annual report 2011 - fundamental analysis ar 31-12-2011...cookware are, to the best of our knowledge...

Ni H

sin Resources B

erhad (653353-W)

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Ni Hsin Resources Berhad (653353-W)

45, Jalan Taming Dua,

Taman Taming Jaya, Off Jalan Balakong

43300 Seri Kembangan,

Selangor Darul Ehsan, Malaysia.

Tel: (603) 8961 6815

Fax: (603) 8961 3941

Email: [email protected]

Annual Report

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02 Corporate Information

03 Corporate Structure

04 Five-Year Group Financial Highlights

06 Chairman’s Statement

12 Board of Directors’ Profi le

15 Statement on Corporate Governance

22 Audit Committee Report

26 Statement on Internal Control

28 Corporate Social Responsibility Statement

29 Directors’ Responsibility Statement

30 Financial Statements

78 Statement of Shareholdings

80 List of Properties

81 Notice of Annual General Meeting

• Proxy Form

Corporate Information

COMPANY SECRETARIESTai Yit Chan (MAICSA 7009143)Chan Su San (MAICSA 6000622)

REGISTERED OFFICELot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul Ehsan, MalaysiaTel: 03 – 7720 1188Fax: 03 – 7720 1111

BUSINESS ADDRESS45 Jalan Taming DuaTaman Taming Jaya, Off Jalan Balakong43300 Seri KembanganSelangor Darul Ehsan, Malaysia Tel: 03 – 8961 6815Fax: 03 – 8961 3941Email: [email protected]: www.ni-hsin.com.my

SHARE REGISTRARTricor Investor Services Sdn Bhd(118401-V)Level 17, The Gardens North TowerMid Valley City,Lingkaran Syed Putra59200 Kuala LumpurMalaysiaTel: 03 – 2264 3883Fax: 03 – 2282 1886

AUDITORSKPMG (AF 0758)Chartered AccountantsLevel 10, KPMG Tower8, First AvenueBandar Utama47800 Petaling JayaSelangor Darul Ehsan, Malaysia

SOLICITORSSoo Thien Ming & NashrahWisma Selangor Dredging10th Floor, South Block142-A, Jalan Ampang50450 Kuala Lumpur, Malaysia

PRINCIPAL BANKERSCIMB Bank Berhad (13491-P)2468 Jalan Mutiara Timur SatuTaman Mutiara Cheras56100 Kuala Lumpur, Malaysia

United Overseas Bank (Malaysia)Berhad (271809-K)Bangunan UOB Medan Pasar10-12 Medan PasarP.O. Box 1137850744 Kuala Lumpur, Malaysia

STOCK EXCHANGE LISTINGMain Market of Bursa MalaysiaSecurities BerhadStock Name : NIHSINStock Code : 7215

BOARD OF DIRECTORS

Hsiao Chih JenChairman/Managing Director

Hsiao Chih ChienExecutive Director

Hsiao Chih CheExecutive Director

Hsiao Tung MinExecutive Director

Ng Shwu ChingExecutive Director

Dato’ Wong Pui LamIndependent Non-Executive Director

Chong Yew KiangIndependent Non-Executive Director

Anita Chew Cheng ImIndependent Non-Executive Director

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Ni Hsin Resources Berhad (653353-W) • Annual Report 2011

Corporate Structure

Ni Hsin Resources Berhad(Company No. 653353-W) Incorporated in Malaysia

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100%Ever-Grow Advanced

Materials Sdn Bhd (“EGAM”)(Company No. 545564-A)Incorporated in Malaysia

Convex Mirror & Clad Metal Division

Research, development and manufacturing of clad metals and

stainless steel convex mirrors

5-PLY

100% Steel Crafts Europa S.R.L. (“SCE”)

(Company No. BS-513499)Incorporated in Italy

Trading and assembly of kitchenware, cookware, clad metals and stainless

steel convex mirrors

100%Ni Hsin Corporation Sdn Bhd (“NHC”)

(Company No. 185578-V) Incorporated in Malaysia

Cookware Division Design, manufacture and sale of

stainless steel kitchenware and cookware

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Five-Year Group Financial Highlights

2007 2008 2009 2010 2011 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 44,407 56,493 47,313 35,975 39,338

Earnings before interest, taxation,

depreciation and amortisation (“EBITDA”) 7,381 11,885 9,974 3,126 3,894

Depreciation (2,840) (3,015) (3,051) (3,099) (3,050)

Interest expense (584) (930) (324) (76) (135)

Interest income 22 30 131 58 37

Profi t Before Taxation (“PBT”) 3,979 7,970 6,730 9 746

Taxation 379 (1,753) (1,607) (338) (894)

Profi t/(loss) After Taxation (“PAT”) 4,358 6,217 5,123 (329) (148)

Minority Interests (“MI”) (1,073) - - - -

Profi t/(loss) attributable to equity holders 3,285 6,217 5,123 (329) (148)

PBT Margin (%) 8.96 14.11 14.22 0.03 1.90

PAT after MI Margin (%) 7.40 11.00 10.83 (0.91) (0.38)

No. of ordinary shares in issue (‘000) 221,021 231,409 230,958 230,958 230,958

Gross Earnings Per Share (“EPS”) (sen) 1 1.315 3.444 2.914 0.004 0.323

Net EPS (sen) 1 1.49 2.69 2.22 (0.14) (0.06)

Tax-exempt Dividends Per Share (sen) - 2.00 0.50 - 1.00

Gross Taxable Dividends Per Share (sen) - - 1.42 - -

Group Income StatementsThe table below sets out a summary of consolidated results of the Ni Hsin Resources (“NHR”) Group for the fi nancial year ended 31 December 2007 to 31 December 2011:-

1 The gross and net EPS have been calculated by dividing PBT after MI and PAT and MI respectively for the fi nancial years by the number of ordinary shares assumed in issue.

2 There were no extraordinary or exceptional items for the fi nancial years under review.

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Five-Year Group Financial Highlights (continued)

Revenue (RM’000) Profi t/(Loss) Attributable to Equity Holders (RM’000)

Profi t/(Loss) Attributable to Equity HoldersMargin (%)

Net Earnings Per Share (Sen)

Local vs Export Sales 2011

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Export77%

Local23%

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Chairman's Statement

OPERATING ENVIRONMENT

The premium cookware market is dependent on consumer spending which in turn is affected by the general economic conditions. In FY2011, the Group operated in another year of economic turbulence.

Japan which accounted for approximately 50% of the Group’s revenue in fi nancial year ended 31 December 2010 began the year with an unexpected natural disaster. In March 2011, an earthquake and tsunami struck northern Japan, causing signifi cant damage and high human casualties to the coastal areas. This was followed by the Fukushima nuclear power station meltdown which was badly damaged by the earthquake and tsunami. Japan’s economy took a nosedive as a result of this disaster.

Dear Shareholders,On behalf of the Board of Directors, I am pleased to present you the annual report of Ni Hsin Resources Berhad (“NHR”) for the fi nancial year ended 31 December 2011 (“FY2011”).

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Chairman's Statement (continued)

Japan’s economy further shrank for the third time in four quarters, between October and December 2011, after floods in Thailand damaged production of key Japanese manufacturers. Furthermore, a strong Yen and subdued overseas demand hurt Japanese exports. The decline in the Japanese economy has curtailed consumer spending as consumers remained cautious and restrained in spending, and focused on rebuilding their homes.

The European economy shrank in 2011 as Europe continues to be affected by high unemployment rates and high government debts. As more and more European countries adopt fiscal prudence and curtail government spending to rein in debt, the European economy suffered a contraction. The Group’s other major export markets such as Hong Kong, South Korea, Singapore and Taiwan registered positive economic growth in the year.

The Malaysian economy continued to expand in 2011 despite the challenging external environment, supported by sustained consumer spending reinforced by strong investment activities. Consumer spending for the year increased backed by increasing household income and stable employment conditions. Private investment is envisaged to strengthen further, boosted by business opportunities from the implementation of the Economic Transformation Programme initiatives.

FINANCIAL PERFORMANCE

Due to the significant economic downturn in Japan and the weaker economic conditions globally, the Group recorded a revenue of RM39.338 million and Profit Before Taxation (“PBT”) of RM0.746 million. Revenue in FY2011 improved by RM3.363 million or 9.3% compared to the revenue of FY2010 mainly due to higher cookware, convex mirror and clad metal sales achieved in quarter 4 of 2011 (“Q42011”). With the higher revenue, the Group registered a PBT of RM0.746 million which is RM0.737 million higher than FY2010. However, the provision for taxation for FY2011 was RM0.894 million, mainly due to the taxation provided for the Convex Mirror and Clad Metals division which contributed majority of the PBT. As a result, the Group registered a marginal Loss After Taxation of RM0.148 million for FY2011.

MOVING FORWARD

Moving forward in FY2012 onwards, our Group will leverage on its strong foundation of cookware design and manufacturing expertise to continuously innovate to compete in the premium cookware market. Premium cookware will remain as our Group’s main business segment. Our Group’s strengths in the premium cookware market are:

• INNOVATIVE COOKWARE DESIGNS AND CONCEPTS

Our Group is in the forefront of the design and manufacture of premium multi-ply stainless steel cookware market in the world. Over the past few years, we have designed and introduced innovative premium multi-ply stainless steel cookware that is revolutionary and modern to the global market. Our design philosophy embodies the need to protect the environment with the usage of less materials, energy saving to reduce energy costs, and healthier cooking methods to ensure that the natural nutrients and juices of our food are retained.

We are proud that our Free and Function series of cookware are, to the best of our knowledge and belief, the only multi-ply stainless steel cookware that has the following features:

1. Unibody design - one piece forming of handles to the cookware body

The first stainless steel cookware to incorporate a one-piece design, there are no welding, no dead edges and no joints. This design allows for cleaning simplicity and promises handles that will last.

2. Detachable bakelite or silicon handle covers

Detachable bakelite or silicon handle covers allow our stainless steel cookware to be multi functional. Easy to attach and detach, our customers can use our cookware both on the stove and in the oven.

Colourful silicon handles made of food grade anti-bacterial material allows our customers to create a colourful creative kitchen, targeting younger generations who have interest in cooking and design.

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3. Shear Forming technology to reduce materials and cookware weight

Our usage of Shear Forming technology has produced our very own varied thickness stainless steel cookware body. This unique design will not only meet the demands of different cooking methods, its thick at the bottom and thin at the side technology also reduces 25% of the stainless steel cookware body weight, enhancing thermal conductivity by more than 30%. Excellent heat distribution minimizes fumes, conserves energy and allows healthy cooking methods.

• PROMOTING A HEALTHIER LIFESTYLE AND HEALTHY COOKING METHODS

It is our Group’s vision to promote a healthier lifestyle and to introduce cooking methods that are simple and healthy. In this regard, we will continue to educate the market on our innovative cookware and its merits to promote healthy cooking methods.

• ONE STOP DESIGN AND MANUFACTURING CENTRE

Our Group is able to design and manufacture premium cookware compared to other manufacturers that focus in manufacturing only. We also manufacture our own clad metals which is the main raw material for multi-ply stainless steel cookware. To the best of our knowledge and belief, there is no other premium cookware manufacturer globally that has its own clad metals manufacturing capability.

• LEVERAGING ON OUR INNOVATIVE RANGE OF PRODUCTS

Over the years, we have developed a comprehensive range of innovative products comprising clad metals, water filters, multi-ply stainless steel cookware, pressure cookers, multi-ply rice bowl inserts and stainless steel convex mirrors. With such a range of products, we will focus in employing more aggressive marketing strategies to expand our market depth and breadth in FY2012 onwards.

GROUP’S PROSPECTS AND BUSINESS DEVELOPMENT PLANS

Our Group will still operate under challenging business environments in the current financial year as the current global economic recovery is still fragile. Events such as the European government debt levels and economic downturn, increasing inflation and commodity price increases may cause the global economic growth to be affected.

Nevertheless, our management team will continue to implement strategies to mitigate business risks. Our Group will focus on the following:

(i) New market development in Europe and Japan

Our new subsidiary, Steel Crafts Europa S.R.L. (“Steel Crafts”) which was incorporated in Italy in FY2010, has successfully marketed our convex mirrors and clad metals in Europe. After operating for more than a year, our subsidiary has performed positively to penetrate this new market. Steel Crafts has secured 18 distributors in various countries in Europe, and 1 distributor in Turkey to market our Group’s convex mirrors. Our stainless steel convex mirrors have garnered good response from local distributors due to its durability and reflectiveness compared to conventional convex mirrors made from acrylic or polycarbonate. Europe will be the new growth market for our convex mirrors.

As for the Japanese market, we have secured new cookware customers in 2011, and are in negotiations with other Japanese cookware brands to improve our exports to Japan. The management believes that the new customers will contribute towards the Group’s performance in the second half of the current financial year when the Japanese economy gradually recovers with its rebuilding efforts post-disaster. We will also focus in expanding the convex mirror market in Japan as we expect the demand for convex mirrors to increase with the economic recovery.


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(ii) Brand Development

Our Group will focus in developing our in-house brand “Buffalo” further in FY2012. Cookware sales under the “Buffalo” brand grew strongly in Malaysia, Australia and Singapore in FY2011. With a newly set-up marketing team to promote our brand, our management intends to grow this segment of our cookware business in our markets such as Malaysia, Singapore, Australia, Taiwan, Hong Kong and North America. We intend to increase our in-house brand sales to reduce reliance on the ODM/OEM market segment.

(iii) Product Development

Ongoing research and development remains as one of the core focus of our Group’s operations. Over the past years, our R&D team has developed new innovative products such as multi-ply stainless steel inner pot for rice cookers, stainless steel water filter casings for the water filter market, pressure cookers and multi-ply stainless steel cookware incorporating single piece forming so that handles are not welded, and thinner bodies using shear and flow forming technologies.

We have launched new pressure cookers in FY2011 which are for the commercial market and also mid-price variants for the Japanese market. Pressure cookers require stringent manufacturing processes and demanding technical designs. Due to the high pressure contained in the pressure cooker, the pressure cooker must be manufactured in accordance with the highest standards with safety features built in. To the best knowledge and belief of the management, the Group is the only manufacturer of stainless steel pressure cookers in Malaysia for the Japanese market. The demand for pressure cookers is high in Japan as the energy costs are high and the Japanese needs faster cooking methods to reduce cooking time and energy costs. Hence our pressure cookers are very suitable for the Japanese market needs. For the current financial year, we will also focus on a range of commercial cookware ranging from fry pans to pressure cookers. Our commercial cookware will be targeted at restaurants and hotels which required high quality cookware for their business operations. We have also successfully developed pressure cookers with a capacity of 30 litres to be used for commercial restaurants to be marketed this year.

(iv) Other Business Development

Our Group had started a restaurant in Bangsar, Kuala Lumpur in the fourth quarter of FY2010. The restaurant, named F Concept Dining by Buffalo Kitchens, is based on an open kitchen concept popular in the West. The purpose of the restaurant is to serve as a new potential business to the Group, as well as to showcase the Group’s products which are used in the kitchen. Customers can see how our professional chefs use our cookware in the restaurant. Customers can buy our cookware in the restaurant as well. We expect our restaurant to improve its business with focus in corporate events and functions to be held in our restaurant.

DIVIDEND

During the financial year, the Company declared an interim single tier dividend of 1 sen per share which was paid on 18 January 2012.

ACKNOWLEDGEMENT AND APPRECIATION

On behalf of the Board of Directors, I wish to extend my appreciation to the Management and Staff of our Group for their contribution, dedication and commitment. To all shareholders, I am sincerely grateful for your confidence in our Group. Our gratitude and sincere thanks is also extended to our valued customers, bankers, business associates, suppliers and regulatory bodies for their invaluable support, assistance and confidence as we move forward together again in the coming year. Lastly, I would also like to thank my fellow Board members for their assistance, advice and guidance.

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MANAGEMENT DISCUSSION AND ANALYSIS

The Group’s performance by each Division for the current fi nancial year are as follows: (i) Cookware Division The Cookware Division’s revenue for FY2011 improved by RM1.012 million or 4.1% compared to FY2010. Seasonally the

cookware division’s revenue is the highest in each year due to the year-end festive season and holiday sales.

The cookware revenue by geographical market for the period is as follows:-


FY2011 FY2010 Increase/ (Decrease) % RM’000 RM’000 RM’000

Japan 10,230 10,489 (259) -2.5%

Malaysia 7,712 5,205 2,507 48.2%

USA and Canada 1,737 1,612 125 7.8%

Taiwan 3,264 4,268 (1,004) -23.5%

Singapore 1,551 696 855 122.8%

Hong Kong and China 693 2,229 (1,536) -68.9%

Others 579 255 324 127.1%

25,766 24,754 1,012 4.1%

10BREAKDOWN OF COOKWARE SALES BY COUNTRY FOR FY2011

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The Group’s sales declined in Japan due to the weak market conditions after the earthquake and tsunami in March 2011 whereas the Group’s Taiwanese distributor faced

more competition from other brands. The Group’s revenue to Hong Kong and China declined substantially as there was an one-off order from

a customer in China in FY2010. Nevertheless the Group’s sales to the other markets such

as Malaysia, USA & Canada, and Singapore registered improvements to partially offset the reduction in sales in Japan, Hong Kong

and China, and Taiwan. The Group registered higher

sales in these markets due to better promotional efforts by the distributors to

increase sales. Malaysian sales improved substantially due to more Buffalo Lifestyle Corner outlets being opened in Klang Valley and higher distributor orders by our local distributor, Everpro Sdn Bhd. Singapore sales doubled due to more promotional efforts of our distributor to market our in-house brand “Buffalo” amidst strong economic growth and increasing cookware demand in the country. (ii) Convex Mirror Division The Convex Mirror Division achieved a revenue of RM8.051

million in FY2011 compared to a revenue of RM6.871 million in FY2010, registering an increase of RM1.180 million or 17.2%.

