumed the position of Vice General Manager (Sales, Marketing and Purchasing), which she currently still holds. She was progressively accorded further responsibilities to oversee Baixings procurement, marketing and distribution functions. Ms Lin attended all the five (5) Board meetings held in the financial year ended 31 December 2011.
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Profile of Directors (contd)
CHAN CHIU HUNG ALEX Independent Non-Executive Director (Peoples Republic of China national) Age 46 Chan Chiu Hung Alex was appointed to Multi Sports Board on 10 July 2009 as an Independent Non-Executive Director. He also serves as the Chairman of the Audit Committee and Nomination Committee and a member of the Remuneration Committee. He holds a Bachelor Degree with Honours in Finance from Hong Kong Baptist University. He has been a Certified Practising Accountant of Hong Kong Institute of Certified Public Accountants since 1998, a fellow member of the Association of Chartered Certified Accountants since 2003, an Associate in the Hong Kong Institute of Chartered Secretaries and Administrators since 2006, and a member of the Institute of Chartered Accountants in England and Wales since 2007. He had worked in various Hong Kong-listed companies, handling compliance, accounting, taxation and financial issues. In 2007, he moved on to join China Sports International Limited (China Sports), a company listed on SGX, as chief financial controller, a position he currently still holds. He oversees the management of the overall finance and accounting operations of China Sports. He is also responsible for implementing internal controls and corporate governance and practices, as well as liaising with external parties and regulatory bodies in respect of China Sports financial matters. Mr Chan attended four (4) out of the five (5) Board meetings held in the financial year ended 31 December 2011.
GONG ANE Independent Non-Executive Director (Peoples Republic of China national) Age 48 Gong Ane was appointed to Multi Sports Board on 10 July 2009 as an Independent Non-Executive Director. She serves as the Chairman of the Remuneration Committee and is also a member of the Audit Committee and Nomination Committee. She holds an MBA from the Open University of Hong Kong, and graduated from the Xiamen Jimei School of Finance in 1982. She is a member of the Institute of Certified Public Accountants, a certified tax agent, and a qualified land valuer. Upon graduation, she joined the finance department of an engineering company in Fujian. In 1985, she joined the investments division of Xiamen Special Economic Zone Joint-Development Company. In 1990, she moved on to the Xiamen Siming Correspondence Station of Zhonghua Accounting Correspondence School. In 1993, she joined Xiamen Siming Accounting Firm, and in 1998, she moved on to Xiamen Yonghe Accounting Firm. In 2003, she joined Xiamen Jinyonghe Tax Firm. She is presently the Director of Tax and Deputy Director of Accounting at Xiamen Jinyonghe Tax Firm. Ms Gong attended all the five (5) Board Meetings held in the financial year ended 31 December 2011.
Annual R eport 2011
Profile of Directors (contd)
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LEE KIAN HU Independent Non-Executive Director (Malaysian) Age 38 Lee Kian Hu was appointed to Multi Sports Board on 10 July 2009 as an Independent Non-Executive Director. He is also a member of the Audit Committee, Nomination Committee and Remuneration Committee. He graduated with a Bachelor of Economics, major in Economics and Accounting from University of Western Australia, Australia in 1997. He qualified as a Certified Practising Accountant, Australia in 2001. In 2002, he qualified as a Chartered Accountant, Malaysia and was granted with the Practicing Certificate which entitles him to engage in public practice under Malaysian Institute of Accountants (Membership and Council) Rules, 2001. After graduation, he gained experience working for a local accounting firm, and moved on to an international accounting firm. In 2003, he joined Chiang Huah Management Consultants Sdn. Bhd. as Company Director. He is now the managing partner of Hu & Co.. His working experiences include the areas of corporate and business advisory, accounting, audit and tax. Mr Lee attended all the five (5) Board meetings held in the financial year ended 31 December 2011.
Notes: 1. Directorship in Public Companies None of the Directors hold any directorship in any public companies incorporated in Malaysia or companies which are the subsidiaries of public companies incorporated in Malaysia. Family Relationship Save for the relationship between Lin Huozhi and Lin Liying as father and daughter, none of the other Directors are related to each other nor has any family relationship with the substantial shareholder of the Company. In addition, other than as disclosed, each of the Directors does do not have any personal interest in any business arrangement involving the Company. Non-Conviction of Offences None of the Directors has been convicted of any offences, other than traffic offences, within the past ten (10) years. No Conflict of Interest None of the Directors has any conflict of interest with the Company.
2.
3.
4.
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Statement from the Executive Chairman
On behalf of the Board of Directors of Multi Sports Holdings Ltd (the Board), I am pleased to present the Annual Report and the audited financial statements of the Group for the financial year ended (FYE) 31 December 2011.
Financial Review The Group recorded revenue of RMB861.7 (RM430.3) million and profit after taxation of RMB161.4 (RM80.6) million for the FYE 2011. The growth in revenue by 40.5% compared with FYE 2010 was mainly due to increase in the sales of EVA MD2 products. Sale volume for MD2 shoe soles grew by 62.9% compared with last year but offset by drop in sales volume for TPR, RB and MD1 shoe soles which dropped by 3.9%, 12.8% and 17.8% respectively. The change in sales mix is mainly due to the market trend and demand. With the expanded capacities in the new production centre since February 2011, our production capacity has increased from 35.6 million pairs to 45.0 million pairs. The production utilisation rate has maintained at high level at 90.5% compared to 90.8% in previous year. The gross profit margin declined by 2.2% to 30.2% from 32.4% for last year as this was mainly due to the higher production costs arising from rises in labour and raw material costs and higher depreciation expense on our production expansion. The Groups profit after taxation declined by 4.0% from 22.7% in the last year corresponding period compared with 18.7% in current year. The decrease in profit after taxation is mainly attributed to 1) drop in gross profit margin 2) higher Enterprise Income tax rate after the lapse of Regular Tax Reduction and Exemption Treatment 3) higher depreciation expense on office building and dormitories 4) recognition of Taiwan Depository Receipt listing expenses and additional provision for withholding tax. Finance costs increased by approximately 43.2% from RMB1.7 million for FYE2010 to RMB2.4 million in current year mainly due to the increase in the short-term bank borrowings in line with the expansion of our production capacity. Net cash for the Group remained high at RMB462.4 million compared with RMB242.7 million FYE 2011. Total assets increased from RMB722.0 million in FYE 2010 to RMB831.6 million in FYE 2011, an increase of 15.2%. In line with the strong financial performance for the year, net assets also rose by 35.7% from RMB518.7 million in FYE 2010 to RMB703.9 million in FYE 2011. Overall, we are pleased with the financial results of the Group.
Production Capacity Our production capacity and output of shoe soles were as listed below: Production capacity (pairs) Production output (pairs) Production utilisation rate (%) FYE2007 FYE2008 FYE2009 FYE2010 FYE2011 000 000 000 000 000 19,477 18,062 92.7% 24,583 22,119 90.0% 27,860 25,804 92.6% 35,595 32,306 90.8% 44,982 40,739 90.6%
Annual R eport 2011
Statement from the Executive Chairman (contd)
13
Corporate Exercise Proposed Sponsorship of the Taiwan Depository Receipts (TDR) Programme in Taiwan (Proposed TDR Programme) / Proposed Issuance and Allotment of up to 67,500,000 New Ordinary Shares of US$0.05 each in Multi Sports Holdings Ltd (Share(s)) amounting up to 15.0% of the existing Issued and Paid-Up Share Capital of Multi Sports Holdings Ltd, which formed the underlying Shares (Underlying Share(s)) for the TDR issued and allotted under the Proposed TDR Programme (Proposed Underlying Shares Issuance) The final issue price of the TDRs was fixed at TWD10.50 per TDR and the Company had received the proceeds amounted to TWD236.25 (RM24.768) million for its TDR offering in Taiwan in full. The Proposed Underlying Shares Issuance is deemed completed following the listing and quotation of the 67,500,000 Underlying Shares on the Main Market of Bursa Malaysia Securities Berhad on 30 December 2011, in conjunction with the listing of the TDRs on the Taiwan Stock Exchange on the same day.
Dividend As disclosed in the prospectus, the Board intends to recommend and distribute dividends of 20% of our net profit distributable to our shareholders with respect to the FYE 2010 and FYE 2011. In line with the commitment to our shareholders, the Board has declared a tax exempt final dividend of 3.11 sen per share in the respect of the FYE 2011. The level of dividends to be declared for FYE 2012 and future financial year would be determined by the Board after taking into consideration the performance, cash flow position and financial requirements of the Group as well as the prevailing economic conditions.
Overview of Chinas economy According to the preliminary estimation, the gross domestic product (GDP) of China in the first quarter of 2012 was RMB10,799.5 billion, a year-on-year increase of 8.1%. The value added of the primary industry was RMB692.2 billion, up by 3.8%; that of the secondary industry was RMB5,145.1 billion, up by 9.1%; and that of the tertiary industry was RMB4,962.2 billion, up by 7.5%. In the first quarter of 2012, the gross domestic product went up by 1.8% on quarterly basis. The total value added of the industrial enterprises above designated size was up by 11.6% year-on-year. An analysis on different types of enterprises showed that the value added growth of the state-owned and state holding enterprises went up by 7.2%; collective enterprises 9.7%; share-holding enterprises 13.8%; and 6.4% growth for enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan provinces. The year-on-year growth of heavy industry was 11.0%, and 13.2% for the light industry. All the 41 industrial divisions registered year-on-year growth. In terms of different areas, the growth in eastern, central and western regions was 8.9%, 16.9% and 14.5% respectively. In the first quarter of 2012, the sales ratio of industrial enterprises above designated size was 97.5%, or 0.3% age point lower than that in the same period of last year. The export delivery value of the industrial enterprises above designated size reached RMB2,317.5 billion, up by 7.4%. In March, the total value added of the industrial enterprises above designated size was up by 11.9% year-on-year, or 1.22% month-on-month. In the first two months of 2012, the profits made by industrial enterprises above designated size stood at RMB606.0 billion, down by 5.2% year-on-year. Among the 41 industrial divisions, 23 divisions registered year-on-year increase in profits. The total value of imports and exports in the first quarter of 2012 was US$859.37 billion, a year-on-year growth of 7.3%. The total value of exports was US$430.02 billion, up by 7.6%; and that of imports was US$429.35 billion, up by 6.9%. The trade surplus was US$670 million.
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The per capita total income of urban households was RMB7,382. Specifically, the per capita disposable income of urban households was RMB6,796, a year-on-year growth of 14.0%, or a real growth of 9.8% after deducting price factors. Of the per capita total income of urban households, the year-on-year growth of wage income was 13.8%; transferred income 15.1%; net income from business operation 13.1%; and 15.1% from property income. The per capita cash income of rural households was RMB2,560, up by 17.0% year-on-year, or 12.7% in real terms. Specifically, the growth of wage income was 17.5%; household operation income 15.4%; property income 12.3%; and 25.6% from transferred income. (Source: Overall Economy Development was stable in the First Quarter of 2012, National Bureau of Statistics of China, 13 April 2012)
Consumer goods / domestic retail sector In the first three (3) month of 2012, the total retail sales of consumer goods reached RMB4,931.9 billion, up 14.8% year-on-year. The total retail sales of consumer goods increased 1.18% in March 2012, month-on-month. In terms of different areas, the retail sales of consumer goods in urban areas was RMB1,356.3 billion in March 2012, up 15.2%, year-on-year; while that in rural areas was RMB208.7 billion, up 14.6%, year-on-year. In terms of different consumption patterns, the retail sales of goods gained RMB1,394.1 billion, up 15.4%, year-on-year, of which, the amount of enterprises (units) above designated size was RMB712.2 billion, up 17.1%, year-on-year. In March 2012, the consumer price index (CPI) went up by 3.6% year-on-year. The prices grew by 3.6% in cities areas and rural areas simultaneously. The food prices went up by 7.5%, while the non-food prices increased by 1.8%. The prices of consumer goods went up by 4.4% and the prices of services grew by 1.5%. In the first quarter, the overall consumer prices were up by 3.8% over the same period of previous year. (Source: Consumer Prices and Total Retail Sales of Consumer Goods in March 2012, National Bureau of Statistics of China, 16 April 2012)
Future Prospects We are optimistic that FYE 2012 will be promising for our Group, on the back of continuing growth in Chinas sportsfootwear, in tandem with Chinas economic growth, which continues to be robust as detailed above. As Chinas per capita total and disposable income continues to grow, we are optimistic that average consumption of sports shoes per person per annum will continue to grow with the increasing purchasing power of the PRC consumers. This will bode well for our Group, especially in light of the size of the domestic consumer market in China. On 30 December 2011, Multi Sports completed the TDR issuance and listing in Taiwan. With the listing of TDR on the Taiwan Stock Exchange, it enables the Group to access to the Taiwanese capital markets as well as to tap into additional fund-raising avenue. The Group may raise additional funding by issuing more TDRs to pursue opportunities for future expansion and growth. Whilst we are optimistic that the consumption and market demand for sportswear and sports-shoe soles will remain strong in China for FYE 2012, we continue to exercise discipline in managing our operating cost base. Despite promising conditions for continual growth in FYE 2012, we believe that prudent management of our Groups financial resources will be fundamental to sustainable long-term growth for our Group, and essential to weathering any unexpected conditions.
Annual R eport 2011
15
Corporate Social Responsibility Multi Sports commitment is to be a socially responsible company which contributes consistently to our communities in a positive manner. Together with our staff, suppliers, business partners and others, we help to create a more sustainable approach in our business operations, to reduce pollution, to improve health and safety measures in order to create a great workplace, to promote diversity, to be responsive to our customers health and wellness needs and to help build stronger local communities. Every year, our Group-wide corporate philanthropy and sponsorships are channelled to a mix of organisations, educational and cultural causes and the less-fortunate. Our Group will continue to identify activities where its support will make an impact.
Acknowledgement and Appreciation On behalf of the Board, I sincerely wish to acknowledge our people for their continued and dedicated effort in their work to create success for our Company. We are where we are because of the hard work and supportive management team and strong team spirit of our staff as well as the strong and continuous support and understanding of our valued customers, suppliers and other stakeholders. Our sincere and heartfelt thanks to them and we look forward to the continued good working relationship together. We remain committed to our goals of providing shareholders value. We would also like to thank the Malaysian government and various regulatory authorities for their support and assistance.
Lin Huozhi
Executive Chairman 31 May 2012
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Corporate Governance Statement
The Board and Management of Multi Sports recognise the importance of good corporate governance in running the operations of the Group and in all of its dealings and are ever mindful of the trust and expectations placed upon their shoulders by the shareholders and stakeholders. In fulfilling the respective fiduciary duties, the principles of transparency, integrity and professionalism are incorporated into all levels of the Groups corporate hierarchy. It is hoped that through this common value system, shareholders value will not just be safeguarded but the performance of the Group be further enhanced and brought a notch higher. Corporate governance principles are adopted in activities undertaken by the Group and the Board has initiated moves to comply with the best practices of principles of good corporate governance as set out in the Malaysian Code on Corporate Governance (the Code) and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Board is pleased to report to the shareholders on the manner of application of these principles contained in the Code and the extent of compliance with the best practises set out therein during the financial year just ended.
1. DIRECTORS
1.1 Board of Directors The Board is entrusted with and is fully responsible for the Groups overall strategy, growth and direction including its financial performance. The Board provides direction and guidance and has effective control of the Group. It maintains a full control of the Groups activities through the matrix of authority filtering down to the various components of the Group. The Executive Chairman is responsible for ensuring the Boards effectiveness in conducting its business and in fulfilling its responsibilities to stakeholders. He oversees the day-to-day operations and implementation of the Boards corporate and operational policies and strategies. In line with the pre-determined authority levels, certain issues such as approval of interim and annual results, significant acquisitions and disposals, long-term planning and major capital expenditure are subject to collective decision by the Board. Certain responsibilities are delegated to the Audit Committee which operates within clearly defined parameters as set out in the Audit Committees Terms of Reference, details of which are set out on pages 29 and 30 of this Annual Report. This is for an added degree of independence and objectivity on matters within the ambit of the Audit Committee. The Board has also set up a Nomination Committee and a Remuneration Committee.
1.2 Board Balance The Board comprises members of diverse expertise, each of whom has a different set of experience and management skills essential for the effective running of the Group by the coming together of their invaluable ideas, knowledge and resources. As at the date of this Statement, there are five (5) Directors (two (2) being female Directors) on the Board of Multi Sports, of whom three (3) are Independent Non-Executive Directors and two (2) are Executive Directors. The profile of each Director is set out on pages 9 to 11 of this Annual Report.
Annual R eport 2011
Corporate Governance Statement (contd)
17
The Executive Chairman cum Chief Executive Officer together with the Executive Director are responsible for implementing policies and decisions of the Board. Assisted and supported by a strong Management team, they are tasked with the respective day-to-day operations and to oversee the overall development and implementation of the Groups business and corporate strategies. The Independent Non-Executive Directors, besides functioning as a check and balance, bring an element of objectivity to the Board and provides the Board with a diverse set of experience, expertise and independent judgement to better manage and run the Group. Under part 2 of the Code, the role of the Chairman and Chief Executive Officer should be separated and should not be performed by the same individual. The Board continues to be mindful of the combined role of the Executive Chairman and Chief Executive Officer positions currently held by Mr Lin Huozhi. In the best interest of the Group, this combined role of Mr Lin Huozhi is maintained as his valuable knowledge in the business operations is essential to the effective management of the Group. The balance of authorisation is ensured by the operation of the senior management and the Board, which comprises experienced and fair minded individuals. The Board currently comprises two (2) Executive Directors and three (3) Independent Non-Executive Directors and therefore has a strong independence element in its composition. The Board had identified Mr Chan Chiu Hung Alex to act as the Senior Independent Non-Executive Director to provide shareholders with an alternative to convey their concerns and seek clarifications from the Board. All Board decisions are arrived at after due discussion and consultation and no individual Director or group of Directors has any undue influence or dominance on the Boards decision making process.
1.3 Board Meetings The Board, chaired by the Executive Chairman, meets on a quarterly basis to review and approve the results of each financial quarter. Additional ad-hoc meetings will be called if so needed. The Chairman of the Audit Committee would report to the Directors at Board meetings on decisions and key issues that have been raised at the Audit Committee meetings including any areas of emphasis that may have been expressed by the Audit Committee. During the financial year ended 31 December 2011, there were five (5) Board Meetings held to which the attendance is as follows: Name of Director Lin Huozhi Lin Liying Lee Kian Hu Gong Ane Chan Chiu Hung Alex No. of Meetings Attended 4/5 5/5 5/5 5/5 4/5
In the intervals between Board meetings, for exceptional matters requiring urgent Boards decisions, Boards decisions are obtained via circular resolutions which are supported with information necessary for an informed decision.
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1.4 Access to and Supply of Information to the Board Prior to the convening of a Board meeting, the notice and agenda for that Board meeting are furnished to each Board member and the full set of the relevant Board Papers are also provided to them for their perusal. The Board Papers contain information pertinent to the matters to be deliberated at the coming meeting and any details or clarifications that the Directors may require on the agenda items would be furnished upon request. In a potential conflict of interest situation, the Director concerned would be required to declare his interest and abstain from decision making. The Company Secretary and/or the representative(s) shall attend all Board meetings as well as the Audit Committee meetings of the Company. Their duties include minuting the proceedings and decisions of Board meetings and ensuring that Board proceedings are properly adhered to, providing advice and ensuring that related statutory obligations namely compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Malaysian Companies Act, 1965, the Bermuda Companies Act, 1981 and any other relevant requirements as may be applicable to the Company are complied with. They also advise the Board on matters relating to corporate governance, Directors responsibilities in compliance with the relevant legislation and regulations and keep them updated of new statutory and regulatory requirements relating to the discharge of duties and responsibilities of Directors. Members of the Board would have complete and unimpeded access to the services and advice of the Company Secretary. They also have direct and unrestricted access to senior management of the Company for information relating to the affairs of the Group and have authority to seek external professional advice at the expense of the Company if they so require.
1.5 Appointments and Re-elections to the Board Matters relating to the appointment of Directors are dealt with by the Nomination Committee in considering appointments of new Directors. The Nomination Committee takes into consideration the mix of skills and expertise, experience and potential contributions of the potential incoming Director. The Bye-laws of the Company provides that all Directors including the Managing Director shall retire from office at least once every three (3) years and all retiring Directors shall be eligible for re-election at the Annual General Meeting (AGM) in which they retire. A retiring Director shall remain in office until the close of the meeting at which he retires. The Bye-laws further provide that Directors who are appointed by the Board during the financial period before an AGM are subject to retirement and shall be eligible for re-election by the shareholders at the next AGM of the Company to be held following their appointments. The names of Directors seeking for re-election at the forthcoming 2012 AGM of the Company are Mr Chan Chiu Hung Alex and Ms Gong Ane under Bye-law 86 .
1.6 Directors Training All the Directors of the Company have attended and completed the Mandatory Accreditation Programme for Directors of Public Listed Companies conducted by Bursatra Sdn. Bhd. within the stipulated timeframe as required by the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. As part of the continue learning process, the Directors will attend seminars and courses to keep themselves updated on regulatory and corporate governance developments besides enhancing their professionalism and knowledge to effectively discharge their duties and obligation. In addition, the Directors were also briefed by the Company Secretary from time to time on updates and changes of statutory requirements such as amendments to Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
Annual R eport 2011
19
During the financial year ended 31 December 2011, all the Directors have attended development and training programmes facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. The training programmes and seminars attended by the Directors are as follows: Name of Director Lin Huozhi Training programme Gong Ane 2012 (Shenzhen Tian Xingjian Impact and Response of Capital Market 2012) 2012 (Shenzhen Tian Xingjian Impact and Response of Capital Market 2012) Ernst & Young, Malaysia: Seminar on the Expanded Governance Role of the Audit Committee, and Recent Changes to the Financial Reporting Standards Malaysian Institute of Accountants: Government Financial Assistance: Enabling Business Expansion and Growth (National Accounting Institute Courses in relation to tax matters) Listco Professional Development Programme: Listing Rules Compliance on Fund Raising Exercise of Listed Company IFRS/HKFRS 2011 Financial Reporting Updates HKFRS Update and Development Claiming Tax Treaty Benefits in China by Hong Kong Companies in Principle and in Practice Listing Rule Requirement on Reverse Takeover and its Related Issues Risk Intelligent Enterprise Impairment Testing: Back to Basic Refresher An Overview of Criminal Investigation Involving Listed Companies Fair Value Measurements: What is the Latest? A Quick Recap on Recent Amendment to Listing Rules on Corporate Government How to do Valuation for M&A Purpose?
Lin Liying
Lee Kian Hu
Chan Chiu Hung Alex
1.7 Directors Remuneration The Company has established a Remuneration Committee. There are presently two (2) Directors holding executive positions and drawing salaries from the Group. The remuneration packages for the Executive Directors of the Company are, to a certain extent, dictated by market competitiveness and are tailored to retain and motivate Directors of the quality required to manage the business of Multi Sports Group and to align the interests of the Directors with those of the shareholders. The contribution, responsibilities and performance of each Executive Director are also taken into account when determining their respective remuneration packages whilst the remuneration of the Non-Executive Directors is determined in accordance with their experience and the level of responsibilities assumed.
20
The remuneration packages of the Directors for the financial year ended 31 December 2011 are as follows: Salaries & other Category Fees emoluments (RMB) (RMB) Executive Directors Non-Executive Directors Total 456,638 456,638 3,091,449 3,091,449
Total (RMB) 3,091,449 456,638 3,548,087
The number of Directors whose total remuneration falls within the following bands is as follows: Range of Remuneration (RMB) 150,001 200,000 750,001 800,000 1,50,001 1,550,000
Executive 2 1
Non-Executive 3
2.

