MIRA INFORM REPORT

Report Date :

29.10.2014

IDENTIFICATION DETAILS

Name :	SAMLING FLOORING PRODUCTS SDN. BHD.
Formerly Known As :	SAMLING INDUSTRY SDN BHD (23/01/1995) SECURITY CREDIT & LEASING SDN BHD
Registered Office :	Wisma Samling, Lot 296, Jalan Temenggong Datuk Oyong Lawai Jau, 98000 Miri, Sarawak
Country :	Malaysia
Financials (as on) :	30.06.2013
Date of Incorporation :	17.01.1983
Com. Reg. No.:	113194-K
Legal Form :	Private Limited
Line of Business :	Manufacturing and Sale of Timber Flooring Products and Veneer
No. of Employees :	250

RATING & COMMENTS

MIRA’s Rating :

Ca

RATING		STATUS	PROPOSED CREDIT LINE
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security

Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – June 1, 2014

Country Name	Previous Rating (31.03.2014)	Current Rating (01.06.2014)
Malaysia	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

MALAYSIA - ECONOMIC OVERVIEW

Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. The NAJIB administration also is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Nevertheless, exports - particularly of electronics, oil and gas, palm oil and rubber - remain a significant driver of the economy. As an oil and gas exporter, Malaysia has profited from higher world energy prices, although the rising cost of domestic gasoline and diesel fuel, combined with sustained budget deficits, has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial reductions in energy and sugar subsidies and the announcement of the 2015 implementation of a 6% goods and services tax. The government is also trying to lessen its dependence on state oil producer Petronas. The oil and gas sector supplies about 32% of government revenue in 2013. Bank Negara Malaysia (central bank) maintains healthy foreign exchange reserves, and a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments and the global financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in commodity prices or a general slowdown in global economic activity because exports are a major component of GDP. In order to attract increased investment, NAJIB earlier raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program (BEEP), policies that favor and advance the economic condition of ethnic Malays

Source : CIA

EXECUTIVE SUMMARY

REGISTRATION NO.

:

113194-K

COMPANY NAME

:

SAMLING FLOORING PRODUCTS SDN. BHD.

FORMER NAME

:

SAMLING INDUSTRY SDN BHD (23/01/1995)
SECURITY CREDIT & LEASING SDN BHD

INCORPORATION DATE

:

17/01/1983

COMPANY STATUS

:

EXIST

LEGAL FORM

:

PRIVATE LIMITED

LISTED STATUS

:

NO

REGISTERED ADDRESS

:

WISMA SAMLING, LOT 296, JALAN TEMENGGONG DATUK OYONG LAWAI JAU, 98000 MIRI, SARAWAK, MALAYSIA.

BUSINESS ADDRESS

:

LOT 191 BLOCK 1, KUALA BARAM LAND DISTRICT INDUSTRIAL ESTATE, CDT 148, 98009 MIRI, SARAWAK, MALAYSIA.

TEL.NO.

:

085-604596

FAX.NO.

:

085-604339

WEB SITE

:

WWW.SAMLING.COM.MY

CONTACT PERSON

:

YAW CHEE CHIK ( DIRECTOR )

INDUSTRY CODE

:

162

PRINCIPAL ACTIVITY

:

MANUFACTURING AND SALE OF TIMBER FLOORING PRODUCTS AND VENEER

AUTHORISED CAPITAL

:

MYR 25,000,000.00 DIVIDED INTO
ORDINARY SHARE 25,000,000.00 OF MYR 1.00 EACH.

ISSUED AND PAID UP CAPITAL

:

MYR 14,750,000.00 DIVIDED INTO
ORDINARY SHARES 10,000,000 CASH AND 4,750,000 OTHERWISE OF MYR 1.00 EACH.

SALES

:

MYR 19,964 [2013]

NET WORTH

:

MYR (21,163,181) [2013]

STAFF STRENGTH

:

250 [2014]

BANKER (S)

:

BANK MUAMALAT MALAYSIA BHD RHB BANK BHD

LITIGATION

:

CLEAR

DEFAULTER CHECK

:

CLEAR

FINANCIAL CONDITION

:

POOR

PAYMENT

:

GOOD

MANAGEMENT CAPABILITY

:

AVERAGE

COMMERCIAL RISK

:

MODERATE

CURRENCY EXPOSURE

:

MODERATE

GENERAL REPUTATION

:

GOOD

INDUSTRY OUTLOOK

:

AVERAGE GROWTH

HISTORY / BACKGROUND

The Subject is a private limited company and is allowed to have a minimum of one and a maximum of forty-nine shareholders. As a private limited company, the Subject must have at least two directors. A private limited company is a separate legal entity from its shareholders. As a separate legal entity, the Subject is capable of owning assets, entering into contracts, sue or be sued by other companies. The liabilities of the shareholders are to the extent of the equity they have taken up and the creditors cannot claim on shareholders' personal assets even if the Subject is insolvent. The Subject is governed by the Companies Act, 1965 and the company must file its annual returns, together with its financial statements with the Registrar of Companies.