Stainless steel convex mirror sales increased mainly due to higher local sales and export sales to Thailand, USA and Europe. For the European market, the Group now has 18 distributors in 12 countries and 1 distributor in Egypt due to marketing efforts by Steel Crafts, our Italian subsidiary. Sales of convex mirrors received favourable response from local distributors due to its durability and reflectiveness compared to conventional convex mirrors made from acrylic or polycarbonate. European sales of convex mirrors improved by 46%. Sales to Japan, our main export market for convex mirrors, however declined marginally by 4% due to the weak Japanese economic environment.


(iii) Clad Metal Division

The Clad Metal Division’s revenue for FY2011 was RM11.998 million which was an improvement of RM0.749 million or 6.7% over FY2010. The Clad Metal sales improved due to our customers in Thailand and Japan increasing production of multi-ply stainless steel cookware, and hence increased orders of clad metals in the financial year.

For FY2011, the Group recorded a revenue of RM39.338 million and PBT of RM0.746 million. Revenue in FY2011 improved by RM3.363 million or 9.3% compared to the revenue of FY2010 mainly due to higher cookware, convex mirror and clad metal sales achieved in Q42011. Group gross profit margin (“GP margin”) in FY2011 increased from 23.9% to 25.8% due to improvement in the GP margin of the cookware division in Q42011. Operating expenses in FY2011 is higher by RM0.816 million due to the operating expenses of our Italian subsidiary company which is in its second year of operations. With the higher revenue, the Group registered a PBT of RM0.746 million which is RM0.737 million higher than FY2010. However, the provision for taxation for FY2011 was RM0.894 million, mainly due to the taxation provided for the Convex Mirror and Clad Metals division which contributed majority of the PBT. As a result, the Group registered a marginal Loss After Taxation of RM0.148 million for FY2011.

The Group’s statement of financial position as at 31 December 2011 remained healthy with net assets per share of RM0.24. The non-current assets was at RM37.263 million. Within the current assets, inventory remained consistent at approximately RM17.353 million as at 31 December 2011. The Group’s net current assets was RM20.053 million, with cash and cash equivalents at RM6.426 million. The Group is currently in net cash position of RM4.597 million after deducting its short term borrowings. The Group’s net operating cash flows for FY2011 was a surplus of RM2.815 million. The net cash outflow from investing activities was RM0.878 million mainly due to purchases of property, plant and equipment. Net cash from financing activities was an inflow of RM1.108 million due to a drawdown of bankers acceptances for working capital. The net resultant impact to Group cash flows was a positive increase in cash of RM3.045 million during the year. Cash and cash equivalents amounted to RM6.426 million as at 31 December 2011.

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Board of Directors’ Profi le

Hsiao Chih JenChairman/Managing Director

Hsiao Chih Jen, a Taiwanese and permanent resident of Malaysia, aged 62, was appointed as our Chairman/Managing Director on 19 March 2005.

He began his career as an apprentice in 1964 with Sun New Stainless Steel Industry Ltd (“Sun New”) in Taiwan, a company jointly owned by his family members and was principally involved in the manufacturing of cookware. He was later promoted to Factory Manager where he gained experience in cookware manufacturing operations. With his indepth knowledge of manufacturing operations and product development, he was subsequently promoted to Marketing Director where he was responsible for securing local and overseas customers, and business development.

In 1990, he was responsible for relocating the entire manufacturing operations from Taiwan to Malaysia. He was promoted to Managing Director of Ni Hsin Corporation Sdn Bhd (“NHC”) upon its commencement of operations in 1991. With his leadership qualities, he successfully nurtured our Group to its present level of operations with market presence in the USA, Europe, Japan, Hong Kong, Taiwan, South Korea and South East Asia.

He is currently responsible for the overall business strategies and international business development of our Group.

His brothers Hsiao Chih Chien and Hsiao Chih Che are Directors and major shareholders of NHR. His father Hsiao Tsai Sheng and his mother Hsiao Liu Lee are major shareholders of NHR. His son, Hsiao Tung Min, is a Director of NHR.

He has attended all fi ve Board meetings held in the fi nancial year. He is deemed interested in the recurring related party transactions entered into by our Group. Details of the transactions are disclosed in Note 27 of the fi nancial statements on pages 75 to 76 of this Annual Report. He has no convictions for any offences within the past ten (10) years.

Hsiao Chih ChienExecutive Director

Hsiao Chih Chien, a Taiwanese and permanent resident of Malaysia, aged 58, was appointed as our Executive Director on 19 March 2005. He graduated from Hua Xia Institute of Technology in Taiwan with a Bachelor Degree in Building Construction in 1974.

He started his career in Sun New in 1976 and gained experience in the entire manufacturing operations of the business. He was later promoted to Factory Manager of Sun New where he was responsible for the entire daily factory operations. Upon the relocation of the manufacturing business from Taiwan to Malaysia, he assumed the position of General Manager of NHC.

He is currently responsible for the overall day-to-day operations and R&D activities of our Group. He has successfully led our R&D team to develop new products such as stainless steel convex mirrors, clad metals which are advanced composite materials, and non-stick coating cookware, and to design new production lines and methodologies to enhance production effi ciency. With his technical knowledge, he has also successfully led our Group’s product development for the Original Equipment Manufacturer (“OEM”)/Original Design Manufacturer (“ODM”) market. As our OEM/ODM customers are stringent in product quality and innovativeness, he is actively involved in product engineering and addressing technical challenges faced in the OEM/ODM market.

His brothers Hsiao Chih Jen and Hsiao Chih Che are Directors and major shareholders of NHR and his nephew Hsiao Tung Min, is a Director of NHR. His father Hsiao Tsai Sheng and his mother Hsiao Liu Lee are major shareholders of NHR.

Hsiao Chih Chien has attended all fi ve Board meetings held in the fi nancial year. He is deemed interested in the recurring related party transactions entered into by our Group. Details of the transactions are disclosed in Note 27 of the fi nancial statements on pages 75 to 76 of this Annual Report. He has no convictions for any offences within the past ten (10) years.


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Board of Directors’ Profi le (continued)

Hsiao Chih CheExecutive Director

Hsiao Chih Che, a Taiwanese, aged 54, was appointed as our Executive Director on 19 March 2005. He graduated from Zhili Business College, Taiwan in 1979 with a Diploma in International Business.

He joined Sun New after his graduation in 1982 as Marketing Manager, where he was responsible for promoting our Company’s products. Amongst his responsibilities were to explore new markets, establish sales leads, customer relationship management and formulation of marketing strategies. He joined NHC in 1990 as General Manager of Marketing where he was responsible for developing markets for cookware under the “Buffalo” brand.

He currently oversees the business development and marketing operations of our Group.

His brothers Hsiao Chih Jen and Hsiao Chih Chien are Directors and major shareholders of NHR and his nephew Hsiao Tung Min, is a Director of NHR. His father Hsiao Tsai Sheng and his mother Hsiao Liu Lee are major shareholders of NHR.

He has attended three out of fi ve Board meetings held in the fi nancial year. He is deemed interested in the recurring related party transactions entered into by our Group. Details of the transactions are disclosed in Note 27 of the fi nancial statements on pages 75 to 76 of this Annual Report. He has no convictions for any offences within the past ten (10) years.

Hsiao Tung MinExecutive Director

Hsiao Tung Min, a Taiwanese and permanent resident of Malaysia, aged 38, was appointed as our Executive Director on 17 August 2009. He holds a Master of Business Administration from University of Southern California, United States of America.

He started his career in NHC in 1997 as R&D Executive. While carrying his duties in the R&D division, he gained valuable knowledge on production operations and new manufacturing technologies. He was promoted to General Manager of EGAM when EGAM was set up in 2001. EGAM has achieved steady growth under his leadership since its establishment. He was further promoted to Technical Director of NHC and EGAM in 2009.

He is currently responsible for the strategic product and manufacturing technology development, and leading the technical team for the continuous improvement of our Group’s products and manufacturing processes.

His father, Hsiao Chih Jen, is Chairman/Managing Director and major shareholder of NHR. He is the nephew of Hsiao Chih Chien and Hsiao Chih Che, both who are Directors and major shareholders of NHR.

He has attended all fi ve Board meetings held in the fi nancial year. He is deemed interested in the recurring related party transactions entered into by our Group. Details of the transactions are disclosed in Note 27 of the fi nancial statements on pages 75 to 76 of this Annual Report. He has no convictions for any offences within the past ten (10) years.

Ng Shwu ChingExecutive Director

Ng Shwu Ching, a Malaysian, aged 44, was appointed as our Executive Director on 19 March 2005. She graduated from Cheng Chi University in Taiwan with a Bachelor of Finance. She also holds a Diploma in Taxation from Help Institute and Master in Finance from RMIT University obtained in 2002.

She joined NHC as a Costing Assistant in 1992 after completing her training in KPMG Taiwan as an Accounts Services Executive. She was promoted to Finance Manager in 1996 to oversee the Finance and Accounting department. She was also responsible for the Management Information System function of our Group and helped to set up an Enterprise Resources Planning system. She was redesignated as Finance & Administration Manager in 2003 where she also oversees the human resource functions of our Group.

She is currently responsible for the fi nance, accounting, secretarial, administrative, production and human resource functions of our Group.

Ng Shwu Ching has attended all fi ve Board meetings held in the fi nancial year. She does not have any family relationship with any director and/or major shareholder of our Group, nor does she have any confl ict of interest with our Group. She has no convictions for any offences within the past ten (10) years.

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Ni Hsin Resources Berhad (653353-W) • Annual Report 2011Ni Hsin Resources Berhad (653353-W) • Annual Report 2011

He began his career as an offi cer at Bank Negara in 1971. He was a lecturer in Accountancy of University of Malaya and was the Head of Department before he left for the private sector. He then worked as the Corporate Planning Manager of Grand United Holdings Berhad.

Currently, he is a Dealer’s Representative with Kenanga Investment Bank Berhad, an investment bank. He also holds directorship in a private limited company.

Chong Yew Kiang is the Chairman of the Audit Committee of our Company. He is also a member of the Nomination and Remuneration Committees. He has attended all fi ve Board meetings held in the fi nancial year. He does not have any family relationship with any director and/or major shareholder of our Group, nor does he have any confl ict of interest with our Group. He has no convictions for any offences within the past ten (10) years.

Anita Chew Cheng ImIndependent Non-Executive Director

Anita Chew Cheng Im, a Malaysian, aged 45, was appointed as our Independent Non-Executive Director on 29 October 2007. She graduated with a degree in Bachelor of Economics majoring in Accounting from Monash University, Australia.

She started her career at KPMG, Melbourne as an Audit Assistant. In 1992, she joined the corporate fi nance department of Bumiputra Merchant Bank Berhad and subsequently worked at Alliance Investment Bank Berhad and HwangDBS Investment Bank Berhad. During her 15 year tenure in the various investment banks, she was involved in most related areas of corporate fi nance advising clients on initial public offerings, fund raising and corporate restructuring exercises. Her last held position at HwangDBS was Senior Vice President, Equity Capital Market.

She is also an Independent Non-Executive Director of Notion VTec Berhad and MK Land Holdings Berhad, both companies listed on the Main Market of Bursa Securities. She also holds directorships in several private limited companies.

Anita Chew Cheng Im is a member of the Audit, Nomination and Remuneration Committees of our Company. She attended all fi ve Board meetings held in the fi nancial year. She does not have any family relationship with any director and/or major shareholder of our Group, nor does she have any confl ict of interest with our Group. She has no convictions for any offences within the past ten (10) years.

Dato’ Wong Pui LamIndependent Non-Executive Director

Dato’ Wong Pui Lam, a Malaysian, aged 70, was appointed as our Independent Non-Executive Director on 19 March 2005. Dato’ Wong graduated with a degree in Bachelor of Social Science (Honours) from Universiti Sains Malaysia and Bachelor of Laws (Honours) from University of Wolverhampton, United Kingdom. He is also awarded the Certifi cate of Legal Practice by The Lembaga Kelayakan Profesion Undang-Undang, Malaysia.

He is a member of the Chartered Institute of Arbitrators United Kingdom and Malaysia Branch. Dato’ Wong is a former Senior Police Offi cer of the Royal Malaysia Police, having retired as the Deputy Chief Police Offi cer Kuala Lumpur in December 1996.

He is currently an Advocate and Solicitor of the High Court of Malaya. He is a practising lawyer and a partner of a legal fi rm in Klang Valley. He also holds directorships in Kop Mantap Berhad and another private limited company.

Dato’ Wong Pui Lam is the Chairman of the Nomination and Remuneration Committees of our Company. He is also a member of the Audit Committee. He has attended four out of fi ve Board meetings held in the fi nancial year. He does not have any family relationship with any director and/or major shareholder of our Group, nor does he have any confl ict of interest with our Group. He has no convictions for any offences within the past ten (10) years.

Chong Yew KiangIndependent Non-Executive Director

Chong Yew Kiang, a Malaysian, aged 63, was appointed as our Independent Non-Executive Director on 19 March 2005. He is a member of Malaysian Institute of Accountants, Canadian Institute of Chartered Accountants and Financial Planning Association of Malaysia. He holds a Master’s Degree in Science (Business Administration) from University of British Columbia, Vancouver, Canada and Bachelor of Economics (2nd Class Upper) from University of Malaya.


Board of Directors’ Profi le (continued)

Dato’ Wong Pui Lam, a Malaysian, aged 70, was appointed as

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Statement on Corporate Governance

The Board of Directors (“the Board”) of NHR is committed to the principles and the best practices in corporate governance as set out in the Malaysian Code on Corporate Governance (“the Code”), in order to meet the highest standard of corporate governance as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and financial performance; and safeguard the interest of other stakeholders.

The Board is pleased to provide the following statement, which outlines the principles and best practices that were implemented throughout the financial year. Unless otherwise stated, the Group has complied with the best practices of the Code throughout the financial year ended 31 December 2011.

1. BOARD OF DIRECTORS

a. Composition of the Board

The Group is led by an effective and experienced Board with members from different backgrounds possessing a wide range of expertise. Together they bring a broad range of skills, experience and knowledge which gives added strength to the leadership in managing and directing the Group’s operations.

The Board recognises its key role in charting the strategic direction, development and control of the Group and has taken the necessary steps to adopt the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities.

b. Board Balance

The Board currently has eight (8) members, comprising three (3) Independent Non-Executive Directors, four (4) Executive Directors and one (1) Chairman/Managing Director. This complies with Paragraph 15.02 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires at least two (2) or one third (1/3) of the Board of the Company, whichever is higher, are Independent Directors. In the event of any vacancy in the Board resulting in non-compliance with the requirements on Independent Directors, the vacancy must be filled within 3 months of that event. The profiles of the Directors are presented on pages 12 to 14 of the Annual Report.

The roles of the Chairman and Managing Director are currently not separated. The Managing Director is primarily responsible for the orderly conduct and the working of the Board, day-to-day running of the business and implementation of Board policies and decisions. There is sufficient balance of Executive and Independent Non-Executive Directors on the Board such that decisions made are fully discussed and examined taking into account the long-term interest of shareholders, employees, customers and the many communities with whom the Group conducts its business.

The presence of Independent Non-Executive Directors fulfils a pivotal role in corporate governance accountability. Although all the Directors have equal responsibility for the Group’s operations, the role of the Independent Non-Executive Directors is particularly important, as they provide an unbiased and independent view, advice and judgement taking into account the interest, not only of the Group but also of shareholders, employees and communities in which the Group conducts its business. The Board is of the view that its current composition fairly reflects the representation of the minority shareholders of the Company.

The Board does not consider it necessary to nominate a Senior Independent Non-Executive Director to whom concerns may be conveyed. All members of the Board have demonstrated that they are always available to the other members and stakeholders. All issues can be openly discussed during Board meetings.

