KHIND HOLDINGS BERHAD - Malaysiastock.biz contents KHIND HOLDINGS BERHAD Pg 7 annual report 2010 Contents 7 Chairman and Group CEO's Joint Statement 8 - 11 Corporate Structure 12 Corporate

KHIND HOLDINGS BERHAD (380310-D)

Manufacturer & Marketer for

Pg 1KHIND HOLDINGS BERHAD annual report 2010

Pg 2 KHIND HOLDINGS BERHAD annual report 2010



Khind makes it a part of everyday businessKhind makes it a part of everyday business



contents


Contents 7

Chairman and Group CEO's Joint Statement 8 - 11

Corporate Structure 12

Corporate Information 13

Profile of Board of Directors 14 - 17

Statement on Corporate Governance 18 - 23

Statement of Corporate Responsibility 24 - 26

Statement on Internal Control 27

Report on Audit Committee 28 - 29

Financial Calendar 30

Financial Statements 31 - 91

Statistics on Shareholdings 92 - 93

Directors' Shareholdings 94

List of Properties Held by the Group 95

Investors' Information 96

Khind Group Offices and Address 97

Notice of Annual General Meeting 98 - 101

Statement Accompanying the Notice of AGM 101

Proxy Form

Pg 8 Pg 9KHIND HOLDINGS BERHAD annual report 2010

KHIND HOLDINGS BERHAD annual report 2010Pg 8 Pg 9KHIND HOLDINGS BERHAD

annual report 2010KHIND HOLDINGS BERHAD annual report 2010

A Year of moderate improvement

In 2010 Malaysia continued to feel the after-effects of the

2009 contagion albeit at a more measured scale, that led

to a slightly better performance across all sectors of the

economy. The Malaysian economy experienced a return

to growth, recording an expansion of 7.2% in terms of gross

domestic product (GDP) following the downturn in 2009.

Against a gradually improving domestic and global recovery,

your Company was able to turn in a modest performance

given that it was impacted by slower recovering consumer

confidence in the country, while maneuvering through some

unexpected political shocks that affected the Middle East

region where it exports a large majority of its products.

In a year of fair growth, the Company also continued to

remain relevant to consumers in the country and around

the globe. The strategy of investing in Blue Ocean

Products (BOP) remained a commitment to ensuring that

the Company was able to compete in an increasingly

competitive and crowded space.

Consumer Electrical Appliances Sector performance

in 2010

Overall, capital spending in the sector was led largely by

the foreign multinational companies (MNCs) in the electrical

and electronics (E&E) industries. While the percentage

of approved investment in the E&E industries declined to

28.7% of the total manufacturing investment amount from

32.3% (source: Economic Report 2010 – Bank Negara

Malaysia) E&E exports particularly semiconductors rose

significantly in the first half, benefiting from inventory

restocking in the global electronics industry. Moving into the

latter half of the year, the moderation in regional demand

led to the softening of electronics exports which resulted

in a slower uptake of product inventory. Nevertheless, in

the manufacturing sector, foreign direct investment (FDI)

was still very much focused on the E&E sector as many

global and domestic companies upgraded or re-tooled

towards higher value added activities and greater product

sophistication.

The E&E output growth was also supported by the

revival of global corporate information technology

(IT) investments, and better than expected consumer

spending on electronics, thus causing higher demand for

semiconductors and audio-visual products, particularly in

the first half of 2010.

Domestically, consumer spending was also sustained by

fairly liberal access to credit as a result of an accommodative

monetary environment that prevailed during the year.

Against this backdrop, the country recorded a better

growth of 6.3% in 2010 (2009: -0.5%) in terms of private

spending. Despite the moderation in the global economy

in the second half-year, local consumer demand conditions

remained robust throughout the year, driven largely by

private sector activity. Household consumption increased

at a faster pace, while private investment rebounded

strongly to record double-digit growth. All these factors

contributed to the Group’s overall performance in 2010.

As a consequence of a more positive economic condition,

headline inflation also averaged 1.7% in 2010 (2009:

0.6%). Much of the inflationary increases were linked to

higher food and commodity prices and adjustments to

subsidised items. This resulted in the consumer electrical

appliances sector performing more positively under the

year in review.

