mapping a global footprint 2012 annual report group chief executive officer giancarlo maccagno ......

2012 Annual ReportMapping a global Footprint

Mapping a global FootprintAt Wah Seong Corporation Berhad, we have established an increasingly vast network of international operations and facilities and our Group commands a reputable track record of projects across the Globe. With this momentum, we further map our global footprint, expanding where opportunities arise and further strengthening our returns to shareholders.

Vision, Mission & Core Values ..................................................... 4

Corporate Profile ......................................................................... 6

Corporate Information ................................................................. 7

Worldwide Operation ................................................................... 8

Financial Highlights ..................................................................... 9

Chairman and Group CEO’s Joint Statement ............................. 12

Board of Directors ....................................................................... 18

Profile of the Board of Directors .................................................. 20

Health, Safety and Environment .................................................. 25

Corporate Social Responsibility .................................................. 26

Audit Committee .......................................................................... 28

Remuneration Committee ............................................................ 31

Nomination Committee ................................................................ 34

Statement on Corporate Governance ......................................... 37

Additional Compliance Information ............................................. 48

Statement on Risk Management and Internal Control ............... 50

Statement of Directors’ Responsibilities ..................................... 52

Directors’ Report ......................................................................... 54

Statement by Directors ................................................................ 59

Statutory Declaration ................................................................... 59

Independent Auditors’ Report ..................................................... 60

Statements of Financial Position ................................................. 62

Statements of Comprehensive Income ....................................... 65

Consolidated Statement of Changes in Equity ........................... 67

Company Statement of Changes in Equity ................................. 71

Statements of Cash Flows .......................................................... 72

Notes to the Financial Statements .............................................. 75

Summary of Significant Recurrent Related ................................. 182 Party Transactions

Summary of Landed Properties ................................................... 184

Analysis of Shareholdings .......................................................... 187

Notice of Thirteenth Annual General Meeting ............................. 190

Statement Accompanying Notice of Thirteenth .......................... 195 Annual General Meeting

Proxy Form

Contents

Providing Work

Opportunities Providing Work

Opportunities

Vision MissionTo develop and manage a world class and profitable, integrated energy infrastructure group.

We will provide reliable and competitive products, services and solutions to the markets that we serve, while continuously creating value for our customers, employees, shareholders and other stakeholders.

WAH SEONG CORPORATION BERHAD ANNUAL REPORT 2012

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Core Values

• Wearepassionateaboutwhatwedo.

• Weareacaringandresponsibleorganisation.

• Weworktogethertocreateanopen,friendlyandsafeworkplace.

• Weholdourselvesandeachothertothehigheststandardsof professionalism, accountability, integrity and transparency.

• Performance,meritandequalopportunityarethecornerstone of our rewards philosophy.

• Wedeliverourcommitmentstocustomers.

• Weareintoleranttowaste.

Only sustainable profit and growth will perpetuate our business and enable all of the above.


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Corporate Profile

Founded in 1994, Wah Seong Corporation Berhad has successfully harnessed its reservoir of knowledge and its diversified oil and gas services activities to serve accelerating energy demands. The Group has since grown from being a medium sized Malaysian enterprise to become a globally integrated energy infrastructure group.

Listed on the Main Market of Bursa Malaysia Securities Berhad, Wah Seong Corporation Berhad has - via its vast product and service offerings - sealed its footprint in more than 12 countries worldwide. The Group aspires to strengthen its foothold in these territories and expand even further across the world.

A RisingGlobal Energy Service Provider


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Directorsrobert tan Chung MengNon-Independent Non-Executive Chairman

Chan Cheu leongManaging Director/Group Chief Executive Officer

giancarlo MaccagnoDeputy Managing Director

Halim bin Haji DinIndependent Non-Executive Director

tan Sri ab rahman bin omarIndependent Non-Executive Director

tan Sri Dato’ Dr. lin See YanSenior Independent Non-Executive Director

pauline tan Suat MingNon-Independent Non-Executive Director

Alternate Director Daniel Yong Chen-i Alternate to Pauline Tan Suat MingNon-Independent Non-Executive Director

Group Company SecretaryWoo Ying pun (MAICSA 7001280)

AuditorsPricewaterhouseCoopers (AF 1146)Chartered AccountantsLevel 10, 1 Sentral, Jalan TraversKuala Lumpur Sentral50706 Kuala LumpurMalaysia

SolicitorsShearn Delamore & Co.Jeyaratnam & Chong

Principal BankersOCBC Bank GroupRHB Bank BerhadCitibank Berhad

Principal AdvisersCIMB Investment Bank BerhadAmInvestment Bank Berhad

Share RegistrarAgriteum Share Registration Services Sdn. Bhd.2nd Floor, Wisma Penang Garden42 Jalan Sultan Ahmad Shah10050 PenangMalaysiaTel : 604-2282 321Fax : 604-2272 391Email : [email protected]

Registered Office And Principal Place Of BusinessSuite 19.01, Level 19 The Gardens North TowerMid Valley City Lingkaran Syed Putra59200 Kuala LumpurMalaysiaTel : 603-2685 6800Fax : 603-2685 6999Email : [email protected] : www.wahseong.com

Stock Exchange ListingMain Market of Bursa Malaysia Securities Berhad

Date of Listing9 July 2002

CategoryIndustrial Products

Stock Code No.5142

Stock NameWASEONG

COMMittEE AuDit COMMittEE NOMiNAtiON COMMittEE REMuNERAtiON COMMittEE

Chairman Halim Bin Haji Din Robert Tan Chung Meng Halim Bin Haji Din

Member Tan Sri Ab Rahman Bin Omar Tan Sri Ab Rahman Bin Omar Tan Sri Ab Rahman Bin Omar

Member Tan Sri Dato’ Dr. Lin See Yan Halim Bin Haji Din Chan Cheu Leong

Corporate information


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Worldwide Operation

pipeline Services

1 Wasco Coatings Malaysia Sdn Bhd

2 Wasco Coatings Europe B.V.

3 Wasco Coatings Norway AS

4 Wasco Kanssen Limited

5 Wasco Corrosion Services Sdn Bhd

6 Wasco Lindung Sdn Bhd

7 Petro-Pipe (Sabah) Sdn Bhd

8 Bayou Wasco Insulation, LLC

Engineering

9 Wasco Engineering Australia Pty Ltd

10 Wasco Engineering Services Singapore Pte Ltd

11 Wasco Engineering International Ltd

12 Mackenzie Hydrocarbons (Australia) Pty Ltd

13 PT. Wasco Engineering Indonesia (formerly known as PT. Megaron Semesta)

14 Wasco Engineering Technologies Pte Ltd

E & p Services

15 Petra Energy Berhad

16 Ashburn International, Inc

17 Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd)

