(extracted from Annual Report 2016)

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report of FACB Industries Incorporated Berhad ("FACBII" or "Company") for the financial year ended 30 June 2016 (FY2016).

Financial Review

For the financial year ended 30 June 2016, the Company and its subsidiaries ("Group") recorded a slight increase in profit before tax to RM8.54 million as compared to RM8.44 million in the preceding financial year. The Group registered lower revenue of RM51.86 million as compared to RM56.09 million mainly due to decrease in business volume from stainless steel fittings division.

The Group registered a net profit attributable to owners of the Company of RM4.64 million which translated into earnings per share of 5.53 sen.

The bedding division Malaysia was able to maintain its revenue compared to the preceding financial year despite the apparent slowdown in consumer spending. Profit improved due to higher gross profit margin. Dreamland, as a brand, again won Gold Award for another year in the prestigious Reader Digest's Trusted Brand - Malaysia.

The stainless steel fittings division registered lower revenue and higher loss before tax compared to the preceding financial year amidst challenging international markets exaggerated by soft commodity prices.

The investments in China continued to contribute positively to the Group's profit despite lower contribution from power plants operation.

Dividend

The Board of Directors is pleased to recommend a final dividend of 2.5% for the financial year, subject to the shareholders' approval at the forthcoming 37th Annual General Meeting.

Share Buy Back

The Company did not execute any share buyback during the financial year.

Corporate Development

There were no corporate developments in the Group during the financial year.

Corporate Social Responsibility

The Group is committed to carry out its business operations in a socially responsible and sustainable manner. In this respect, safety and health of employees as well as environment protection are our focus. Our Safety & Health Committee ensures safety and health for all level of employees by organising safety and health awareness activities periodically. Industrial hygiene and safety measures are also put in place via preventative maintenance programs to ensure plant and machinery and ventilation systems are in good and safe conditions, and in compliance with requirements under the Occupational, Health and Safety Act. Chemical risk assessment tests are also conducted jointly with Department of Environment to ensure compliance with relevant regulations.

Environmental protection initiatives include using CFC free products and recycling policy.

Future Outlook

The Board expects the performance of the Group for the next financial year to remain challenging. Low domestic growth due to weak commodity prices, coupled with sluggish growth in advanced economies, are having direct impact on businesses.

Dreamland, as the market leader in the back care mattress with the patented state-of-the art Miracoil spring system, will continue to set the benchmark for quality mattress. Dreamland products are associated with superior quality in the middle and premium markets. The division will continue to invest in research and development to further improve existing products and innovate new products which will bring benefits to consumers. Brand building is a continuous process including engagement with consumers over social media. More comprehensive customer insights and information management will ensure more effective marketing success.

The stainless steel fittings division will continue to be challenged by the weakening commodity prices and aggressive global competition. Cost cutting measures have been implemented and will be continuously monitored for better performance.

We expect investments in power plants and bedding business in China to contribute positively to the Group.

The Group is still looking for suitable new businesses. We are working with professionals to identify and evaluate various business proposals.

Acknowledgement

On behalf of the Board members, I would like to extend our heartfelt thanks to our shareholders, customers, bankers, business associates and regulatory authorities for their support, guidance and assistance extended to the Group. We would like to express our appreciation to the management and staff of the Group for their hard work and dedication too.

Datuk Wan Kassim bin Ahmed
Chairman
10 October 2016