2010 performance

Group revenue for the period ended December 31, 2010

was RM196.02 million, representing a 6.8% increase over

Dear Shareholders,Your Board is honoured to share with you the Company and Group performance for the financial year ended December 31, 2010.

Chairman and Group Chief Executive Officer Joint Statement




the previous corresponding year of RM183.60 million. The

moderate increase was mainly attributable to marginally

better demand domestically and globally for the Group’s

products.

While revenue remained relatively flat, group profit before

tax recorded a 13.6% increase to RM12.75 million as

compared with RM11.22 million for December 31, 2009.

The positively better performance was ascribed to selling

higher margin products, continued cost effectiveness

programmes, and more aggressive marketing strategies to

increase product share in the market place.

From a sectoral performance perspective, domestic

revenue contributed approximately 70% to total group

revenue performance, while the remaining 30% from

export sales.

In this context, the Group’s performance domestically

was spearheaded by the introduction of a greater number

of BOP. In terms of its export performance, the Group

turned in a fair showing for its Singapore operation, while

the Middle East region was impacted by the unforeseen

political upheaval in many of the countries it does business

in.

Operations review

Cost effectiveness programmes that were implemented in

previous financial years continued to be executed across

all operational aspects within the Group. Consistently

positive reinforcement of the Group’s mantra of managing

costs to ensure better margins meant that all operational

and manufacturing procedures were reviewed regularly to

strip unwanted costs out of the entire value chain within the

Group – from manufacturing, to administration to marketing

to distribution. As a result of the on-going diligence by the

Group’s employees, bottom-line performance continued to

be impacted positively.

Furthermore, the Group invested into the future capacity

building operations by investing in strategic acquisitions.

These acquisitions were mainly in real estate properties.

The Group announced on June 1 that it had invested in a

65,340 square feet (6,070 square metres) piece of freehold

land within Setia City 1, a future commercial development

located in Shah Alam, Selangor. The RM7.84 million

investment in the land was to facilitate the expansion and

construction of the Group’s proposed new headquarters in

the future.

The Group also purchased two (2) units of a three storey

(3-storey) semi-detached factory lot at I-Parc Bukit

Jelutong, Shah Alam for RM6.59 million in January 2010

to support its Bukit Jelutong warehousing and distribution

operations. In Kuching, Sarawak, the Group announced

in May, that it had also acquired a piece of leasehold land

measuring 59,125 square feet (5,496 square metres) that

would be utilised for the expansion of its business and

operations in the state.

On the Middle East front, notwithstanding the uncertain

political climate in some of the countries around the region,

the Group remained committed to its Dubai regional

headquarters in the United Arab Emirates (UAE). The

Group invested in providing housing accommodation

for its expanding workforce with the purchase of two (2)

units of condominiums amounting to Dirhams 1,050,000

(approximately RM823,000).

All these investments into landed assets are preparation

for the Group’s future expansion requirements, and given

the significantly lower market valuations for many of these

acquisitions, also represented good buys - was a a positive

move to help the Group manage its future capacity building

ability in a financially prudent and planned manner.

On the human resource front, the Group remained

committed to upgrading the skills set of its employees,

and provide motivational and positive reinforcement

programmes for all its executives. Since 2004, the

Management had committed to a series of team building

retreats throughout the country. These team building

retreats were to strengthen team work, provide constant




motivation and support to employees, encourage a sense of

belonging and shared objectives. A total of 175 employees

participated in four (4) team building retreats in 2010.

To facilitate better time management and productivity,

the Group also invested in FlexHR, a human resource

management information system software that provided

better time and scheduling management of employee

productivity.

Marketing Review

The Group invested a sum of approximately RM11.7million

in building brand and product awareness promotion

activities in the local and global market during the year.

This investment was utilized through a combination of

promotional initiatives such as trade-related incentive

programmes; business-to-business trade events; and

consumer awareness campaigns. The Group also

successfully hosted its third (3rd) nationwide trade dealer

convention which witnessed the introduction of 13 new BOP

products under the Khind and Mistral brands. Attendance

by some 600 domestic dealers and 20 overseas suppliers

was highly encouraging and allowed the Group’s trade

partners to experience first-hand some of the new products

launched.