18 LTT Oil & Gas Nigeria Limited

19 Wasco China International Limited (formerly known as Wah Seong China Limited)

20 Wasco (Australia) Pty Ltd

industrial Services Division

Renewable Energy

21 Jutasama Sdn Bhd

22 Mackenzie Industries Sdn Bhd

23 PMT Industries Sdn Bhd

24 PMT-Dong Yuan Industries Sdn Bhd

25 PMT-Phoenix Industries Sdn Bhd

26 PMT Shinko Turbine Sdn Bhd

industrial trading & Services

27 Syn Tai Hung Trading Sdn Bhd

28 PPI Industries Sdn Bhd

Others

29 Atama Plantation SARL

30 Wah Seong Boustead Company Limited

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4

10

15 17

14

1 5

21 22

24 25 26

6

23

27 28

9

13

12

1911

8 16

18

29

30

2

3

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Oil & Gas


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FinanCial YEar EnDED 31 DECEMbEr

opErating rESUltS 2008 2009 2010 2011 2012

Revenue RM’000 2,343,194 1,950,308 1,523,356 1,889,111 1,951,552

EBITDA RM’000 219,841 340,351 167,347 242,419 148,072

EBIT RM’000 183,258 282,387 104,011 184,083 93,392

Profit Before Tax RM’000 152,913 245,782 86,156 173,268 82,481

Net Profit RM’000 133,049 206,239 64,952 131,239 60,628

Net Profit Attributable to Owners of the Company RM’000 115,596 121,322 55,981 110,374 52,538

KEY balanCE SHEEt Data

Total Assets RM’000 2,129,594 2,206,735 2,009,711 2,295,623 2,175,358

Paid-up Capital RM’000 328,500 343,370 361,971 376,787 387,444

Capital and Reserves Attributable

to Owners of the Company RM’000 791,166 885,616 925,186 1,004,034 990,296

ValUation

Per share of RM0.50 each

Basic Earnings sen 15.68 15.98 7.35 14.48 6.86

Gross Dividend

- Cash Dividend sen 6.00 5.50 4.50 6.00 5.50

- Share Dividend sen - 1.96* - - 1.50**

Net Assets RM 1.20 1.29 1.28 1.33 1.28

proFitabilitY ratioS

Return on Total Assets % 9 13 5 8 4

Return on Capital Employed % 14 18 7 12 7

gEaring ratio

Net Debt to Capital and Reserves

Attributable to Owners of the Company Times 0.62 0.32 0.28 0.23 0.37

Note:* The share dividend distributed from the treasury shares of the Company was made on the basis of one (1) share for every one hundred and twenty (120) existing

shares held at the entitlement date. Based on the Company’s share price of RM2.35 each on 31 December 2009, the value of the share dividend per share is equivalent to an approximate gross cash dividend of 1.96 sen.

** The share dividend distributed from the treasury shares of the Company was made on the basis of one (1) share for every one hundred and ten (110) existing shares held at the entitlement date. Based on the Company’s share price of RM1.65 each on 31 December 2012, the value of the share dividend per share is equivalent to an approximate gross cash dividend of 1.50 sen.

Financial Highlights

FiVE-YEARS GROuP FiNANCiALHiGHLiGHtS


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Developing High

QualityProducts

Chairman and Group CEO’s Joint Statement

On behalf of the Board of Directors, we are pleased to present you our annual review of the performance of Wah Seong Corporation Berhad (“WSC” or “the Company”) and its subsidiaries (“the Group”) for the financial year ended 31 December 2012.

DearShareholders,


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oVErall FinanCial rEViEW

Wah Seong Corporation Berhad recorded a net profit of RM52.5 million in 2012, a reduction of 52.4% from corresponding results in the previous year. The Group’s revenue improved by 3.3% to RM1.95 billion from RM1.89 billion in 2011. The decrease in net profit was the result of lower margin products/services making up the large portion of revenue generated in the financial year ended 31 December 2012. The Group’s net gearing remained at a manageable level of 0.37 times as of 31 December 2012, compared with 0.23 times in the preceding year. The slight increase in net gearing was principally due to our acquisition of a 26.9% equity interest in Petra Energy Berhad which was paid using internal funds. Overall, our balance sheet and cash flows continue to remain healthy.

WSC’s Oil & Gas segment contributed RM843.7 million and RM31.0 million to the Group’s revenue and net profit respectively. The Renewable Energy segment registered an improved performance, contributing RM302.3 million and RM33.2 million to the Group’s revenue and net profit respectively, while the Industrial Trading & Services segment contributed revenue and net profit of RM705.6 million and RM4.1 million respectively.

The Group continued to replenish its order book with several new wins, and it stands at RM1.5 billion (2011: RM1.2 billion) comprising RM1.1 billion from the Oil & Gas segment, RM245 million from the Renewable Energy segment and RM172 million from the Industrial Trading & Services segment. This order book is expected to give a positive contribution in the financial years ending 31 December 2013 and 2014.

DiViDEnD

The Board has declared and paid/credited the following interim dividends in respect of the financial year ended 31 December 2012:

a) On 28 August 2012, the Directors declared a first interim cash dividend of 3.0 sen per share comprising a gross dividend of 1.25 sen per share less 25% Malaysian income tax, and a tax exempt dividend of 1.75 sen per share, amounting to RM20,753,093, paid on 3 October 2012.

b) On 26 February 2013, the Directors declared a second interim dividend comprising:

- Single-tier cash dividend of 2.5 sen per share, amounting to RM19,180,954; and

- Special single-tier share dividend of 6,970,292 treasury shares, distributed on the basis of one (1) treasury share for every one hundred and ten (110) existing ordinary shares held at the entitlement date on 13 March 2013. Based on the closing share price of WSC shares of RM1.65 each as at 31 December 2012, the value of the special share dividend per WSC share is equivalent to a gross cash dividend of 1.5 sen per share.

The second interim dividend was paid/credited into the entitled shareholders’ securities accounts on 3 April 2013.