COMMITTEES OF THE BOARD

The three (3) Committees set up to assist the Board have specific powers and responsibilities. The Chairman of the respective committees reports the outcome of decisions and recommendations to the Board and minutes of committees meetings would be tabled for the Boards notation. Notwithstanding recommendations from the committees, the ultimate decision on all matters lies with the entire Board. 2.1 Nomination Committee The role of the Nomination Committee is to recommend suitable candidates for appointment to the Board. The Committee is required to evaluate the effectiveness of the Board as a whole, the various committees of the Board and to assess the contribution of each individual Director to the effectiveness of the Boards decision-making process on an annual basis. The Nomination Committee comprises the following Directors: Chan Chiu Hung Alex (Chairman, Independent Non-Executive Director) Gong Ane (Independent Non-Executive Director) Lee Kian Hu (Independent Non-Executive Director) During the financial year ended 31 December 2011, the Nomination Committee had one (1) meeting which was attended by all the members.
2.2 Remuneration Committee The Remuneration Committee is responsible for drawing up policy framework and to make recommendations to the Board on the remuneration packages of the Executive Directors of the Company. The Executive Directors take no part in decisions relating to their remuneration. The Board as a whole determines the remuneration of the Non-Executive Directors with the Directors concerned abstaining from participating in decisions in respect of their individual remuneration.
Annual R eport 2011
21
The remuneration of the Non-Executive Directors is determined in accordance with their experience and level of responsibilities assumed. Non-Executive Directors are remunerated in the form of Directors fees as approved by the shareholders. The Remuneration Committee comprises the following Directors: Gong Ane (Chairperson, Independent Non-Executive Director) Chan Chiu Hung Alex (Independent Non-Executive Director) Lee Kian Hu ((Independent Non-Executive Director) Lin Liying (Executive Director)
During the financial year ended 31 December 2011, the Remuneration Committee had one (1) meeting which was attended by all the members.
2.3 Audit Committee The main purpose of the Audit Committee is to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Group. The report of the Audit Committee, its terms and references and the list of committee members are set out on pages 29 to 31 of this Annual Report.
3. SHAREHOLDERS
3.1 Shareholders Communication and Investor Relation The Board recognises the importance of an effective communications channel between the Board, shareholders and general public. The Companys annual reports, quarterly announcements of the quarterly financial results, circulars to shareholders and announcements on matters pertaining to corporate and other developments in the Group serve as the Companys primary medium for dissemination of information to the shareholders, stakeholders and the general public. The Company has also established a website www.multi-sports.com.cn which provides another communication channel for investors and shareholders to access corporate information and news related to the Group as well as another communication whereby investors can communicate with the Company directly.
3.2 Annual General Meeting (AGM) and Special General Meeting (SGM) The principal forum for shareholders to interact and have dialogue with the Board is at the AGM of the Company. Notice of AGM and the annual report are disseminated to the shareholders at least twenty-one (21) days before the date of the AGM. Any special business items within the agenda for the AGM would be accompanied by an explanatory statement in order for the shareholders to have a better understanding of the issues involved and thereby, better evaluation and decision-making. For certain business/corporate proposals where shareholders approval is required, circulars are sent to shareholders within the prescribed timeframe in compliance with the regulatory and statutory provisions. These circulars provide the necessary details and are sufficiently comprehensive to enable shareholders to arrive at an informed decision on the proposals to be tabled at the AGM/SGM. During the AGM/SGM, shareholders would have the opportunity to seek clarification pertaining to the Group or to request for information regarding operations, business activities, developments and direction of the Group. Any queries raised would be attended to by the Board and members of senior management would be at hand to provide the necessary information.
22
4.
ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting The Directors are duty bound to present a fair and accurate assessment of the Groups financial position and prospects to the shareholders and stakeholders. The Audit Committee plays a crucial role in assisting the Board to scrutinise information for disclosure to shareholders in order to ensure accuracy, adequacy, completeness and timeliness. The Board is responsible for the preparation of the financial statements of the Company and ensuring that they are drawn up in accordance with the provisions of the Bermuda Companies Act, 1981 and International Financial Reporting Standards. The Statement of Responsibility by Directors in respect of the preparations of the annual audited financial statements of Multi Sports and the Multi Sports Group is found on page 26 of this Annual Report.
4.2 Internal Control and Risk Management The Board has overall responsibility for maintaining a sound system of internal controls, internal procedures and guidelines that together serve to provide a reasonable assurance of an effective and efficient operation and always strive to comply with the relevant laws and regulations. The internal controls in place are meant to safeguard the Groups assets and thus, shareholders investments. A key component in carrying out this responsibility is to ensure that risks are appropriately and adequately managed within the Group. However, it must be noted that such controls by their nature can only provide reasonable assurance but are not absolute assurance against the risk of material errors, frauds or losses occurring. An overview of the state of internal controls within the Group is set out in the Internal Control Statement on pages 27 and 28 of this Annual Report.
4.3 Relations with the Auditors The Board has a formal, professional and transparent relationship with both the internal and external auditors of the Group. The auditors have direct access to the Board and to Audit Committee thus ensuring that issues highlighted are treated objectively and are free from any potential management influence.
The Audit Committee has the liberty to meet with the external auditors as and when deemed necessary. The responsibility of the Audit Committee in relation to both the internal and external auditors are described on page 30 of this Annual Report. During the financial year ended 31 December 2011, the Audit Committee has met with the external auditors twice without Executive Board members present.
Annual R eport 2011
23
5.
ADDITIONAL COMPLIANCE INFORMATION