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Statement on Corporate Governance (continued)

1. BOARD OF DIRECTORS (continued)

c. Board Meetings and Supply of Information

During the financial year ended 31 December 2011, the Board held a total of five (5) meetings and the details of Directors’ attendances are as follows:-

Name Position Attendance

Hsiao Chih Jen Chairman/Managing Director 5/5

Hsiao Chih Chien Executive Director 5/5

Hsiao Chih Che Executive Director 3/5

Hsiao Tung Min Executive Director 5/5

Ng Shwu Ching Executive Director 5/5

Dato’ Wong Pui Lam Independent Non-Executive Director 4/5

Chong Yew Kiang Independent Non-Executive Director 5/5

Anita Chew Cheng Im Independent Non-Executive Director 5/5

The Board endeavours to meet at least four (4) times a year, at quarterly intervals, with additional meetings to be convened when necessary. Board meetings for each year are scheduled before the end of the previous financial year in order for the Directors to plan according to their schedules. All meetings will be preceded by an agenda with due notice issued. The relevant reports and Board papers will be distributed to all Directors prior to the Board meetings to allow the Directors sufficient time to peruse for effective discussions and decision making during meetings. To facilitate productive and meaningful deliberations, the proceedings of the Board meetings are conducted in accordance to a structured agenda. All pertinent issues discussed at the meetings in arriving at the decisions and conclusions are properly recorded in discharging its duties and responsibilities.

The Board has unrestricted access to timely and accurate information, necessary in the furtherance of their duties, which is not only quantitative but also other information deemed necessary such as information on customer satisfaction, products and services qualities, market share, market reaction and environmental performance. Directors may obtain independent professional advice at the Company’s expense, where necessary in furtherance of their duties.

The Board has access to the advice and services of both Company Secretaries, who are experienced and capable of carrying out the duties to which the post entails. The removal of the Company Secretaries, if any, would be decided by the Board.

The Company Secretaries circulated the relevant guidelines on statutory and regulatory requirements from time to time for the Directors’ reference and briefed the Board members on these updates at Board meetings. The Company Secretaries also notified the Directors on the closed period for trading in the Company’s shares, in accordance with Chapter 14 on Dealings in Securities of Bursa Securities Main Market Listing Requirements. The external auditors briefed the Board members on any new Financial Reporting Standards that would affect the Group’s financial statements during the year.

d. Re-election of Directors

In accordance with the Articles of Association of the Company, at least one-third (1/3) of the Directors for the time being or if the number is not three (3) or a multiple of three (3), then the nearest one-third (1/3) shall retire from office at each Annual General Meeting (“AGM”). All Directors shall retire from office once at least every three (3) years but shall be eligible for re-election. The Directors to retire in each year shall be those who have been the longest in office since their last election. This provides an opportunity for the shareholders to review and approve their tenure in office.

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1. BOARD OF DIRECTORS (continued)

e. Directors’ Training

All Directors have successfully completed the Mandatory Accreditation Programme. The Directors will continue to identify and attend appropriate seminars, conferences and courses to keep abreast of changes in legislation and regulations affecting the Group. The Directors are also committed to continue to undergo other relevant training programmes and seminars whether in-house or external to keep abreast with the developments of the business environment and further enhance their skills and knowledge.

During the financial year ended 31 December 2011, the relevant training programmes, seminars, forums and discussions relating to business, corporate governance, law, accounting, finance, taxation and economy attended by the Directors were on the following topics:-

• 2012 Budget Proposal (Tax Changes and Its Impact on Businesses) • FRS 139 Financial Instruments • Hedge Accounting & IFRS 7 • Presentation of Financial Statements • Round table discussion on Business and Human Rights • International Chambers of Commerce (ICC) – Mock ICC Arbitration • Government Transformation Programme: NKRA on fighting corruption, corporate integrity • How you can participate and benefit from the government transformation programme • Seminar on succession of family business • Bridging a gap in developing CSR capacity • Managing The Risk and Evolution in Anti-Money Laundering and Counter Terrorism Financing • Essential of Fundamental Analytic Tools Creating Framework for The Sector Analysis

Some of the Directors had also attended some of the talks on Corporate Governance issues organised by Bursa Securities during the Corporate Governance week from 29 November 2011 till 2 December 2011.

The Directors who have not attended any pertinent training programmes, workshops or seminars during the financial year ended 31 December 2011 were Hsiao Chih Jen, Hsiao Chih Chien and Hsiao Chih Che due to the lack of local courses or seminars conducted in Mandarin by professional bodies.

f. Directors’ Remuneration

The Group has adopted the best practice as recommended by the Code in determining the remuneration of the Board so as to ensure that the Group attracts and retains its Directors needed to run the Group successfully. Their remuneration are structured so as to link rewards to corporate and individual performance in the case of Executive Directors. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the Non-Executive Director concerned.

The Directors’ fees and salaries take into consideration the responsibilities, experience, contribution and performance of each Executive Director. Non-Executive Directors are provided with Directors’ fees, which are recommended by the Board for approval by shareholders of the Company at AGM.

Details of the aggregate remuneration of the Directors for the financial year ended 31 December 2011, categorised into appropriate components are as follows:-

Remuneration Executive Directors Non-Executive Directors RM RM

Salaries 1,307,520 -

Fees & Allowances - 95,400

Benefits-in-kind 43,200 -

EPF 28,320 -

Total 1,379,040 95,400

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f. Directors’ Remuneration (continued)

The number of Directors whose remuneration falls within the following bands for financial year ended 31 December 2011 is as follows:-

Range of Remuneration Number of Directors Number of Directors Executive Directors Non-Executive Directors

Below RM50,000 - 3 RM100,001 – RM150,000 1 - RM200,001 – RM250,000 1 - RM250,001 – RM300,000 1 - RM350,001 – RM400,000 2 -

The Board has chosen to disclose the remuneration in bands pursuant to the Main Market Listing Requirements as separate and detailed disclosure of individual director’s remuneration will not add significantly to the understanding and evaluation of the Company’s governance.

2. THE BOARD COMMITTEES

The Board has established three standing committees, each operating within defined terms of reference in accordance with the Main Market Listing Requirements and best practices prescribed by the Malaysia Code on Corporate Governance (Revised 2007) to assist the Board in discharging its responsibilities during the financial year. The committees are the Audit Committee, the Nomination Committee and the Remuneration Committee. The functions and terms of references of the Board Committees as well as authority delegated by the Board to these Committees have been approved by the Board and are reviewed from time to time to ensure they are relevant and up-to-date. The Board Committees examine specific issues and report to the Board with their recommendations. The ultimate responsibility for decision-making lies with the Board.

a. Audit Committee

The Audit Committee reviews issues of accounting policy and presentation of external financial reporting, monitors the work of the internal audit function and ensures that an objective and professional relationship is maintained with the external and internal auditors. The Audit Committee works closely with both the internal and external auditors who, in turn, have access to the Chairman of Audit Committee.

The Audit Committee’s Report for the year is set out on pages 22 to 25 of the Annual Report.

b. Nomination Committee

The Nomination Committee was established on 1 August 2005. The Nomination Committee comprises wholly of the following Independent Non-Executive Directors:-

Name Position Dato’ Wong Pui Lam Chairman (Independent Non-Executive Director) Chong Yew Kiang Member (Independent Non-Executive Director) Anita Chew Cheng Im Member (Independent Non-Executive Director)

The duties and responsibilities of the Nomination Committee include the following:-

• recommend to the Board, candidates for all directorships. In making the recommendations the Committee should also consider candidates proposed by the Managing Director, and within the bounds of practicability, by any other senior executive, director or shareholder;

• recommend to the Board, directors to fill the seats on the board committees;

• review annually the required mix of skills and experience of the Board, including core competencies which non- executive directors should bring to the Board; and

• assess annually the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual director.

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2. THE BOARD COMMITTEES (continued)

b. Nomination Committee (continued)

The evaluation process is led by the Nomination Committee chairman and supported by the Company Secretary annually. The Directors complete the relevant questionnaires regarding the effectiveness of the Board and its Board committees. The assessment by all Directors are summarised and disclosed at the Nomination Committee meeting and reported at a Board meeting by the Nomination Committee chairman.

Meeting of the Nomination Committee shall be held at least once a year. During the financial year ended 31 December 2011, the Nomination Committee met once which was attended by all the members. During the financial year, the Nomination Committee had reviewed and assessed the mix of skills and experience of the Board including the core competencies of both Executive and Non-Executive Directors, size of the Board, contribution of each director and effectiveness of the Board and Board Committees and also evaluated the level of independence of the Directors. Based on the assessment, the Nomination Committee was satisfied with the existing Board composition and was of the view that all the Directors and Board Committees of the Company have discharged their responsibilities in a commendable manner and have performed competently and effectively.

c. Remuneration Committee

The Remuneration Committee was established on 1 August 2005. The Remuneration Committee, comprises wholly of the following Independent Non-Executive Directors:-

Name Position Dato’ Wong Pui Lam Chairman (Independent Non-Executive Director) Chong Yew Kiang Member (Independent Non-Executive Director) Anita Chew Cheng Im Member (Independent Non-Executive Director)

The Remuneration Committee is authorised by the Board to seek appropriate professional advice within and outside the Group as and when it considers as necessary.

The Remuneration Committee shall review and recommend to the Board the remuneration of the Executive Directors. The remuneration packages of Non-Executive Directors shall be determined by the Board of Directors as a whole. The director concerned shall abstain from any discussion on his/her individual remuneration.

Meeting of the Remuneration Committee shall be held at least once a year. During the financial year ended 31 December 2011, the Remuneration Committee met once, which was attended by all the members. During the financial year, the Remuneration Committee had reviewed and recommended to the Board, the remuneration package for the Managing Director and Executive Directors of the Company. The remuneration/fees of the Non-Executive Directors shall be determined by the Board as a whole where each individual Director abstains from discussion on their own remuneration/fees. The directors’ fees will be subject to the shareholders’ approval at the Company’s forthcoming AGM.

3. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS

A number of formal communication channels are used to inform shareholders about the performance of the Group. These include the Annual Report and Financial Statements and announcements made through Bursa Securities, as well as through the AGM.

Notice of the AGM and Annual Report are sent out to shareholders at least 21 days before the date of the AGM.

The AGM will be the principal forum for dialogue with individual shareholders, as it provides shareholders the opportunity to ask questions about the resolutions being proposed or about the Group’s operations in general. The Share Registrar is available to attend to matters relating to shareholders’ interests.

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3. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS (continued)

Extraordinary General Meetings (“EGM”) are held as and when required. When an EGM is held to obtain shareholders’ approval on certain business or corporate proposals, comprehensive circulars to shareholders will be sent within prescribed deadlines in accordance with regulatory and statutory provisions. During the AGM and EGM, the Chairman and Board members are available to respond to all shareholders’ queries.

Members of senior management are directly involved in investor relations through investor briefings with financial analysts, institutional shareholders and fund managers. The Company has also participated in Bursa Securities’ CMDF-Bursa Research Scheme and analyst reports of the Group can be downloaded at Bursa Securities’ website.

The Company’s website, www.ni-hsin.com.my is another tool of communication that provide easy access to the latest corporate information of the Group. To enhance access and to effectively address any issues and concerns, the Group has also set up a dedicated email address ([email protected]), to which its stakeholders can direct their queries.

4. ACCOUNTABILITY AND AUDIT

a. Financial reporting The Board aims to present a balanced and clear assessment of the Group’s financial performance and prospects in

presenting the annual financial statements and quarterly reports as well as announcements to Bursa Securities. The Board is assisted by the Audit Committee in reviewing the Group’s financial reporting processes and accuracy of its financial results, and scrutinising information for disclosure to ensure compliance with accounting standards, accuracy, adequacy and completeness. .Timely release of announcement on quarterly financial statements reflects the Board’s commitment to provide transparent and up-to-date disclosure of the performance of the Group.

b. Internal Control The Board has an overall responsibility in maintaining a sound internal control system that provides reasonable assurance

of effective and efficient operations and compliance with internal procedures and guidelines. The Statement on Internal Control is set out on pages 26 to 27 of this Annual Report.

c. Relationship with Auditors The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the

external auditors in seeking professional advice and ensuring compliance with the provisions of the Companies Act, 1965 (the “Act”) and applicable Financial Reporting Standards approved by the Malaysian Accounting Standards Board (“MASB”) in Malaysia. The Audit Committee is committed to meet with the external auditors twice a year to discuss their audit plan, audit findings and the financial statements.

5. ADDITIONAL COMPLIANCE INFORMATION

The following information is provided in compliance with the Listing Requirements of Bursa Securities:-

a. Utilisation of Proceeds There were no proceeds raised from any corporate proposal during the financial year ended 31 December 2011.

b. Share Buy-Back The shareholders of the Company at the Seventh AGM held on 18 May 2011, granted authority to the Company to

repurchase its own shares provided that the aggregate number of shares purchased do not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at the point of purchase.

The Company did not purchase its own shares during the financial year ended 31 December 2011.

c. Options, Warrants or Convertible Securities The Company did not have any options, warrants or convertible securities in issue for the financial year ended 31

December 2011.

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5. ADDITIONAL COMPLIANCE INFORMATION (continued)

d. Depository Receipt The Company did not sponsor any depository receipt programme for the financial year ended 31 December 2011.

e. Imposition of Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by

relevant regulatory bodies during the financial year ended 31 December 2011.

f. Non-audit Fees During the financial year ended 31 December 2011, the non-audit fees paid to the external auditors and a company

affiliated to the external auditors’ firm were approximately RM44,000.

g. Profit Estimate, Forecast, Projection, and Variation in Results There was no material variance between the results for the financial year ended 31 December 2011 and the unaudited

results previously announced by the Company.

There was no profit estimate, forecast or projection that has been previously announced by the Company during the financial year ended 31 December 2011.

h. Profit Guarantee During the financial year ended 31 December 2011, there was no profit guarantee issued by the Group and

Company.

i. Material Contracts or Loans There were no material contracts or loans entered into by the Group involving Directors’ and major shareholders’

interests, either still subsisting at the end of the financial year ended 31 December 2011 or entered into since the end of the previous financial year.

j. Recurrent Related Party Transactions At the Seventh AGM held on 18 May 2011, the Company obtained a shareholders’ mandate to allow the Group to enter

into recurrent related party transactions of a revenue or trading nature.

All recurrent related party transactions entered into by the Group during the financial year ended 31 December 2011 are disclosed in Note 27 of the financial statements on pages 75 to 76 of the Annual Report.

k. Share Options offered to Non-Executive Directors There was no option offered to and exercised by Non-Executive Directors in the financial year ended 31 December

2011.

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Audit Committee Report

1. MEMBERS

The Audit Committee was established on 21 March 2005 and its term of reference is consistent with the Main Market Listing Requirements of Bursa Securities and the Code. During the financial year ended 31 December 2011, the Committee held a total of five (5) meetings. The members of the Committee together with their attendance are set out below:-

Name Position Attendance

Chong Yew Kiang Chairman (Independent Non-Executive Director) 5/5

Dato’ Wong Pui Lam Member (Independent Non-Executive Director) 5/5

Anita Chew Cheng Im Member (Independent Non-Executive Director) 5/5

2. TERMS OF REFERENCE OF AUDIT COMMITTEE

COMPOSITION

The Audit Committee shall be appointed by the Directors from amongst their number (pursuant to a resolution of the Board of Directors) which fulfils the following requirements:-

a) comprise no fewer than 3 members;

b) all members of the Audit Committee should be non-executive directors with a majority being independent directors;

c) all members of the Audit Committee should be financially literate and at least one member of the Audit Committee:-

(i) must be a member of Malaysian Institute of Accountants (“MIA”); or (ii) if he is not a member of the MIA, he must have at least three (3) years working experience and; • he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967;

or • 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 (iii) he must be a person who fulfils such other requirements as may be prescribed by or approved by the Exchange

and/or such other relevant authorities from time to time.

d) no alternate director is appointed as a member of the Audit Committee.

The members of the Audit Committee shall elect a chairman from among their number who shall be an independent director.

In the event of any vacancy in the Audit Committee resulting in the non-compliance of items (a) to (d) above, the vacancy must be filled within 3 months of that event.

The Board must review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether the Audit Committee and its members have carried out their duties in accordance with the terms of reference.

FUNCTIONS

The functions of the Audit Committee are as follows:-

a) to review the following and report the same to the Board of Directors:- (i) with the external auditors, the audit plan, evaluation of the system of internal control and audit report; (ii) the assistance given by the Group’s employees to the external auditors; and (iii) any related party transactions and conflict of interest situation that may arise with the Group including any

transaction, procedure or course of conduct that raises questions of management integrity.

b) to consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissal and the letter of resignation from the external auditors, if applicable;

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Audit Committee Report (continued)

2. TERMS OF REFERENCE OF AUDIT COMMITTEE (continued)

FUNCTIONS (continued)

c) to discuss with the external auditors before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

d) to review the quarterly and year-end financial statements of the Group, focusing particularly on:- • Any changes in accounting policies and practices; • Significant adjustments arising from the audit; • The going concern assumption; • Compliance with accounting standards and other legal requirements.

e) to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management, where necessary);

f) to review the external auditors’ management letter and management’s response;

g) to do the following in relation to the internal audit function:- • Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that

it has the necessary authority to carry out its work; • Review the internal audit programme and results of the internal audit process and where necessary, ensure that

appropriate actions are taken on the recommendations of the internal audit function; • Review any appraisal or assessment of the performance of members of the internal audit function; • Approve any appointments or termination of members of the internal audit function; • Take cognisance of resignations of internal audit staff members (for in-house internal audit function) or change

in internal audit function service provider (for outsourced internal audit function) and provide the resigning staff member/service provider an opportunity to submit his/their reasons for resigning.

h) to consider the major findings of internal investigations and management’s response; i) to consider any related party transactions that may arise within the Company and Group;

j) to ensure the internal audit function established is independent of the activities it audits and to identify a head of internal audit who reports directly to the Audit Committee. The head of internal audit will be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control, and governance processes within the Company;

k) to consider any other areas as defined by the Board.