The Company reported another profitable year against the backdrop of a challenging global economic environment following the slowdown in United States and the financial crisis still lingering in the Eurozone. To mitigate the inherent risk of dependence on project-based revenue from the Oil & Gas industry, the Group continues to strengthen and realign its Oil & Gas and Industrial Services Divisions so as to position the Group on a more sustainable growth trajectory in the coming years. Our core focus remains on delivering shareholders’ value from our strength and continuous growth opportunities across our divisions.

oil & gaS DiViSion

The Group’s Oil & Gas Division, Wasco Energy Ltd and its subsidiaries (“Wasco”), recorded lower revenue compared with its preceding year, mainly due to delays and deferment of certain anticipated projects. This reduction, together with a large number of lower margin projects executed during the year impacted the profitability of this division. Notwithstanding this challenging environment, there were several positive developments in the Oil & Gas Division during the year, as follows:-



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• Wasco successfully acquired a 26.9% equity interestin Petra Energy Berhad (“Petra”), enabling the Oil & Gas Division to diversify its products and services provided to the oil and gas industry. Petra, a company listed on the Main Market of Bursa Malaysia Securities Berhad, has extensive exposure and experience in brownfield operations, particularly in the topside major maintenance/hook-up construction and commissioning work. Petra was recently awarded a Small Field Risk Service Contract in partnership with CEC International Ltd, for the development and production of petroleum from the Kapal, Banang and Meranti fields, located offshore Terengganu, Malaysia. This is a strategic milestone for the Oil & Gas Division as we move up the value chain reaching into technology-driven exploration and production market of the oil and gas industry. In addition, Petra was recently awarded the contract to provide Offshore Crane Operations and Maintenance for Sarawak Shell Berhad / Sabah Shell Petroleum Co Ltd from 1 May 2013 to 30 April 2016, with a one-year extension option. We also anticipate a greater participation in the Malaysian oil and gas sector through our equity interest in Petra.

• BayouWasco Insulation, LLC (“BWI”), a joint venturebetween Wasco Coatings UK Ltd, a wholly-owned indirect subsidiary of WSC and Insituform E&M Holding Company, had recently commissioned a new facility in Lousiana, United States, to provide full thermal insulation coating services for offshore flow assurance, including syntactic polyurethane and polypropylene coatings for the offshore oil and gas customers in the United States, Gulf of Mexico, Central America and the Caribbean. It had also jointly developed the NEPTUNE™ Advanced Subsea Flow Assurance Insulation System, a breakthrough technology specifically engineered to withstand the increasingly harsh conditions associated with subsea oil production, providing protection from -40°C up to 160°C, the widest temperature range of any complete wet insulation system currently available in the market. This breakthrough development also earned the Offshore Technology Conference (OTC) Spotlight on New Technology Award in Houston in May 2013, recognising Wasco as an industry leader in subsea flow

assurance insulation systems. These developments augur well for Wasco’s expansion into new geographic markets and strengthening its position globally.

• Wasco had also recently secured a number of newinternational and domestic projects, namely coating works for Statoil’s Polarled Development Project in the Norwegian Sea (valued at approximately USD198 million), ExxonMobil Damar A to Lawit A Full Wellstream (“FWS”) Pipeline, Murphy SK Development Project and Sarawak Shell F14 & F29 Project. These projects will contribute to earnings for the financial years 2013 and 2014.

• Wasco had successfully completed several projectsduring the year, namely Chevron’s Gorgon Pipe Coating Project, Sabah Oil & Gas Terminal (“SOGT”) Project, Kebabangan Petroleum Operating Company (“KPOC”) Northern Hub Development Project and the Tapis Enhanced Oil Recovery development projects. We also completed the Australian Pacific LNG (“APLNG”) Project in the first quarter of 2013.

inDUStrial SErViCES DiViSion

The Group’s Industrial Services Division delivered a strong performance in 2012:

• The increase in revenue and net profit of WSC’sRenewable Energy segment was attributed to higher volume of equipment fabrication for the oil and gas/oleo-chemical industry and supply of steam turbines and palm oil mill equipment driven by the buoyant global demand for palm oil in high growth countries such as China and India.

• Emerging markets such as Africa and Latin Americahave been identified as future growth regions of the division. We will focus our resources and investments in these markets in order to capitalize on the opportunities created by the economic expansion of these regions. In tandem with this, the Group had recently entered into a joint venture with Shinko Ind Ltd (“Shinko”), a reputable and reliable manufacturer of steam turbines,


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to enhance technical collaboration and to create the first manufacturing base for Shinko outside Japan with proximity to the end users in the Asean region. This collaboration is expected to create a competitive advantage to promote further growth of steam turbines in our Renewable Energy segment. Our clients are also rapidly expanding around the world and we will be able to complement this through our own strategy of global expansion in our markets and operations.

• Consistent with the Division’s strategy to integratevertically into the greater palm oil sector, our Plantation sub-segment has expanded on its infrastructure and to date 33 hectares of highly suitable agriculture land for cultivation of oil palm have been planted with 4,500 seedlings with another 200 hectares in progress.

• IndustrialTradingandServicessegmentcomprisesthetrading of construction products & services and the manufacturing of structural & water pipes. Despite a challenging year in the pipe manufacturing business, this segment still registered incremental growth in revenue albeit with a lower net profit.

oUtlooK

Growth in the pipeline infrastructure market is expected to continue as demand for oil and gas is expected to grow 3.6% in 2013. The Statoil Polarled project in the Norwegian Sea valued at USD198 million, secured in early 2013, represents a significant diversification in the geographical footprint of our pipe coating business. Wasco had newly incorporated a wholly owned subsidiary, Wasco Coating Norway AS, to undertake the pipe coating services for this project which is expected to span up to mid 2015. Going forward, the market for pipeline contracts is encouraging and we expect to see further growth in this sub-sector in the Oil & Gas industry.

The recent acquisition of Socotherm S.p.A., a large pipe coating service provider, by our major competitor has eliminated effective competition in certain geographical areas from the end users perspective. This has presented a unique opportunity to us and we have received positive responses from end users to discuss opportunities in new geographical areas. We are reviewing these opportunities.

The growth in the petrochemical sector will accelerate the demand for petro-chemical process equipment which can benefit our engineering and fabrication of specialised process equipment sub-segment. With increasing exploration and production activities by Petronas with its local and international partners in projects based on enhanced oil recovery (EOR), small fields development and pipeline replacements, Wasco will focus on gaining greater participation in this domestic oil and gas development.