5.1 Utilisation of Proceeds (a) Utilisation of Initial Public Offer ( IPO) Proceeds The gross proceeds received from the Initial Public Offering of RM48.96 million will be utilised as follows: Proceeds Amounts Amount Intended Raised Utilised Unutilised Time Frame Utilisation RM000 RM000 RM000 for Utilisation Explanations (i) Expansion of production capacity - Production Centre 25,000 89,807 (64,807) (1) - Production line 5,000 5,600 (600) 24 months (1),(2) (ii) Expansion of sales and marketing network in China (iii) Advertising and branding (iv) Enhancement of product development capabilities (v) Working capital (vi) Estimated listing expenses Total 30,000 95,407 (65,407)
3,960 3,000 4,000 1,000 7,000
2,412 1,091 1,000 7,695
3,960 588 2,909 - (695)
18 months 24 months 24 months 24 months Immediate
(2) (2) (2) (3)
48,960 107,605
Notes: (1) The construction of a new production centre has been completed and the total cost of production centre was RM89.8 million, out of which RM25 million was financed via the IPO proceeds and the deviation of RM64.8 million was financed via funds generated internally by the Group. The total expansion cost of machinery and equipment amounting to RM5 million was financed via IPO proceeds and the deviation of RM0.6 million was financed via internal generated funds. IPO proceeds will be utilised within the estimated timeframe given and the Group does not expect any material deviation. The total listing expenses were RM7.7 million, out of which RM2.7 million was offset against share premium as these transaction costs were directly relating to the public initial offering and the issuance of equity instrument. The deviation of RM0.7 million was financed via the funds generated internally by the Group.
(2)
(3)
24
(b)
Utilisation of Rights Share Proceeds The Rights Share Issue raised gross proceeds were RM34.20 million and the proceeds have been utilised in the following manner: Utilisation (i) Expansion of production capacity - Production Centre & Production Line (ii) Estimated issuance expenses Total Proceeds Amounts Amount Raised Utilised Unutilised RM000 RM000 RM000 Explanations
33,200 1,000
28,884 1,000
4,316 (1)
34,200 29,884
Note: (1) The total Rights Share expenses amounting to RM0.94 million were offset against share premium as these transaction costs were directly relating to the issuance of Rights Share. The deviation of RM0.06 million was utilised as working capital by the Group.
(c)
Utilisation of Taiwan Depository Receipts (TDR) Proceeds The TDR Issue raised gross proceeds were TWD236.25 (RM24.768) million and the proceeds raised were planned to be utilised in the following manner: Utilisation Expansion of (i) production capacity - Production Line (ii) Working Capital (iii) Estimated issuance expenses Total Proceeds Amounts Amount Raised Utilised Unutilised RM000 RM000 RM000 Explanations
14,595 7,873 2,300
2,653
14,595 7,873 (353)
(1) (2) (3)
24,768 2,653
Note: (1) (2) The Company has completed its TDR issuance and listing on 30 December 2011. TDR proceeds have been deposited into a bank in Hong Kong and will be transferred to its subsidiary as working capital in due course. The total listing expenses were RM2.653 million, out of which RM0.94 million was offset against share premium as these transaction costs were directly relating to the public initial offering and the issuance of equity instrument. The deviation of RM0.353 million was financed via the funds generated internally by the Group.
(3)
Annual R eport 2011
25
5.2 Shares Buy-Back The Company did not undertake any share buy-back exercise.
5.3 Options or Convertible Securities The Company has not issued any options or convertible securities during the financial year.
5.4 Depository Receipt (DR) Programme During the financial year, the Company was involved in the TDR Programme of which has been listed and quoted on the Taiwan Stock Exchange on 30 December 2011. Far Eastern International Bank Co., Ltd. has been appointed as the depository institution for the TDR Programme with Citibank Hong Kong as the custodian of Multi Sportss shares in Malaysia for the TDR. The total number of shares that can be purchased under the TDR shall not exceed 15% of the total issued and paid-up capital of Multi Sport at any point in time. As at 30 April 2012, the total number of Multi Sport shares issued was 517,500,000 Ordinary Shares of USD0.05 each. The total number and percentage of the securities for which the DRs are issued against its issued and paid-up capital was 67,500,000 Ordinary Shares of USD0.05 each at an issue price of RM0.37 per share, 13.04%.
5.5 Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company, its subsidiaries, the Directors and the Management by the relevant regulatory bodies during the financial year.
5.6 Non-Audit Fees There were no non-audit fees paid or payable to the external auditors by the Group for the financial year.
5.7 Variation in Results There was no material variance between the results for the financial year and the audited results previously announced. No profit forecast was announced or published by the Group and hence, no comparison is made between actual and forecast results.
5.8 Profit forecast There was no profit forecast issued by the Company and its subsidiary companies during the financial year.
5.9 Profit Guarantee There were no profit guarantees given by the Company and its subsidiary companies during the financial year.
5.10 Material Contracts During the year under review, the Company and its subsidiaries did not enter into material contracts involving Directors and major shareholders interest.
26
5.11 Revaluation Policy on Landed Properties The Group does not revalue its landed properties classified as Property, Plant and Equipment unless the need arises. The existing policy of showing the assets at cost less accumulated depreciation and impairment losses as disclosed in Note 4 to the financial statements is a generally accepted accounting practise as well as a cost-saving measure.
5.12 Recurrent Related Party Transactions (RRPT) There was no Shareholders Mandate obtained in respect of RRPTs during the financial year-end.
6.

STATEMENT PERTAINING TO THE ALLOCATION OF SHARE OPTIONS TO EMPLOYEES

To date, the Company has not established any share options for employees. In the event the Company establishes such employees share options scheme (ESOS), the Audit Committee would carry the responsibility of reviewing all allocations granted to eligible employees to ensure compliance with the criteria as would have been spelt out in the bye-laws of the Companys proposed ESOS.
7.

COMPLIANCE WITH THE CODE

Except for matters specifically identified, Multi Sports was substantially in compliance with the Principles and Best Practices in Corporate Governance throughout the financial year ended 31 December 2011.
8.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors are required by the Malaysian Companies Act, 1965 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year. The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all applicable accounting standards have been followed. The Directors have responsibility for ensuring that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial position of the Company and the Group and which enable them to ensure that the financial statements comply with the Malaysian Companies Act, 1965. The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and the Group and to prevent and detect fraud and other irregularities.
Annual R eport 2011
Statement on Internal Control

(pursuant to paragraph 15.26(b) of Listing Requirements of Bursa Malaysia Securities Berhad)
27
The Malaysian Code of Corporate Governance sets out as a principal that the Board of Directors of a listed company should maintain a sound system of internal control to safeguard shareholders investment and the Groups assets. The Board is committed to maintaining a sound system of internal controls in the Group and is pleased to provide the following statement pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements.
BOARD RESPONSIBILITIES
The Board recognises that it is responsible for maintaining a sound system of internal control including the establishment of a robust control framework to assist management in mitigating business process and regulatory risks. As with any internal control system, controls can only provide reasonable but not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminating the risk of failure to achieve business objectives. As part of the Boards commitment to promote good internal controls, the Board will continue to take necessary measures to enhance its internal control via various measures.
RISK MANAGEMENT FRAMEWORK

The Board recognises the need for an effective risk management practice and to maintain a sound system of internal control. The Board has formalised the Groups risk management framework in which the existence of significant risk of the Group has been identified and rated using its adopted risk quadrant. A risk profile has been compiled to help the Board and senior management to prioritise their focus on high risks. Significant risk matters are brought to the attention of the Directors and the risk profile has been discussed at Board meetings.
INTERNAL AUDIT
The Board recognises the need for an internal audit function and has engaged the services of an independent professional accounting and consulting firm to provide much of the assurance it requires on the effectiveness as well as the adequacy and integrity of the Groups systems of internal control. The Board has established that the internal audit functions are independent of the activities or operations of the operating units and report directly to the Audit Committee. The internal audit adopts a risk-based approach in developing its audit plan based on the Groups key risks profile. The scope of the internal audit was discussed and approved by the Audit Committee. Scheduled internal audits are carried out by the internal auditors and internal audit reports are presented to the Audit Committee during its quarterly meeting. The internal auditors also monitor the implementation of action plans recommended to improve on areas where control deficiencies were identified during the financial year.
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Statement on Internal Control (contd)
KEY ELEMENTS OF INTERNAL CONTROL

During the financial year ended 31 December 2011 and prior to signing of the published financial statements, the Board has continued its ongoing process of identifying, evaluating and managing of key financial, operational and compliance risks facing the business. Control details are as follows: Quarterly financial results are presented to the Audit Committee to ensure all matters of concern are noted by the Board; There is a clearly defined delegation of responsibilities of the Board and the management of the Group who ensure that appropriate control procedures are in place; Weekly management meetings are held amongst the Group to review operational matters that includes, Sales and Marketing, Operational Production, Cash Flow and any other related matters that may arise; The Company has a policy on the financial limits and approving authority for its revenue and expenditure, and capital expenditure with appropriate approving authority thresholds to ensure all revenue and expenditure, and capital expenditure are in line with the Groups strategic objectives; The Audit Committee is tasked by the Board with the duty of reviewing the effectiveness of the Groups system of internal controls; and The Audit Committee, on behalf of the Board, review and hold discussion with management to deliberate on action plans addressing the internal control issues identified by the external auditors.
Weaknesses in Internal Control Resulting in Material Losses

There were no material losses incurred during the current financial year as a result of weaknesses in internal control. The management of the Company continues to take measures to strengthen the internal control environment.
Review of the statement by external auditors

The external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report of the Company for the financial year ended 31 December 2011 and nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.
Summary
The Board is pleased to disclose that the Groups internal control system is adequate and is responsive to support its business objective and its dynamic industrial environment. To this end, the Board remains committed to improve the control mechanism to achieve optimal performance results.
This statement was made in accordance with a resolution of the Board of Directors passed on 18 May 2012.
Annual R eport 2011
Audit Committee Report
29
The Audit Committee serve to assist the Board in ensuring the effectiveness of the Groups system of internal control, risk management and financial reporting practices of the Group.
1.
COMPOSITION OF THE AUDIT COMMITTEE

The Audit Committee of Multi Sports comprised the following members:Chan Chiu Hung Alex (Chairman), Independent Non-Executive Director Gong Ane (Member), Independent Non-Executive Director Lee Kian Hu (Member), Independent Non-Executive Director
2.
TERMS OF REFERENCE
2.1 Composition of the Audit Committee The Audit Committee must be composed of no fewer than 3 Non-Executive Directors of which the majority shall be Independent Directors. All Audit Committee members should be financially literate, with at least one member:(i) (ii) must be a member of the Malaysian Institute of Accountants; or if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years working experience and: (a) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or (b) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or fulfils such other requirements as prescribed or approved by the Exchange.
(iii)
No Alternate Director shall be appointed as a member of the Committee. The Chairman of the Audit Committee should engage on a continuous basis with the senior management, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company. All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board must review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference.
2.2 Secretary of the Audit Committee The Company Secretary of the Company shall act as Secretary of the Audit Committee.
30
Audit Committee Report (contd)
2.3 Duties and Responsibilities of the Audit Committee The Audit Committee shall review and report to the Board on the following key matters:i. To review the appointment, resignation, conduct and audit plans of the Internal and External Auditors; To review the assistance given by the employees of the Company to the external auditors and the internal auditors; To review the quarterly results and year end financial statements, prior to the approval by the Board; To review any related party transactions and conflict of interest situations that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; To oversee the Companys internal control structure to ensure operational effectiveness and efficiency, reduce risk of inaccurate financial reporting, protect the Companys assets from misappropriation and encourage legal and regulatory compliance; To review the allocation of options pursuant to a share scheme for employees; and To report promptly to the Bursa Malaysia Securities Berhad where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements.
ii. iii. iv.
v.
vi. vii.
2.4 Authority of the Audit Committee The Committee shall at the expense of the Company have the following authority:i. ii. iii. iv. v. vi. to investigate any matter within its terms of reference; to have the resources which are required to perform its duties; to have full and unrestricted access to any information pertaining to the Company; to have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; to obtain independent professional or other advice; and to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.
Attendance of any particular Audit Committee meeting by other Directors and employees of the Company shall be at the Audit Committees invitation and discretion and must be specific to the relevant meeting.
3. MEETINGS
During the financial year ended 31 December 2011, the Audit Committee held four (4) meetings. The details of attendance of each Director are as follows: Name of Director Chan Chiu Hung Alex Gong Ane Lee Kian Hu No. of Meetings Attended 3/4 4/4 4/4
Annual R eport 2011
Audit Committee Report (contd)
31
4.

SUMMARY OF ACTIVITIES
A brief summary and an overall view of the activities of the Audit Committee in discharging their duties and responsibilities during the financial year ended 31 December 2011 are as follows:i. ii. iii. iv. reviewed the quarterly financial results of the Group prior to their release to Bursa Malaysia Securities Berhad; reviewed the changes in accounting policies; reviewed any significant or unusual events; and met up with the external auditors prior to the commencement of the audit of the Groups financial statements for the financial year ended 31 December 2011 to discuss the scope of the statutory audit and to review the audit plan.
5.