RIGHTS OF THE AUDIT COMMITTEE

The Audit Committee shall, wherever necessary and reasonable for the Company to perform its duties, in accordance with a procedure to be determined by the Board and at the cost of the Company:-

a) have authority to investigate any matter within its terms of reference;

b) have the resources which are required to perform its duties;

c) have full and unrestricted access to any information pertaining to the Group;

d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

e) be able to obtain independent professional or other advice; and

f) be able to convene meetings with the external auditors, internal auditors or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary.

The Chairman of the Audit Committee shall engage on a continuous basis with Senior Management, such as the Chairman/Managing Director, finance director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Group.

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2. TERMS OF REFERENCE OF AUDIT COMMITTEE (continued)

MEETINGS

The Audit Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide in order to fulfil its duties. However, at least twice a year the Audit Committee shall meet with the external auditors without the executive Board members present.

In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee member, the Managing Director or the internal or external auditors.

The Company Secretary or other appropriate senior official shall act as secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it, supported by explanatory documentation to committee members prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulating them to committee members and to the other members of the Board of Directors.

A quorum shall consist of a majority of independent directors.

By invitation of the Audit Committee, the Company must ensure that other directors and employees attend any particular Audit Committee meeting, specific to the relevant meeting.

3. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the financial year ended 31 December 2011 in line with the terms of reference, the Committee carried out the following activities in discharging of its functions and duties:-

a) reviewed the unaudited quarterly reports of the Group prior to submission to the Board for consideration and approval;

b) reported and recommended to the Board to approve the unaudited quarterly reports of the Group;

c) reviewed the related party transactions on a quarterly basis and also the internal audit reports to ascertain that the review procedures established to monitor the related party transactions have been complied with;

d) met with the external auditors during the year to review the external auditors’ independence, scope of work and the audit plan, their audit fees, the results of their examination in the external audit reports and management’s responses, as well as weaknesses in the internal control;

e) met with the external auditors on the updates of new Financial Reporting Standards and how they will impact the Group as well as new developments on regulatory requirements;

f) met with the internal auditors to review and approve the Group’s internal audit plan, scope of work and audit fees;

g) met with the internal auditors to review the internal audit reports and findings on the effectiveness of the system of internal control, adequacy of risk management and other compliance and governance processes;

h) met with the external auditors and internal auditors twice during the financial year (without the presence of the Management staff or any Executive Directors);

i) reviewed the terms of reference of the Audit Committee and recommend any amendments, where necessary to the Board for approval;

j) monitored the compliance requirements in line with the new updates of Bursa Securities, Securities Commission, MASB and other legal and regulatory bodies;

k) reviewed the Annual Report before submission to the Board for approval; and

l) reviewed the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work.


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4. TRAINING

During the financial year ended 31 December 2011, the Audit Committee members attended the following relevant training programmes, seminars, forums and discussions relating to business, corporate governance, law, accounting, finance, taxation and economy to enhance their knowledge to enable them to discharge their duties more effectively:-

• Round table discussion on Business and Human Rights • International Chambers of Commerce (ICC) – Mock ICC Arbitration • Government Transformation Programme: NKRA on fighting corruption, corporate integrity • How you can participate and benefit from the government transformation programme • Seminar on succession of family business • Bridging a gap in developing CSR capacity • Managing The Risk and Evolution in Anti-Money Laundering and Counter Terrorism Financing • Essential of Fundamental Analytic Tools Creating Framework for The Sector Analysis

All of the Audit Committee members had also attended some of the talks on Corporate Governance issues organised by Bursa Securities during the Corporate Governance week from 29 November 2011 till 2 December 2011.

5. INTERNAL AUDIT FUNCTION

The Group recognises that an internal audit function is essential in ensuring the effectiveness of the Group’s system of internal control and is an integral part of the risk management process.

The Company has outsourced its internal audit function to a professional service firm whose primary responsibility is to independently assess and report to the Board, through the Audit Committee, the systems of internal control of the Group. The internal audit functions are as set out in the Statement on Internal Control on pages 26 to 27 of the Annual Report.

During the financial year, the Internal Auditors carried out internal audit reviews to assess the adequacy and integrity of the system of internal control as established by the Management, so as to provide reasonable assurance that:-

• the system of internal control continues to operate satisfactorily and effectively, • assets and resources are safeguarded, • integrity of records and information is protected, • internal policies, procedures and standards are adhered to, and • applicable rules and regulations are complied with.

The scope of work, as approved by the Audit Committee, was essentially based on the risk profiles of companies in the Group, where areas of higher risk were included for internal audit. The internal audit covered key operational, financial and compliance controls, including the risk management process deployed by Management. Audit findings and areas of concern that need improvements were highlighted in the internal audit reports and reviewed at the Audit Committee meetings. During the Board meetings, the Chairman of the Audit Committee briefed the Board on audit matters and the minutes of the Audit Committee meetings were duly noted by the Board.

The cost incurred in outsourcing of the internal audit function to an independent professional firm during the financial year amounted to approximately RM42,000 which included expenses.


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Statement on Internal Control

INTRODUCTION

The Board of Directors is committed to maintaining a sound system of internal control in the Group to safeguard shareholders’ investment and Group’s assets. In pursuant to paragraph 15.26(b) of the Bursa Securities Main Market Listing Requirements, the Board is pleased to provide the following Statement on Internal Control which outlines the nature and scope of internal control of the Group during the financial year.

RESPONSIBILITY

The Board acknowledges the importance of maintaining a sound system of internal control to safeguard the shareholders’ investments and the Group’s assets. Accordingly, the Board affirms its responsibility for the Group’s system of internal control and its commitment to review its effectiveness, adequacy and integrity. The Group’s existing system of internal control includes financial, operational and compliance controls and risk management procedures. Due to the limitations that are inherent in any system of internal control, this system is designed to manage, rather than eliminate, the risk of failure to achieve business objectives. The Board also recognises that a sound system of internal control can only reduce but not eliminate the possibility of poor judgement in decision making, human error, control process being deliberately circumvented by employees, management overriding controls and the occurrence of unforeseeable circumstances. Accordingly, the system provides only reasonable but not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud.

RISK MANAGEMENT

The Board and Management are mindful of measures required to identify risks residing in any major proposed transactions, changes in nature of activities and/or operating environment, or venturing into new operating environment. The Board reviews and monitors the significant risks affecting the achievement of the Group’s business objectives through its assessment of the internal control system and management information system. Any material risks identified will be discussed and appropriate actions or controls will be implemented. This is to ensure risk is continuously managed and mitigated to an acceptable level.

INTERNAL AUDIT FUNCTION

The internal audit function has the primary objective of carrying out reviews of the internal control system to determine if the internal control procedures have been complied with as well as to make recommendations to strengthen the internal control system so as to foster a strong management control environment.

The Board is fully aware of the importance of the internal audit function and has outsourced this function to an independent professional service firm to provide an independent assurance the Board requires on the effectiveness and efficiency of the Group’s system of internal control.

The internal audit adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles from the comprehensive risk assessment of the specific business units of the Group. Scheduled internal audits are carried out by the internal auditors based on the annual internal audit plan presented to and approved by the Audit Committee. On a quarterly basis, the internal auditors present to the Audit Committee the internal audit reports which summarise the audit approach, scope, significant audit findings, the overall opinion for the internal control review, management comments on the audit findings and recommendations. The cost of internal audit function for the financial year ended 31 December 2011 was approximately RM42,000.

27


27


Statement on Internal Control (continued)

THE SYSTEM OF INTERNAL CONTROL

The system is designed to manage the principal risks attributed to the Group’s operations and due to the limitations that are inherent in any system, the Board takes cognizance that the system can only provide reasonable but not absolute assurance against material loss or misstatement

The key elements of the Group’s internal control system are as follows:-

• An organisational structure with defined responsibilities and delegation of authorities for Committees of the Board and Operational Committees;

• Company’s Policies and Procedures, which set out guidelines and the expected standards for the Group’s operations, are under regular review and update so as to maintain its effectiveness at all times;

• A strategic planning and an annual budgeting process has been established, whereby all key operating subsidiaries of the Group are required to prepare budgets and business plans for the coming year;

• Operational review meetings are held and attended by the Executive Directors and the department heads to assess the performance of the Group’s operations;

• Monthly financial reporting by the subsidiaries to the holding company. Actual performance compared with budget is reviewed monthly with major variances being followed up and management action taken where necessary;

• Each department measures its performance against its business objectives and monitors the identified risks associated with the achievability of its objectives;

• The public releases of quarterly financial reports are made after the review by the Audit Committee and the approval of the Board;

• There are guidelines within the Group for hiring and termination of staff. Appointment of staff is based on the required level of qualification, experience and competency to fulfil their responsibilities. Training and development are provided for selected employees to enhance their competency in carrying out their responsibilities;

• A formal employee appraisal to evaluate and measure employee’s performance and their competency is performed at least once a year;

• A centralised accounting and disbursement function ensures compliance with the procedures and approval authority;

• A co-ordinated procurement function for major purchases and maintenance expenditures that ensures adherence to approval procedures as well as to leverage on economies of scale;

• Regular production meetings, which involve the senior production management and related units to promptly address any production problems faced;

• ISO 9001:2008 Quality Management System has been implemented for a subsidiary, Ni Hsin Corporation Sdn. Bhd. Documented internal procedures and standard operating procedures have been put in place and internal quality audits are carried out by the management and annual surveillance audits are conducted by a certification body to provide assurance of compliance with the procedures.

MONITORING AND REVIEW OF THE SYSTEM OF INTERNAL CONTROL

The existing system of internal control has operated effectively in the year under review and up to the date of issuance of the financial statements and there were no reported material losses caused by weaknesses in the Group’s system of internal control. The Board is committed towards operating a sound system of internal control and will strive for continuous improvement where necessary, to further enhance the Group’s system of internal control. The Board has reviewed the internal control system in accordance with the guidelines for directors on internal control, the Statement on Internal Control: Guidance for Directors of Public Listed Companies.

The Board is of the view that the system of internal control being instituted throughout the Ni Hsin Group is adequate and effective.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITOR

Pursuant to paragraph 15.23 of the Bursa Securities Main Market Listing Requirements, the external auditor has reviewed this Statement on Internal Control for the inclusion in the annual report of the Group for the financial year ended 31 December 2011 and reported to the Board that 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 control.

28


28


Corporate Social Responsibility Statement

AT NI HSIN GROUP, WE RECOGNISE OUR CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITMENTS BASED ON ETHICAL VALUES AND RESPECT FOR THE ENVIRONMENT, COMMUNITY, EMPLOYEES, SHAREHOLDERS AND OTHER STAKEHOLDERS. AS A RESPONSIBLE AND CARING CORPORATION, IT IS OUR RESPONSIBILITY TO STRIVE FOR THE BETTERMENT OF OUR SOCIETY AND ENVIRONMENT WHILST PURSUING OUR BUSINESS GOALS AND ADDING VALUE TO OUR SHAREHOLDERS.

The CSR initiatives undertaken by our Group are as follows:

Business Ethics and ResponsibilityOur Group acknowledges that CSR is an important aspect of our business. We continue to undertake responsible practices that impact the society and environment in a positive manner and to inculcate a culture of responsibility in all aspects of our business. Balancing profits and principles has always been a core tenet of our Group’s operations. We need to balance profits and principles through CSR and ensure that the products we develop are of international safety standards, are friendly to the environment and provide safe working environments for our employees. We also develop ethical and responsible business policies and practices that are applied without exception across our operations.

We are committed to ensure that the interests of all our important stakeholders – our shareholders, suppliers and customers are being taken care. Our Group emphasise on good corporate governance practices to meet shareholder expectations. For our suppliers, we practise transparent and fair procurement policies. As for our customers, all the facilities within our Group are accredited with ISO 9001:2008 Quality Management System. We are committed to supply quality products and meeting customers’ satisfactions through continual improvement in technology, process and services.

Protect Our Environment – Reuse and Recycle It is our responsibility to apply our capabilities towards creating a better and safer world. Our Group is committed to achieve excellence in manufacturing and manage our operations in an environmentally sustainable way. Our Group undertakes to:• Recycle raw material wastages for re-use.• Ensure compliance to all relevant environmental legal and

other requirements and raise the environmental awareness among employees.

• Prevent air, water, land and noise pollution in the workplace and surrounding.

• Integrate the environmental and quality management system to strive for continual improvement.

We will continue our R&D initiatives to seek alternative ways to further enhance environmental protection through more efficient use of materials, minimising the production of waste and to reuse and recycle materials wherever feasible. Our product development emphasises on caring for the environment by minimising material wastage in our designs and using high technology multi-ply stainless steel clad metals, so that our customers benefit from reduced energy costs whilst cooking. We utilise manufacturing technologies such as shear and flow forming and develop new cookware designs which minimise material wastage, which leads to less usage of the world’s natural resources.

We have also implemented a recycling policy in our administrative offices whereby all consumable items that can be re-used or recycled are collected and sent to a social

welfare organisation which collects these items for recycling or charity purposes. Reusing and recycling of office stationery and paper, switching off the lights, air conditioners and other electrical appliances when they are not in use are among some of the other conservation measures taken by our Group.

Promote Healthy LifestylesOur products are designed to provide our customers with a healthy eating lifestyle. Our multi-ply stainless steel cookware is highly efficient in heat distribution, enables induction cooking and uses less energy whilst cooking. Our philosophy centres around designing and manufacturing energy saving products and promoting healthy lifestyles.

Our Employee WelfareEmployees are recognised for their dedicated long service through a long service award scheme whereby monetary rewards and overseas trips are provided for employees with long employment service records. Our Group also provides additional rewards to staff who has a 100% attendance record, i.e. non utilisation of medical leave, and also outstanding performance. Recognising the importance of strong family bonding, a family day event is held every alternate year during which employees and family members come together for a time of fun and togetherness. In addition, sports activities were held to encourage employees to enjoy a healthy lifestyle.

Human capital is a primary driver for success. We emphasise on developing our people into creative thinking and innovative individuals and team players. We are committed to create a knowledge-based workforce to compete effectively in global markets. Training paths are charted for ongoing enhancement of skills. We carried out various training and development programmes for our employees. On-the-job training is conducted for all new employees. In addition, we engage external professional trainers to conduct specific process training and skills enhancement training to our employees to ensure that our employees are well equipped with the necessary skills for their jobs. Recognising that employees are important assets, our Group shall continue to care for the welfare of all employees and shall constantly upgrade employee skill sets to meet changing requirements.

Creating a safe working environment and ensuring safe practices in all aspects is the paramount duty of our Group. As part of our commitment to provide a safe workplace, we have initiated health and safety programmes such as fire drills, safety system checks on equipments, first aid training, plant evacuation exercise as well as health talks.

The Group’s Occupational Safety and Health Policy is actively and effectively implemented to ensure that the occupational safety and health of all employees are not compromised. The Group’s safety programmes go beyond the minimum statutory requirements. Constant education, training and safety workshops ensure a high level of awareness of safety requirements at all levels.

Engaging and Supporting Our SocietyThe Group is committed to being a responsible corporate citizen. Our Group makes donations to charitable organisations from time to time. We also assist in providing industrial training for students. We have also donated our cookware products to a non-government organisation to assist them in raising funds for their activities.

29


29


Directors’ Responsibility Statement

The Board of Directors is required under Paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Securities to issue a statement on its responsibility in the preparation of the annual audited financial statements.

The Board is responsible for ensuring that the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards approved by the Malaysian Accounting Standards Board (“MASB”) in Malaysia so as to give a true and fair view of the financial position of the Group and the Company as at 31 December 2011 and of the results and cash flows of the Group and the Company for the financial year then ended.

The Directors are satisfied that in preparing the financial statements of the Group and the Company for the financial year ended 31 December 2011, the Group and the Company have adopted suitable accounting policies in accordance with applicable Financial Reporting Standards approved by MASB in Malaysia and applied them consistently and reasonably.

The Statement is made in accordance with a resolution of the Board of Directors dated 21 March 2012.

Directors’ Report 31

Statement by Directors 34

Statutory Declaration 34

Independent Auditors’ Report 35

Statements of Financial Position 37

Income Statements 38

Statements of Comprehensive Income 39

Consolidated Statement of Changes in Equity 40

Statement of Changes in Equity 41

Statements of Cash Flows 42

Notes to the Financial Statements 44

fin

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31


The Directors hereby submit their report and the audited fi nancial statements of the Group and of the Company for the year ended 31 December 2011.

Principal activities

The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries are as stated in Note 4 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year.

Results Group Company RM’000 RM’000(Loss)/Profi t for the year attributable to: Owners of the Company (148) 3,774

Reserves and provisions

There were no material transfers to or from reserves and provisions during the fi nancial year under review except as disclosed in the fi nancial statements.