The global market for oleo-chemicals is expected to continue to be buoyant with an estimated demand of

over 15 million tons by 2018, growing at a rate of around 6.0% between 2013 and 2018. This growth is centred in Asia Pacific and will continue to spur demand for process equipment manufactured by our Industrial Services Division. To expand further the business of manufacturing turbines, boilers and related ancillary equipment, parts and spares in the Renewable Energy Segment, we shall be synergizing our in-house competencies by combining capabilities, resources and expertise. This collaboration is expected to create added competitive advantage to promote further growth in sales of steam turbines and ancillary equipment, parts and spares in this segment.

The expected availability of cheaper gas supply in Malaysia and Singapore later in 2013 provides a promising outlook for industrial and Heat Recovery Steam Generator (HRSG) boilers. We are also exploring possible tie ups with international companies by riding on their strong network to market our industrial and HRSG boilers in the Middle East and Africa regions.

The construction industry is forecast to register a growth rate of 15.9%. The main thrust of the industry would be largely centered around the various mega projects approved under the Economic Transformation Programme. This is expected to have a positive impact on our Industrial Trading & Services segment.

In spite of the uncertainty in the economic environment in US and the Eurozone, the outlook for businesses in the Group is promising. With the opportunities and developments in Oil & Gas, Renewable Energy and Industrial Trading & Services segments, supported by a sizeable order book, the Group anticipates an improvement in the overall performance in the years ahead.

aCKnoWlEDgEMEnt

While the economic environment remains challenging, we remain very positive about the opportunities to grow the business and continue to build a sustainable business base. On that note, on behalf of the Board of Directors, we would like to express our gratitude to the management and employees for their efforts and dedication throughout the year.

We would also like to thank the Board of Directors for their invaluable guidance, insight and contribution and to all stakeholders, government authorities, bankers, clients, partners, suppliers and other business associates for their continuous support.

robert tan Chung MengNon-Executive Chairman

Chan Cheu leongManaging Director/ Group Chief Executive Officer


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Delivering Our

Commitments

Board of Directors

1. Robert Tan Chung Meng Non-Independent Non-Executive Chairman

2. Tan Sri Ab Rahman Bin Omar Independent Non-Executive Director

3. Halim Bin Haji Din Independent Non-Executive Director

1 2 3


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Board of Directors

4. Chan Cheu Leong Managing Director/Group Chief Executive Officer

5. Pauline Tan Suat Ming Non-Independent Non-Executive Director

Daniel Yong Chen-I Alternate to Pauline Tan Suat Ming

Non-Independent Non-Executive Director

6. Tan Sri Dato’ Dr. Lin See Yan Senior Independent Non-Executive Director

7. Giancarlo Maccagno Deputy Managing Director

4 5 6 7


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Profile of the Board of Directors

Robert Tan Chung MengNon-Independent Non-Executive Chairman

Mr Robert Tan, a Malaysian aged 60, was appointed Chairman of Wah Seong Corporation Berhad (“WSC”) on 22 May 2002.

Mr Robert Tan has vast experience in the property and hotel industry. After studying Business Administration in the United Kingdom, he was attached to a Chartered Surveyor’s firm for one (1) year. He has also developed a housing project in Central London before returning to Malaysia. He has been involved in various development projects carried out by IGB Corporation Berhad and Tan & Tan Developments Berhad, in particular the Mid Valley Project.

Currently, Mr Robert Tan is the Group Managing Director of IGB Corporation Berhad, IGB REIT Management Sdn Bhd and KrisAssets Holdings Berhad (delisted on 16 May 2013 from the Official List of Bursa Securities); and a Director of Tan & Tan Developments Berhad. He also sits on the Board of several private limited companies.


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Chan Cheu LeongManaging Director/Group Chief Executive Officer

Mr Chan, a Malaysian aged 62, is the Managing Director and Group Chief Executive Officer of WSC. He was appointed to the Board of WSC on 22 May 2002.

Mr Chan attained a Bachelor of Science (Hon) Degree in Engineering Production in 1974 from the University of Birmingham under a Colombo Plan Award and began his career by joining the Singapore Administrative Service. He left the Ministry of Finance, Singapore in 1976 to pursue his Master in Business Administration from the London Business School.

Upon successful completion of the same, he joined ESSO Production Malaysia Incorporated as their Senior Financial Analyst before joining Tractors Malaysia Berhad as their Group Treasurer in 1981. Thereafter, he left to become the Group Executive Director for General Corporation Berhad from 1984 to 1990 before assuming the position of Managing Director of Tan & Tan Developments Berhad from 1990 to 1995. In 1994, he established Wah Seong Industrial Holdings Sdn Bhd and subsequently formed WSC, which was listed on the Main Market of Bursa Malaysia Securities Berhad on 9 July 2002. He has extensive experience in the property, manufacturing and financial fields. Mr Chan is a Trustee of Yayasan Wah Seong and a Board member of the Federation of Malaysian Manufacturers. He also sits on the Board of several other privatelimited companies.


Tan Sri Ab Rahman Bin OmarIndependent Non-Executive Director

Tan Sri Ab Rahman, a Malaysian aged 66, was appointed to the Board of WSC on 1 October 2003.

Tan Sri Ab Rahman holds an Honours Degree in Economics from the University of Malaya. Tan Sri Ab Rahman served in the Administration & Diplomatic Service of the various Government Departments i.e. the Statistics Department, the Ministry of Commerce & Industry and the Ministry of Primary Industry from 1970 to 1973 before opting out of civil service in 1978. He was seconded to Pineapple Cannery Malaysia Sdn Bhd as the Finance & Administrative Manager in late 1973 and was subsequently promoted as General Manager before becoming a Director for the period from 1980 to 1993. He was the Managing Director of Perusahaan Otomobil Kedua Sdn Bhd from May 1996 to 1 May 2004.

Concurrently, Tan Sri Ab Rahman was appointed as Director of Edaran Otomobil Nasional Berhad (“EON”) from 1989 to 1996 and reappointed as Chairman and Director of EON from 2006 to 2008, Director of PROTON from 1991 to 1996 and Director of DRB-HICOM Berhad from December 2005 to July 2008. Currently, Tan Sri Ab Rahman is the Chairman of Perusahaan Sadur Timah Malaysia (Perstima) Berhad. He is also a Director of several other private limited companies.


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Halim Bin Haji DinIndependent Non-Executive Director

Encik Halim, a Malaysian aged 66, was appointed to the Board of WSC on 22 May 2002.