INTERNAL AUDIT FUNCTION

The internal audit function is essential in assisting the Audit Committee in reviewing the state of the systems of internal control maintained by the management. The Group had established an internal audit function upon listing. Currently, this function is outsourced to an internal audit services company and functionally, the internal auditor team reports to the Audit Committee directly. The cost incurred for the internal audit function in respect of the financial year was RM80,000.
FINANCIAL STATEMENTS
33 Directors Report 37 Statement by Directors and Statutory Declaration 38 Independent Auditors Report 40 Statements of Financial Position 41 Consolidated Statement of Comprehensive Income 42 Consolidated Statements of Changes in Equity 43 Consolidated Statement of Cash Flows 44 Notes to the Financial Statements
Annual R eport 2011
Directors Report
33
The directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2011.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of its subsidiaries are disclosed in Note 6 to the financial statements. There were no significant changes in the nature of these activities of the Company and its subsidiaries during the financial year.
FINANCIAL RESULTS
Group Company RMB000 RMB000 Profit for the year attributable to equity holders 161,369 31,684
DIVIDENDS
Dividend paid and declared by the Company since the end of the previous financial year were as follows:(i) A final tax-exempt dividend of RM0.025 (RMB 0.053) per ordinary share amounting to RM11,250,000 in respect of the financial year ended 31 December 2010 paid on 12 September 2011.
The directors recommended a final tax-exempt dividend of RM0.0311 (RMB 0.0624) per ordinary share amounting to RM16,094,250 in respect of current financial year, subject to the approval of the shareholders at the forthcoming Annual General Meeting.
RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements.
DIRECTORS
The Directors in office since the date of the last report are:Lin Huozhi Lin Liying Huang Weimin (Resigned on 15 Feb 2012) Chan Chiu Hung Alex Gong Ane Lee Kian Hu
34
Directors Report (contd)
DIRECTORS BENEFITS
Neither at the end of the financial year, nor at any time during the year, did there subsist any arrangement to which the Company was a party, with the object or objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive any benefit other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full time employee of the Company as shown in Note 19 to the financial statements 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, except as disclosed in Note 24 to the financial statements.
DIRECTORS INTERESTS
According to the register of directors shareholdings, the beneficial interests of those who were directors at the end of the financial year in the shares of the Company and its related corporations during the financial year were as follows:The Company Ordinary shares of USD 0.05 each At 31.12.2011 233,217,125
Indirect interest At 1.1.2011 Lin Huozhi (1) 233,217,125
(1)
Indirect interest by virtue of his substantial interest in Power Wide Holdings Limited.
Lin Huozhi by virtue of his interest in shares in the Company is also deemed interested in shares of all the Companys subsidiaries to the extent the Company has an interest. Other than those disclosed above, the directors at the end of the financial year did not hold any interest in shares and/or option over shares and/ or loan stocks of the Company and its related corporations during the financial year.
ISSUE OF SHARES
During the financial year, the following shares were issued: Date of issue Purpose of issue Class of shares 30.12.2011 Underlying shares for Taiwan Depository Receipts issue Ordinary Number of shares @US$0.05 each 67,500,000
Annual R eport 2011
35
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 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 there were no bad debts to be written off and no allowance for doubtful debts was required; and 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.
(ii)
(b)
At the date of this report, the directors are not aware of any circumstances which would render:(i) (ii) it necessary to write off any bad debts or to make any amount of the allowance for doubtful debts in respect of the financial statements of the Group and of the Company; or the values attributed to current assets in the financial statements of the Group and of the Company misleading.
(c)
At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist:(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Group or of the Company which has arisen since the end of the f inancial year.
(d)
(e)
(ii)
(f)
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 or of the Company to meet its obligations as and when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
(ii)
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 31 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

There is no other item, transaction or event of a material or unusual nature has arisen in the interval between 31 December 2011 and the date of this report.
36
INDEPENDENT AUDITORS
The auditors, Foo Kon Tan Grant Thornton LLP, have expressed their willingness to accept re-appointment.
On behalf of the Board,
Lin Huozhi
Lin Liying
Date: 27 April 2012 Jinjiang City, Fujian Province, China
Annual R eport 2011
Statement by Directors
37
In the opinion of the directors, the accompanying statements of the financial position of the Group and of the Company, consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated statement of cash flows, together with the notes thereon, are drawn up in accordance with the provision of the International Financial Reporting Standards so as to give a true and fair view of the financial position of the Company and of the Group as at 31 December 2011 and of the financial performance, changes in equity and cash flows of the Group for the financial year then ended. The information set out in Note 30 to the financial statements have been prepared in accordance with the Guidance of Special Matter No 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. On behalf of the Directors
LIN HUOZHI
LIN LIYING
Date: 27 April 2012 Jinjiang City, Fujian Province, China pursuant to Paragraph 9.27 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad
Statutory Declaration
I, Mr. YONG SHIAU WUEE, being the Officer primarily responsible for the financial management of Multi Sports Holdings Ltd, do solemnly and sincerely declare that the accompanying financial statements set out on pages 40 to 74 are in my opinion corrects and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths and Declaration Act Cap. 211. Subscribed and solemnly declared by the abovenamed Mr. YONG SHIAU WUEE in Singapore Date: 27 April 2012
Mr. YONG SHIAU WUEE
Before me:
Commissioner for Oaths/ Notary Public
38
Independent Auditors Report

to the Members of Multi Sports Holdings Ltd
Report on the financial statements

We have audited the financial statements of Multi Sports Holdings Ltd (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 31 December 2011, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements

Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRSs), and for such internal control as management determines necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. 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 the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Annual R eport 2011
Independent Auditors Report (contd)
39
Opinion
In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with International Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and the Group as at 31 December 2011, and of the results, changes in equity and cash flows of the Group for the financial year then ended.
Other reporting responsibilities

The supplementary information set out in Note 30 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material aspects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Foo Kon Tan Grant Thornton LLP Public Accountants and Certified Public Accountants
Wong Kian Kok Partner in charge of the audit
Singapore. 27 April 2012
40
Statements of Financial Position

as at 31 December 2011
The Company The Group 31 December 31 December 31 December 31 December 2011 2010 2011 2010 Notes RMB000 RMB000 RMB000 RMB000 ASSETS Non-current assets 3 243,760 258,463 Property, plant and equipment Intangible assets 4 768 864 5 18,186 23,117 Land use right Subsidiaries 6 277,374 277,374 277,374 277,374 262,714 282,444
Current assets Inventories Trade and other receivables Cash and bank balances Deposits pledged for bill payables
7 8 9 10
69,566 223
19,081 1,187
13,462 93,047 462,356
11,144 148,518 242,718 37,200
69,789 20,268 568,865 439,580 Total assets 347,163 297,642 831,579 722,024
EQUITY AND LIABILITIES Capital and Reserves Share capital 11 175,361 153,898 175,361 153,898 Reserves 12 169,175 135,144 528,532 364,817 Total equity 344,536 289,042 703,893 518,715 Non-current liability Deferred tax liability 13 3,000 Current liabilities Trade and other payables 14 2,381 8,337 83,565 150,437 Amount owing to a shareholder cum director 15 246 263 246 263 20 16,375 9,609 Income tax payable Interest-bearing bank borrowings 16 27,500 40,000 2,627 8,600 127,686 203,309
Total equity and liabilities 347,163 297,642 831,579 722,024 Approved by the Board of Directors and signed on its behalf by:
LIN HUOZHI LIN LIYING DIRECTOR DIRECTOR Date: 27 April 2012 Date: 27 April 2012
The annexed notes form an integral part of and should be read in conjunction with these financial statements.
Annual R eport 2011
Consolidated Statement of Comprehensive Income

for the financial year ended 31 December 2011
41
The Group Year ended Year ended 31 December 31 December 2011 2010 Notes RMB000 RMB000 Revenue 17 861,732 613,458 (601,674) (414,713) Cost of sales Gross profit 260,058 198,745 Other income 17 2,404 1,386 Selling and distribution expenses (11,558) (10,388) Administrative expenses (28,737) (20,345) 18 (2,428) (1,695) Finance costs Profit before taxation Income tax expense 19 219,739 167,703 20 (58,370) (28,562)
Profit after taxation representing total comprehensive income attributable to equity holders 161,369 139,141
Basic earnings per share (RMB cents) 21 Diluted earnings per share (RMB cents) 21
35.85
30.92
35.85
30.92
42
Consolidated Statements of Changes in Equity

Share Share Statutory Merger Retained Total Capital Premium Reserve Deficit Profits Equity RMB000 RMB000 RMB000 RMB000 RMB000 RMB000 Notes (Note 11) (Note 12a) (Note 12b) (Note 12c) Balance at 1 January 2010 Net profit for the year Issue of shares Share issue expenses Balance at 31 December 2010 123,178 30,720 153,898 69,689 43,507 (2,032) 111,164 23,353 23,353 (54,916) (54,916) 146,075 139,141 285,216 307,379 139,141 74,227 (2,032) 518,715
Balance at 1 January 2011 153,898 111,164 23,353 (54,916) 285,216 518,715 161,369 161,369 Net profit for the year Issue of shares 21,463 28,149 49,612 Share issue expenses (1,887) (1,887) 22 (23,916) (23,916) Dividend on ordinary shares Balance at 31 December 2011 175,361 137,426 23,353 (54,916) 422,669 703,893
Annual R eport 2011
Consolidated Statement of Cash Flows

43
The Group Year ended Year ended 31 December 31 December 2011 2010 Notes RMB000 RMB000 Cash flows from operating activities Profit before taxation Adjustments for : Depreciation of property, plant and equipment 3 4 Amortisation of intangible assets Amortisation of land use rights 5 Loss on disposal of property, plant & equipment Gain on disposal of land use right Interest income 17 Interest expense 18 Operating profit before working capital changes (Increase)/ decrease in inventories Decrease/ (Increase) in trade and other receivables (Decrease)/ Increase in trade and other payables Cash generated from operations Income tax paid 20 Interest received 17 Interest paid 18 Net cash generated from operating activities Cash flows from investing activities 3 Acquisition of property, plant and equipment Acquisition of intangible assets 4 Proceeds from disposal of property, plant and equipment Proceeds from disposal of land use right Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue expenses written off to share premium account Repayment to a shareholder cum director Bank loan obtained Repayment of bank loan Deposit pledged with bank Dividends paid Net cash generated from financing activities 219,739 20,731 96 433 3 (112) (2,013) 2,428 241,305 (2,318) 55,471 (66,889) 227,569 (54,604) 2,013 (2,428) 172,550 167,703 9,975 96 497 2 (926) 1,695 179,042 1,016 (83,824) 99,862 196,096 (27,341) 926 (1,695) 167,986
(6,649) 618 4,610 (1,421)
(141,922) (960) 26 (142,856)
49,612 (1,887) 27,500 (40,000) 37,200 (23,916) 48,509
74,227 (2,032) (18,113) 40,000 (37,200) 56,882
Net increase in cash and cash equivalents 219,638 82,012 Cash and cash equivalents at beginning of the year 242,718 160,706 Cash and cash equivalents at end of the year 9 462,356 242,718
44
Notes to the Financial Statements

1.

GENERAL INFORMATION
The financial statements of the Company and of the Group for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on the date of the Statement by Directors. The Company (Bermuda Company Registration No. 42425 and Malaysia Foreign Company Registration No. 995199-H) was incorporated in Bermuda on 18 September 2008 under the Bermuda Companies Act as an exempted company with limited liability under the name of Multi Sports Holdings Ltd and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered offices of the Company in Bermuda and Malaysia are Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia, respectively. The principal place of business of the Company is located at No. 18, Yongjun Road, Xibin Farm, Xibin Town, Jinjiang City, Fujian Province, the Peoples Republic of China (PRC). The principal activity of the Company is investment holding. The principal activities of its subsidiaries are disclosed in Note 6 to the financial statements.
2.
SIGNIFICANT ACCOUNTING POLICIES

2(a) Basis of preparation The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) including related interpretations. The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The Groups principal operations are conducted in the PRC and thus the financial statements are presented in Renminbi (RMB), being the measurement and presentation currency of the Group. All values are rounded to the nearest thousand (RMB000) except when otherwise indicated. Significant accounting estimates and judgement The preparation of the financial statements in conformity with IFRS requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on managements best knowledge of current events and actions, actual results may differ from those estimates. Estimates and judgements are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the process of applying the Groups accounting policies as described below, management is of the opinion that there are no instances of application of judgements which are expected to have a significant effect on the amounts recognised in the financial statements.
Annual R eport 2011
Notes to the Financial Statements (contd)
45
2.
SIGNIFICANT ACCOUNTING POLICIES (contd)

2(a) Basis of preparation (contd) Significant accounting estimates and judgement (contd) Critical judgement made and key sources of estimation uncertainty in applying accounting policies Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of property, plant and equipment to be within 3 to 20 years. The carrying amounts of the Groups property, plant and equipment as at 31 December 2011 and 31 December 2010 were approximately RMB 243,760,000 and RMB 258,463,000 respectively. 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. Allowance for bad and doubtful debts Allowances for bad and doubtful debts are based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgement and estimates. Where the expected outcome is different from the original estimate, such differences will impact carrying value of trade and other receivables and doubtful debt expenses in the period in which such estimate has been changed. Allowance for inventory obsolescence The Group reviews the ageing analysis of inventories at each reporting date, and makes provision for obsolete and slow moving inventory items identified that are no longer suitable for sale. The net realisable value for such inventories are estimated based primarily on the latest invoice prices and current market conditions. Possible changes in these estimates could result in revisions to the valuation of inventories. Income tax The Group has exposure to income taxes in the PRC. Significant judgement is required in determining the provision for income taxes. There are also claims for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes 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 recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
46
2.

2(b) Interpretations and amendments to published standards effective in 2011 On 1 January 2011, the Group adopted the new or amended IFRS and IFRS Interpretations Committee (IFRIC) that are mandatory for application from that date. This includes the following IFRS and IFRIC, which are relevant to the Group: Reference Description IAS 1 IAS 24 IAS 32 Improvements to IFRSs 2010 Presentation of Financial Statements - Amendments to review the way other comprehensive income is presented Related Party Disclosure - Revised definition of related party Financial Instruments: Presentation Amendments relating to classification of rights issues
The adoption of these new/revised IFRS and IFRIC did not result in substantial changes to the Groups accounting policies nor any significant impact on these financial statements.
2(c) FRS not yet effective At the date of authorisation of these financial statements, the following IFRS and IFRIC were issued but not yet effective: Reference Description Amendments to IFRS 7 Disclosures - Transfers of Financial Assets Financial Instruments - Clarification IFRS 9 and Measurement IFRS 10 Consolidated Financial Statements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement Amendments to IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 12 Deferred Tax - Recovery of Underlying Assets IAS 19 (as revised in 2011) Employee Benefits - Amended Standard resulting from the Post-Employment Benefits and Termination Benefits projects Effective date (annual periods beginning on or after) 1 July 2011 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 July 2012 1 January 2012 1 January 2013
The directors do not anticipate that the adoption of the above IFRS and IAS in future periods will have a material impact on the financial statements of the Group and the Company in the period of their initial adoption. Management is currently considering the revised definition to determine whether any additional disclosures will be required and has yet to put systems in place to capture the necessary information. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented after the effective date of the standards.
Annual R eport 2011
47
2.


2(d) Summary of significant accounting policies Basic of consolidation The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 31 December 2011. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control through more than half of the voting rights. All subsidiaries have a reporting date of 31 December. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable. Business combination The Group was formed as a result of the Reorganisation exercise undertaken in 2009 for the purpose of the Companys listing on the main market of the Bursa Malaysia Securities Berhad. The acquisition of 100% equity in Jinjiang Baixing and Paksing pursuant to the Reorganisation exercise under common control has been accounted for using the pooling-of-interests method of consolidation. Under the poolingof-interest method, the consolidated financial statements of the Group have been presented as if the Group structure immediately after the reorganization has been in existence since the earliest financial year presented. The assets and liabilities were brought into the consolidated statement of financial position at their existing carrying amounts. The pooling-of-interest method will continue to be used for the entities in existence up to the Groups Reorganisation exercise. Business control not under common control is amounted for using acquisition method. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideratio9n arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have previously recognised in the acquirees financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair value of identifiable net assets. If the fair value of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately.
48
2.