The Subject is principally engaged in the (as a / as an) manufacturing and sale of timber flooring products and veneer.

The Subject is not listed on Bursa Malaysia (Malaysia Stock Exchange).

The immediate holding company of the Subject is LINGUI DEVELOPMENTS BERHAD, a company incorporated in MALAYSIA.

Share Capital History

Date	Authorised Shared Capital	Issue & Paid Up Capital
18/04/2014	MYR 25,000,000.00	MYR 14,750,000.00
24/06/2005	MYR 10,000,000.00	MYR 10,000,000.00
20/05/1993	MYR 10,000,000.00	MYR 9,500,000.00

The major shareholder(s) of the Subject are shown as follows :

Name	Address	IC/PP/Loc No	Shareholding	(%)
LINGUI DEVELOPMENTS BERHAD	MENARA MAXIS, KUALA LUMPUR CITY CENTRE, LEVEL 42, 50088 KUALA LUMPUR, WILAYAH PERSEKUTUAN, MALAYSIA.	7574D	14,750,000.00	100.00
			---------------	------
			14,750,000.00	100.00
			============	=====

+ Also Director

DIRECTORS

DIRECTOR 1

Name Of Subject	:	MR. YAW CHEE CHIK
Address	:	LOT 1895, PIASAU 6, JALAN PUJUT-LUTONG, 98000 MIRI, SARAWAK, MALAYSIA.
IC / PP No	:	K412672
New IC No	:	600629-13-5631
Date of Birth	:	29/06/1960
Nationality	:	MALAYSIAN
Date of Appointment	:	11/08/1993

DIRECTOR 2

Name Of Subject	:	MR. HO YAM KUAN
Address	:	A/7/3A/A, THE BRIGHTON CONDOMINIUM, LOT 900 & 901, JALAN TEMENGGONG DATUK OYONG LAWAI JAU, 98000 MIRI, SARAWAK, MALAYSIA.
IC / PP No	:	K270135
New IC No	:	460109-13-5089
Date of Birth	:	09/01/1946
Nationality	:	MALAYSIAN
Date of Appointment	:	28/08/2009

MANAGEMENT

1)	Name of Subject	:	YAW CHEE CHIK
	Position	:	DIRECTOR

AUDITOR

Auditor	:	KPMG
Auditor' Address	:	WESTMOORE HOUSE, TWIN TOWER CENTRE, ROCK ROAD, LEVEL 6, 93200 KUCHING, SARAWAK, MALAYSIA.

COMPANY SECRETARIES

1)	Company Secretary	:	MR. YONG NYAN SIONG
	IC / PP No	:	K105353
	New IC No	:	540304-13-5551
	Address	:	LOT 3165, MIRI-BINTULU ROAD, 98000 MIRI, SARAWAK, MALAYSIA.

BANKING

Banking relations are maintained principally with :

1)

Name

:

BANK MUAMALAT MALAYSIA BHD

2)

Name

:

RHB BANK BHD

ENCUMBRANCE (S)

Charge No	Creation Date	Charge Description	Chargee Name	Total Charge	Status
1	14/06/1994	DEBENTURE	DEVELOPMENT COMMERCIAL BANK BERHAD	MYR 24,500,000.00	Unsatisfied
2	13/07/2001	N/A	BANK MUAMALAT MALAYSIA BERHAD	MYR 12,000,000.00	Satisfied
3	03/09/2001	DEBENTURE	RHB BANK BERHAD	MYR 10,000,000.00	Unsatisfied
4	28/09/2001	DEBENTURE	RHB BANK BERHAD	MYR 15,500,000.00	Unsatisfied

LITIGATION CHECK AGAINST SUBJECT

* A check has been conducted in our databank againt the Subject whether the Subject has been involved in any litigation. Our databank consists of 99% of the wound up companies in Malaysia.

No legal action was found in our databank.

No winding up petition was found in our databank.