Encik Halim is a Chartered Accountant who spent more than thirty (30) years working for multinational corporations and international consulting firms. He accumulated eighteen (18) years of experience working in the Oil and Gas Industry - six (6) years of which as a Board member of Caltex/Chevron, responsible for financial management before engaging in the Consulting business. Prior to his appointment as a Board member of Caltex Malaysia, Encik Halim served as Regional Financial Advisor for Caltex Petroleum Corporation Dallas, Texas overseeing investment viability of the Corporation’s Asian subsidiaries.

Encik Halim also had extensive experience in corporate recovery when he worked for Ernst & Whinney, London, United Kingdom in mid 1980’s. He was appointed as Managing Partner of the Consulting Division of Ernst & Young Malaysia in 1995. He later became the Country Advisor of Cap Gemini Ernst & Young Consulting when Cap Gemini of France merged with Ernst & Young Consulting. In 2003, he with two (2) partners took over the consulting business of Cap Gemini Ernst & Young Malaysia through a management buyout and rebranded it as Innovation Associates, currently known as The IA Group, where he is currently the Chairman of the Group.

Encik Halim is an independent member of the Board of Employees Provident Fund Board, KrisAssets Holdings Berhad (delisted on 16 May 2013 from the Official List of Bursa Securities), BNP Paribas Malaysia Berhad, Takaful Ikhlas Sdn Bhd and IGB REIT Management Sdn Bhd. He is also a Director of several other private limited companies.

Giancarlo MaccagnoDeputy Managing Director

Mr Maccagno, an Italian aged 49, was first appointed as an Executive Director of WSC on 1 June 2004 and subsequently promoted to be the Deputy Managing Director on 1 January 2007. Mr Maccagno is also the Chief Executive Officer of the Wasco Energy Group of Companies. He is responsible for the overall business and management operations of the WSC Group.

Mr Maccagno attained his Bachelor in Business Administration from Tecnico Commerciale Maddalena Adria (RO) Italy in 1982, after which he worked with Socotherm S.R.L, Italy from 1984 to 1987 as a Trainee in Production and Project Management. He was appointed as Project Manager for Socotherm S.R.L in Nigeria from 1987 to 1990 and was briefly seconded to Petro-Pipe Industries (M) Sdn Bhd (“PPI”) in 1990 to assist in the setting up of PPI’s coating plant in Kuantan, Malaysia. After serving as Country Manager for Socotherm S.R.L in Taiwan from 1991 to 1992, he returned to Malaysia in 1993 to be the General Manager of Wasco Coatings Malaysia Sdn Bhd in Kuantan, Malaysia. He has vast experience in the global pipe coating business and the oil and gas business in general.

Mr Maccagno is a Director of Petra Energy Berhad. He also sits on the Board of several other private limited companies.


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Pauline Tan Suat MingNon-Independent Non-Executive Director

Ms Pauline Tan, a Malaysian aged 67, was appointed to the Board of WSC on 22 May 2002.

Ms Pauline Tan is a holder of Bachelor of Science (Honours) in Biochemistry from University of Sussex, England and is a Fellow member of The Malaysian Institute of Chartered Secretaries and Administrators. She started her career as a chemist with Malayan Sugar Manufacturing Company Bhd from 1969 to 1972. She then joined Tan Kim Yeow Sendirian Berhad as an Executive Director in 1976 and subsequently joined Wah Seong (Malaya) Trading Co. Sdn Bhd in 1983 and was made an Executive Director in 1994. Currently, she is a Director of IGB Corporation Berhad and Goldis Berhad, a Trustee of Yayasan Wah Seong and also sits on the Board of several other private limited companies.

Tan Sri Dato’ Dr. Lin See YanSenior Independent Non-Executive Director

Tan Sri Dato’ Dr. Lin, a Malaysian aged 73, was appointed to the Board of WSC on 20 July 2004.

Tan Sri Dato’ Dr. Lin, a British Chartered Scientist, is a Harvard educated economist. Qualified as Malaysia’s first Chartered Statistician, he graduated from the University of Malaya in Singapore and Harvard University (where he received three degrees, including a PhD in economics). He is also Professor of Economics (Adjunct), Universiti Utara Malaysia, Professor of International Finance and Business (Adjunct), Universiti Malaysia Sabah and an Eisenhower Fellow.

Prior to 1998, he was Chairman/President and Chief Executive Officer of Pacific Bank and for fourteen years previously, Deputy Governor of Bank Negara Malaysia, having been a central banker for thirty four years. Tan Sri Dato’ Dr. Lin continues to serve the public interest, including Member, Prime Minister’s Economic Council Working Group, as well as a member of a number of key National Committees on Higher Education; Economic Advisor, Associated Chinese Chambers of Commerce and Industry of Malaysia; Governor, Asian Institute of Management, Manila; Director, Monash University Sunway Campus; and Chairman Emeritus, Harvard Graduate School Alumni

Council at Harvard University in Cambridge (USA) as well as President, Harvard Club of Malaysia.

Tan Sri Dato’ Dr. Lin advises and sits on the Boards of

a number of publicly listed and private businesses in Malaysia, Singapore and

Indonesia including Chairman, Cabot (Malaysia) Sdn Bhd

and KrisAssets Holdings Berhad (delisted on 16

May 2013 from the Official List of Bursa Securities)

as well as IGB REIT Management Sdn Bhd;

and a Director of Ancom Berhad, Genting Berhad,

JobStreet Corporation Berhad and Top Glove

Corporation Bhd.


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Daniel Yong Chen-IAlternate Director to Pauline Tan Suat MingNon-Independent Non-Executive Director

Mr Daniel Yong Chen-I, a Malaysian aged 41, was appointed the Alternate Director to Pauline Tan Suat Ming on the Board of WSC on 13 May 2013.

Mr Daniel Yong is a law graduate from the University of Bristol, England. He joined Mid Valley City Sdn Bhd (“MVC”) in 1999 as a member of the pre-opening retail development team. He was appointed an Executive Director of MVC in 2003 and has been responsible for overseeing the management and operation of Mid Valley Megamall, since. He was also involved in the design and pre-opening of The Gardens Mall from 2004 to 2007. His prior work experience includes the development of bespoke systems with BYG Systems Ltd in England and Operational Management with Wah Seong Engineering Sdn Bhd, the distributor and manufacturer for Toshiba Elevator and Escalator in Malaysia.