Dividends

Since the end of the previous fi nancial year, the Company paid an interim single-tier ordinary dividend of 1.0 sen per ordinary share totalling approximately RM2,310,000 in respect of the year ended 31 December 2011 on 18 January 2012.

The Directors do not recommend any fi nal dividend for the fi nancial year ended 31 December 2011.

Directors of the Company

Directors who served since the date of the last report are:

Hsiao Chih Jen Hsiao Chih Chien Hsiao Chih Che Hsiao Tung Min Ng Shwu Ching Dato’ Wong Pui Lam Chong Yew Kiang Anita Chew Cheng Im

Directors’ interests

The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM0.20 each At At 1.1.2011 Bought Sold 31.12.2011Direct interests in the Company

Hsiao Chih Jen 23,101,371 - - 23,101,371Hsiao Chih Chien 24,601,371 - - 24,601,371Hsiao Chih Che 27,101,166 - - 27,101,166Hsiao Tung Min 2,331,000 - - 2,331,000Ng Shwu Ching 720,000 - - 720,000Dato’ Wong Pui Lam 100,000 - - 100,000Chong Yew Kiang 100,000 - - 100,000

Deemed interests in the Company

Hsiao Chih Jen 4,931,000 - - 4,931,000Hsiao Chih Chien 2,500,000 - - 2,500,000Hsiao Tung Min 150,000 - - 150,000

Directors’ report for the year ended 31 December 2011

32


Directors’ report for the year ended 31 December 2011 (continued)

Directors’ interests (continued)

By virtue of their interests in the Company, the above Directors are also deemed to have interests in the subsidiaries during the fi nancial year to the extent that the Company has an interest.

None of the other Directors holding offi ce at 31 December 2011 had any interest in the ordinary shares of the Company and of its related corporations during the fi nancial year.

Directors’ benefi ts

Since the end of the previous fi nancial year, no Director of the Company has received nor become entitled to receive any benefi t (other than a benefi t included in the aggregate amount of emoluments received or due and receivable by certain Directors as shown in the fi nancial statements of the Company) by reason of a contract made by the Company or a related corporation with the Director or with a fi rm of which the Director is a member, or with a corporation in which the Director has a substantial fi nancial interest, other than certain Directors who have signifi cant fi nancial interests in corporations which traded with certain companies in the Group in the ordinary course of business and rental receivable from a company in which certain Directors have substantial fi nancial interests as disclosed in Note 27 to the fi nancial statements.

There were no arrangements during and at the end of the fi nancial year which had the object of enabling Directors of the Company to acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Issue of shares and debentures

There were no changes in the authorised, issued and paid-up capital of the Company during the fi nancial year.

There were no debentures issued during the fi nancial year.

Treasury shares

The repurchased shares are held as treasury shares and carried at cost. The number of outstanding shares in issue after deducting treasury shares held at the fi nancial year end is 230,957,610 (2010: 230,957,610) ordinary shares of RM0.20 each. Treasury shares have no rights to voting, dividends and participation in other distribution.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the year.

Other statutory information

Before the statements of fi nancial position and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) there are no bad debts to be written off and no provision needs to be made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

i) that would render it necessary to write off any bad debts or provide for any doubtful debts, or ii) that would render the value attributed to the current assets in the Group and in the Company fi nancial statements misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the fi nancial statements, that would render any amount stated in the fi nancial statements of

the Group and of the Company misleading.

33


Directors’ report for the year ended 31 December 2011 (continued)

Other statutory information (continued)

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the fi nancial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the fi nancial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the fi nancial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the fi nancial performance of the Group and of the Company for the fi nancial year ended 31 December 2011 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that fi nancial year and the date of this report.

Remuneration Committee

The Remuneration Committee carries out annual review of the remuneration package for the Managing Director and Executive Directors whereupon recommendations are made to the Board of Directors for approval.

The members of the Remuneration Committee comprising of all the Independent Non-Executive Directors of the Company are:

Dato’ Wong Pui LamChong Yew KiangAnita Chew Cheng Im

Auditors

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

……………………………………………………………… Hsiao Chih Jen

……………………………………………………………… Ng Shwu Ching

Date: 21 March 2012

34


In the opinion of the Directors, the fi nancial statements set out on pages 37 to 77 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as of 31 December 2011 and of their fi nancial performance and cash fl ows for the year then ended.

In the opinion of the Directors, the information set out in Note 28 to the fi nancial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the Directors:

……………………………………………………………… Hsiao Chih Jen

……………………………………………………………… Ng Shwu Ching

Date: 21 March 2012

Statement by Directors pursuant toSection 169(15) of the Companies Act, 1965

I, Ng Shwu Ching, the Director primarily responsible for the fi nancial management of Ni Hsin Resources Berhad, do solemnly and sincerely declare that the fi nancial statements set out on pages 37 to 77 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 21 March 2012.

…………………………….… Ng Shwu Ching

Before me:

Statutory declaration pursuant toSection 169(16) of the Companies Act, 1965

35


Report on the Financial Statements

We have audited the fi nancial statements of Ni Hsin Resources Berhad, which comprise the statements of fi nancial position as at 31

December 2011 of the Group and of the Company, and the income statements, statements of comprehensive income, changes in equity

and cash fl ows of the Group and of the Company for the year then ended, and a summary of signifi cant accounting policies and other

explanatory information, as set out on pages 37 to 77.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of fi nancial statements that give a true and fair view in accordance with

Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are

necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with

approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The

procedures selected depend on our judgement, including the assessment of risks of material misstatement of the fi nancial statements,

whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of fi nancial

statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall

presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the fi nancial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies

Act, 1965 in Malaysia so as to give a true and fair view of the fi nancial position of the Group and of the Company as of 31 December 2011

and of their fi nancial performance and cash fl ows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and the subsidiaries

of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We are satisfi ed that the accounts of the subsidiaries that have been consolidated with the Company’s fi nancial statements are in form

and content appropriate and proper for the purposes of the preparation of the fi nancial statements of the Group and we have received

satisfactory information and explanations required by us for those purposes.

c) Our audit reports on the accounts of the subsidiaries did not contain any qualifi cation or any adverse comment made under Section

174(3) of the Act.

Independent auditors’ report to the members of Ni Hsin Resources Berhad

36


Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the fi nancial statements taken as a whole. The information set out in Note 28

to the fi nancial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements.

We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has

been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and

Unrealised Profi ts or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the

Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in

Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG Chin Shoon Chong

Firm Number: AF 0758 Approval Number: 2823/04/13(J)

Chartered Accountants Chartered Accountant

Petaling Jaya,

Date: 21 March 2012

Independent auditors’ report to the members of Ni Hsin Resources Berhad (continued)

37


Group Company 2011 2010 2011 2010 Note RM’000 RM’000 RM’000 RM’000Assets

Property, plant and equipment 3 32,158 34,316 - - Investments in subsidiaries 4 - - 56,954 56,584Goodwill 5 5,105 5,105 - -

Total non-current assets 37,263 39,421 56,954 56,584

Derivative fi nancial assets 6 - 19 - - Inventories 7 17,353 17,324 - - Receivables, deposits and prepayments 8 4,878 4,424 4,488 1,436Tax recoverable 963 715 31 62Cash and cash equivalents 9 6,426 3,616 161 501

Total current assets 29,620 26,098 4,680 1,999

Total assets 66,883 65,519 61,634 58,583

Equity Share capital 47,320 47,320 47,320 47,320 Reserves 7,877 10,104 11,105 9,641

Total equity 10 55,197 57,424 58,425 56,961

Liabilities Deferred tax liabilities 11 2,119 2,192 - -

Total non-current liabilities 2,119 2,192 - -

Liabilities Payables and accruals 12 7,513 4,917 3,209 1,622 Borrowings 13 1,829 980 - - Taxation 225 6 - -

Total current liabilities 9,567 5,903 3,209 1,622

Total liabilities 11,686 8,095 3,209 1,622

Total equity and liabilities 66,883 65,519 61,634 58,583

The notes on pages 44 to 77 are an integral part of these fi nancial statements.

Statements of fi nancial position as at 31 December 2011

38


Group Company 2011 2010 2011 2010 Note RM’000 RM’000 RM’000 RM’000

Revenue 14 39,338 35,975 4,818 3,880Cost of sales (29,190) (27,363) - -

Gross profi t 10,148 8,612 4,818 3,880Distribution costs (682) (787) - - Administrative expenses (9,362) (8,444) (386) (1,147) Other income 740 646 - -

Operating profi t 15 844 27 4,432 2,733Finance costs 17 (135) (76) - - Interest income 37 58 7 15

Profi t before tax 746 9 4,439 2,748 Tax expense 18 (894) (338) (665) (919)

(Loss)/Profi t for the year (148) (329) 3,774 1,829

(Loss)/Profi t for the year attributable to: Owners of the Company (148) (329) 3,774 1,829

Earnings per ordinary share (sen) Basic 19 (0.06) (0.14)


Income statementsfor the year 31 December 2011

39



(Loss)/Profi t for the year (148) (329) 3,774 1,829

Other comprehensive income, net of tax: Foreign currency translation differences for foreign operations 29 7 - - Fair value of available-for-sale fi nancial asset 202 - - -

Total other comprehensive income for the year 20 231 7 - -

Total comprehensive income/(loss) for the year 83 (322) 3,774 1,829

Total comprehensive income/(loss) attributable to: Owners of the Company 83 (322) 3,774 1,829


Statements of comprehensive income for the year 31 December 2011

40


Consolidated statement of changes in equityfor the year ended 31 December 2011

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41


Statement of changes in equity for the year ended 31 December 2011

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42



Cash fl ows from operating activities Profi t before tax 746 9 4,439 2,748 Adjustments for:

Depreciation 3,050 3,099 - - Gain on disposal of property, plant and equipment (23) (165) - - Interest expense 135 76 - - Interest income (37) (58) (7) (15) Net (gain)/loss on foreign exchange - unrealised (16) 21 10 60Net change in fair value of fi nancial instruments measured at fair value 19 (19) - - Property, plant and equipment written off 9 3 - -

Operating profi t before working capital changes 3,883 2,966 4,442 2,793Changes in working capital: Inventories (29) (1,213) - - Receivables, deposits and prepayments (252) (622) (3,432) (266)Payables and accruals 307 1,188 (723) 646

Cash generated from operations 3,909 2,319 287 3,173Income taxes paid (1,042) (1,547) (680) (898)Income taxes refunded 46 375 46 139 Interest expense (135) (76) - - Interest income 37 58 7 15

Net cash generated from/(used in) operating activities 2,815 1,129 (340) 2,429

Cash fl ows from investing activitiesPurchase of property, plant and equipment (1,003) (2,911) - - Proceeds from disposal of property, plant and equipment 125 172 - - Investment in subsidiary - - - (45)

Net cash used in investing activities (878) (2,739) - (45)

Statements of cash fl ows for the year ended 31 December 2011

43



Cash fl ows from fi nancing activities Net proceeds/(repayment) of bankers’ acceptances 1,108 (1,348) - - Dividends paid - (2,460) - (2,460)

Net cash generated from/(used in) fi nancing activities 1,108 (3,808) - (2,460)

Net increase/(decrease) in cash and cash equivalents 3,045 (5,418) (340) (76)

Effect of exchange rate fl uctuations on cash held 24 (23) - -

Cash and cash equivalents at 1 January 3,357 8,798 501 577

Cash and cash equivalents at 31 December (i) 6,426 3,357 161 501

(i) Cash and cash equivalents

Cash and cash equivalents included in the statements of cash fl ows comprise the following statement of fi nancial position amounts: Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Deposits with licensed banks 2,333 1,185 146 320 Cash and bank balances 4,093 2,431 15 181 Bank overdrafts - (259) - -

6,426 3,357 161 501


Statements of cash fl ows for the year ended 31 December 2011 (continued)

44


Ni Hsin Resources Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered offi ce of the Company are as follows:

Principal place of businessNo. 45, Jalan Taming Dua Taman Taming Jaya, Off Jalan Balakong43300 Selangor Darul Ehsan

Registered offi ceLot 6-05, Level 6, KPMG Tower8, First AvenueBandar Utama47800 Petaling JayaSelangor Darul Ehsan

The consolidated fi nancial statements of the Company as at and for the year ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The fi nancial statements of the Company as at and for the year ended 31 December 2011 do not include other entities.

These fi nancial statements were authorised for issue by the Board of Directors on 21 March 2012.

1. Basis of preparation

(a) Statement of compliance

The fi nancial statements of the Group and the Company have been prepared in accordance with Financial Reporting Standards (FRS), accounting principles generally accepted and the Companies Act, 1965 in Malaysia.

The following are accounting standards, amendments and interpretations of the FRS framework that have been issued by the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the Company:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011• IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments• Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012• FRS 124, Related Party Disclosures (revised)

• Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Severe Hyperinfl ation and Removal of Fixed Dates for First-time Adopters

• Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets• Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012• Amendments to FRS 101, Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013• FRS 10, Consolidated Financial Statements• FRS 11, Joint Arrangements• FRS 12, Disclosure of Interests in Other Entities• FRS 13, Fair Value Measurement• FRS 119, Employee Benefi ts (2011)• FRS 127, Separate Financial Statements (2011)• FRS 128, Investments in Associates and Joint Ventures (2011)• IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine• Amendments to FRS 7, Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities

Notes to the fi nancial statements

45


1. Basis of preparation (continued)

(a) Statement of compliance (continued)

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014• Amendments to FRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015• FRS 9, Financial Instruments (2009)• FRS 9, Financial Instruments (2010)• Amendments to FRS 7, Financial Instruments: Disclosures – Mandatory Date of FRS 9 and Transition Disclosures

The Group and the Company’s fi nancial statements for annual period beginning on 1 January 2012 will be prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs) issued by the MASB and International Financial Reporting Standards (IFRSs). As a result, the Group and the Company will not be adopting the above FRSs, Interpretations and amendments.

(b) Basis of measurement

The fi nancial statements have been prepared on the historical cost basis other than as disclosed in the fi nancial statements.

(c) Functional and presentation currency

These fi nancial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All fi nancial information presented in RM has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of the fi nancial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies that have a signifi cant effect on the amounts recognised in the fi nancial statements.

2. Signifi cant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these fi nancial statements, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Investments in subsidiaries are stated in the Company’s statement of fi nancial position at cost less impairment losses. The cost of investments includes transaction costs.

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group.

Notes to the fi nancial statements (continued)

46



2. Signifi cant accounting policies (continued)

(a) Basis of consolidation (continued)

(ii) Accounting for business combinations

Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group.

The Group has changed its accounting policy with respect to accounting for business combinations.

From 1 January 2011 the Group has applied FRS 3, Business Combinations (revised) in accounting for business combinations. The change in accounting policy has been applied prospectively in accordance with the transitional provisions provided by the standard and does not have impact on earnings per share.

Acquisitions on or after 1 January 2011

For acquisitions on or after 1 January 2011, the Group measures goodwill at the acquisition date as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less• the net recognised amount (generally fair value) of the identifi able assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profi t or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profi t or loss.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classifi ed as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profi t or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

Acquisitions between 1 January 2006 and 1 January 2011

For acquisitions between 1 January 2006 and 1 January 2011, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifi able assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profi t or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition.

Acquisitions prior to 1 January 2006

For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair values of the net identifi able assets and liabilities.

(iii) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated fi nancial statements.

47




(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profi t or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a fi nancial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

(ii) Operations denominated in functional currencies other than Ringgit Malaysia

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 January 2006 which are reported using the exchange rates at the dates of the acquisitions. The income and expenses of foreign operations, are translated to RM at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, signifi cant infl uence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassifi ed to profi t or loss as part of the profi t or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining signifi cant infl uence or joint control, the relevant proportion of the cumulative amount is reclassifi ed to profi t or loss.

In the consolidated fi nancial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the FCTR within equity.

(iii) Net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations, are recognised in the Company’s profi t or loss. Such exchange differences are reclassifi ed to other comprehensive income, and are presented as translation reserve in equity. Deferred exchange differences are recognised in the consolidated income statement upon disposal of the investment.

(c) Financial instruments

(i) Initial recognition and measurement

A fi nancial asset or a fi nancial liability is recognised in the statement of fi nancial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

48




(c) Financial instruments (continued)

(i) Initial recognition and measurement (continued)

A fi nancial instrument is recognised initially at its fair value plus, in the case of a fi nancial instrument not at fair value through profi t or loss, transaction costs that are directly attributable to the acquisition or issue of the fi nancial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profi t or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise fi nancial instruments as follows:

Financial assets (a) Financial assets at fai r value through profi t or loss

Fair value through profi t or loss category comprises fi nancial assets that are held for trading, including derivatives (except for a derivative that is a fi nancial guarantee contract or a designated and effective hedging instrument) or fi nancial assets that are specifi cally designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other fi nancial assets categorised as fair value through profi t or loss are subsequently measured at their fair values with the gain or loss recognised in profi t or loss.

(b) Held-to-maturity investments

Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity.

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

(c) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

(d) Available-for-sale fi nancial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other fi nancial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profi t or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassifi ed from equity into profi t or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profi t or loss.