DEFAULTER CHECK AGAINST SUBJECT

* We have checked through the Subject in our defaulters' database which comprised of debtors that have been blacklisted by our customers and debtors that have been placed or assigned to us for collection.

No blacklisted record & debt collection case was found in our defaulters' databank.

PAYMENT RECORD

SOURCES OF RAW MATERIALS:
Local	:	YES
Overseas	:	YES

The Subject refused to provide any name of trade/service supplier and we are unable to conduct any trade enquiry. However, from financial historical data we conclude that :

OVERALL PAYMENT HABIT
Prompt 0-30 Days	[	]	Good 31-60 Days	[	X	]	Average 61-90 Days	[	]
Fair 91-120 Days	[	]	Poor >120 Days	[		]

CLIENTELE

Local	:	YES
Domestic Markets	:	MALAYSIA
Overseas	:	YES
Export Market	:	WORLDWIDE
Credit Term	:	30 - 60 DAYS
Payment Mode	:	LETTER OF CREDIT (LC) CHEQUES

OPERATIONS

Products manufactured

:

HARDWOOD FLOORINGS & LAMINATED FLOORINGS

Competitor(s)

:

JAVA TIMBER SDN BHD
MAXIDOR MARKETING SDN BHD
RINVISION SDN BHD
SANBUMI SAWMILL SDN BHD
TELEMONT SDN BHD

Member(s) / Affiliate(s)

:

SMI ASSOCIATION OF MALAYSIA

Ownership of premises

:

OWNED

Shifts

:

2 SHIFTS

Total Number of Employees:
YEAR	2014
GROUP	N/A
COMPANY	250

Branch

:

NO

Other Information:

The Subject is principally engaged in the (as a / as an) manufacturing and sale of timber flooring products and veneer.

The Subject is under the Samling Group of Companies.

The Subject is a manufacturer of wood based products.

The Subject mainly manufactures parquet for flooring system.

RECENT DEVELOPMENT

We have checked with the Malaysian National News Agency's (BERNAMA) database, but no latest development was noted in our investigation.

CURRENT INVESTIGATION

Latest fresh investigations carried out on the Subject indicated that :

Telephone Number Provided By Client	:	N/A
Current Telephone Number	:	085-604596
Match	:	N/A
Address Provided by Client	:	LOT 191 BLK 1, K BARAM LAND DISTRICT IND ESTATE, CDT NO 148,98009,MIRI,SARAWAK.
Current Address	:	LOT 191 BLOCK 1, KUALA BARAM LAND DISTRICT INDUSTRIAL ESTATE, CDT 148, 98009 MIRI, SARAWAK, MALAYSIA.
Match	:	YES
Latest Financial Accounts	:	YES

Other Investigations

On 27th October 2014 we contacted one of the staff from the Subject and she provided some information.

FINANCIAL ANALYSIS

Profitability
Turnover	:	Decreased	[	2009 - 2013	]
Profit/(Loss) Before Tax	:	Decreased	[	2009 - 2013	]
Return on Shareholder Funds	:	Unfavourable	[	12.66%	]
Return on Net Assets	:	Unfavourable	[	11.73%	]
The continuous fall in turnover could be due to the lower demand for the Subject's products / services.The Subject could be more efficient in controlling its operating costs and had managed to reduce its losses during the year. Although the Subject's returns showed positive figures it is not reflective of the true situation. The Subject incurred losses during the year and its shareholders' funds have turned red. The positive returns on shareholders' funds is the result of losses divided by negative shareholders' funds. The Subject's management was inefficient in utilising the assets to generate returns.
Working Capital Control
Stock Ratio	:	Unfavourable	[	54233 Days	]
Debtor Ratio	:	Unfavourable	[	555 Days	]
Creditors Ratio	:	Favourable	[	7 Days	]
The Subject could be incurring higher holding cost. As its capital was tied up in stocks, it could face liquidity problems. The Subject's debtors ratio was high. The Subject should tighten its credit control and improve its collection period. The Subject had a favourable creditors' ratio where the Subject could be taking advantage of the cash discounts and also wanting to maintain goodwill with its creditors.
Liquidity
Liquid Ratio	:	Unfavourable	[	0.10 Times	]
Current Ratio	:	Unfavourable	[	0.14 Times	]
A low liquid ratio means that the Subject may be facing working capital deficiency. If the Subject cannot obtain additional financing or injection of fresh capital, it may face difficulties in meeting its short term obligations.
Solvency
Interest Cover	:	Unfavourable	[	(12.59 Times)	]
Gearing Ratio	:	Unfavourable	[	(0.01 Times)	]
The Subject incurred losses in the year. It did not generate sufficient income to service its interest.  If the situation does not improve, the Subject may be vulnerable to default in servicing the interest. The Subject's gearing was negative during the year as its shareholders' funds was in the red. This means the Subject is running its business using borrowed money. We consider the Subject as facing high financial risks.
Overall Assessment :
Although the Subject's turnover decreased, its losses also decreased during the year. This could be the result of more efficient control in its operating costs. Due to its weak liquidity position, the Subject will be faced with problems in meeting all its short term obligations if no short term loan is obtained or additional capital injected into the Subject. The Subject's interest cover was negative, indicating that it did not generate sufficient income to service its interest. If its result does not show impressive improvements or succeed obtaining short term financing or capital injection, it may not be able to service its interest and repay the loans. The Subject has high financial risks. If its shareholders do not inject more capital into the company or if its business performance does not improve, its going concern may be in question.
Overall financial condition of the Subject : POOR