To ensure better product penetration, the Group also

restructured its sales teams to further concentrate on BOP

products and its two key brands – Khind and Mistral. The

BOP sales team was established to specifically “push the

acceptance” of the Group’s new products among trade

partners, while a Mistral sales team was reignited to

aggressively build market share for the brand’s air-moving

and cooling products. All in all, the brand specific teams

established allowed for greater focus on driving product

penetration and awareness in the market place and

providing a clearer focus to sales team targets.

At the retail front, more promoters were engaged at

high traffic outlets to step up promotional inputs and to

encourage consumers to consider purchasing a Khind or

Mistral product. Additionally, the Group engaged three

(3) different product managers to step up the on-going

research and development of new BOP products with the

aim of remaining relevant to the needs of consumers.

Giving back to the community at large – Corporate

Responsibility (CR)

Since its inception, the Company and Group have always

sought to give back to society where possible. In 2010,

more effort, resource and time were committed to Corporate

Responsibility (CR) initiatives that allowed the Company

and its employees to be actively engaged in.

Some of these included: flood and earthquake disaster

relief assistance; employees volunteering at The Kechara

Soup Kitchen, an urban soup kitchen providing free meals

for the less fortunate within Kuala Lumpur; sponsorship

of the music and arts, specifically the Hands Percussion

ensemble and E-major Symphony on “Lawuita” the

musical concert; and local community-based volunteer

tuition programmes – all aimed at providing a positive

influence to various communities, and encourage a spirit of

compassion, volunteerism and good will among employees

within the Khind Group.

Your Board is pleased that the positive CR achievements in

2010 have left an indelible impression among the various

stakeholders that the Khind Group is not only focused on

financial performance and returns, but understands its role

within the community that it operates.

2011 - Celebrating 50 Years of continued success

Khind celebrates its 50th Anniversary in 2011. A significant

and important milestone in the Company’s history as the

five decades represent the Company’s longevity and

determination to be a leading player in its industry. From

its humble beginning in 1961, the Company has certainly

achieved much success and overcome adversity to arrive

at its 50th year of doing business. However, recognising

that business environments change constantly, the Group




must also continuously evolve to meet the needs of the

market place in the future, and enhance earnings potential

in the long run.

In this regard, the Group announced in January 2011 that

it had acquired a cluster of industrial specialist electrical

and power distribution businesses that will add value from

a revenue perspective, and also knowledge and skills

offering to an industrial customer base. Your Board is

hopeful that these synergistic acquisitions will propel the

Khind Group up the value chain within the electrical and

electronics industry, while expanding its earnings stream.

Moving ahead, as part of the upcoming 50th Anniversary

celebrations the Group intends to celebrate and

commemorate its achievements. Your Board encourages

all stakeholders to join in the future celebrations to be

announced in 2011.

Note of Appreciation

While the Company and Group’s growth was moderate in

2010, the Board would like to recognise the contributions

of everyone associated with the Khind Group. From long-

standing employees who continue to serve the Group with

distinction; to truly remarkable trade partnerships with local

and international dealers; to our loyal consumers who

purchase our products; to regulatory authorities who help

facilitate the progress of our business; and to members of

the Community who help us in their own way - the Board

places on record its kind appreciation to each and every

one of you. We are encouraged by your support and look

forward to celebrating our 50th Anniversary with you.