All fi nancial assets, except for those measured at fair value through profi t or loss, are subject to review for impairment (see Note 2(i)(i)).

49




(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement (continued)

Financial liabilities

All fi nancial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profi t or loss.

Fair value through profi t or loss category comprises fi nancial liabilities that are held for trading, derivatives (except for a derivative that is a fi nancial guarantee contract or a designated and effective hedging instrument) or fi nancial liabilities that are specifi cally designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other fi nancial liabilities categorised as fair value through profi t or loss are subsequently measured at their fair values with the gain or loss recognised in profi t or loss.

(iii) Financial guarantee contracts

A fi nancial guarantee contract is a contract that requires the issuer to make specifi ed payments to reimburse the holder for a loss it incurs because a specifi ed debtor fails to make payment when due in accordance with the original or modifi ed terms of a debt instrument.

Financial guarantee contracts are classifi ed as deferred income and are amortised to profi t or loss using a straight-line method over the contractual period or, when there is no specifi ed contractual period, recognised in profi t or loss upon discharge of the guarantee. When settlement of a fi nancial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the fi nancial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

(iv) Regular way purchase or sale of fi nancial assets

A regular way purchase or sale is a purchase or sale of a fi nancial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of fi nancial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable

from the buyer for payment on the trade date.

(v) Derecognition

A fi nancial asset or part of it is derecognised when, and only when, the contractual rights to the cash fl ows from the fi nancial asset expire or the fi nancial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a fi nancial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profi t or loss.

A fi nancial liability or a part of it is derecognised when, and only when, the obligation specifi ed in the contract is discharged or cancelled or expires. On derecognition of a fi nancial liability, the difference between the carrying amount of the fi nancial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profi t or loss.

50




(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are stated at cost/valuation less any accumulated depreciation and any accumulated impairment losses.

Property, plant and equipment under the revaluation model The Group revalues its property comprising freehold land and factory buildings every 5 years or at shorter intervals whenever the fair value of the revalued assets is expected to differ materially from their carrying value. Surpluses arising from revaluation are dealt with in the property revaluation reserve account. Any defi cit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is recognised in profi t or loss.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour.

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate.

When signifi cant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other expenses” respectively in profi t or loss. When revalued assets are sold, the amounts included in the property revaluation reserve are transferred to retained earnings.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefi ts embodied within the part will fl ow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profi t or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profi t or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset or other amount substituted for cost, less its residual value. Depreciation is recognised in profi t or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated.

51




(d) Property, plant and equipment (continued)

(iii) Depreciation (continued)

The estimated useful lives for the current and comparative periods remained unchanged and depreciation is at the following principal annual rates:

Factory buildings 2% Hostels 2% Plant and machinery 7% Moulds 7% Factory equipment 10% Offi ce equipment, furniture, fi xtures and fi ttings 10% - 20% Motor vehicles 20% Renovation 10%

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate at the end of the reporting period.

(e) Leased assets (i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under fi nance leases are apportioned between the fi nance expense and the reduction of the outstanding liability. The fi nance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confi rmed.

(ii) Operating lease

Leases where the Group or the Company does not assume substantially all the risks and rewards of ownership are classifi ed as operating leases and the leased assets are not recognised in the statement of fi nancial position.

Payments made under operating leases are recognised in profi t or loss on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefi ts from the leased asset are consumed. Lease incentives received are recognised in profi t or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profi t or loss in the reporting period in which they are incurred. Leasehold land which in substance in an operating lease is classifi ed as prepaid lease payments.

(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations and is measured at cost less any accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee.

(ii) Amortisation

Goodwill with indefi nite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

52




(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

The cost of inventories is measured based on weighted average cost formula, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and fi nished goods, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

The fair value of inventories acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profi t margin based on the effort required to complete and sell the inventories.

(h) Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignifi cant risk of changes in value. For the purpose of the statement of cash fl ows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(i) Impairment (i) Financial assets

All fi nancial assets (except for fi nancial assets categorised as fair value through profi t or loss and investments in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash fl ows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a signifi cant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profi t or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale fi nancial assets is recognised in profi t or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale fi nancial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassifi ed from equity to profi t or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profi t or loss and is measured as the difference between the fi nancial asset’s carrying amount and the present value of estimated future cash fl ows discounted at the current market rate of return for a similar fi nancial asset.

Impairment losses recognised in profi t or loss for an investment in an equity instrument classifi ed as available-for-sale is not reversed through profi t or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profi t or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profi t or loss.

53




(i) Impairment (continued)

(ii) Other assets

The carrying amounts of other assets (except for inventories) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash infl ows from continuing use that are largely independent of the cash infl ows of other assets (known as cash-generating unit). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a cash-generating units or a group of cash-generating units that are expected to benefi t from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset or cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profi t or loss. Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the cash-generating units or the group of cash-generating units and then to reduce the carrying amount of the other assets in the cash-generating unit (or a group of cash-generating units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profi t or loss in the year in which the reversals are recognised.

(j) Equity instruments

Instruments classifi ed as equity are stated at cost on initial recognition and are not remeasured subsequently.

(i) Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classifi ed as treasury shares in the statement of changes in equity.

Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable reserves, or both.

Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity, and the resulting surplus or defi cit on the transaction is presented in share premium.

54




(j) Equity instruments (continued)

(ii) Distributions of non-cash assets to owners of the Company

From 1 January 2011, the Group has applied IC 17, Distributions of Non-cash Assets to Owners in accounting for distributions of non-cash assets to owners of the Company. The new accounting policy has been applied prospectively.

The Group measures a liability to distribute non-cash assets as a dividend to the owners of the Company at the fair value of the assets to be distributed. The carrying amount of the dividend is remeasured at each reporting period and at the settlement date, with any changes recognised directly in equity as adjustments to the amount of the distribution. On settlement of the transaction, the Group recognises the difference, if any, between the carrying amount of the assets distributed and the carrying amount of the liability in profi t or loss.

(k) Employee benefi ts

(i) Short term employee benefi ts

Short-term employee benefi t obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profi t-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contributions to the statutory pension funds are charged to profi t or loss in the fi nancial year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(l) Contingent liabilities

Where it is not probable that an outfl ow of economic benefi ts will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outfl ow of economic benefi ts is remote. Possible obligations, whose existence will only be confi rmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outfl ow of economic benefi ts is remote.

(m) Revenue and other income

(i) Goods sold

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the signifi cant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Dividend income

Dividend income is recognised in profi t or loss on the date that the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(iii) Interest income

Interest income is recognised in profi t or loss as it accrues using the effective interest method.

(iv) Rental income

Rental income is recognised in profi t or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

55




(n) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profi t or loss using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specifi c borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

(o) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profi t or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous fi nancial years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of fi nancial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profi t or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profi ts will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profi t or loss as and when it is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profi ts will be available against which the unutilised tax incentive can be utilised.

(p) Earnings per ordinary share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profi t or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding adjusted for own shares held for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

(q) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Managing Director of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete fi nancial information is available.

56



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57



3. Property, plant and equipment (continued)

Property, plant and equipment under the revaluation model

Freehold land and factory buildings were revalued on 14 April 2009 by independent professional qualifi ed valuers using an open market value method.

Had the freehold land and factory buildings been carried under the cost model, their carrying amounts would have been RM3,612,000 (2010: RM3,612,000) and RM7,499,000 (2010: RM7,726,000) respectively.

4. Investments in subsidiaries Company 2011 2010 Note RM’000 RM’000

Unquoted shares, at cost 56,584 56,584 Amount due from a subsidiary 4.1 370 -

56,954 56,584

4.1 The amount due from a subsidiary is non-trade in nature, unsecured and interest free. The settlement of the amount is neither planned nor likely to occur in the foreseeable future. As this amount is in substance, a part of the Company’s net investment in the subsidiary, it was stated at cost less accumulated impairment.

The principal activities of the subsidiaries, their place of incorporation and the interest of Ni Hsin Resources Berhad, are as follows: Effective ownership Country of interest Name of subsidiary Principal activities Incorporation 2011 2010 % %

Ni Hsin Corporation Design, manufacture and Malaysia 100 100 Sdn. Bhd. (“NHC”) sale of stainless steel kitchenware and cookware

Ever-Grow Advanced Research, development Malaysia 100 100 Materials Sdn. Bhd. and manufacturing of (“EGAM”) clad metals and stainless steel convex mirrors

Steel Crafts Europa Trading and assembly of Italy 100 100 S.R.L. (“SCE”)* kitchenware, cookware, clad metals and stainless steel convex mirrors

* Subsidiary incorporated in Italy and has not been audited as it is exempted from statutory audit under Italian Company Laws. It is consolidated based on management accounts.

All other subsidiaries are incorporated in Malaysia and audited by KPMG.

58



5. Intangible assets Group 2011 2010 RM’000 RM’000 Goodwill Cost At 31 December 5,105 5,105

Carrying amounts At 31 December 5,105 5,105

6. Derivative fi nancial assets Group 2011 2010 Note RM’000 RM’000

Current Financial assets at fair value through profi t or loss: - Derivatives a - 19

Note aDerivatives consist of forward exchange contracts.

7. Inventories Group 2011 2010 At cost RM’000 RM’000

Raw materials and component parts 7,576 8,329 Indirect materials 997 890 Work-in-progress 932 854 Manufactured inventories 7,848 7,251

17,353 17,324

Recognised in profi t or loss: Inventories recognised as cost of sales 29,190 27,363

8. Receivables, deposits and prepayments

Group Company 2011 2010 2011 2010 Note RM’000 RM’000 RM’000 RM’000 Current Trade Trade receivables 8.1 3,546 3,268 - -

Non-trade Subsidiary - - 1,480 1,428 Other receivables 8.2 477 388 - - Deposits 191 279 - - Prepayments 664 489 8 8 Dividends receivable - - 3,000 - 1,332 1,156 4,488 1,436

4,878 4,424 4,488 1,436

59



8. Receivables, deposits and prepayments (continued)

Group

8.1 Included in trade receivables is amount due from corporations in which certain Directors have substantial fi nancial interests amounting to RM2,787,000 (2010: RM2,407,000) and are subject to normal trade terms.

8.2 Included in other receivables are club memberships in the Klang Valley. The memberships are valued at their fair value of RM320,000 (2010: RM118,000).

Company

The amount due from a subsidiary is non-trade related, unsecured, interest free and is repayable on demand.

9. Cash and cash equivalents Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 2,333 1,185 146 320 Cash and bank balances 4,093 2,431 15 181

6,426 3,616 161 501

10. Share capital and reserves

10.1 Share capital Group and Company Number Number Amount of shares Amount of shares 2011 2011 2010 2010 RM’000 ’000 RM’000 ’000 Authorised: Ordinary shares of RM0.20 each At 1 January/31 December 100,000 500,000 100,000 500,000

Issued and fully paid: Ordinary shares of RM0.20 each At 1 January/31 December 47,320 236,600 47,320 236,600

10.2 Treasury shares

The shareholders of the Company, by a special resolution passed in a general meeting held on 18 May 2011, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

There were no repurchase of issued share capital during the year.

The number of outstanding shares in issue after deducting treasury shares held at the fi nancial year end is 230,957,610 (2010: 230,957,610) ordinary shares of RM0.20 each. Treasury shares have no rights to voting, dividends and participation in other distribution.

60



10. Share capital and reserves (continued)

10.3 Share option reserve The share option reserve comprises the cumulative value of employee services received for the issue of share options. When the

option is exercised, the amount from the share option reserve is transferred to share premium. When the share options expire, the amount from the share option reserve is transferred to retained earnings. In the previous year, the share options have lapsed and the share option reserve has been transferred to retained earnings.

10.4 Property revaluation reserve Property revaluation reserve arises from the revaluation of property, plant and equipment in 2004 and 2009.

10.5 Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale fi nancial assets until the investments are derecognised or impaired. The fi nancial asset is the club memberships (Note 8.2).

10.6 Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the fi nancial statements of the

Group entities with functional currencies other than RM, as well as from the translation of liabilities that hedge the Company’s net investment in foreign operations.

10.7 Retained earnings Pursuant to Section 50 of the Finance Act, 2007, the Company has elected for the irrevocable option to disregard the Section

108 balance as at 26 July 2010 and exercised an irrevocable option not to deduct tax under Section 40. As such, the Company may distribute single tier exempt dividends to its shareholders out of its entire retained earnings.

11. Deferred tax liabilities Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net 2011 2010 2011 2010 2011 2010 Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - - 2,925 2,531 2,925 2,531 Provisions (89) (81) - - (89) (81) Unabsorbed capital allowances carried forward (715) (411) - - (715) (411) Unabsorbed reinvestment allowances carried forward (111) - - - (111) - Tax losses carried forward (45) - - - (45) - Others - - 154 153 154 153

Net tax (assets)/ liabilities (960) (492) 3,079 2,684 2,119 2,192

Deferred tax liabilities and assets are offset above where there is a legally enforceable right to set off current tax asset against current tax liability and where the deferred taxes relate to the same taxation authority.

61



11. Deferred tax liabilities (continued)

Movement in temporary differences during the year Recognised Recognised in profi t Recognised in profi t At or loss directly in At or loss At 1.1.2010 (Note 18) equity 31.12.2010 (Note 18) 31.12.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment 2,643 (112) - 2,531 394 2,925 Provisions (128) 47 - (81) (8) (89) Unabsorbed capital allowances carried forward - (411) - (411) (304) (715) Unabsorbed reinvestment allowances carried forward - - - - (111) (111) Tax losses carried forward - - - - (45) (45) Other items 135 (59) 77 153 1 154

2,650 (535) 77 2,192 (73) 2,119

12. Payables and accruals

Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Current Trade Trade payables 2,064 1,571 - -

Non-trade Subsidiary - - 880 880 Other payables 931 1,776 - 742 Accrued expenses 2,208 1,570 19 - Dividends payable 2,310 - 2,310 -

5,449 3,346 3,209 1,622

7,513 4,917 3,209 1,622

Company

The amount due to a subsidiary is non-trade related, unsecured, interest free and is repayable on demand.

62



13. Loans and borrowings Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Current: Bank overdrafts – unsecured - 259 - - Bankers’ acceptances – unsecured 1,829 721 - - 1,829 980 - -

Bank overdrafts

The Group’s bank overdrafts in the previous year were supported by negative pledge over the Group’s present assets and corporate guarantee from the Company and were subject to interest at 6.30% per annum.

Bankers’ acceptances

The Group’s bankers’ acceptances are jointly and severally guaranteed by certain Directors of the Company.

The bankers’ acceptances are subject to interest ranging from 4.35% to 4.48% (2010: 3.28% to 4.06%) per annum.

14. Revenue Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000

Sales of goods 39,338 35,975 - - Dividend income - - 4,578 3,580 Management fees - - 240 300

39,338 35,975 4,818 3,880

15. Operating profi t Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Operating profi t is arrived at after charging: Auditors’ remuneration - Statutory audit - KPMG 100 100 45 42 - Other services - KPMG 44 52 17 25 Depreciation on property, plant and equipment 3,050 3,099 - - Net change in fair value of fi nancial instruments measured at fair value 19 - - - Net loss on foreign exchange - unrealised - 21 10 60 Property, plant and equipment written off 9 3 - - Personnel expenses - Contributions to Employees Provident Fund 524 417 - - - Wages, salaries and others 9,342 7,890 95 95

and crediting: Gain on disposal of property, plant and equipment 23 165 - - Gross dividends from subsidiaries - - 4,578 3,580 Net gain on foreign exchange - unrealised 16 - - - Net gain on foreign exchange - realised 550 389 - - Net gain in fair value of fi nancial instruments measured at fair value - 19 - - Bad debts recovered 5 - - - Rental income from land and buildings 162 162 - -

63



16. Key management personnel compensation

The key management personnel compensations are as follows: Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Directors’ remuneration - other emoluments 1,508 1,521 5 5 - fees 90 90 90 90 Other short term employee benefi ts (including estimated monetary value of benefi ts-in-kind) 44 46 - -

1,642 1,657 95 95

17. Finance costs Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Bank overdrafts 68 17 - - Bankers’ acceptances 67 59 - -

135 76 - -

18. Tax expense Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Current tax expense - current 985 887 665 919 - prior years (18) (14) - -

Total current tax 967 873 665 919

Deferred tax expense - origination and reversal of temporary differences (545) (575) - - - prior years 472 40 - -

Total deferred tax (73) (535) - - Total tax expense 894 338 665 919

Reconciliation of effective tax expense Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Profi t before tax 746 9 4,439 2,748

Income tax using Malaysian tax rate - 25% 187 2 1,110 687 Non-deductible expenses 373 470 55 232 Tax exempt income - (76) (500) - Tax incentives (120) (86) - - Other items - 2 - -

440 312 665 919 Underprovision in prior years 454 26 - -

Tax expense 894 338 665 919

64



19. Earnings per ordinary share

Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share for the year ended 31 December 2011 was based on the loss attributable to ordinary shareholders of RM148,000 (2010: RM329,000) and the weighted average number of ordinary shares outstanding during the year of 230,958,000 (2010: 230,958,000).

No diluted EPS is disclosed in these fi nancial statements as there are no dilutive potential ordinary shares.