Currently, he is a Director of KrisAssets Holdings Berhad (delisted on 16 May 2013 from the Official List of Bursa Securities), IGB REIT Management Sdn Bhd; and the Alternate Director to Pauline Tan Suat Ming on the Board of IGB Corporation Berhad.


notes :

Family relationship with Director and/or major shareholders

1. Mr Robert Tan Chung Meng and Ms Pauline Tan Suat Ming are siblings.

2. Mr Daniel Yong Chen-I is the son of Ms Pauline Tan and nephew of Mr Robert Tan.

3. Mr Robert Tan and Ms Pauline Tan are deemed major shareholders of WSC and their interest in the securities of WSC are set out in the Analysis of Shareholdings of this Annual Report.

Saved as disclosed herein, none of the Directors have any family relationship with any Directors and/or major shareholders of WSC.

Conflict of interestNone of the Directors have any conflict of interest with WSC.

Convicted of offencesNone of the Directors have been convicted for any offences within the past ten (10) years other than possible traffic offences.


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Health, Safety and Environment

To reach our goal of an Incident and Injury-Free working environment, we have to date and for the last seven (7) years, achieved a total of 14,070,517 million manhours, recorded without fatality. The manhours achieved in 2012 were 2,119,547 which are slightly lower than of the previous year at 2,423,294 million manhours. However, the number of Total Recordable Cases in 2012 was reduced to 4 cases which is 33.3% lower than the year before.

To further improve our safety performance, we have had Health, Safety and Environment (HSE) programmes thoroughly planned and carried out throughout the period under review, to ensure the compliance with standards and legal requirements. Several audit sessions were performed by our clients and also internal parties for continuous improvement of the overall HSE practice in Wasco Coatings Malaysia Sdn Bhd, being a subsidiary of WSC. The 2nd Surveillance audit was also conducted by Moody International to monitor and review the effectiveness of the certified HSE

Wah Seong Corporation Berhad is fully committed to ensure the prevention and elimination of workplace injuries as well as safeguarding the environment. The Group continues to focus on its goal of an Incident and Injury-Free working culture where the responsibility for safety is at the individual level.

Management System. Programmes for emergency preparedness including Fire Drills and Medical Drills were held to ensure the defence capability of the organisation. Training and awareness programmes were also conducted involving workers in the plants to improve their understanding and implementation on HSE. Monthly HSE campaigns were carried out, including the Road Safety Campaign, Hand and Finger Injury Prevention Campaign, Monsoon Season Safety Campaign, and Load Out Safety Campaign. Medical Surveillance Programmes such as Chemical Health Risk Assessment (CHRA), Drug and Alcohol screening and Pregnancy Programme were also incorporated in the yearly programme.

As part of our efforts to continually strive towards high safety standards, Wasco Coatings Malaysia Sdn Bhd received a Safety Recognition for the Chevron Gorgon Upstream Pipe Coating Project. To recognise this excellent achievement, Chevron presented the Safety Recognition Award on 21 September 2012 at an event which was held at the Wasco plant in Kuantan. This recognition acknowledges the exemplary team effort between Wasco and Chevron, resulting in a project Total Recordable Case Frequency (TRCF) of 0.29 and Lost Time Incident Frequency (LTIF) of 0.57 which are considered world class safety results. With this recognition and with the HSE programmes implemented in 2012 and beyond, we hope to further drive our Health, Safety and Environment commitment.


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Yayasan Wah Seong Scholarship AwardsYayasan Wah Seong has been offering scholarships to deserving undergraduates and students entering Malaysian public universities since 2008. To date, 56 scholarships have been awarded to outstanding students. In 2012, 6 scholarships were given out for 1st degree courses in local public universities. The students awarded the scholarships are Ms Tan An Liy (Accounting - UUM), Ms Chan Mun Wei (Economics - UUM), Ms Suguna Jeganathan (Chemical Engineering - UMPahang), Ms Yeow Che Sing (Management - USM), Ms Mak Sok Yee (Polymer Engineering - USM) and Mr Muhamad Nurizami Bin Zolkefli (Mechanical Engineering - UPM).

At Wah Seong Corporation Berhad (“WSC”), we stand by our core value, “We are a caring and responsible organisation” and we constantly work towards making a positive contribution to society. Here are some of the Corporate Social Responsibility (CSR) activities that took place in 2012.

Corporate Social Responsibility

We are A Caring and Responsible Organisation


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Corporate Social Responsibility

Hari Raya Aidilfitri Open House with Rumah teratak ShifaHari Raya Adilfitri Open House was hosted by the Oil & Gas Division on 27 August 2012 at Impiana KLCC Hotel. They invited very special guests, the children from Teratak Shifa, and donated a total of RM9,000 to Teratak Shifa which included Jusco vouchers to be used for school uniforms and other essentials.

Blood Donation DriveSyn Tai Hung Trading Sdn Bhd (“STHT”), being a subsidiary of WSC recognises that blood donations can saves lives. With participation from WSC employees, STHT has successfully organised many Blood Donation Drives throughout the years. In 2012, the blood donation drives were held at the National Blood Bank, Kuala Lumpur on 26 March, 27 June and 19 October.

internship and training ProgrammesWSC strongly believes in providing education through training to technical students from various technical schools and colleges in Malaysia. We do this through the Internship and Training Programmes initiated by the Renewable Energy segment. In 2012, PMT Industries Sdn Bhd (“PMT”), being a subsidiary of WSC, conducted an internship programme for one student from Universiti Malaysia Pahang and seven students from Pusat Teknologi Auto Prima. They have also conducted training for Universiti Teknologi MARA (UiTM), Technical Institute Kuantan, University Technology Malaysia (UTM) and SIRIM.

2012Activities

Paint A Home CSR ProjectOn 3 November 2012, 15 volunteers from Oil & Gas Division cleaned, painted and did some maintenance work for Sanctuary Care Centre which is a Boys Home situated in Setapak, Kuala Lumpur. The Home was established in 15 April 2003 by Pastor Rev. Dr. Mary and it currently houses 22 children, ages ranging from 3-19 years old. The Home is run by full time staff and volunteers who provide a loving and caring environment for the children.

They also donated 10 wall fans and repaired the front gate of the Home.


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AuDit COMMittEE REPORt

1. rolE oF tHE aUDit CoMMittEE

The primary function of the Audit Committee is to assist the Board of Directors (“the Board”) in fulfilling the following oversight objectives on the Group’s activities:

• assesstheGroup’sprocessesrelatingtoitsrisksandcontrolenvironment;• overseefinancialreporting;and• evaluatetheinternalandexternalauditprocesses.