MALAYSIA ECONOMIC / INDUSTRY OUTLOOK

Major Economic Indicators:	2009	2010	2011	2012	2013
Population ( Million)	28.13	28.35	28.70	29.30	29.80
Gross Domestic Products ( % )	(0.5)	7.2	5.1	5.6	5.3
Domestic Demand ( % )	2.9	6.3	8.2	9.4	5.6
Private Expenditure ( % )	(2.7)	8.1	8.2	8.0	7.4
Consumption ( % )	0.7	6.7	7.1	1.0	5.7
Investment ( % )	(17.2)	17.7	12.2	11.7	13.3
Public Expenditure ( % )	5.2	3.8	8.4	13.3	1.2
Consumption ( % )	3.1	0.2	16.1	11.3	(1.2)
Investment ( % )	8.0	2.8	(0.3)	15.9	4.2
Balance of Trade ( MYR Million )	89,650	118,356	116,058	106,300	110,700
Government Finance ( MYR Million )	(28,450)	(40,482)	(45,511)	(42,297)	(39,993)
Government Finance to GDP / Fiscal Deficit ( % )	(4.8)	(5.6)	(5.4)	(4.5)	(4.0)
Inflation ( % Change in Composite CPI)	(5.2)	5.1	3.1	1.6	2.5
Unemployment Rate	4.5	3.9	3.3	3.2	3.0
Net International Reserves ( MYR Billion )	331	329	415	427	-
Average Risk-Weighted Capital Adequacy Ratio ( % )	2.87	2.20	3.50	2.20	-
Average 3 Months of Non-performing Loans ( % )	11.08	15.30	14.80	14.70	-
Average Base Lending Rate ( % )	5.53	6.30	6.60	6.53	-
Business Loans Disbursed( % )	10.5	14.7	15.3	32.2	-
Foreign Investment ( MYR Million )	22,156.8	22,517.9	23,546.1	26,230.4	-
Consumer Loans ( % )	-	-	-	-	-
Registration of New Companies ( No. )	41,578	44,148	45,455	45,441	-
Registration of New Companies ( % )	(0.1)	6.2	3.0	(0.0)	-
Liquidation of Companies ( No. )	39,075	25,585	132,476	-	-
Liquidation of Companies ( % )	39.6	(34.5)	417.8	-	-
Registration of New Business ( No. )	312,581	271,414	284,598	324,761	-
Registration of New Business ( % )	-	-	-	-	-
Business Dissolved ( No. )	19,345	19,738	20,121	-	-
Business Dissolved ( % )	2.4	2.0	1.9	-	-
Sales of New Passenger Cars (' 000 Unit )	486.3	543.6	535.1	552.2	-
Cellular Phone Subscribers ( Million )	30.1	32.8	35.3	38.5	-
Tourist Arrival ( Million Persons )	23.6	24.6	24.7	25.0	-
Hotel Occupancy Rate ( % )	58.0	63.0	60.6	62.4	-
Credit Cards Spending ( % )	12.8	14.1	15.6	12.6	-
Bad Cheque Offenders (No.)	36,667	33,568	32,627	26,982	28,876
Individual Bankruptcy ( No.)	16,228	18,119	19,167	19,575	21,984
Individual Bankruptcy ( % )	16.7	11.7	5.8	2.1	12.3