20. Other comprehensive income Before Net tax Tax expense of tax RM’000 RM’000 RM’000 2011 Foreign currency translation differences for foreign operations 29 - 29 Fair value of available-for-sale fi nancial assets 202 - 202

231 - 231

2010 Foreign currency translation differences for foreign operations 7 - 7

21. Dividends

Dividends recognised in the current year by the Company are: Sen Total per share amount Date of 2011 (net of tax) RM’000 payment Interim 2011 ordinary (single-tier) 1.00 2,310 18 January 2012

2010 Final 2009 ordinary (taxable) 0.50 1,161 30 June 2010

22. Segment reporting

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly interest-earning assets and related revenue, loans and borrowings and related expenses, corporate assets (primarily the Company’s receivables) and head offi ce expenses, and tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment.

Inter-segment pricing is determined on an arm’s length basis.

65



22. Segment reporting (continued)

Business segments The Group comprises the following main business segments: Cookware Design, manufacture and sale of stainless steel kitchenware and cookware. Convex mirrors Manufacture and sale of stainless steel convex mirrors. Clad metals Research, development and manufacture of clad metals.

Geographical segments

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers.

2011 Convex Clad Business Cookware mirrors metals Others Eliminations Total segments RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Revenue 25,742 7,499 5,300 797 - 39,338 Inter-segment revenue 24 552 6,698 - (7,274) -

Total revenue 25,766 8,051 11,998 797 (7,274) 39,338

Results Segment results (891) 1,312 1,359 (544) (6) 1,230

Unallocated corporate expenses (386) Interest expense (135) Interest income 37

Profi t before tax 746 Tax expense (894)

Loss for the year (148)

Assets Segment assets 46,194 4,936 16,574 659 (8,869) 59,494 Unallocated corporate assets 7,389

Total assets 66,883

Liabilities Segment liabilities 11,740 2,943 3,079 39 (8,234) 9,567 Unallocated corporate liabilities 2,119

Total liabilities 11,686

Other information Capital expenditure 954 39 10 - - 1,003 Depreciation 2,092 261 697 - - 3,050 Others (14) - - - - (14)

Revenue Geographical segments RM’000

Japan and Korea 17,947 Malaysia and Singapore 10,792 China, Taiwan and Hong Kong 4,785 USA and Canada 2,118 Others 3,696

39,338

66



22. Segment reporting (continued)

2010 Convex Clad Business Cookware mirrors metals Others Eliminations Total segments RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 24,586 6,591 4,588 210 - 35,975 Inter-segment revenue 168 280 6,661 - (7,109) -

Total revenue 24,754 6,871 11,249 210 (7,109) 35,975

Results Segment results (1,367) 1,095 1,643 (240) 43 1,174

Unallocated corporate expenses (1,147) Interest expense (76) Interest income 58

Profi t before tax 9 Tax expense (338)

Loss for the year (329)

Assets Segment assets 43,997 4,354 16,862 644 (4,669) 61,188 Unallocated corporate assets 4,331

Total assets 65,519

Liabilities Segment liabilities 7,121 1,269 1,525 - (4,175) 5,740 Unallocated corporate liabilities 2,355

Total liabilities 8,095

Other information Capital expenditure 2,094 283 534 - - 2,911 Depreciation 2,231 21 847 - - 3,099 Others (162) - - - - (162)

Revenue Geographical segments RM’000

Japan and Korea 18,648 Malaysia and Singapore 6,386 China, Taiwan and Hong Kong 7,548 USA and Canada 1,757 Others 1,636

35,975

The carrying amount of segment assets and cost to acquire property, plant and equipment by location of assets are not provided. The assets of the Group are located and capital expenditure incurred for these assets, are principally in Malaysia.

67



23. Capital and other commitments

Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Property, plant and equipment Contracted but not provided for 56 221 - -

24. Contingent liabilities (unsecured)

Company 2011 2010 RM’000 RM’000 Corporate guarantee to licensed banks for credit facilities granted to a subsidiary 26,140 26,140

25. Financial instruments

25.1 Categories of fi nancial instruments

The table below provides an analysis of fi nancial instruments categorised as follows:

(a) Loans and receivables (L&R);(b) Fair value through profi t or loss (FVTPL) - Held for trading (HFT);(c) Available-for-sale fi nancial assets (AFS); and(d) Financial liabilities measured at amortised cost (FL).

Carrying FVTPL amount L&R -HFT AFS 2011 RM’000 RM’000 RM’000 RM’000

Financial assetsGroupReceivables and deposits 4,214 3,894 - 320Cash and cash equivalents 6,426 6,426 - -

10,640 10,320 - 320

Carrying amount L&R 2011 RM’000 RM’000CompanyReceivables and deposits 4,480 4,480Cash and cash equivalents 161 161

68



25. Financial instruments (continued)

25.1 Categories of fi nancial instruments (continued)

Carrying FVTPL amount L&R -HFT AFS 2010 RM’000 RM’000 RM’000 RM’000

Financial assetsGroupDerivative fi nancial assets 19 - 19 - Receivables and deposits 3,935 3,817 - 118Cash and cash equivalents 3,616 3,616 - -

7,570 7,433 19 118

Carrying amount L&R 2010 RM’000 RM’000CompanyReceivables and deposits 1,428 1,428Cash and cash equivalents 181 181

Carrying amount FL2011 RM’000 RM’000 Financial liabilitiesGroupBankers’ acceptances 1,829 1,829Payables and accruals 7,513 7,513

9,342 9,342

CompanyPayables and accruals 3,209 3,209

Carrying amount FL2010 RM’000 RM’000 Financial liabilitiesGroupBankers’ acceptances 259 259Bank overdrafts 721 721Payables and accruals 4,917 4,917

5,897 5,897

CompanyPayables and accruals 1,622 1,622

69




25.2 Net gains and losses arising from fi nancial instruments Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Net gains/(losses) arising on: Fair value through profi t or loss: - Held for trading (19) 19 - - Loans and receivables 81 45 (3) (45) Available-for-sale fi nancial assets 202 - - - Financial liabilities 415 301 - -

679 365 (3) (45)

25.3 Financial risk management

The Group has exposure to the following risks from its use of fi nancial instruments:

• Credit risk • Liquidity risk • Market risk

25.4 Credit risk

Credit risk is the risk of a fi nancial loss to the Group if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and investment securities. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and fi nancial guarantees given to banks for credit facilities granted to subsidiaries.

Receivables

Risk management objectives, policies and processes for managing the risk The Group’s exposure to credit risk arises through its receivables. Management has an informal credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the Group has no signifi cant exposure to any individual receivable other than the amount due from corporations in which certain Directors have substantial fi nancial interests as stated in Note 27 to the fi nancial statements. The maximum exposure to credit risk for the Group is represented by the carrying amount of each fi nancial asset.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A signifi cant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having signifi cant balances past due more than 60 days, which are deemed to have higher credit risk, are monitored individually.

The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was:

Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000

Domestic 3,232 2,525 - - Others 314 743 - -

3,546 3,268 - -

70




25.4 Credit risk (continued)

Impairment losses

The ageing of trade receivables as at the end of the reporting period was:

Individual Collective Group Gross impairment impairment Net RM’000 RM’000 RM’000 RM’000 2011 Not past due 2,193 - - 2,193 Past due 1 – 30 days 1,353 - - 1,353

3,546 - - 3,546

2010 Not past due 2,129 - - 2,129 Past due 1 – 30 days 1,074 - - 1,074 Past due 31 – 60 days 65 - - 65

3,268 - - 3,268

As at end of the reporting period, there was no indication the receivables are not recoverable. Amounts past due were collected subsequent to year end.

Investments and other fi nancial assets

Risk management objectives, policies and processes for managing the risk

Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group. Transactions involving derivative fi nancial instruments are with approved fi nancial institutions.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the Group has only invested in domestic money market. The maximum exposure to credit risk is represented by the carrying amounts in the statement of fi nancial position.

In view of the sound credit rating of counterparties, management does not expect any counterparty to fail to meet its obligations.

The investments and other fi nancial assets are unsecured.

Financial guarantees


The Company provides unsecured fi nancial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.


The maximum exposure to credit risk amounts to RM1,829,000 (2010: RM980,000) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

The fi nancial guarantees have not been recognised since the fair value on initial recognition was nil.

71




25.4 Credit risk (continued)

Inter company balances


The Company provides unsecured loans and advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.


As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statement of fi nancial position.

Loans and advances are only provided to subsidiaries which are wholly owned by the Company.

Impairment losses

As at the end of the reporting period, there was no indication that the loans and advances to the subsidiaries are not recoverable. The Company does not specifi cally monitor the ageing of the advances to the subsidiaries as these are repayable on demand.

25.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, bank overdrafts and bankers’ acceptances.

The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as for as possible, that it will have suffi cient liquidity to meet its liabilities when they fall due.

Maturity analysis

The table below summarises the maturity profi le of the Group’s and the Company’s fi nancial liabilities as at the end of the reporting period based on undiscounted contractual payments:

Carrying Contractual Contractual Under amount interest rate cash fl ows 1 year

Group RM’000 % RM’000 RM’000 2011 Non-derivative fi nancial liabilities Bankers’ acceptances 1,829 4.39 1,829 1,829 Payables and accruals 7,513 - 7,513 7,513

2010 Non-derivative fi nancial liabilities Bankers’ acceptances 259 4.06 259 259 Bank overdrafts 721 6.30 721 721 Payables and accruals 4,917 - 4,917 4,917

Company 2011 Non-derivative fi nancial liabilities Payables and accruals 3,209 - 3,209 3,209

2010 Non-derivative fi nancial liabilities Payables and accruals 1,622 - 1,622 1,622

72




25.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s fi nancial position or cash fl ows.

25.6.1 Currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (USD), Japanese Yen (JPY), Euro (EUR), Great Britain Pound (GBP) and Singapore Dollar (SGD).


The Group does not have a fi xed policy to hedge its sales and purchases via forward contracts. However, the exposure to foreign currency risk is monitored from time to time by management.

Exposure to foreign currency risk

The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated in Group USD EUR GBP SGD JPY RM’000 RM’000 RM’000 RM’000 RM’000 2011 Trade receivables 187 - - - - Trade payables (110) (52) - (22) -

Net exposure 77 (52) - (22) -

2010 Trade receivables 552 21 - - 170 Trade payables* 191 (155) (98) (18) - Forward exchange contracts 5 - - - 14

Net exposure 748 (134) (98) (18) 184

* Positive balances in trade payables relate to advances made to overseas supplier for purchases.

Currency risk sensitivity analysis

Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented.

A 10% strengthening of the RM against the following currencies at the end of the reporting period would have increased (decreased) equity and post-tax profi t or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

73




25.6 Market risk (continued)

25.6.1 Currency risk (continued)

Currency risk sensitivity analysis (continued) Profi t Equity or loss Group RM’000 RM’000 2011 USD (6) (6) JPY - - EUR 4 4 GBP - - SGD 2 2

2010 USD (48) (48) JPY (17) (17) EUR - - GBP 10 10 SGD 2 2

A 10% weakening of RM against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

25.6.2 Interest rate risk

The Group’s investments in fi xed deposits are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash fl ows due to changes in interest rates. Short term receivables and payables are not signifi cantly exposed to interest rate risk.


The Group has an informal policy in place and the exposure to interest rate risk is monitored on an ongoing basis.

Exposure to interest rate risk

The interest rate profi le of the Group’s and the Company’s signifi cant interest-bearing fi nancial instruments, based on carrying amounts as at the end of the reporting period was:

Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000

Fixed rate instruments Deposits with licensed banks 2,333 1,185 146 320

Floating rate instruments Bankers’ acceptances 1,829 721 - - Bank overdrafts - 259 - -

74




25.6 Market risk (continued)

25.6.2 Interest rate risk (continued)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fi xed rate instruments

The Group does not account for any fi xed rate fi nancial assets and liabilities at fair value through profi t or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profi t or loss.

(b) Cash fl ow sensitivity analysis for variable rate instruments

A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased (decreased) equity and post-tax profi t or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Equity Profi t or loss 100 bp 100 bp 100 bp 100 bp increase decrease increase decrease Group RM’000 RM’000 RM’000 RM’000

2011 Bankers’ acceptances (3) 3 (3) 3

2010 Bankers’ acceptances (1) 1 (1) 1

25.7 Fair value of fi nancial instruments

The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings approximate their fair values due to the relatively short term nature of these fi nancial instruments.

It was not practicable to estimate the fair value of the Company’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs.

The fair values of other fi nancial assets and liabilities, together with the carrying amounts shown in the statement of fi nancial position, are as follows: 2011 2010 Carrying Fair Carrying Fair amount value amount valueGroup RM’000 RM’000 RM’000 RM’000

Forward exchange contracts - - 19 19Investments in club memberships 320 320 118 118

The following summarises the methods used in determining the fair value of fi nancial instruments refl ected in the above table.

Derivatives

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

Non-derivatives

The fair value of investments in club memberships is based on their latest published membership price.

75




25.7 Fair value of fi nancial instruments (continued)

25.7.1 Fair value hierarchy

Comparative fi gures have not been presented for 31 December 2010 by virtue of the exemption provided in paragraph 44G of FRS 7.

The table below analyses fi nancial instruments carried at fair value, by valuation method. The different levels have been defi ned as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000

2011 Financial assets Investments in club memberships - 320 - 320

26. Capital management

The Group’s objectives when managing capital are to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confi dence and to sustain future development of the business. The Directors monitor adequacy of capital on an ongoing basis.

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

27. Related parties

For the purposes of these fi nancial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common signifi cant infl uence. Related parties may be individuals or other entities.

Key management personnel are defi ned as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors of the Group, and certain members of senior management of the Group.

The signifi cant related party transactions of the Group, other than key management personnel compensation (refer to Note 16), are as follows:

Transaction Balance value for outstanding year ended as at 31 December 31 December 2011 2010 2011 2010 Group RM’000 RM’000 RM’000 RM’000

With a company in which Hsiao Chih Jen, Hsiao Chih Chien and Hsiao Chih Che have substantial fi nancial interests

Standardworld Holding Ltd. Royalty fees payable 181 129 (367) (336)

Sun New Stainless Steel Industry Ltd. Sales (3,269) (3,693) - - Purchases 152 129 (15) (3)

76



27. Related parties (continued)

Transaction Balance value for outstanding year ended as at 31 December 31 December 2011 2010 2011 2010 Group RM’000 RM’000 RM’000 RM’000

With a company in which Hsiao Chih Jen and Hsiao Chih Chien have substantial fi nancial interests

Everpro Sdn. Bhd. Sales (7,849) (4,779) 2,787 2,167 Purchases 296 - - - Rental income receivable (162) (162) - -

With a company in which Hsiao Chih Chien has substantial fi nancial interests

I.D.M. Creative Development Co. Ltd. Sales (150) (611) - 240 Purchases 1,302 972 (5) (90)

Company

Dividend income (4,578) (3,580) 3,000 - Management fees (240) (300) - - Loans to a subsidiary 422 1,428 1,850 1,428Loans from a subsidiary - - (880) (880)

The terms and conditions for the above transactions are based on normal trade terms. All the amounts outstanding are unsecured and expected to be settled with cash.

77



28. Supplementary information on the breakdown of realised and unrealised profi ts or losses

The breakdown of retained earnings of the Group and the Company as at 31 December into realised and unrealised profi ts pursuant to Bursa Malaysia’s directive is as follows:

Group Company 2011 2010 2011 2010 RM’000 RM’000 RM’000 RM’000 Group Total retained earnings - Realised 38,005 40,587 10,971 9,557 - Unrealised (2,292) (2,396) (10) (60)

35,713 38,191 10,961 9,497 Less: Consolidation adjustments (33,142) (33,162) - -

Total retained profi ts as per consolidated account 2,571 5,029 10,961 9,497

The determination of realised and unrealised profi ts is made based on the Guidance On Special Matter No. 1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.

78


Authorised share capital RM100,000,000 Paid-up share capital RM47,320,002 comprising 236,600,010 ordinary shares of RM0.20 each Class of shares Ordinary Share of RM0.20 each Voting rights One vote per ordinary share

SIZE OF SHAREHOLDINGS AS AT 30 MARCH 2012 No. of % of No. of % ofSize of Shareholdings Shareholders Shareholders shares held issued capital*1

1 - 99 10 0.70 265 0.00 100 - 1,000 330 23.31 177,250 0.08 1,001 - 10,000 428 30.23 2,814,480 1.22 10,001 - 100,000 521 36.79 20,192,800 8.74 100,001 to less than 5% of issued shares 122 8.62 78,765,975 34.10 5% and above of issued shares 5 0.35 129,006,840 55.86 Total 1,416 100.00 230,957,610 *1 100.00

Note: *1 Excluding a total of 5,642,400 NHR shares bought-back by NHR and retained as treasury shares as at 30 March 2012. DIRECTORS’ SHAREHOLDINGS AS AT 30 MARCH 2012 Direct Interest Deemed Interest No. of % of No. of % of Name of Directors shares held issued capital*1 shares held issued capital*1

1 Hsiao Chih Jen 23,101,371 10.00 4,931,000 ^1 2.14 2 Hsiao Chih Chien 24,601,371 10.65 2,500,000 ^2 1.08 3 Hsiao Chih Che 27,101,166 11.73 - - 4 Hsiao Tung Min 2,331,000 1.01 150,000 ^3 0.06 5 Ng Shwu Ching 720,000 0.31 - - 6 Dato’ Wong Pui Lam 100,000 0.04 - - 7 Chong Yew Kiang 100,000 0.04 - - 8 Anita Chew Cheng Im - - - -

Note: *1 Excluding a total of 5,642,400 NHR shares bought-back by NHR and retained as treasury shares as at 30 March 2012.