2. KEY FUnCtionS anD rESponSibilitiES

The key functions and responsibilities of the Audit Committee are as follows:

a. Review the appointment and performance of external auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board.

b. Review with the external auditors, the audit scope and plan, including any subsequent changes to the audit scope and plan.

c. Review the quarterly results and the annual financial statements, prior to the approval by the Board focusing particularly on:

- changes in or implementation of major accounting policy changes;- significant or unusual events; and- compliance with accounting standards and other legal requirements.

d. Review the Internal Audit Charter and the adequacy of the internal audit scope and plan, as well as the functions, competency and resources of the Group Internal Audit Department and whether it has the necessary authority to carry out its work.

e. Review the internal and external audit reports to ensure that appropriate and prompt remedial action is taken by management on major deficiencies in controls or procedures that are identified.

f. Review major audit findings and the management’s response during the year with Management, internal and external auditors, including the status of previous audit recommendations.

g. Review the assistance given by the Group’s officers to both the internal and external auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.

h. Review the independence and objectivity of the external auditors and their services, including non-audit services and the professional fees, so as to ensure a proper balance between objectivity and value for money.

i. Approve all decisions regarding the appointment or removal of the Head, Group Internal Audit.

j. Review the adequacy and integrity of internal control systems, including risk management, management information system and the internal auditors’ and/or external auditors’ evaluation of the said systems.

k. Direct and where appropriate supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts.

l. Review procedures in place to ensure that the Group is in compliance with the Companies Act, 1965, Bursa Securities Listing Requirements and other legislative and reporting requirements.

m. Review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises question on management integrity.

Audit Committee


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Audit Committee

n. Prepare reports, if the circumstances arise or at least once (1) a year, to the Board summarising the work performed in fulfilling the Committee’s primary responsibilities.

o. Review the allocation of options pursuant to WSC Group’s Employees Share Option Scheme (if any).

p. Any other activities, as authorised by the Board.

3. MEMbErS anD MEEtingS

The Audit Committee meets regularly at least four (4) times annually, with due notice of issues to be discussed and its conclusions duly recorded and minuted by the Company Secretary in attendance towards discharging of its duties and responsibilities. Additional meetings may be held at the request of the Board, the Committee, the Management, the External or Group Internal Auditors.

Nonetheless, the Chairman and the Audit Committee members have free and direct access to consult, communicate and enquire with any Senior Management of the Company as well as the External Auditors at any time.

The Head, Group Compliance, Risk Management, Tax and Strategic Finance and the Head, Group Internal Audit attend such Audit Committee Meetings and the representative of the External Auditors are encouraged to attend whenever possible. Other Directors may be invited to attend such Audit Committee Meetings when necessary. The Audit Committee will meet the External Auditors at least twice (2) a year without the presence of any executive Board member.

Members and details of attendance of Directors at the Audit Committee Meetings of the Company for the financial year ended 31 December 2012 are as follows:

no. of Meetingsname of Directors Directorship Date of appointment attended

Halim Bin Haji Din (Chairman) Independent 22 May 2002 5/5 Non-Executive Director

Tan Sri Ab Rahman Bin Omar (Member) Independent 1 October 2003 5/5 Non-Executive Director Tan Sri Dato’ Dr. Lin See Yan (Member) Senior Independent 20 July 2004 5/5 Non-Executive Director

4. SUMMarY oF aCtiVitiES

During the financial year under review, the Audit Committee conducted its activities in line with the terms of reference, as follows:

• ReviewedquarterlyreportsoftheGroupandtheCompany’sannualreportbeforesubmissiontotheBoardforconsideration and approval.

• Reviewedtheannualauditplanandthescopeofworkfortheyearpreparedbytheinternalandexternalauditors.

• Reviewedthefeeforexternalauditors.

• Discussedwiththeexternalauditorstheirreportonthefinancialstatementsandmanagementlettersrelatingtotheir audit.

• Hadtwo(2)meetingswiththeExternalAuditorswithoutanyexecutivepresentexcepttheSecretary.

• Reviewed the recurrent related party transactions of a revenue or trading nature and provision of financialassistance of the Group for inclusion in the Circular to Shareholders in relation to the Proposed Renewal of the Existing and New Shareholders’ Mandate for Recurrent Related Party Transactions pursuant to Bursa Securities Listing Requirements for the Board’s approval.


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Audit Committee

• Reviewedallrelatedpartytransactionsandrecurrentrelatedpartytransactionstoensurethattheyarewithinthemandate obtained.

• ReviewedkeyandsignificantrisksdeliberatedattheRiskManagementCommitteeMeeting.

• ReviewedmajorfindingsinthereportspreparedbytheGroupInternalAudittogetherwiththerecommendationsand Management’s responses to the findings.

5. StatEMEnt bY aUDit CoMMittEE on WSC groUp SHarE iSSUanCE SCHEME

Appendix 9C Part A Item No. 26 of Bursa Securities Listing Requirements requires a statement by the Audit Committee in relation to the allocation of options pursuant to Share Issuance Scheme as required under Paragraph 8.17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

There was no new Share Issuance Scheme in place during the financial year under review.

6. intErnal aUDit FUnCtion

The Audit Committee is assisted by the Group Internal Audit Department in reviewing the adequacy of operational controls so as to provide reasonable assurance that such system continues to operate satisfactorily and effectively in the Group and to add value and improve the Group’s operations by providing independent and objective assurance.

The Group Internal Audit Department is independent from the activities or operations of other operating units of the WSC Group. Its principal responsibility is to conduct periodic reviews on the Group’s key operations and to ensure adequacy in operational controls, consistency in application of policies and procedures and compliance with statutory requirements.

A summary of the Internal Audit activities during the financial year under review is as follows:

a) prepared its annual audit plan for consideration by the Audit Committee;

b) performed operational audits on business units of the Group to ascertain the adequacy and integrity of their system of internal controls and made recommendations for improvement where weaknesses were found;

c) conducted follow-up review to determine the adequacy, effectiveness and timeliness of actions taken by the Management on audit recommendations and provided updates on their status to the Audit Committee; and

d) performed special reviews requested by the Management and/or the Audit Committee.

After each audit, the findings and recommendations for improvement were communicated to the respective Management for their response and corrective actions, if necessary. On quarterly intervals, the internal audit reports with the Management’s responses were submitted to the Audit Committee for their review and consideration.

The total costs incurred by the Internal Audit Function for 2012 was RM361,007 (2011: RM567,496).