CHENG PING KEATGROUP CHIEF EXECUTIVE OFFICER (CEO)

CHENG KING FA CHAIRMAN




KHIND HOLDINGS BERHAD (380310-D)

100% Khind-Mistral Industries Sdn Bhd (213282-V)

Manufacture and sale of electrical home appliances and wiring accessories

100% Khind Middle East FZE (01020)

Trading in home appliances

100% Khind-Mistral (M) Sdn Bhd (442421-A)

Trading in electrial products

100% Khind-Mistral (Borneo) Sdn Bhd (234614-W)

Trading in electrical home appliances and wiring

accessories

100% Mistral (Singapore) Pte Ltd (200106472H)

Trading in electrical products

100% Khind Customer Service Sdn Bhd (109015-W)

Providing general repair and rework services and renting

of commercial properties

100% Indesico (M) Sdn Bhd (811092-W)

Trading in electrical home appliances

100% Khind-Mistral (Sabah) Sdn Bhd (177741-V)

Renting of properties and motor vehicles

100% Khind Components Sdn Bhd (196021-P)

Dormant

100% Khind Technology Centre Sdn Bhd (429363-P)

Dormant

100% Khind Home Appliances Sdn Bhd (429595-W)

Dormant

100% Khind Industries Sdn Bhd (173304-D)

Dormant

Corporate Structure




Registered Office : Level 18, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurTel: 603-2264 8888Fax: 603-2282 2733

Website Address : www.khind.com / www.khind.aewww.mistral.com.my / www.mistral.com.sgwww.indesico.com.my

Email Address :[email protected]

Share Registrars : Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel: 603-2264 3883 Fax: 603-2282 1886

Company Secretaries : Kuan Hui Fang (MIA 16876)Tan Ai Peng (MAICSA 7018419)

Stock Exchange Securities : Main Market of Bursa Malaysia Securities BerhadStock Code : 7062

External Auditors : KPMG Chartered Accountants (AF 0758)

Internal Auditors : BDO Governance Advisory Sdn Bhd

Principal Bankers: DBS Bank LtdEON Bank BerhadHong Leong Bank BerhadKuwait Finance House (M) BerhadMalayan Banking BerhadPublic Bank BerhadRHB Bank BerhadStandard Chartered Bank Malaysia BerhadUnited Overseas Bank Limited

Solicitors :Halim, Hong & QuekOng & PartnershipShearn Delamore & CoKhor, Anuar & Khong

Corporate Information

MR. CHENG KING FA - Malaysian- Founder/Chairman

Mr. Cheng King Fa, aged 72, is the Founder of the KHIND group, which commenced as a small family business 50 years ago. Under his vision and guidance, the business has grown into one of Malaysia’s leading local electrical products manufacturer. With 50 years’ experience in the electrical industry, he provides invaluable advice to the Group on production, marketing, new product research and development.

Mr. KF Cheng was appointed as the Executive Chairman of the Group on 20 April 1998 prior to the Company’s listing on the Second Board of Bursa Malaysia Securities Berhad on 12 August 1998. On 1 March 2005, he was re-designated as Founder /Chairman.

Mr. KF Cheng has no convictions for any offence within the past ten years and no conflict of interest with KHIND, other than those disclosed in the 2010 financial statements in respect of related party transactions. In 2010, he attended all the five meetings held by the Board. He is the father of Mr. Cheng Ping Keat.




Profile of Board of Directors

MR. CHENG PING KEAT - Malaysian- Group Chief Executive Officer

Mr. Cheng Ping Keat, aged 50, was appointed Executive Director of KHIND on 20 April 1998. He graduated with a Bachelor of Commerce degree from the University of Melbourne, Australia in 1984. Post graduation, he had a short stint in audit, accountancy and receivership, both locally and abroad. He joined the KHIND Group in September 1987. In 1996, he obtained his Master of Business Administration from Bath University, U.K.

Mr. PK Cheng was appointed and designated as the Group Chief Executive Officer of the KHIND Group on 18 November 2003. He is responsible for the overall strategic planning and operations relating to manufacturing, marketing, financial, export management and brand building for the KHIND Group.

Mr. PK Cheng has no convictions for any offence within the past ten years and no conflict of interest with KHIND, other than those disclosed in the 2010 financial statements in respect of related party transactions. In 2010, he attended all the five meetings of the Board. He is the son of Mr Cheng King Fa.







MR. KAMIL BIN DATUK HJ. ABDUL RAHMAN - Malaysian- Senior Independent Non-Executive Director- Chairman of Audit Committee- Member of Nomination and Remuneration Committee

Mr. Kamil A. Rahman, aged 62, was appointed as an Independent Non-Executive Director of KHIND on 30 July 2001. At the same time, he became an independent member of the KHIND Audit Committee. His area of specialization is in corporate governance, corporate finance and risk management.