2(d) Summary of significant accounting policies (contd) Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is computed utilising the straight-line method to write off the cost of these assets over their estimated useful lives as follows: Buildings Plant and machinery Office equipment, furniture & fixtures Moulding equipment Motor vehicles 20 years 5 - 10 years 5 years 3 - 5 years 3-10 years
The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the items. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset. Subsequent expenditure relating to property, plant and equipment that have been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the standard of performance of the asset before the expenditure was made, will flow to the Group and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred. For acquisitions and disposals during the financial year, depreciation is provided from the month of acquisition and to the month before disposal respectively. Fully depreciated property, plant and equipment are retained in the books of accounts until they are no longer in use. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date as a change in estimates. Impairment of non-financial assets
The carrying amounts of the Companys and Groups non-financial assets subject to impairment are reviewed at end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets 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 asset belongs will be identified. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any impairment loss is charged to profit or loss unless it reverses a previous revaluation in which case it is charged to equity.
Annual R eport 2011
49
2.

2(d) Summary of significant accounting policies (contd) Impairment of non-financial assets (contd) In the case of goodwill, it would be allocated to those cash-generated units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Groups management as equivalent to its operating segments) are tested for impairment at least annually. An impairment loss is recognised for the amount by which the assets or cash-generating units carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and valuein-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Groups latest approved budget, adjusted as necessary to exclude the effects of future reorganisation and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect managements assessment of respective risk profiles, such as market and asset-specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating units recoverable amount exceeds its carrying amount. Financial assets Financial assets, other than hedging instruments, can be divided into the following categories: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the investments were acquired. The designation of financial assets is re-evaluated and classification may be changed at the reporting date with the exception that the designation of financial assets at fair value through profit or loss is not revocable. All financial assets are recognised on their trade date - the date on which the Company and the Group commit to purchase or sell the asset. Financial assets are initially recognised at fair value, plus directly attributable transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Derecognition of financial instruments occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each financial position date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired. Non-compounding interest and other cash flows resulting from holding financial assets are recognised in profit or loss when received, regardless of how the related carrying amount of financial assets is measured
50
2.

2(d) Summary of significant accounting policies (contd) Financial assets (contd) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the financial position date. These are classified as non-current assets. Loans and receivables include trade and other receivables. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. If there is objective evidence that the asset has been impaired, the financial asset is measured at the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the assets recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. The impairment or write back is recognised in profit or loss. Financial liabilities The Groups financial liabilities include trade payables, bills payables and other payables and amount owing to a shareholder cum director. Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in finance cost in profit or loss. Financial liabilities are derecognised if the Groups obligations specified in the contract expire or are discharged or cancelled. Trade payables, bills payables and other payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method. Borrowings are recognised initially at the fair value of proceeds received less attributable transaction costs, if any. Borrowings are subsequently stated at amortised cost which is the initial fair value less any principal repayments. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to profit or loss over the period of the borrowings using the effective interest method. The interest expense is charged on the amortised cost over the period of the borrowings using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process. Borrowings which are due to be settled within twelve months after the balance sheet are included in current borrowings in the balance sheet even though the original terms was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the financial position date. Borrowings to be settled within the Groups normal operating cycle are classified as current. Other borrowings due to be settled more than twelve months after the financial position date are included in non-current borrowings in the balance sheet.
Annual R eport 2011
51
2.

2(d) Summary of significant accounting policies (contd) Inventories Inventories are valued at the lower of cost and net realisable value. Cost incurred in bringing each product to its present location and conditions are accounted for as follows: (a) (b) Raw materials at purchase cost on a weighted average basis; and Finished goods and work in progress at cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. Provisions Provisions are recognised when the Group have 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. The directors review the provisions annually and where in their opinion, the provision is inadequate or excessive, due adjustment is made. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of the time is recognised as finance costs. Recognition of revenue Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, generally when the delivery of the goods completed. Revenue excludes goods and services taxes and is arrived at after deduction of trade discounts. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Interest income is recognised on a time-apportioned basis using the effective interest rate method. Cost of sales Cost of sales comprises mainly of direct material, direct labour and manufacturing overheads. Direct material costs are included in cost of sales based on actual consumption of raw materials for each products sold. Direct labour and manufacturing overheads costs are included in cost of sales based on a systematic allocation of such costs that are incurred in converting raw materials to finished goods sold.
52
2.

2(d) Summary of significant accounting policies (contd) Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet. PRC corporate income tax is provided at rates applicable to an enterprise in the PRC on income for financial reporting purpose, adjusted for income and expenses items which are not assessable or deductible for income tax purposes. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting or taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
(ii)
Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. Value-added tax
The Groups sale of goods in the PRC are subjected to Value-added tax (VAT) at the applicable tax rate of 17% for PRC domestic sales. Input VAT on purchases can be deducted from output VAT. The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of trade receivables or trade payables in the statement of financial position respectively. Revenues, expenses and assets are recognised net of the amount of VAT except where: VAT incurred on the purchase of assets or services is not recoverable from the taxation authority, in which case VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of VAT included.
Annual R eport 2011
53
2.

2(d) Summary of significant accounting policies (contd) Employee benefits Pursuant to the relevant regulations of the PRC government, the Group participates in a local municipal government retirement benefits scheme (the Scheme), whereby the PRC subsidiary is required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the PRC subsidiary. The only obligation of the Group with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under the Scheme are expensed as incurred. Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. Directors, legal representative and certain general managers are considered key management personnel. Foreign currencies (i) Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (functional currency). The financial statements of the Group and the Company are presented in Renminbi (RMB), which is also the functional currency of the Company. Transactions and balances Transactions in a currency other than the functional currency (foreign currency) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences arising from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates are recognised in profit or loss. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
(ii)
(iii) Group companies The results and financial position of all the entities (none of which has the currency of a hyperinflationary economy) within the Group that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) (b) Assets and liabilities are translated at the closing exchange rates at the date of the balance sheet date; Income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and All resulting currency translation differences are recognised in the currency translation reserve in equity.
(c)
54
2.

2(d) Summary of significant accounting policies (contd) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. Operating leases Rentals on operating leases are charged to profit or loss on a straight-line basis over the lease term. Lease incentives, if any, are recognised as an integral part of the net consideration agreed for the use of the leased asset. Penalty payments on early termination, if any, are recognised in profit or loss when incurred. Financial instruments The recognition methods adopted of financial assets and liabilities are disclosed in the individual policy statements associated with each item. These instruments are recognised when contracted for. Disclosures on financial risk management are provided in Note 27. Operating segment For management purposes, operating segments are organised based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers are directly accountable to the chief executive officer who regularly reviews the segment results in order to allocate resources to the segments and to assess segment performance. Share capital, reserves and dividend payments Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Other components of equity include the following: translation reserve comprises foreign currency translation differences arising from the translation of financial statement of the Groups foreign entities into functional currencies retained earnings includes all current and prior period retained profits. All transactions with owners of the parent are recorded separately within equity. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date. Cash and cash equivalents For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and in bank.
Annual R eport 2011
55
2.

2(d) Summary of significant accounting policies (contd) Intangible assets Intangible assets are accounted for using the cost model. Capitalised costs are amortised on a straight-line basis over their estimated useful lives for those considered as finite useful lives. After initial recognition, they are carried at cost less accumulated amortisation and accumulated impairment losses, if any. In addition, they are subject to annual impairment testing. Indefinite life intangibles are not amortised but are subject to annual impairment testing. Intangible assets are written off where, in the opinion of the directors, no further future economic benefits are expected to arise. Software Costs relating to software acquired, which are not an integral part of related hardware, are capitalised and amortised on a straight-line basis over their remaining useful life of 10 years. Land use rights Land use rights represent up-front payment to acquire long-term interests in the usage of land and are stated at cost less accumulated amortisation and impairment losses, if any. Amortisation is charged so as to write off the cost of the land use rights, using the straight-line method, over the period of the grant of 50 years, which is the lease term. Research and developments costs Research costs are expensed as incurred, except for development costs which relate to the design and testing of new or improved materials, products or processes which are recognised as an asset to the extent that it is expected that such assets will generate future economic benefits. Borrowing cost Borrowing costs are recognised in profit or loss using the effective interest rate method except for those costs that are directly attributable to the construction of qualifying assets. This includes those costs on borrowings acquired specifically for the construction of qualifying assets, as well as those in relation to general borrowings used to finance the construction of qualifying assets. Borrowing costs on general borrowings are capitalised by applying a capitalisation rate to the expenditures on that qualifying assets that are financed by general borrowings.
56
3.
PROPERTY, PLANT AND EQUIPMENT

Office Leasehold equipment, Building Leasehold Plant & furniture & Moulding Motor under The Group Buildings machinery fixtures equipment vehicle construction Total RMB000 RMB000 RMB000 RMB000 RMB000 RMB000 RMB000 Cost At 1 January 2010 33,056 407 41,359 784 87,224 162,830 10,570 915 6,313 337 123,787 141,922 Additions Disposal/ written off (56) (56) Reclassification 211,011 (211,011) At 31 December 2010 211,011 43,626 1,322 47,672 1,065 304,696 1,892 951 3,353 453 6,649 Additions Disposal/ written off (1,229) (23) (1,252) 211,011 44,289 2,273 51,025 1,495 310,093 At 31 December 2011 Accumulated Depreciation 13,474 243 22,438 130 36,285 At 1 January 2010 Depreciation 3,694 59 6,078 144 9,975 (27) (27) Disposal/ written off At 31 December 2010 17,168 302 28,516 247 46,233 Depreciation 9,495 4,702 314 6,071 149 20,731 Disposal/ written off (626) (5) (631) At 31 December 2011 9,495 21,244 616 34,587 391 66,333 Net Book Value At 31 December 2010 211,011 26,458 1,020 19,156 818 258,463
At 31 December 2011
201,516
23,045
1,657
16,438
1,104
243,760
All property, plant and equipment held by the Group are located in the PRC.
Annual R eport 2011
57
4.
INTANGIBLE ASSETS
Software Total The Group RMB000 RMB000 Cost At 1 January 2010 Additions 960 960 At 31 December 2010 and at 31 December 2011 960 960
Accumulated Amortisation At 1 January 2010 Amortisation 96 96 96 96 At 31 December 2010 Amortisation 96 96 At 31 December 2011 Net Book Value At 31 December 2010 192 192
864
864
At 31 December 2011
768
768
58
5.
LAND USE RIGHTS

The Group Land use rights Total RMB000 RMB000 Cost At 1 January 2010 23,733 23,733 Additions At 31 December 2010 Disposal/ written off At 31 December 2011 23,733 (4,743) 18,990 23,733 (4,743) 18,990
Accumulated Amortisation At 1 January 2010 119 119 Amortisation 497 497 616 616 At 31 December 2010 Amortisation 433 433 (245) (245) Disposal/ written off At 31 December 2011 804 804
Net Book Value At 31 December 2010 23,117
23,117
At 31 December 2011
18,186
18,186
The Groups land use right with net book value of approximately RMB 18,186,000 is located at Xinbin Farm, Xibin Town, Jinjiang City, Fujian Province, PRC. The land use right is pledged to a bank as securities for a banking facility (Note 16). The Groups Directors are of the opinion that the recoverable amount of the land use rights exceeds its carrying amount as at 31 December 2011 and 2010.
6. SUBSIDIARIES
The Company 2011 2010 RMB000 RMB000 Unquoted equity investment, at cost Amount owing by a subsidiary 103,465 173,909 103,465 173,909
277,374 277,374
Annual R eport 2011
59
6. SUBSIDIARIES (contd)
As athe amount owing by a subsidiary is an extension of the Companys net investment in its subsidiary with undeterminable repayment, fair value is not appropriate. The subsidiaries are: Country of incorporation/ Principal place Cost of Equity of business investments interest held Name 2011 2010 2011 2010 RMB000 RMB000 % % Directly held: Pak Sing Shoe Material (H.K.) Limited (1)
Principal activities
Hong Kong
103,465
103,465
100%
100%
Investment holding
Indirectly held: Jinjiang Baixing PRC 100% 100% Shoe Material Co., Ltd. (2)
Design, development and manufacturing of sport-shoe soles
(1)
Audited by Vision A.S. Limited, Certified Public Accountants, Hong Kong for statutory purposes and reviewed by Foo Kon Tan Grant Thornton LLP for the purposes of expressing an opinion on the consolidated financial statements. Audited by Quanzhou Ming Cheng You Xian Ze Ren Kuai Ji Shi Shi Wu Suo, Certified Public Accountants for statutory purposes and audited by Foo Kon Tan Grant Thornton LLP for the purpose of expressing an opinion on the consolidated financial statements.
(2)
7. INVENTORIES
The Group 2011 2010 RMB000 RMB000 Raw materials 8,022 6,283 Finished goods 3,451 3,144 Work in progress 1,989 1,717 13,462 11,144
During the financial year ended 31 December 2011 and 31 December 2010, there have been no inventory written off or allowance of inventory obsolescence made.
60
8.
TRADE AND OTHER RECEIVABLES

The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Trade receivables 92,966 83,154 Amounts due from a related party 182 69,535 19,069 Amount due from a subsidiary Advance payments to suppliers 64,516 Prepayments 22 3 72 183 Deposit 9 9 9 483 69,566 19,081 93,047 148,518
Amounts due from a related party related to rental paid in advance. The amounts were unsecured, interest free and expensed off during the year. Amount due from a subsidiary related to inter-company advances for working capital purposes. The amount was unsecured, interest- free and repayable on demand. Advance payments to suppliers related to purchase agreements entered into with suppliers to guarantee the purchase of raw materials at a pre-determined price range and to ensure the product quality for a period of six months. The raw materials were received during the year.
Trade and other receivables are denominated in the following currencies: The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 69,535 19,069 93,016 148,506 Renminbi Malaysia Ringgit 31 12 31 12 69,566 19,081 93,047 148,518
The ageing analysis of trade receivables and advance payments to suppliers past due but not impaired is as follows: The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Not past due Past due 0 to 1 months 92,827 139 92,966 147,227 443 147,670
Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables and advance payments to suppliers that are past due. These receivables mainly relate to customers that have a good record with the Group.
Annual R eport 2011
61
9.
CASH AND BANK BALANCES