INDUSTRIES ( % of Growth ):	2009	2010	2011	2012	2013
Agriculture	0.1	2.4	5.8	1.3	2.1
Palm Oil	(1.1)	(3.4)	10.8	(2.8)	-
Rubber	(19.8)	9.9	6.1	(0.6)	-
Forestry & Logging	(5.9)	(3.3)	(7.6)	(2.2)	-
Fishing	5.5	5.6	2.1	(0.7)	-
Other Agriculture	9.0	7.9	7.1	6.4	-
Industry Non-Performing Loans ( MYR Million )	413.7	508.4	634.1	-	-
% of Industry Non-Performing Loans	1.3	2.1	3.2	-	-
Mining	(6.5)	(0.3)	(5.4)	1.0	0.7
Oil & Gas	2.1	0.5	(1.7)	-	-
Other Mining	-	-	-	-	-
Industry Non-performing Loans ( MYR Million )	44.2	49.7	46.5	-	-
% of Industry Non-performing Loans	0.1	0.1	0.1	-	-
Manufacturing #	(9.0)	11.9	4.7	4.8	3.5
Exported-oriented Industries	(19.0)	12.1	2.8	4.1	-
Electrical & Electronics	(30.3)	28.4	(4.0)	12.7	18.6
Rubber Products	(10.1)	25.3	20.7	3.0	8.2
Wood Products	(24.1)	20.1	(5.1)	8.7	(3.1)
Textiles & Apparel	(19.5)	(0.4)	13.2	(7.1)	(2.6)
Domestic-oriented Industries	(9.8)	16.3	6.5	8.6	-
Food, Beverages & Tobacco	0.2	3.0	4.8	2.7	3.6
Chemical & Chemical Products	(7.7)	16.2	10.0	10.8	(0.7)
Plastic Products	(9.1)	2.4	3.8	-	-
Iron & Steel	(32.7)	29.3	2.2	(6.6)	3.4
Fabricated Metal Products	(2.5)	14.9	21.8	13.8	12.2
Non-metallic Mineral	(15.5)	20.2	12.1	2.9	(0.4)
Transport Equipment	(13.5)	36.5	12.0	3.4	13.8
Paper & Paper Products	(5.0)	18.7	9.5	3.1	2.3
Crude Oil Refineries	0.2	(11.4)	9.3	-	-
Industry Non-Performing Loans ( MYR Million )	6,007.3	6,217.5	6,537.2	-	-
% of Industry Non-Performing Loans	18.3	23.8	25.7	-	-
Construction	6.2	11.4	4.7	18.6	10.9
Industry Non-Performing Loans ( MYR Million )	3,241.8	4,038.5	3,856.9	-	-
% of Industry Non-Performing Loans	9.9	10.7	10.2	-	-
Services	2.9	7.4	7.1	6.4	5.9
Electric, Gas & Water	1.4	7.8	3.5	4.4	4.2
Transport, Storage & Communication	1.6	7.7	6.5	7.1	7.3
Wholesale, Retail, Hotel & Restaurant	2.8	4.7	5.2	4.7	5.9
Finance, Insurance & Real Estate	3.8	6.1	6.9	9.7	3.7
Government Services	3.4	5.9	12.4	9.4	8.3
Other Services	3.8	4.4	5.1	3.9	5.1
Industry Non-Performing Loans ( MYR Million )	6,631.3	7,384.6	6,825.2	-	-
% of Industry Non-Performing Loans	20.2	25.7	23.4	-	-
* Estimate / Preliminary
** Forecast
# Based On Manufacturing Production Index (Source : Department of Statistics / Economic Report / Bank Negara Report)