Mr. Kamil was appointed as the Chairman of the Audit Committee on 5 August 2008 and as the Senior Independent Director on 31 March 2009. He is also a member of the Nomination and Remuneration Committee.

Mr. Kamil graduated with a Bachelor of Commerce degree from the University of Otago, New Zealand and subsequently qualified as a Chartered Accountant of the Institute of Chartered Accountants of New Zealand. He is also a Fellow Chartered Secretary of the Institute of Chartered Secretaries and Administrators, United Kingdom, and a Chartered Accountant of the Malaysian Institute of Accountants.

Mr. Kamil’s previous senior positions were Senior Vice President of the Bank of Commerce (M) Berhad and Executive Director of Commerce International Merchant Bankers Berhad. He is also a Director of Malaysian Merchant Marine Berhad, Global Carriers Berhad, *Putera Capital Berhad, *Bukit Katil Resources Berhad, *WDM Holdings Berhad (*not listed on Bursa Malaysia), and the Malaysia South Africa Business Council (a company limited by guarantee). Mr. Kamil has no family relationship with any Director and or major shareholder of the Company, no conflict of interest with KHIND and no convictions for any offence within the past ten years. He attended all the five meetings of the Board in 2010.

MR. MD. AZMI BIN LOP YUSOF- Malaysian- Independent Non-Executive Director- Member of Nomination and Remuneration Committee

Mr. Md. Azmi bin Lop Yusof, aged 56, was appointed as a Non-independent Non-Executive Director of KHIND on 20 April 1998. He obtained a Diploma in Agriculture from Kolej Pertanian Malaysia in 1975 and graduated with a degree in Agricultural Business from Louisiana State University, USA in 1979. He is a former State Assemblyman for Terengganu and also sitson the board of some private limited companies.

On 26 February 2008, Mr. Md. Azmi wasre-designated as an Independent Non-Executive Director.

Mr. Md. Azmi has no family relationship with any Director but is a shareholder of KHIND. He is also a member of the Nomination andRemuneration Committee. He has noconflict of interest with KHIND and no convictions for any offence within the past ten years. He attended all the five meetings of the Board in 2010.

MR. LEE AH LAN @ LEE KEOK HOOI - Malaysian- Non-Independent Non-Executive Director- Member of the Audit Committee - Member of the Nomination and Remuneration Committee

Mr. Lee Keok Hooi, aged 64, was appointed as a Non-independent Non-Executive Director of KHIND on 26 March 1999. He holds a Bachelor of Commerce degree in Accounting from the University of Western Australia and is a Chartered Accountant (Malaysia) and a CPA (Australia).

Mr. Lee is a member of the Audit Committee and the Nomination and Remuneration Committee.

Mr. Lee is the Group Executive Chairman and Managing Director of Hock Sin Leong




Group Berhad - a company listed on the Main Market of Bursa Malaysia Securities Berhad, and a premier home-grown consumer electrical and electronic products player. He has been involved in the group activities since 1976. He is also a member of the Nomina-tion and Remuneration Committee of KHIND.

Mr. Lee has no family relationship with any Director and/or major shareholder of KHIND and has no convictions for any offence within the past ten years. He attended four of the five meetings of the Board held in 2010.

Mr. Lee does not have any conflict of interest with KHIND, other than that disclosed in the 2010 financial statements pertaining to related party transactions.

MR. WONG CHIN MUN- Malaysian- Independent Non-Executive Director- Chairman of the Nomination and Remuneration Committee- Member of the Audit Committee

Mr. Wong Chin Mun, aged 66, was appointed as an Independent Non-Executive Director of KHIND on 19 July 2010. He holds degrees in Bachelor of Business (Secretarial Administration) and (Accounting) from Curtin University of Western Australia and has a Teacher’s Certificate from the Ministry of Education, Malaysia. He is a Fellow of the Australian Society of Certified Practising Accountants and Associate of Malaysian Institute of Accountants.