The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Cash on hand Cash at bank 223 1,187 80 462,276 77 242,641
223 1,187 462,356 242,718
Cash and bank balances are denominated in the following currencies: The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Renminbi Hong Kong Dollar United States Dollar Malaysia Ringgit 413,942 239,842 382 1,548 192 48,001 141 31 1,187 31 1,187 223 1,187 462,356 242,718
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange Renminbi for foreign currencies through banks that are authorised to conduct foreign exchange business. The cash at bank bears effective interest rates of 0.36% - 0.50% per annum and 0.36% per annum during the years ended 31 December 2011 and 31 December 2010 respectively. Cash and bank balances of the Group are in the current account and have no maturity dates or fixed interest rates, accordingly, there is no repricing of the cash and bank balances.
10. DEPOSITS PLEDGED FOR BILL PAYABLES

The Group 2011 2010 RMB000 RMB000 Fixed deposits - pledged 37,200
Fixed deposits with financial institution have maturity dates of 6 months. Fixed deposits bear effective interest rate of 1.98 % per annum for the financial year ended 31 December 2010. Fixed deposits are pledged for bill payables (Note 14) and there was no facilities granted as at 31 December 2011.
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11. SHARE CAPITAL

The Company No. of ordinary shares Amount 2011 2010 2011 2010 USD000 RMB000 USD000 RMB000 Authorised share capital: At beginning of the year and at end of the year 1,000,000,000
1,000,000,000
50,000
342,000
50,000
342,000
Issued and fully paid: At beginning of the year Underlying shares for TDR issue (1) Rights share Issue
450,000,000
360,000,000
22,500
153,898
18,000
123,178
67,500,000 3,375 21,463 90,000,000 4,500 30,720 153,898
At end of the year 517,500,000 450,000,000 25,875 175,361 22,500

(1)
On 30 December 2011, the Company implemented 67,500,000 ordinary shares of US$0.05 each on the Main Market of Bursa Malaysia Securities Berhad, in conjunction with the listing of the Taiwan Depository Receipts (TDR) on the Taiwan Stock Exchange on the same day.
12. RESERVES
12a) Share premium The share premium arises from the difference between the par value and issue price of the share issued after deducting equity reducing transaction costs.
12b) Statutory reserves In accordance with the relevant laws and regulations of the PRC, the subsidiary of the Company established in the PRC are required to transfer 10% of its profit after taxation prepared in accordance with the accounting regulation of the PRC to the statutory reserve until the reserve balance reaches 50% of the respective registered capital. Such reserve may be used to offset accumulated losses or increase the registered capital of the subsidiary, subject to the approval from the PRC authorities, and are not available for dividend distribution to the shareholders.
12c) Merger Deficit The merger deficit arises from the difference between the nominal value of shares issued by the Company and the nominal value of shares and share premium of subsidiary acquired under the pooling of interest method of accounting.
Annual R eport 2011
63
13. DEFERRED TAX LIABILITY

2011 2010 The Group RMB000 RMB000 Deferred tax liability 3,000
Movements: Beginning of financial year (Credited)/charge to income statement during the year (Note 20) End of financial year
3,000 (3,000)
3,000 3,000
According to the Corporate Income Tax Law and its implementation rules, withholding tax is imposed on dividends declared in respect of profits earned by the PRC subsidiary from 1 January 2008 onwards. For the Group, the applicable rate for withholding tax is 10%. In estimating the withholding taxes on dividends expected to be distributed by the PRC subsidiary in respect of earnings generated from 1 January 2008 onwards, the directors have made an assessment based on the factors which included the dividend policy and the level of capital and working capital required for the Groups operations in the foreseeable future.
14. TRADE AND OTHER PAYABLES

The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Trade payables 47,207 24,598 Bills payable 93,000 VAT payable 6,746 5,730 Accrued liabilities 2,381 1,182 25,333 21,159 Withholding tax payable 4,200 Other payables 79 5,950 Amount due to a subsidiary 7,155 2,381 8,337 83,565 150,437
Trade payables generally have credit terms of 30 to 40 days. The bills payable are transferrable, secured by the bank deposits pledged (Note 10) and have a maturity period of six months. Accrued liabilities consist mainly of accrued wages, social security insurance and production overhead. Other payables in 2010 related to construction retention sums for the construction of buildings and are payable to contractors within a year from the date of completion of constructions. Amount due to a subsidiary related to IPO listing and rights issue expenses paid on behalf by the subsidiary. The amount was unsecured, interest free and repaid in 2011.
64
14. TRADE AND OTHER PAYABLES (contd)

Trade and other payables are denominated in the following currencies: The Company The Group 2011 2010 2011 2010 RMB000 RMB000 RMB000 RMB000 Renminbi 24 7,155 81,192 149,239 796 627 796 627 Malaysia Ringgit Singapore Dollar 441 555 441 555 Hong Kong Dollar 16 16 United States Dollar 343 343 Taiwan Dollar 777 777 2,381 8,337 83,565 150,437
15. AMOUNT OWING TO A SHAREHOLDER CUM DIRECTOR

Amount owing to a shareholder cum director is unsecured, interest- free and repayable on demand. The amount owing to a shareholder cum director is denominated in Malaysia Ringgit.
16. INTEREST-BEARING BANK BORROWINGS

The Group 2011 2010 RMB000 RMB000 Short term bank borrowings- secured 27,500 40,000
The Groups interest- bearing bank borrowings in the financial year 2011 are pledged by the Groups land use right. The Groups interest bearing bank borrowings in the financial year 2010 were guaranteed by third party. Bank borrowings bear effective interest rate of 6.6% per annum (2010: 5.8% per annum) The carrying amounts of interest-bearing bank borrowings are denominated in Renminbi.
17. REVENUE AND OTHER INCOME

Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts, if any. An analysis of the Groups revenue and other income is as follows: The Group 2011 2010 RMB000 RMB000 Revenue Sale of goods
861,732
613,458
Other income Interest income Gain on disposal of land use rights Sale of scrap material
2,013 112 279
926 460
2,404 1,386
Annual R eport 2011
65
18. FINANCE COSTS

The Group 2011 2010 RMB000 RMB000 Interest expense, bank borrowings (Note 16) 2,428 1,695
19. PROFIT BEFORE TAXATION

The Groups profit before taxation is arrived at after charging: The Group 2011 2010 Notes RMB000 RMB000 422,936 288,008 Cost of inventories recognised as expenses Depreciation of property, plant and equipment 3 20,731 9,975 Amortisation of intangible assets 4 96 96 Amortisation of land use rights 5 433 497 Directors remuneration excluding directors fee - salaries and related cost 3,076 2,774 - retirement scheme contribution 16 10 Directors fee 456 490 Key management personnel (other than directors) - salaries and related cost 1,387 1,460 - retirement scheme contributions 11 12 Other than directors and key management personnel - salaries and related cost 104,464 77,693 - retirement scheme contribution 10,864 6,021 Operating lease expenses 1,870 Research and development expenses 615 809 Loss on disposal of property, plant and equipment 2 2 Taiwan Depository Receipts (TDR) listing expenses 3,426
1.
Depreciation expenses of approximately RMB 14,264,000 (2010: RMB 9,772,000) and RMB 6,467,000 (2010: RMB 203,000) have been charged in cost of sales and administrative expenses on the face of the statement of comprehensive income respectively. Salaries and related cost of approximately RMB 98,673,000 (2010: RMB73,223,000), RMB 2,347,000 (2010: RMB 2,338,000) and RMB 3,444,000 (2010: RMB 2,132,000) have been charged in cost of sales , selling and distribution expenses and administrative expenses on the face of the statement of comprehensive income respectively. Retirement scheme contribution of approximately RMB 10,546,000 (2010: RMB 5,753,000, RMB 131,000 (2010: RMB 125,000) and RMB 187,000 (2010: RMB 143,000) have been charged in cost of sales, selling and distribution expenses and administrative expenses on the face of the statement of comprehensive income respectively.
2.
3.
66
20. INCOME TAX EXPENSE

The Group 2011 2010 RMB000 RMB000 Current taxation 61,133 25,484 Underprovision of taxation in respect of prior year 237 78 Deferred taxation (3,000) 3,000 PRC income tax 58,370 28,562
Reconciliation between tax expense and profit before taxation at applicable tax rates is as follows: 2011 2010 The Group RMB000 RMB000 Profit before taxation 219,739 167,703
Tax at the applicable tax rate of 25% 54,935 41,925 Tax effect on non-deductible expenses 1,539 921 Income exempt from tax (21,531) Underprovision of taxation in respect of prior year 237 78 Withholding tax on PRC dividend 4,654 4,091 Effect of deferred tax on undistributed PRC earnings (3,000) 3,000 Effect of tax rate in foreign countries 5 78 58,370 28,562
Movements in current income tax liabilities are as follows: 2011 2010 The Group RMB000 RMB000 Beginning of financial year Income tax expense for the year Underprovision of taxation in respect of prior year Income tax paid End of financial year 9,609 61,133 237 (54,604) 16,375 11,388 25,484 78 (27,341) 9,609
Bermuda income tax Pursuant to the tax rules of Bermuda, the Group is not subject to income tax. Hong Kong profit tax No provision was made for Hong Kong profits tax as the Group did not earn any income subject to Hong Kong profits tax during the financial year.
Annual R eport 2011
67
20. INCOME TAX EXPENSE (contd)

PRC enterprise income tax (EIT) As a wholly foreign-owned enterprise established under the laws of the PRC, Jinjiang Baixing Shoe Material Co., Ltd. (Jinjiang Baixing) is entitled to full exemption from EIT for the first two years and a 50% reduction in EIT for the next three years starting from its first profitable year of operations. Jinjiang Baixing had elected 31 December 2006 to be its first profitable year for the purpose of determining the tax holiday period and was exempted from EIT for the financial years ended 31 December 2006 and 31 December 2007, and was subject to EIT at a preferential rate of 12.5% for the financial years ended 31 December 2008 to 31 December 2010. Withholding tax on dividends According to the Corporate Income Tax Law and its implementation rules, withholding tax is imposed on dividends declared in respect of profit earned by PRC subsidiaries from 1 January 2008 onward. For the Group, the applicable rate for the withholding tax is 10%. In estimating the withholding taxes on dividends expected to be distributed by the subsidiary established in PRC in respect of earnings generated from 1 January 2008 onwards, the directors have made an assessment based on the factors which included the dividend policy and the level of capital and working capital required for the Groups operations in the foreseeable future.
21. EARNINGS PER SHARE

Basic earnings per share are calculated based on profit attributable to equity holders of the Group and weighted average number of 450,184,932 and 450,000,000 ordinary shares in issue for the financial years ended 31 December 2011 and 2010 respectively: The Group 2011 2010 RMB RMB Basic earnings per share is based on: Profit after taxation attributable to ordinary shareholders 35.85 30.92
At beginning of year Right shares issue Public issue (67,500,000 ordinary shares for 1 day on 31 December 2011)
Weighted average no. of shares 2011 2010 360,000,000 90,000,000
450,000,000 184,932
Total 450,184,932 450,000,000 Comparative figures for the weighted average number of ordinary shares for basic earnings per share have been restated to reflect the adjustment arising from the Rights share issue for the year ended 31 December 2011. There is no potential dilutive effect on earnings per share.
68
22. DIVIDENDS
The Group 2011 2010 RMB000 RMB000 First and final tax-exempt dividend of RM 0.025 (approximately RMB 0.053) per ordinary share paid in 2011
23,916
After the end of the reporting period, the directors proposed a first and final tax exempt (one-tier) dividend of RM 0.0311 (RMB 0.0624) per ordinary share. Based on the share capital as at 31 December 2011, the proposed final dividend is estimated at RM 16,094,250 (RMB 32,292,000) which will be subject to the approval of shareholders at the next Annual General Meeting of the Company. The financial statements do not reflect these dividends payable, which will be accounted for as a reduction in equity as a distribution of retained profits in the financial year the shareholders approve the dividends.
23. COMMITMENTS
Operating lease commitments The Group leases production factory from a related party and a non-related party under non-cancellable operating lease arrangements. The Group also leases office building and employees hostel from a non-related party under a non-cancellable operating lease arrangement. The leases have varying terms and the total future minimum lease payments of the Group under non-cancellable operating leases are as follows: The Group 2011 2010 RMB000 RMB000 Not later than one year Later than one year and not later than five years 312 312
The Group has terminated the lease agreements with the related party and the non-related party with effect from 28 February 2011.
24. RELATED PARTY TRANSACTIONS

Other than as disclosed elsewhere in these consolidated financial statements, related party transactions of the Group are as follow: The Group 2011 2010 RMB000 RMB000 Rental paid to a related party Repayment of advance from Lin Huozhi 1,092 18,139
Annual R eport 2011
69
25. SEGMENT INFORMATION

For management purposes, the Group is organized into business units based on their business activities, and has four reportable operating segments as follows: 1) TPR shoe soles TPR shoe soles are a physical mix of polymers, usually a rubber and a plastic. It combines the functional properties of rubber and the easy processability, mouldability and recyclability of thermoplastics. TPRbased sports shoe soles are lightweight, durable, and flexible and provide good traction even under cold conditions. RB shoe soles Natural and synthetic rubbers are used in the production of RB shoe soles. They are highly resistant to wear and tear, possess the highest tensile strength, provide good traction and is waterproof and weatherproof. However, they provide less dimensional stability, cushioning and shock-absorption capabilities. MD1 shoe soles The main components of MD1 shoe soles are ethylene vinyl acetate (EVA) and rubber. EVA-based sports-shoe soles are lightweight, soft, flexible, elastic, resistant to wear and tear, and are dimensionally stable with adequate cushioning, thus serve as an excellent shock-absorber in sports shoe soles. MD2 shoe soles The main component of MD 2 shoe soles are similar to MD 1 shoe soles, but are produced using a distinct production process with equipment that are technologically more advanced than MD1 shoe soles and as such, has greater variability in designs and improved quality control.
2)
3)
4)
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the Consolidated Financial Statements. Group income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arms length basis in a manner similar to transaction with third parties, if any.
70
25. SEGMENT INFORMATION (contd)