INDUSTRY ANALYSIS

MSIC CODE
162 : Manufacture of products of wood, cork, straw and plaiting materials
INDUSTRY :	MANUFACTURING
The Manufacturing sector is one of the important sectors to the growth of the Malaysian economy. According to Ministry of Finance, the manufacturing sector is expected to grow 4.9% in year 2013. Export oriented-industries are expected to benefit from the higher growth of global trade, while domesticoriented industries expand in line with the better consumer sentiment and business confidence. The resource-based industries are envisaged to grow steadily attributed to improved demand for petroleum, chemical, rubber and plastic products. With better job prospects and higher disposable income, the transportation equipment subsector, in particular, the passenger car segment is expected to expand.
Value-added of the manufacturing sector expanded 5% during the first half of 2012. Output of the sector rose 5.2% during the first sevenmonths of 2012 in line with the increase in sales value of manufactured products by 6.5% to RM363.1 billion. Output from domesticoriented industries continued to expand 8.6% while export-oriented industries grew 4.1%.
According to the Department of Statistics, the sales value of the Manufacturing sector in January 2013 posted a growth of 7.4% (RM3.6 billion) to record RM52.4 billion as compared to RM48.8 billion reported in year 2012. Meanwhile, month-on-month basis, the sales value has decreased by 0.4% (RM0.2 billion) as compared with the preceding month. The sales value in December 2012 has been revised positive 7.5% year-on-year to record RM52.6 billion.
Output of rubber products increased 3.6% in the first seven month of 2012 mainly supported by continuous demand for rubber gloves. Output of rubber gloves grew 5.9% on account of the expansion in the global healthcare industry and wider usage of gloves in other sectors. Similarly, output of catheters, especially for use in medical appliances, also registered a strong growth of 12.6%. Nevertheless, production of rubber tyres and tubes reduced 10.9% in tandem with slowing external demand from the automotive industry, especially China.
Meanwhile, production of wood and wood products rebounded 4.6% largely supported by higher demand for wooden and cane furniture (33.5%). The positive performance was attributed to vibrant higher demand from major export destinations such as China and the United States (US) for Malaysian-made furniture. Demand from China accelerated further following the country’s rising income level and the implementation of zero import duty on Malaysian made-furniture. Malaysia government has growth target of 6.5% for wood based furniture where estimated to reach up to RM53 billion by year 2020.The government providing pioneer status for tax exemption and investment tax allowance for this industry as a boost up step towards produce good quality product and to meet the world demand.
The output of chemicals and chemical products rose 9.9% in the first seven month of year 2012 on account of increasing demand for plastic products (11.8%) and basic chemicals (11.1%). External demand for plastic packaging materials surged during the early part of the year 2012, particularly from Japan and Thailand, as manufacturers resumed operations, which were interrupted by natural calamities and power outages. Chemical production are expected to show 7.5 % in year 2013 inline with Malaysia as one of the largest contributor in world Chemicals & Chemical industries.
Tax and non-tax incentives provided by goverment encourage manufacturers to move up the value chain of manufacturing industry. The new growth initiatives by goverment in the manufacturing sector such assolar and medial services can be important drivers of growth apart from helping to diversify the manufacturing base and contributing to the resilience of the sector.
OVERALL INDUSTRY OUTLOOK : Average Growth

CREDIT RISK EVALUATION & RECOMMENDATION

Incorporated in 1983 as a Private Limited company, the Subject is principally engaged in the manufacturing and sale of timber flooring products and veneer. With experiences for about 30 years in the industry, the Subject's operation has been running relatively stable since it has built up a relatively sound and stable clientele base which has contributed to its business growth. The Subject issued and paid up capital is MYR 14,750,000 and strong backing from its holding company.

Our investigation revealed that the Subject serves both local and overseas clients. Penetrating into the overseas countries has well diversified its business risk. The Subject is a fairly large and rapidly growing company with over 250 staff in its operations Overall, we regard that the Subject's management capability is average. This indicates that the Subject has greater potential to improve its business performance and raising income for the Subject.

Due to the challenging market conditions, the Subject's business performance seems to be deteriorating and losses incurred. The Subject has generated an unfavourable return on shareholders' funds indicating that the management was inefficient in utilising its funds to generate return. Due to its weak liquidity position, the Subject may face working capital deficiency in meeting its short term financial obligations if no fresh capital are injected into the Subject. The Subject has generated an unfavourable gearing ratio indicated that the Subject is in high financial risk. The Subject's unfavourable financial performance over the years has wiped out its shareholders' funds to a deficit of MYR -21,163,181. Therefore, the Subject as a going concern is much dependent on its ability to generate sufficient cash flow and obtain additional financing to meet its future obligations.

Without a strong assets backing, the Subject may face difficulties in getting loans for its future expansion and continued growth. The Subject's supplier are from both the local and overseas countries. This will eliminates the risk of dependency on deliveries from a number of key suppliers and insufficient quantities of its raw materials. Overall the Subject has a good control over its resources.

Overall, the Subject's payment habit is good as the Subject has a good credit control and it could be taking advantage of the cash discounts while maintaining a good reputation with its creditors.

The industry shows an upward trend and this trend is very likely to sustain in the near terms. Hence, the Subject is expected to benefit from the favourable outlook of the industry.

Based on the above unfavourable condition, we regard granting credit to the Subject to be quite risky. Hence, credit is not recommended.