On 19 July 2010, Mr. Wong was also appointed as an Independent Member of the Audit Committee and the Nomination and Remuneration Committee. On 1 March 2011, Mr. Wong became the Chairman of the Nomination and Remuneration Committee.

Mr. Wong is currently the Chairman of Vistage Malaysia Sdn. Bhd., which has the rights for the Vistage System from Vistage International Inc., USA, aimed at assisting chief executive officers and entrepreneurs of small, medium enterprise to proactively manage change and grow their businesses. He joined Nylex Malaysia Berhad (“Nylex”) as Financial Controller/Company Secretary in January 1976 and became the first local

General Manager/Director of Nylex in 1980. He was promoted to the position of Managing Director in 1985 and when he left at the end of June 1994 to found Vistage Malaysia, he was appointed and served as non-executive Deputy Chairman of the Nylex Malaysia Group of Companies up to October 1999.

Mr. Wong is currently the Senior Independent Non-Executive Director of Sunway Holdings Berhad and Chairman of its Audit Committee as well as a Member of the Nomination and Remuneration Committees. He was appointed to the National Branding Taskforce of the Ministry of Trade and Industry since 2006 and also served on the Technical Evaluation Panel for the Annual Prime Minister’s Award. He has served on the Board of Trustees of Scientex Foundation since 2008 and was a Member of the Board of Trustees of the Malaysian Rubber Export Promotion Council from 2000 to 2002. He also served as a Council Member with Federation of Malaysian Manufacturers (“FMM”) from 1985 to 1997, held positions with the Young Presidents’ Organization-Malaysia Chapter from 1988 to 1993 and also was involved in the Lions Club of Shah Alam from 1976 to 1980. He is also a Board Member of Transparency International Malaysia since 2006 until to date. In January 2011, he was appointed by FMM to be the Chairman of the FMM Branding & IPR Committee.

Mr. Wong has no family relationship with any Director and/or major shareholder of KHIND and no convictions for any offence within the past ten years. He attended two of the remaining three meetings of the Board since his appointment on 19 July 2010.

Mr. Wong does not have any conflict of interest with KHIND.




The Board of Directors of Khind Holdings Berhad recognizes the importance of good corporate governance throughout the Group as a fundamental process of discharging its responsibilities to protect and enhance shareholders’ value and financial performance of the Group.

The Board is committed to the maintenance of high standards of corporate governance by adopting and implementing the prescription of the principles and best practices set out in Malaysia Code of Corporate Governance, revised 2007 (The “Code”).

BOARD OF DIRECTORS

BOARD COMPOSITION AND BALANCE

The Board currently comprises six (6) members, of whom two (2) are of Executive capacity and three (3) out of four (4) Non-Executive Directors are independent. This is in compliance with the Paragraph 15.02 of the Listing Requirements of Bursa Securities, that at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, are Independent Directors. All Independent Non-Executive Directors are independent of management and free of any relationship that could interfere with the exercise of their independent judgment.

The Executive Directors are responsible for determining and implementing financial and operational decisions. The role of Independent Non-Executive Directors is crucial in ensuring that the strategies proposed by the management are fully deliberated and examined. They fulfill a pivotal role in corporate accountability as they provide unbiased and independent views, advices and judgements on issues pertaining to the shareholders, employees, customers, suppliers and the various communities in which the Group conduct its business.

In totality, the Directors share a wide exposure in the legal, business, financial and technical fields. This blend of knowledge and experience is vital to determine an objective outlook of the Group. A brief profile of each Director is set out in pages 14 to 17 of the Annual Report.

In accordance with Part 2 AA, VII of the Code, Mr. Kamil Bin Datuk Hj. Abdul Rahman has been appointed as the Senior Independent Non-Executive Director.