The segment information provided to the management for the reportable segments for the financial year ended is as follows: Revenue: External sales Financial year ended 31 December 2011 RB MD1 MD2 shoe soles shoe soles shoe soles RMB000 RMB000 RMB000
TPR shoe soles RMB000
Total RMB000
56,527
23,332
168,239
613,634
861,732
Segment results
14,908
6,225
43,832 160,951 225,916
(6,177) Unallocated other expenses (1) Profit before taxation Segment assets 51,682 21,580 219,739
151,956 557,980 783,198
Segment liabilities
7,170
2,995
21,084
77,419 108,668
Other information: Interest income 133 Interest expenses (160) 439 Additions to non-current assets (2) Depreciation and amortization (1,403)
55 391 1,434 2,013 (67) (471) (1,730) (2,428) 183 1,290 4,737 6,649 (586) (4,125) (15,146) (21,260)
31 December 2011 RMB000
Segment assets are reconciled to total assets as follows: Total assets for reportable segments Unallocated prepayment and other receivables (3) Unallocated cash and cash balances (4) Group assets
783,198 31 48,350 831,579
Segment liabilities are reconciled to total liabilities as follows: Total liabilities for reportable segments 108,668 Unallocated amount owing to a shareholder cum director (5) 246 Unallocated income tax payable 16,375 2,397 Unallocated accruals and other payables (6) Group liabilities 127,686
(1) (2)
(3) (4) (5) (6)
Relate mainly to the Companys administrative expenses. Additions to non-current assets consists of additions to property, plant and equipment (Note 3). Relate mainly relate to the Companys prepaid administrative expenses. Relate to Pak Sing and the Companys cash and cash balances. Relates to amount owing to a shareholder cum director (Note 15). Relate mainly to Pak Sing and the Companys accruals and payables
Annual R eport 2011
71
25. SEGMENT INFORMATION (contd)

The segment information provided to the management for the reportable segments for the financial year ended is as follows: Revenue: External sales Segment results TPR shoe soles RMB000 54,178 15,069 Financial year ended 31 December 2010 RB MD1 MD2 shoe soles shoe soles shoe soles RMB000 RMB000 RMB000 22,100 6,282 191,533 53,317 345,647 97,583
Total RMB000 613,458 172,251
Unallocated interest income 1 Unallocated other expenses (1) (4,549) Profit before taxation Segment assets Segment liabilities 62,913 16,818 26,225 7,011 167,703
222,596 407,402 719,136 59,504 108,906 192,239
Other information: 81 34 287 524 926 Interest income Interest expenses (148) (62) (525) (960) (1,695) Additions to non-current assets (2) 12,500 5,211 44,227 80,944 142,882 Depreciation and amortization (925) (385) (3,271) (5,987) (10,568) Segment assets are reconciled to total assets as follows: Segments assets Unallocated prepayment and other receivables (3) Unallocated cash and cash balances (4) Group assets 31 December 2010 RMB000 719,136 13 2,875 722,024
Segment liabilities are reconciled to total liabilities as follows: Segments liabilities Unallocated amount owing to a shareholder cum director (5) Unallocated income tax payable Unallocated accruals and other payables (6) Group liabilities
(1) (2)
192,239 263 9,609 1,198 203,309
(3) (4)
(5) (6)
Relate mainly to the Companys administrative expenses. Addition to non-current assets consists of additions to property, plant and equipment and intangible asset (Note 3,4). Relate mainly relate to the Companys prepaid administrative expenses. Relate to Pak Sing and the Companys cash and cash balances. Relates to amount owing to a shareholder cum director (Note 15). Relate mainly to Pak Sing and the Companys accruals and other payables.
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26. IMMEDIATE AND ULTIMATE HOLDING COMPANY

The Companys immediate and ultimate holding company is Power Wide Holdings Limited, a company incorporated in the British Virgin Islands.
27. FINANCIAL RISK MANAGEMENT OBJECTIVES POLICIES

The Group does not have written risk management policies and guidelines. However, the board of directors meets periodically to analyse and formulate measures to manage the Groups exposure to market risk, including principally changes in interest rates and currency exchange rates. Generally, the Group employs a conservative strategy regarding its risk management. As the Groups exposure to market risk is kept at a minimum level, the Group has not used any derivatives or other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes. As at 31 December 2011, the Groups financial instruments mainly comprise cash and bank balances, trade receivables, other receivables, trade payables, accrued liabilities, other payables, amount owing to a shareholder cum director and interest-bearing bank borrowings. (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups financial instruments will fluctuate because of changes in market interest rates. The Groups interest rate risk arises primarily from bank deposits placed with the financial institutions and interest-bearing bank borrowings. The Groups exposures to interest rate risk from the interest-bearing bank borrowings are minimal as the Groups policy is to maintain the borrowings on a fixed rate basis. The Group does not have investment in other financial assets. Foreign currency risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk arises when transactions are denominated in foreign currencies. The Group carries out its business in the PRC and most of the transactions are denominated in Renminbi. Accordingly, the Groups exposure to risk resulting from changes in foreign currency exchange rates is minimal.
(ii)
(iii) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Groups policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserve for cash to meet its liquidity requirement in the short and long term. The Groups financial liabilities are repayable within 12 months.
Annual R eport 2011
73
27. FINANCIAL RISK MANAGEMENT OBJECTIVES POLICIES (contd)

(iv) Credit risk Credit risk is the risk of financial loss to the Group if counterparty fails to meet its contractual obligations. The carrying amounts of trade receivables and other receivables represent the Groups maximum exposure to credit risk in relation to its financial assets. The Group does not have significant concentration of credit risk as no individual customer form more than 5% of the trade receivables balance as at 31 December 2011 and 31 December 2010, respectively. The Group performs ongoing credit evaluation of its customers financial condition and requires no collateral from its customers. The provision for impairment loss for doubtful debts is based upon a review of the expected collectability of all trade and other receivables. There is no impairment loss recognized in the statement of comprehensive income as majority of the receivables are collected within the credit period granted and directors expect all balances to be recoverable. Further quantitative disclosure in respect of the Groups exposure to credit risk arising from trade and other receivables are set out in Note 8. Cash and cash balances of the Group are held by reputable financial institutions. Fair value The fair values of the Groups financial assets and liabilities are not materially different from their carrying amounts because of the immediate or short term maturity of these financial instruments.
(v)
(vi) Price risk Price risk is the risk that the value of a financial instrument will fluctuate due to changes in market prices whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market. The Group does not hold any quoted or marketable financial instrument, hence is not exposed to any movement in market prices.
28. CAPITAL MANAGEMENT

The Groups objectives when managing capital are: (a) (b) (c) To safeguard the Groups ability to continue as a going concern, so that it continues to provide returns to shareholders and benefits for other stakeholders; To support the Groups stability and growth; and To provide capital for the purpose of strengthening the Groups risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholders returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected investment opportunities. The Group currently does not adopt any formal dividend policy.
74
29. FINANCIAL INSTRUMENTS

Fair value The carrying amounts of financial assets and liabilities with a maturity of less than one year approximate their fair values. The Group does not anticipate that the carrying amounts recorded at the statement of financial position date would be significantly different from the values that would eventually be received or settled.
30. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES LISTING REQUIREMENT
The breakdown of the retained profits of the Group as at 30 June 2011 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No.1., Determination of Realised and Unrealised Profits or Losses as issued by the Malaysia Institute of Accountants. The Group 2011 2010 RMB000 RMB000 Total retained profits of the Group - realised 425,768 290,996 - unrealised (4,606) (7,287) 421,162 283,709 Add: Consolidation adjustments Retained profits as per financial statements 1,507 422,669 1,507 285,216
31. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

On 30 December 2011, the Company issued and listed 22,500,000 units of TDR and Underlying Shares of 67,500,000 of USD0.05 each in Taiwan and Malaysia respectively.
32. SUBSEQUENT EVENT

There is no other item, transaction or event of a material or unusual nature has arisen in the interval between 31 December 2011 and the date of the report from the independent auditor.
Annual R eport 2011
Statistics of Shareholdings
75
Authorised Ordinary Share Capital : Issued and Paid-up Ordinary Share Capital : Class of Shares : : Voting Rights
USD50,000,000.00 USD25,875,000 comprising of 517,500,000 ordinary shares of USD0.05 each Ordinary shares of USD0.05 each One vote per ordinary share
Analysis of shareholdings
Size of holdings 1 - 99 100 - 1,000 1,001 - 10,000 10,001 - 100,000 100,001 - 25,874,999 25,875,000 and above Number of holders 35 399 1,535 1,431 263 2 % over shareholders 0.954 10.886 41.882 39.045 7.175 0.054 Number of shares 1,557 269,306 9,455,886 49,463,551 170,012,575 288,297,125 % over total shares 0.000 0.052 1.827 9.558 32.852 55.709 100.00
Total 3,665 100.00 517,500,000
Directors shareholdings as at 10 may 2012

Name of Directors Direct Number of shares held % Indirect %
Lin Huozhi 0.000 233,217,125 (1) 45.07% Lin Liying 0.000 0.000 Chan Chiu Hung Alex 0.000 0.000 Gong Ane 0.000 0.000 Lee Kian Hu 0.000 0.000 Note:
(1)
Deemed interested by virtue of his substantial interest in Power Wide Holdings Limited.
Substantial shareholdings as at 10 mAy 2012

Name of substantial shareholders Direct Number of shares held % Indirect % 0.00
Power Wide Holdings Limited 233,217,125 45.07
76
Statistics of Shareholdings (contd)
List of 30 largest securities account holders as at 10 may 2012

No. Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Power Wide Holdings Limited Citigroup Nominees (Asing) Sdn. Bhd. Far Eastern International Bank Dr Prog. For Multi Sports Holdings Ltd Cartaban Nominees (Asing) Sdn. Bhd. Exempt an for RBC Dexia Investor Services Trust (Clients Account) HSBC Nominees (Asing) Sdn. Bhd. CS Zurich for Gale 3 SPC Ltd (Asian+EM Mkt EQ) Citigroup Nominees (Asing) Sdn. Bhd. Pershing LLC for Van Biema Asia Value Master Fund L.P. Mercsec Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Siow Wong Yen @ Siow Kwang Hwa Koek Tiang Kung Citigroup Nominees (Asing) Sdn. Bhd. CIPLC for Perinvest Lux Sicav Citigroup Nominees (Asing) Sdn. Bhd. JP Morgan CLR Corp for the Tail Wind Fund Ltd Ooi Cheng Huat @ Ooi Peng Huat Chai Chat Leong Eva Lim Siew Wen Maybank Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Mak Kok Leong AllianceGroup Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Lim Hon Cheong (100623) HSBC Nominees (Asing) Sdn. Bhd. Exempt an for Societe Generale Bank & Trust Tan Kin Seng Henry Liang HLB Nominees (Tempatan ) Sdn. Bhd. Pledged Securities Account for Oo Phaik See JF Apex Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Paramjit Singh Gill (Margin) A.A. Anthony Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Cheah Chee Choong Amsec Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Tay Joo Loong Public Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Cheah Chee Choong (JBU/AAA) AllianceGroup Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Cheah Chee Choong (8060594) Public Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Eng Su Lim (E-BMM) CIMB Commerce Trustee Berhad Exempt an for EPF Investment for Member Savings Scheme Tea Bee Ring Maybank Securities Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ong Fee Chong (REM157-Margin) Lim Chin Sean Amsec Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Chin Chin Seong Chin Song Mooi Number of shares held 233,217,125 55,080,000 24,500,000 20,104,000 10,000,000 5,000,000 4,000,000 3,500,000 3,105,300 2,281,000 2,088,500 2,000,000 1,850,000 1,781,000 1,700,000 1,570,000 1,523,000 1,515,700 1,500,000 1,410,000 1,350,000 1,325,000 1,300,000 1,200,000 1,083,700 1,050,000 1,040,000 1,015,000 1,000,000 1,000,000 % of issued share capital 45.066 10.643 4.734 3.884 1.932 0.966 0.772 0.676 0.600 0.440 0.403 0.386 0.357 0.344 0.328 0.303 0.294 0.292 0.289 0.272 0.260 0.256 0.251 0.231 0.209 0.202 0.200 0.196 0.193 0.193
Annual R eport 2011
List of Properties
77
The summary of the information on landed properties owned by our Group is as follows:Description of Property Land (26,807 sq m) Date of Acquisition 25 September 2009
Address Xibin Farm, Xibin Town, Jinjiang City Fujian Province, PRC
Existing Use Industry
Tenure Land-use-right up to 2,057
Net Book Value RMB18,186,000
78
Notice of Annual General Meeting for Year 2012
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting for year 2012 of the Company will be held at Selangor Room, Level 1, Putrajaya Marriott Hotel & Spa, IOI Resort City, 62502 Sepang Utara, Selangor Darul Ehsan on Friday, 22 June 2012 at 10.00 a.m., to transact the following businesses:-
AGENDA
As Ordinary Business:1. To receive the Audited Financial Statements of the Company and of the Group and the Reports of the Directors and the Auditors thereon for the financial year ended 31 December 2011. To approve the payment of Directors fees for the financial year ended 31 December 2011. To re-elect the following Directors who retire pursuant to the Companys Bye-laws: 3.1 Chan Chiu Hung Alex 3.2 4. Gong Ane [Bye-law 86] [Bye-law 86] (Ordinary Resolution 2) (Ordinary Resolution 3) (Ordinary Resolution 4) (Please refer to Explanatory Note 1)
2.
(Ordinary Resolution 1)
3.
To approve the payment of a tax exempt final dividend of 3.11 sen per share for the financial year ended 31 December 2011. To re-appoint Messrs. Foo Kon Tan Grant Thornton LLP as Auditors of the Company and to authorise the Board of Directors to fix their remuneration.
5.
(Ordinary Resolution 5)
As Special Business:6. To consider and if thought fit, to pass the following Ordinary Resolution, with or without modifications:Authority To Issue Shares (Ordinary Resolution 6)
THAT subject always to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby authorised pursuant to the Companys Bye-law 12 to issue shares in the Company at any time upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, PROVIDED THAT the aggregate number of new ordinary shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued share capital of the Company and that such authority shall unless revoked or varied by an ordinary resolution by the shareholders of the Company in general meeting commence upon the passing of this resolution until the conclusion of the next Annual General Meeting of the Company AND THAT the Directors are further authorised to do all such things and upon such terms and conditions as the Directors may deem fit and expedient in the best interest of the Company to give effect to the issuance of new ordinary shares under this resolution including making such applications to Bursa Malaysia Securities Berhad for the listing of and quotation for the new ordinary shares to be issued pursuant to this resolution.
Annual R eport 2011
Notice of Annual General Meeting for Year 2012 (contd)
79
7.
To consider and if thought fit, to pass the following Special Resolution, with or without modifications:(Special Resolution 1)
PROPOSED AMENDMENTS TO THE BYE-LAWS OF THE COMPANY THAT the proposed amendments to the Bye-laws of the Company as contained in the Appendix 1 attached to the Annual Report 2011 be and are hereby approved. 8. To transact any other business that may be transacted at an annual general meeting of which due notice shall have been given in accordance with the Companys Bye-laws and Bermuda Companies Act, 1981.
NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the members at the Annual General Meeting for year 2012 to be held on 22 June 2012, a tax exempt final dividend of 3.11 sen per share in respect of the financial year ended 31 December 2011, if approved, will be paid on 12 September 2012. The entitlement date for the dividend payment is 15 August 2012. A depositor shall qualify for entitlement to the dividend only in respect of:(a) Shares transferred into the Depositors Securities Account before 4.00 p.m. on 15 August 2012 in respect of transfers; and Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.
(b)
BY ORDER OF THE BOARD MULTI SPORTS HOLDINGS LTD
SECRETARIUS SERVICES SDN. BHD. Company Secretary Kuala Lumpur 31 May 2012
80
Notice of Annual General Meeting for Year 2012 (contd)
Notes:i. For the purpose of determining a Member who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Bye-laws 58 (5) of the Companys Bye-laws and Section 34(l) of the Securities Industry (Central Depositories) Act, 1991 of Malaysia (Central Depositories Act) to issue a General Meeting Record of Depositors as at 15 June 2012. Only a depositor whose name appears on the Record of Depositors as at 15 June 2012 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. A Member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. A proxy may but need not be a Member of the Company. Where a Member appoints more than one (1) proxy the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. Where a Member is an authorised nominee as defined under the Central Depositories Act, it may appoint not more than two proxies to attend and vote at the same general meeting in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of that Securities Account. Where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (omnibus account), there is no limit to the number of proxies which such exempt authorised nominee may appoint in respect of each omnibus account it holds. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, the proxy form must be executed under its Common Seal or under the hand of an office, attorney or other person duly authorised to sign the same. The instrument appointing a proxy must be deposited at the Companys Registered Office in Malaysia i.e. Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting i.e. on or before 10.00 a.m., Wednesday, 20 June 2012 or any adjournment thereof.
ii.
iii.
iv.
v.
vi.
Explanatory Notes:1. Item 1 of the Agenda The Agenda item is meant for discussion only as the provision of Section 84 of the Bermuda Companies Act, 1981 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting. Item 6 of the Agenda Ordinary Resolution 6 The proposed adoption of the Ordinary Resolution No. 6 is primarily to give flexibility to the Board of Directors to issue shares to such persons at any time in their absolute discretion without convening a general meeting. This authorisation will expire at the conclusion of the next Annual General Meeting of the Company. This is a renewal of the mandate obtained from the members at the last Annual General Meeting (the previous mandate). The previous mandate was not utilised and accordingly no proceeds were raised. The purpose of this general mandate is for possible fund raising exercises including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of borrowings and/or acquisitions. Item 7 of the Agenda Special Resolution 1 The proposed amendments to the Bye-Laws of the Company are in line with the directive of Bursa Malaysia Securities Berhad dated 22 September 2011 and for administrative purpose.
2.
3.
Annual R eport 2011
Appendix I
81
PROPOSED AMENDMENTS TO THE BYE-LAWS OF THE COMPANY