PROFIT AND LOSS ACCOUNT

THE FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH MALAYSIAN FINANCIAL REPORTING STANDARDS(FRS)

SAMLING FLOORING PRODUCTS SDN. BHD.

Financial Year End	2013-06-30	2012-06-30	2011-06-30	2010-06-30	2009-06-30
Months	12	12	12	12	12
Consolidated Account	Company	Company	Company	Company	Company
Audited Account	YES	YES	YES	YES	YES
Unqualified Auditor's Report (Clean Opinion)	YES	YES	YES	YES	YES
Financial Type	FULL	FULL	SUMMARY	SUMMARY	SUMMARY
Currency	MYR	MYR	MYR	MYR	MYR
TURNOVER	19,964	49,223	346,221	2,632,652	49,739,498
Other Income	1,590,647	364,785	-	-	-
	----------------	----------------	----------------	----------------	----------------
Total Turnover	1,610,611	414,008	346,221	2,632,652	49,739,498
Costs of Goods Sold	(3,185,621)	(5,814,929)	-	-	-
	----------------	----------------	----------------	----------------	----------------
Gross Profit	(1,575,010)	(5,400,921)	-	-	-
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) FROM OPERATIONS	(2,678,846)	(21,288,351)	(6,168,658)	-	-
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) BEFORE TAXATION	(2,678,846)	(21,288,351)	(6,168,658)	-	-
Taxation	-	-	-	(6,603,584)	(18,714,642)
	----------------	----------------	----------------	----------------	----------------
PROFIT/(LOSS) AFTER TAXATION	(2,678,846)	(21,288,351)	(6,168,658)	(6,603,584)	(18,714,642)
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) BROUGHT FORWARD
As previously reported	(62,984,335)	(41,366,595)	(35,197,937)	(28,594,353)	(9,879,711)
Prior year adjustment	-	(329,389)	-	-	-
	----------------	----------------	----------------	----------------	----------------
As restated	(62,984,335)	(41,695,984)	(35,197,937)	(28,594,353)	(9,879,711)
	----------------	----------------	----------------	----------------	----------------
PROFIT AVAILABLE FOR APPROPRIATIONS	(65,663,181)	(62,984,335)	(41,366,595)	(35,197,937)	(28,594,353)
	----------------	----------------	----------------	----------------	----------------
RETAINED PROFIT/(LOSS) CARRIED FORWARD	(65,663,181)	(62,984,335)	(41,366,595)	(35,197,937)	(28,594,353)
	=============	=============	=============	=============	=============
INTEREST EXPENSE (as per notes to P&L)
Bank overdraft	-	56,320	-	-	-
Lease interest	66	1,345	-	-	-
Revolving loans	197,101	242,547	-	-	-
	----------------	----------------	----------------	----------------	----------------
	197,167	300,212	-	-	-
	=============	=============

BALANCE SHEET

SAMLING FLOORING PRODUCTS SDN. BHD.

ASSETS EMPLOYED:
FIXED ASSETS	35,987,708	38,753,706	50,676,631	45,915,513	62,431,456
Investments	20,000	20,000	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM INVESTMENTS/OTHER ASSETS	20,000	20,000	20,000	20,000	20,000
	----------------	----------------	----------------	----------------	----------------
TOTAL LONG TERM ASSETS	36,007,708	38,773,706	50,696,631	45,935,513	62,451,456
Stocks	2,966,334	3,456,394	-	-	-
Trade debtors	30,374	30,374	-	-	-
Other debtors, deposits & prepayments	3,501,050	890,724	-	-	-
Amount due from related companies	2,561,898	3,502,707	-	-	-
Cash & bank balances	440,494	724,475	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT ASSETS	9,500,150	8,604,674	19,122,434	36,071,975	36,758,052
	----------------	----------------	----------------	----------------	----------------
TOTAL ASSET	45,507,858	47,378,380	69,819,065	82,007,488	99,209,508
	=============	=============	=============	=============	=============
CURRENT LIABILITIES
Trade creditors	58,791	59,625	-	-	-
Other creditors & accruals	288,378	306,101	-	-	-
Hire purchase & lease creditors	-	5,919	-	-	-
Other borrowings	-	5,000,000	-	-	-
Amounts owing to holding company	24,401,078	20,457,485	-	-	-
Amounts owing to related companies	41,922,792	40,033,585	-	-	-
	----------------	----------------	----------------	----------------	----------------
TOTAL CURRENT LIABILITIES	66,671,039	65,862,715	67,009,130	23,679,760	57,098,193
	----------------	----------------	----------------	----------------	----------------
NET CURRENT ASSETS/(LIABILITIES)	(57,170,889)	(57,258,041)	(47,886,696)	12,392,215	(20,340,141)
	----------------	----------------	----------------	----------------	----------------
TOTAL NET ASSETS	(21,163,181)	(18,484,335)	2,809,935	58,327,728	42,111,315
	=============	=============	=============	=============	=============
SHARE CAPITAL
Ordinary share capital	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000
	----------------	----------------	----------------	----------------	----------------
TOTAL SHARE CAPITAL	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000
RESERVES
Share premium	34,500,000	34,500,000	34,170,611	34,500,000	34,500,000
Retained profit/(loss) carried forward	(65,663,181)	(62,984,335)	(41,366,595)	(35,197,937)	(28,594,353)
	----------------	----------------	----------------	----------------	----------------
TOTAL RESERVES	(31,163,181)	(28,484,335)	(7,195,984)	(697,937)	5,905,647
	----------------	----------------	----------------	----------------	----------------
SHAREHOLDERS' FUNDS/EQUITY	(21,163,181)	(18,484,335)	2,804,016	9,302,063	15,905,647
TOTAL LONG TERM LIABILITIES	-	-	5,919	49,025,665	26,205,668
	----------------	----------------	----------------	----------------	----------------
	(21,163,181)	(18,484,335)	2,809,935	58,327,728	42,111,315
	=============	=============	=============	=============	=============