BOARD MEETINGS

During the year, four (4) Ordinary Board Meeting and one (1) Special Board Meeting were held and the attendance record of the Board members is reflected as follows:-

DIRECTORS’ BOARD MEETINGS IN YEAR 2010

Directors Total Number of Meetings Attended by Directors

1. Mr. Cheng King Fa 5/5

2. Mr. Cheng Ping Keat 5/5

3. Mr. Kamil bin Datuk Hj. Abdul Rahman 5/5

4. Mr. Lee Ah Lan @ Lee Keok Hooi 4/5

5. Mdm. Tan Lay Kuan @ Tan Lay Wah (resigned on 27.5.2010) 2/2

6. Mr. Wong Chin Mun (appointed on 19.7.2010) 2/3

7. Mr. Md. Azmi bin Lop Yusof 5/5

Statement on Corporate Governance




SUPPLY OF INFORMATION TO THE BOARD

All Directors have full access to information concerning the Company and the Group. The agenda for every Board Meeting, together with a comprehensive set of board papers are furnished to all Directors for their perusal in advance of the Board Meeting date. This is to ensure sufficient time is given to enable the Directors to review and consider the agenda items to be deliberated at the Board Meetings. The Board papers include, amongst others, quarterly financial reports, year-end financial statements of the Group, annual budget, other major operational financial and legal issues.

Corporate plans and annual budgets, acquisitions and disposals of undertakings and properties with a substantial value, major investments and financial decisions, including key policies and procedures and delegated authority limits are subject to Board approval. All deliberations in relation to matters discussed and the conclusions are recorded.

The Directors are provided with non-financial indicators like customer service performance, safety & health compliance, market information when dealing with such matters on the agenda.

The Directors have unrestricted access to advice and services of the company secretary, senior management and independent professional advisers including the external auditors, at the Company’s expense. The Directors can utilize the professional services when necessary to fulfill their duties and specific responsibilities as enumerated in Best Practices Provisions AAI of the code.

BOARD COMMITTEES

The Board delegates certain responsibility to Board Committees which operate within clear defined terms of reference. They are mainly the Audit Committee and the Nomination and Remuneration Committee. Prior to the establishment of these committees, their functions were assumed by the Board as a whole. The Chairman of the two (2) Committees will report to the Board the outcome of their Committee decisions.

a) Audit Committee

The Audit Committee was appointed by the Board and established on 10 August 1998 to assist its duty of maintaining a sound system of internal controls and risk management to safeguard shareholders’ interest and the Company’s assets.

A full Audit Committee report enumerating its membership, its role and its activities during the year is set out in pages 28 to 29 of this annual report.

b) Nomination and Remuneration Committee

The Nomination and Remuneration Committee which was established on 15 November 2001 comprises three (3) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Directors.

The Committee is responsible for developing the remuneration packages and benefits-in-kind of Executive Directors and making recommendation to the Board for approval. The remuneration of the Non-Executive Directors is decided by the entire Board. The Board has complied with the Code to review the remuneration of Directors such that the Group attracts and retain the right Director mix to run the Company successfully.

The Committee is also responsible to make appropriate recommendations to the Board on matters of renewal, extension, retirement, appointment and re-appointment of directors as well as review annually the mix of skills experience and competencies of the Board. The Committee is finalising the process of assessment on the effectiveness of the Board, the committee members and contribution of each individual director, including Independent Non-Executive Directors, as well as the Chief Executive Officer (CEO). This process also includes developing a job description and limits to management responsibility for directors including CEO

The members of the Nomination and Remuneration Committee who served during the financial year are:

ChairmanWong Chin Mun(appointed on 1.3.2011)

(Independent and Non-Executive Director)

MembersTan Lay Kuan @ Tan Lay Wah(resigned on 27.5.2010)

(Independent and Non-Executive Director)

Lee Ah Lan @ Lee Keok Hooi (Non-independent and Non-Executive Director)Md. Azmi bin Lop Yusof (Independent and Non-Executive Director)Kamil bin Datuk Haji Abdul Rahman (Senior Independent and Non-Executive Director)

Statement on Corporate Governance (Continued)

Documents

KHIND HOLDINGS BERHAD - Malaysiastock.biz contents KHIND HOLDINGS BERHAD Pg 7 annual report 2010 Contents 7 Chairman and Group CEO's Joint Statement 8 - 11 Corporate Structure 12 Corporate