The amendments which are proposed to be made to the Bye-laws of Multi Sports Holdings Ltd are set out below. For ease of reference, and where appropriate, the full text of the existing provision in the Bye-laws which are proposed to be amended have been reproduced. The amendments showing the changes are in bold. Bye-law 77 Existing Provisions (1) Any Member entitled to attend (1) and vote at a meeting of the Company who is the holder of two or more shares shall be entitled to appoint not more than two proxies to attend and vote instead of him at the same general meeting provided that if the Member is an authorised nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy to attend and vote at the same (2) general meeting in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of that Securities Account. (2) I n a n y c a s e w h e r e a n instrument of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be (3) specified in the instrument of proxy. (3) A proxy need not be a Member. In addition, subject to Bye-law 77(1), a proxy or proxies representing either a Member who is an individual or a Member which is a corporation shall be entitled to exercise the same powers on behalf of the Member which he or they represent as such Member could exercise, including, notwithstanding Bye-law 65, the right to vote individually on a show of hands on any question Amended Provisions A Member, who is entitled to attend and vote at a meeting of the Company, or at a meeting of any class of members of the Company, shall be entitled to appoint not more than two proxies to attend, speak and vote instead of him at the same general meeting. There shall be no restriction as to the qualification of the proxy. Where a Member is an authorised nominee as defined under the Central Depositories Act, it may appoint not more than two proxies to attend and vote at the same general meeting in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of that Securities Account. Where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (omnibus account), there is no limit to the number of proxies which such exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the Central Depositories Act which is exempted from compliance Rationale To be in line with the directive of Bursa Malaysia Securities Berhad dated 22 September 2011 and for administrative purpose.
82
Appendix I (contd)
Bye-law
Existing Provisions or resolution at any general meeting. On a poll, a proxy need not use all the votes he is entitled to cast or cast all such votes in the same way. (4)
Amended Provisions with the provisions of subsection 25A(1) of the Central Depositories Act. Where a Member or an authorised nominee appoints two proxies, or where an exempt authorised nominee appoints two or more proxies, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the instrument of appointing the proxies.
Rationale
(5) A proxy need not be a Member. In addition, subject to Bye-law 77(1), a proxy or proxies representing either a Member who is an individual or a Member which is a corporation shall be entitled to exercise the same powers on behalf of the Member which he or they represent as such Member could exercise, including, notwithstanding Bye-law 65, the right to vote individually on a show of hands on any question or resolution at any general meeting. On a poll, a proxy need not use all the votes he is entitled to cast or cast all such votes in the same way. 135 The Board may, subject to these (1) Bye-laws and in accordance with the Act, declare a dividend in any currency to be paid to the Members and such dividend may be paid in cash or wholly or partly in specie in which case the Board may fix the value for distribution in specie of any assets. The Board may declare and make such other distributions (in cash or in specie) to the Members as may be lawfully made out of the assets of the Company. The Company in general meeting may also, subject to these Bye-laws and in accordance with the Act, declare a dividend or such other distribution The Board may, in respect To incorporate the of each financial year of dividend policy of the the Company commencing Company. from the financial year ended 31 December 2011, subject to these Bye-laws and in accordance with the Act, declare a dividend in any currency to be paid to the Members and such dividend may be paid wholly or partly in cash or partly in specie in which case the Board may fix the value for distribution in specie of any assets. The Board may declare and make such other distributions (in
Annual R eport 2011
Appendix I (contd)
83
Bye-law
Existing Provisions to be paid to the Members but no dividend or distribution shall be declared by the Company in general meeting in excess of the amount recommended by the Board.
Amended Provisions cash or in specie) to the Members as may be lawfully made out of the assets of the Company. The Company in general meeting may also, subject to these Bye-laws and in accordance with the Act, declare a dividend or such other distribution to be paid to the Members but no dividend or distribution shall be declared by the Company in general meeting in excess of the amount recommended by the Board.
Rationale
(2) The matters which the Board shall take into consideration when determining whether or not to declare or recommend any dividend or distribution shall include (but without limitation) the following: (a) t h e a v a i l a b i l i t y of adequate distributable reserves and cash flow; (b) the operating cash flow requirements and financing commitments of t h e C o m p a n y, i t s subsidiaries, related companies and affiliates (collectively, the Group); (c) the anticipated future operating conditions, future expansion, capital expenditure and investment plans of the Group; and
i m p a c t (d) t h e of applicable taxation laws and other regulatory requirements.
84
Appendix I (contd)
Bye-law
Existing Provisions (3)
Amended Provisions Where the Board acting in good faith in the best interests of the Company declares or recommends any dividend or distribution, the amount of dividend or distribution declared or recommended shall not be less than 10% of the Distributable Profits. For the purposes of this Bye-law 135(3), the term Distributable Profits shall mean profits of the Group for the relevant financial year less (i) all relevant taxes, (ii) all losses carried forward (if any) and (ii) such sums as may be determined by the Board under Byelaw 145 to be set aside as reserves.
Rationale
(4) N o t w i t h s t a n d i n g a n y provisions to the contrary in these Bye-laws, where any dividend or distribution is to be paid or made to Members, not less than 50% of the total amount of such dividend or distribution shall be paid or made in cash. 137 No dividend shall be paid or distribution made if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than the aggregate of its liabilities and its issued share capital and share premium accounts. No dividend shall be paid or distribution made if to do so would render the Company unable to pay its liabilities as they become due or the realisable value of its assets would thereby become less than the aggregate of its liabilities. To be in line with the changes to the Companies Act, 1981 of Bermuda made pursuant to the Companies Amendment (No. 2) Act 2011, which was operative with effect from 18 December 2011.
143
Whenever the Board or the Company in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to
W h e n e v e r t h e B o a r d o r t h e To incorporate the Company in general meeting has dividend policy of the resolved that a dividend be paid Company. or declared, the Board may further resolve that such dividend be satisfied in part (being not more than 50% of the total amount of such dividend) by the distribution of specific assets of any kind and in
Annual R eport 2011
Appendix I (contd)
85
Bye-law
Existing Provisions subscribe securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.
Amended Provisions particular of paid up shares, debentures or warrants to subscribe securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof, and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall not be or be deemed to be a separate class of Members for any purpose whatsoever.
Rationale
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MULTI SPORTS HOLDINGS LTD

(Incorporated in Bermuda under the Companies Act, 1981 of Bermuda - Registration No. 42425) (Registered as a Foreign Company in Malaysia under the Companies Act, 1965 of Malaysia - Company No. 995199-H)
FORM OF PROXY
I/We .................................................................................................................. NRIC/ Company No. .............................................. (Full Name in Capital Letters) of ....................................................................................................................................................................................................... (Full Address) being a member(s) of MULTI SPORTS HOLDINGS LTD (Incorporated in Bermuda under Companies Act, 1981 of Bermuda) (Registered as a foreign company in Malaysia under the Companies Act, 1965 of Malaysia) (Company No. 995199-H) hereby appoint ........................................................................................................................................................................................................... (Full Name in Capital Letters) of ....................................................................................................................................................................................................... (Full Address) and/or failing him/her, ......................................................................................................... NRIC No. .............................................. (Full Name in Capital Letters) of ....................................................................................................................................................................................................... (Full Address) or failing *him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the 2012 Annual General Meeting of the Company to be held at Selangor Room, Level 1, Putrajaya Marriott Hotel & Spa, IOI Resort City, 62502 Sepang Utara, Selangor Darul Ehsan on Friday, 22 June 2012 at 10.00 a.m. and at any adjournment thereof. The proxy is to vote in the manner indicated below, with an X in the appropriate spaces. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion. NO. RESOLUTIONS Ordinary Resolution 1. 2. 3. 4. 5. 6. To approve the payment of Directors Fees for the financial year ended 31 December 2011. To re-elect Mr Chan Chiu Hung Alex who retires pursuant to the Companys Bye-laws. To re-elect Ms Gong Ane who retires pursuant to the Companys Bye-laws. To approve the payment of a tax exempt final dividend of 3.11 sen per share for the financial year ended 31 December 2011. To re-appoint Messrs. Foo Kon Tan Grant Thornton as Auditors of the Company and to authorise the Board of Directors to fix their remuneration. Authority to issue shares. Special Resolution 1. Proposed amendments to the Bye-laws of the Company. FOR AGAINST
Signed this .day of .. 2012. Number of shares held CDS Account No. ............................................................... ............................................................................................. Telephone no. (During office hours)
Notes: i. For the purpose of determining a Member who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. in accordance with Bye-laws 58 (5) of the Companys Bye-laws and Section 34(l) of the Securities Industry (Central Depositories) Act, 1991 of Malaysia (Central Depositories Act) to issue a General Meeting Record of Depositors as at 15 June 2012. Only a depositor whose name appears on the Record of Depositors as at 15 June 2012 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. ii. A Member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. A proxy may but need not be a Member of the Company. Where a Member appoints more than one (1) proxy the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. iii. Where a Member is an authorised nominee as defined under the Central Depositories Act, it may appoint not more than two proxies to attend and vote at the same general meeting in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of that Securities Account. iv. Where a Member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) Securities Account (omnibus account), there is no limit to the number of proxies which such exempt authorised nominee may appoint in respect of each omnibus account it holds. v. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, the proxy form must be executed under its Common Seal or under the hand of an office, attorney or other person duly authorised to sign the same. vii. The instrument appointing a proxy must be deposited at the Companys Registered Office in Malaysia i.e. Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting i.e. on or before 10.00 a.m., Wednesday, 20 June 2012 or any adjournment thereof.
.............................................................................. Signature Shareholder or Common Seal
Fold this flap for sealing
Then fold here
Affix STAMP
The Secretary
Multi Sports Holdings Ltd

Level 18, The Gardens North Tower Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur MALAYSIA
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(Incorporated in Bermuda under the Companies Act, 1981 of Bermuda - Registration No.

MULTI SPORTS HOLDINGS LTD ANNUAL REPORT 2011

Annual R eport 2011

Multi Sports H oldings Ltd

Revenue (RMB Million)

Cash and Cash Equivalent (RMB Million)

24 2007 2008 2009 2010 2011 0 2007

30 2008 2009 2010 2011

Revenue by Product (RMB Million)

Shareholders Equity (RMB Million)

Gross Profit (RMB Million) / Margins (%)

Operating Profit (RMB Million) / Margins (%)

Profit after Tax / Margins (%)

Annual R eport 2011

Multi Sports H oldings Ltd

Our Corporate Structure

The structure of our Group is set out below:

Annual R eport 2011

Multi Sports H oldings Ltd

Annual R eport 2011

Multi Sports H oldings Ltd

EVA MD II shoe soles series

EVA MD I shoe soles series

TPR shoe soles series

RB shoe soles series

Annual R eport 2011

Multi Sports H oldings Ltd

Profile of Directors (contd)

Annual R eport 2011

Multi Sports H oldings Ltd

Profile of Directors (contd)

Statement from the Executive Chairman

Annual R eport 2011

Multi Sports H oldings Ltd

Statement from the Executive Chairman (contd)

Statement from the Executive Chairman (contd)

Annual R eport 2011

Multi Sports H oldings Ltd

Statement from the Executive Chairman (contd)

Corporate Governance Statement

Annual R eport 2011

Multi Sports H oldings Ltd

Corporate Governance Statement (contd)

Corporate Governance Statement (contd)

Annual R eport 2011

Multi Sports H oldings Ltd

Corporate Governance Statement (contd)

Chan Chiu Hung Alex

Corporate Governance Statement (contd)

Total (RMB) 3,091,449 456,638 3,548,087

COMMITTEES OF THE BOARD

Annual R eport 2011

Multi Sports H oldings Ltd

Corporate Governance Statement (contd)

Corporate Governance Statement (contd)

ACCOUNTABILITY AND AUDIT

Annual R eport 2011

Multi Sports H oldings Ltd

Corporate Governance Statement (contd)

ADDITIONAL COMPLIANCE INFORMATION

3,960 3,000 4,000 1,000 7,000

2,412 1,091 1,000 7,695