FINANCIAL RATIO

SAMLING FLOORING PRODUCTS SDN. BHD.

TYPES OF FUNDS
Cash	440,494	724,475	-	-	-
Net Liquid Funds	440,494	724,475	-	-	-
Net Liquid Assets	(60,137,223)	(60,714,435)	(47,886,696)	12,392,215	(20,340,141)
Net Current Assets/(Liabilities)	(57,170,889)	(57,258,041)	(47,886,696)	12,392,215	(20,340,141)
Net Tangible Assets	(21,163,181)	(18,484,335)	2,809,935	58,327,728	42,111,315
Net Monetary Assets	(60,137,223)	(60,714,435)	(47,892,615)	(36,633,450)	(46,545,809)
BALANCE SHEET ITEMS
Total Borrowings	197,101	5,248,466	-	-	-
Total Liabilities	66,671,039	65,862,715	67,015,049	72,705,425	83,303,861
Total Assets	45,507,858	47,378,380	69,819,065	82,007,488	99,209,508
Net Assets	(21,163,181)	(18,484,335)	2,809,935	58,327,728	42,111,315
Net Assets Backing	(21,163,181)	(18,484,335)	2,804,016	9,302,063	15,905,647
Shareholders' Funds	(21,163,181)	(18,484,335)	2,804,016	9,302,063	15,905,647
Total Share Capital	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000
Total Reserves	(31,163,181)	(28,484,335)	(7,195,984)	(697,937)	5,905,647
LIQUIDITY (Times)
Cash Ratio	0.01	0.01	-	-	-
Liquid Ratio	0.10	0.08	-	-	-
Current Ratio	0.14	0.13	0.29	1.52	0.64
WORKING CAPITAL CONTROL (Days)
Stock Ratio	54,233	25,630	-	-	-
Debtors Ratio	555	225	-	-	-
Creditors Ratio	7	4	-	-	-
SOLVENCY RATIOS (Times)
Gearing Ratio	(0.01)	(0.28)	-	-	-
Liabilities Ratio	(3.15)	(3.56)	23.90	7.82	5.24
Times Interest Earned Ratio	(12.59)	(69.91)	-	-	-
Assets Backing Ratio	(2.12)	(1.85)	0.28	5.83	4.21
PERFORMANCE RATIO (%)
Operating Profit Margin	(13,418.38)	(43,248.79)	(1,781.71)	-	-
Net Profit Margin	(13,418.38)	(43,248.79)	(1,781.71)	(250.83)	(37.63)
Return On Net Assets	11.73	113.55	(219.53)	-	-
Return On Capital Employed	11.84	115.09	(219.53)	-	-
Return On Shareholders' Funds/Equity	12.66	115.17	(219.99)	(70.99)	(117.66)
Dividend Pay Out Ratio (Times)	0.00	0.00	-	-	-
NOTES TO ACCOUNTS
Contingent Liabilities	0	0

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.35
UK Pound	1	Rs.98.93
Euro	1	Rs.77.92

INFORMATION DETAILS

Analysis Done by :	DIV
Report Prepared by :	PDT

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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