^1 Deemed interested in shares held by his sons, Hsiao Tung Hsin and Hsiao Tung Min, by virtue of Section 134(12)(c) of the Companies

Act, 1965. ^2 Deemed interested in shares held by his son, Hsiao Tung Wei, by virtue of Section 134(12)(c) of the Companies Act, 1965.

^3 Deemed interested in shares held by his wife, Hii Sing Hee, by virtue of Section 134(12)(c) of the Companies Act, 1965.

Statement of shareholdingsAs at 30 March 2012

79


30 LARGEST SHAREHOLDERS AS AT 30 MARCH 2012(Without aggregating the securities from different securities accounts belonging to the same Depositor) No, of % of Name of Shareholders shares held shares held*1

1 Hsiao Liu Lee 27,101,466 11.732 Hsiao Tsai Sheng 27,101,466 11.733 Hsiao Chih Che 27,101,166 11.734 Hsiao Chih Chien 24,601,371 10.655 Hsiao Chih Jen 23,101,371 10.006 Lin Shu-Mei 5,767,700 2.507 Kenanga Nominees (Tempatan) Sdn Bhd 5,592,000 2.42 Pledged securities account for Chia Kee Siong 8 Chen, Chiu-Tong 5,000,000 2.179 Liang, Low-Tan 3,443,000 1.4910 HLG Nominee (Tempatan) Sdn Bhd 3,249,254 1.41 Pledged securities account for Kek Pei Chin (CCTS) 11 Lee Cheh Fern 3,000,000 1.3012 Hsiao, Tung Hsin 2,600,000 1.1313 Hsiao Tung Wei 2,500,000 1.0814 Hsiao Tung Min 2,000,000 0.8715 Alliancegroup Nominees (Tempatan) Sdn Bhd 1,835,200 0.79 Pledged securities account for Tan Vun Su (8045771) 16 Mokhtar Bin Mohd Yusof 1,800,000 0.7817 Mohd Radzuan Bin Ab Halim 1,500,000 0.6518 Chee Lai Hock 1,309,100 0.5719 Nakano Yoshio 1,280,000 0.5620 Sing Foong Yin 1,189,800 0.5221 Ogata Giichi 1,094,400 0.4722 Ng Beng Huat 1,061,000 0.4623 Abdul Aziz Al-Akbar Bin Mohamed Noor 1,000,000 0.4324 Lim Hoe 1,000,000 0.4325 Chong Kok Fah 975,000 0.4226 Choo Ching Mei 975,000 0.4227 Yap Keong Ang 916,700 0.4028 RHB Capital Nominees (Tempatan) Sdn Bhd 837,500 0.36 Pledged securities account for Lim Moi Lan (CEB) 29 Tsai Chia Kuei 800,000 0.3530 Growth Factor Sdn Bhd 750,000 0.32 Total 180,482,494 78.14

Note: *1 Excluding a total of 5,642,400 NHR shares bought-back by NHR and retained as treasury shares as at 30 March 2012. SUBSTANTIAL SHAREHOLDERS AS AT 30 MARCH 2012 Direct Interest Deemed Interest No. of % of No. of % of Name of Directors shares held issued capital*1 shares held issued capital*1

1 Hsiao Liu Lee 27,101,466 11.73 - - 2 Hsiao Tsai Sheng 27,101,466 11.73 - - 3 Hsiao Chih Jen 23,101,371 10.00 4,931,000 ^1 2.14 4 Hsiao Chih Chien 24,601,371 10.65 2,500,000 ^2 1.08 5 Hsiao Chih Che 27,101,166 11.73 - -

Note: *1 Excluding a total of 5,642,400 NHR shares bought-back by NHR and retained as treasury shares as at 30 March 2012. ^1 Deemed interested in shares held by his sons, Hsiao Tung Hsin and Hsiao Tung Min. ^2 Deemed interested in shares held by his son, Hsiao Tung Wei.

Statement of shareholdingsAs at 30 March 2012 (continued)

80


List of propertiesAs at 31 December 2011

No

1

*

*

2

3

4

Location

HS (D) 140097, PT No, 71214

(formerly HS(D) 38402, PT No. 20620)Mukim of KajangDistrict of Ulu LangatSelangor Darul Ehsan

(formerly HS(D) 23491, PT No. 20621 )Mukim of KajangDistrict of Ulu LangatSelangor Darul Ehsan

Unit No. 06, Block BB, 3rd Floor, Taman Taming Jayaheld under Strata Title Geran 34049/M2/4/102, Lot 19716 for Parcel No. 102, Level No. 4, Building No. M2Mukim of KajangDistrict of Hulu LangatSelangor Darul Ehsan

Unit No. 07, Block BB, 3rd Floor, Taman Taming Jayaheld under Strata Title Geran 34049/M2/4/103, Lot 19716 for Parcel No. 103, Level No. 4, Building No. M2Mukim of KajangDistrict of Hulu LangatSelangor Darul Ehsan

Unit No. 08, Block BB, 3rd Floor, Taman Taming Jayaforming part of the land held under Master Title HS(D) 16865, PT No. 17962Mukim of KajangDistrict of Hulu LangatSelangor Darul Ehsan

Description

Industrial Land with 2 Storey Offi ce Building and 1 Storey Factory Building Industrial Land with 3 Storey Offi ce Building and 1 Storey Factory Building 1 unit fl at housing

1 unit fl at housing 1 unit fl at housing

Existing use

Offi ce Building and Factory

Offi ce Building, Factory and Warehouse

Staff accommodation

Staff accommodation

Staff accommodation

Tenure

Freehold

Freehold

Freehold

Freehold

Freehold

Age of buildings (Years) #

21

14

19

19

19

Land Area (sq

meters)

9,854

7,865

-

-

-

Net Book Value

RM’000

16,300

-

21

21

21

Year of Last Revaluation/Acquisition

2009(revaluation)

1990

1990

1990

Built-up Area

(sq meters)

6,320

7,682

62

62

62

Note:

# Age of buildings starts from the date of certifi cate of fi tness issued.

* On 16 April 2009, the respective pieces of land have been amalgamated pursuant to the condition imposed by the Securities Commission during the initial public offering.

81


NOTICE IS HEREBY GIVEN THAT the Eighth Annual General Meeting of the Company will be held at Tioman Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Wednesday, 23 May 2012 at 9.30 a.m. to transact the following businesses:

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the fi nancial year ended 31 December 2011 together with the Directors’ and Auditors’ Reports thereon. Ordinary Resolution 1

2. To approve the payment of Directors’ Fees in respect of the fi nancial year ended 31 December 2011. Ordinary Resolution 2

3. To re-elect the following Directors retiring under Article 90.1 of the Articles of Association of the Company:- i) Mr Hsiao Chih Jen Ordinary Resolution 3 ii) Mr Hsiao Chih Chien Ordinary Resolution 4

4. To consider and if thought fi t, to pass the following Ordinary Resolution in accordance with Section 129 of the Companies Act, 1965:-

“THAT Dato’ Wong Pui Lam, retiring pursuant to Section 129 of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold offi ce until the next Annual General Meeting.” Ordinary Resolution 5

5. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fi x their remuneration. Ordinary Resolution 6As Special Business

To consider and, if thought fi t, to pass the following resolutions:-

6. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company at any time and from time to time until the conclusion of the next Annual General Meeting upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fi t provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the issued share capital of the Company for the time being, subject always to the approval of all relevant regulatory bodies being obtained for such allotment and issue.” Ordinary Resolution 7

7. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)

“THAT, subject to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the Company and its subsidiaries (“NHR Group”) to enter into the recurrent transactions of a revenue or trading nature as set out in Section 2.4 of the Circular to Shareholders dated 30 April 2012 (“Circular”) with the related parties mentioned therein which are necessary for the NHR Group’s day-to-day operations.

THAT the NHR Group be and is hereby authorised to enter into the recurrent transactions with the related parties mentioned therein provided that:-

a) the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and

b) the disclosure of the aggregate value of the transactions concluded during a fi nancial year will be disclosed in the Annual Report for the said fi nancial year.

Notice of Annual General Meeting

82


7. Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”) (continued)

THAT authority conferred by such renewed mandate shall continue to be in force until:-

i) the conclusion of the next Annual General Meeting (“AGM”) of NHR at which time it will lapse, unless by a resolution passed at a general meeting, the authority is again renewed;

ii) the expiration of the period within which the next AGM after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Act); or

iii) revoked or varied by resolution passed by the shareholders in general meeting,

whichever is the earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to this resolution.”

Ordinary Resolution 88. Proposed Renewal of Authority for the Company to Purchase its own Ordinary Shares

“THAT, subject to the Companies Act, 1965 (“the Act”), the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory authorities (if any), the Company be and is hereby authorised to utilise an amount not exceeding the audited retained profi ts and/or share premium of the Company to purchase such amount of ordinary shares of RM0.20 each in the Company (“Proposed Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fi t and expedient in the interest of the Company provided that the aggregate number of shares purchased and/or held pursuant to this resolution does not exceed ten per centum (10%) of the issued and paid-up share capital of the Company;

THAT authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either retain the shares so purchased as treasury shares (as defi ned in Section 67A of the Act) and/or to cancel the shares so purchased and if retained as treasury shares, may resell the treasury shares and/or to distribute them as share dividend and/or subsequently cancel them;

THAT the authority conferred by this resolution will be effective immediately upon the passing of this resolution and will expire at:-

i) the conclusion of the next Annual General Meeting (“AGM”) of the Company (being the Eighth (“8th”) AGM of the Company), at which time the said authority will lapse unless by an ordinary resolution passed at a general meeting of the Company, the authority is renewed, either unconditionally or subject to conditions;

ii) the expiration of the period within which the 8th AGM of the Company is required by law to be held; or

iii) revoked or varied by an ordinary resolution passed by the shareholders in a general meeting;

whichever occurs fi rst but not so as to prejudice the completion of the purchase(s) by the Company before the aforesaid expiry date and in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and/or any other relevant governmental and/or regulatory authorities (if any);

AND THAT the Directors of the Company be authorised to take all steps necessary to implement, complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Share Buy-Back as may be agreed or allowed by any relevant governmental and/or regulatory authority.”

Ordinary Resolution 99. Proposed amendments to the Articles of Association of the Company “THAT the amendments to the Articles of Association of the Company as set out in Appendix 1 attached in the Annual Report for the

fi nancial year ended 31 December 2011 be and hereby approved.” Special Resolution 1

BY ORDER OF THE BOARDTAI YIT CHAN (MAICSA 7009143) CHAN SU SAN (MAICSA 6000622)Company Secretaries

Selangor Darul EhsanDate: 30 April 2012

Notice of Annual General Meeting(continued)

83


NOTES:

1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. A proxy may, but need not, be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

2. Where a member of the Company is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defi ned under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of sebsection 25A(1) of SICDA.

4. If the appointer is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an offi cer or attorney duly authorised.

5. The instrument appointing a proxy or proxies and the power of attorney or other authority (if any) under which it is signed or a notarially certifi ed copy of such power or authority must be deposited at the Registered Offi ce of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, not less than 48 hours before the time set for holding the Meeting or any adjournment thereof.

6. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company, a Record of Depositors as at 16 May 2012 and only a Depositor whose name appears on such Record of Depositors shall be entitled to attend the meeting and entitled to appoint proxy or proxies.

7. EXPLANATORY NOTES ON SPECIAL BUSINESS

(i) Ordinary Resolution No. 7- Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

The Company had, during its Seventh Annual General Meeting (“AGM”) held on 18 May 2011, obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”). The Company did not issue any shares pursuant to this mandate obtained.

The Ordinary Resolution 7 proposed under item 6 of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. The mandate, if passed, will provide fl exibility for the Company and empower the Directors to allot and issue new shares speedily in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for purpose of funding the working capital or future investments of the Group. This would eliminate any delay arising from and cost involved in convening a general meeting to obtain approval of the shareholders for such issuance of shares. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM.

At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is sought, the Company will make an announcement in respect thereof.

(ii) Ordinary Resolution No. 8 - Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Please refer to the Circular to Shareholders dated 30 April 2012 for further information.

(iii) Ordinary Resolution No. 9 - Proposed Renewal of Authority for the Company to Purchase its own Ordinary Shares

Please refer to the Circular to Shareholders dated 30 April 2012 for further information.

(iv) Special Resolution 1 – Proposed amendments to the Articles of Association of the Company

The Special Resolution 1, if passed, will render the Articles of Association of the Company to be in line with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which took effect on 3 January 2012.

Notice of Annual General Meeting(continued)

84


The Articles of Association of the Company are proposed to be amended in the following manner:-

1. To delete the following existing Article 3.4 and replace with the new Article 3.4:-

Article No. Existing Articles Amended Articles

2. To delete the following existing Article 59 and replace with the new Article 59:-


3. To delete the following existing Article 83 and replace with the new Article 83:-


PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

No director shall participate in an issue of shares or options to employees unless the members in general meeting have approved the specifi c allotment to be made to such Director.

No Director shall participate in an issue of shares or a share scheme involving a new issue of shares to employees unless the members in general meeting have approved a the specifi c allotment to be made to such Director (including Non-Executive Directors).

3.4

In every notice calling a meeting of the Company, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. A proxy may, but need not, be a member of the Company and provision of Section 149(1)(b) of the Act shall not apply to the Company.

A member 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 any person as his proxy to attend and vote instead of the member at the meeting. There shall be no restriction as to the qualifi cation of the proxy and the provision of Section 149(1)(b) shall not apply.

A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member to speak at the meeting.

59

Where a member of the Company is an authorised nominee as defi ned under the Central Depositories Act, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defi ned under the Depositories Act which is exempted from compliance with the provisions of subsection 25A (1) of the Depositories Act.

83

Appendix 1

85


PROXY FORM

I/We, ________________________________________________________________(name of shareholder as per NRIC, in capital letters)

IC No./ID No./Company No. _________________________________________ (new)____________________________________ (old)

of _________________________________________________________________________________________________(full address)

being a member of NI HSIN RESOURCES BERHAD, hereby appoint ______________________________________________________

(name of proxy as per NRIC, in capital letters) IC No. _____________________________________(new)________________________(old)

of ________________________________________________________________________________________________(full address)

or failing him/her ____________________________________________________________(name of proxy as per NRIC, in capital letters)

IC No. ____________________________________(new) ______________________________(old) of __________________________

________________________________________________________________ (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eighth Annual General Meeting of the Company to be held at Tioman Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Wednesday, 23 May 2012 at 9.30 a.m. or at any adjournment thereof in respect of my/our shareholding in the manner indicated below:

No. For Against

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution 9

Special Resolution 1

Ordinary Resolution

Receipt of Audited Financial Statements for the fi nancial year ended 31 December 2011 together with the Directors’ and Auditors’ Report

Approval of Directors’ fees for the fi nancial year ended 31 December 2011

Re-election of Mr Hsiao Chih Jen as Director

Re-election of Mr Hsiao Chih Chien as Director

Re-appointment of Dato’ Wong Pui Lam as Director

Re-appointment of Messrs KPMG as Auditors and authority to the Directors to fi x the Auditors’ remuneration

Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Proposed Renewal of Authority for the Company to Purchase its Own Ordinary Shares

Proposed amendments to Articles of Association of the Company

[Please indicate with an “X” in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specifi c directions, your proxy will vote or abstain as he/she thinks fi t.]

.......................................................Signature/Common Seal Number of shares held: .................................................... Date: ......................................

NOTES:1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him. A proxy may, but need not, be a member of the Company and the provision

of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

2. Where a member of the Company is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple benefi cial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defi ned under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of sebsection 25A(1) of SICDA.

4. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of an offi cer or attorney duly authorised.

5. The instrument appointing a proxy or proxies and the power of attorney or other authority (if any) under which it is signed or a notarially certifi ed copy of such power or authority must be deposited at the Registered Offi ce of the Company at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, not less than 48 hours before the time set for holding the Meeting or any adjournment thereof.

6. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company, a Record of Depositors as at 16 May 2012 and only a Depositor whose name appears on such Record of Depositors shall be entitled to attend the meeting and entitled to appoint proxy or proxies.

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

No. of shares Percentage

Proxy 1 %Proxy 2 %Total 100%

CDS account no. of authorised nominee

NI HSIN RESOURCES BERHAD(Company No. 653353-W)(Incorporated in Malaysia)

No. of shares held

The Company SecretaryNi Hsin Resources Berhad (Company No. 653353-W)

Lot 6.05, Level 6, KPMG Tower,8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul Ehsan

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