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Remuneration Committee


Members and details of attendance of Directors at the Remuneration Committee Meetings of the Company for the financial year ended 31 December 2012 are as follows:

Date of no. of Meetingsname of Directors Directorship appointment attended

Halim Bin Haji Din (Chairman) Independent 22 May 2002 1/1 Non-Executive Director

Tan Sri Ab Rahman Bin Omar (Member) Independent 1 October 2003 0/1 Non-Executive Director Chan Cheu Leong (Member) Managing Director/ 22 May 2002 1/1 Group Chief Executive Officer

2. rolE oF tHE rEMUnEration CoMMittEE (“rC”)

The RC shall set the policy framework and recommend to the Board, the remuneration of the Executive Directors in all its forms, drawing from outside advice as necessary with the objective of ensuring:

a. that the Company’s Executive Directors are fairly rewarded for their individual contributions to the Company’s overall performance; and

b. that the levels of remuneration are sufficient to attract and retain the Directors needed to run the Company successfully.

The determination of remuneration packages of Non-Executive Directors, including Non-Executive Chairman should be a matter for the Board as a whole.

The individuals concerned should abstain from discussion of their own remuneration.

3. tErMS oF rEFErEnCE

i. Composition The RC shall be headed by a non-executive Chairman and its members shall comprise wholly or mainly non-executive Directors.

ii. Quorum of MeetingsA minimum of two (2) RC Members present in person shall constitute the quorum.

iii. rC MembersThe RC Members are as disclosed above.

Any other person(s) may be invited by the RC and/or the RC Chairman from time to time.

iv. Majority DecisionAll decisions of the RC shall be decided on the votes of the simple majority of those Members present. However, no Executive Director shall participate in the discussion of his own remuneration.

Any decision or recommendation made at the RC shall be subject to the review and ultimate approval of the Company’s Board of Directors.


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v. Casting VoteIn the event there be an equality of votes, then the Chairman of the meeting shall have a casting vote.

vi. Frequency of MeetingsThe Committee shall meet at least annually or at such other frequency as the Chairman may determine.

vii. notice of MeetingsMinimum seven (7) days or such shorter notice as the RC may deem fit depending on the nature and prevailing circumstances at hand.

viii. SecretaryThe Company’s Company Secretary(s) shall be the Secretary(s) for the RC. In the event any of the Company Secretary(s) is unable to attend, an assistant or deputy Secretary(s) may be appointed for that specific meeting.

ix. Minutes of MeetingsThe Secretary (which expression shall include the assistant or deputy Secretary appointed under item (viii)) shall table the minutes of each RC Meeting and shall circulate the same for each Member’s record. The Chairman’s confirmation of the Minutes shall be taken as a correct record of the proceedings thereat.

The Chairman shall report on each meeting to the Board.

x. Functions of the rCWithout prejudice to the generality of the foregoing, the RC shall:

a. Review, recommend and advise on all forms of Directors’ remuneration e.g.

•BasicSalary•Profit-sharingschemes(ifany)•Shareoptions•Anyotherbenefits;

b. Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of individual Directors;

c. To structure the component parts of the Executive Directors’ remuneration so as to link rewards to corporate and individual performance; whereas, in the case of Non-Executive Directors, the level of remuneration should reflect the experience and level of responsibilities undertaken by the particular Non-Executive Director concerned;

d. Conduct continued assessment of individual Executive Directors to ensure that remuneration is directly related to performance over time;

In this regard, the review of Non-Executive Directors’ fees may take place at a different time of the year from the review of Executive Directors’ salaries;

e. To monitor and assess the suitability of such proposed performance related formula (e.g. whether the formula is based on individual performance, company profit performance, earnings per share, etc.) and to see that awards under the Company’s share option schemes are consistent with the Company’s overall performance and provide an additional incentive to management;

f. To provide an objective and independent assessment of the benefits granted to Executive Directors;

g. To ensure that there are adequate pension arrangements for the Executive Directors;

h. To consider what other details of Executive Directors’ remuneration to be reported in addition to the existing legal requirements, and how these details should be presented in the Annual Report;

i. Introduce any regulation which would enable the smooth administration and effective discharge of the Committee’s duties and responsibilities;


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j. To furnish a report to the Board of any findings of the Committee;

k. Engage or appoint such other competent and professional advisers/consultants as may be deemed fit to assist the RC in the smooth discharge of its duties herein;

l. To establish a remuneration framework for key officers of the Group in order to attract and retain key personnel of requisite quality that increases productivity and profitability in the long run;

m. To review and determine the appropriate remuneration package for key officers of the Group as follows:

- Head Office - Group Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Group Company Secretary;

n. To review the salary increment or adjustment in the event of promotion or re-designation of key officers of the Group, where necessary;

o. To review the annual increment and bonus payment for key officers of the Group basing on the performance of the Group and performance of the individuals, where necessary;

p. To establish schemes, options and remuneration and compensation plans for the key officers of the Group, where appropriate; and

q. Generally, to decide and implement such other matters as may be delegated by the Company’s Board of Directors from time to time.

xi. VariationThe above Terms of Reference may be determined and/or varied by the Company’s Board of Directors at anytime and from time to time.



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Members and details of attendance of Directors at the Nomination Committee Meetings of the Company for the financial year ended 31 December 2012 are as follows:

Date of no. of Meetings name of Directors Directorship appointment attended Robert Tan Chung Meng (Chairman) Non-Independent 22 May 2002 2/2 Non-Executive Chairman

Tan Sri Ab Rahman Bin Omar (Member) Independent 1 October 2003 1/2 Non-Executive Director

Halim Bin Haji Din (Member) Independent 22 May 2002 2/2 Non-Executive Director

2. rolE oF tHE noMination CoMMittEE (“nC”)

The NC is responsible for assessing and making recommendations on any new appointments to the Board and its various Committees.

The NC shall set the policy framework and:-

a. Recommend to the Board, candidates for all directorships to be filled by the shareholders or the Board after considering the candidates’ -

- skills, knowledge, expertise and experience;- professionalism;- integrity; and- in the case of candidates for the position of independent non-executive directors, to evaluate the candidates’

ability to discharge such responsibilities/functions as expected from independent non-executive directors.

b. Consider, in making its recommendations, candidates for directorships proposed by the Chief Executive Officer and within the bounds of practicability, by any other senior executive or any director or shareholder;

c. Recommend to the Board, directors to fill the seats on Board Committees.

The actual decision as to who shall be nominated shall be the responsibility of the full Board after considering the NC’s recommendations.

The individuals concerned should abstain from discussion of their own nomination.

3. tErMS oF rEFErEnCE

i. CompositionThe NC shall be headed by a non-executive Chairman and its members shall comprise exclusively of non-executive directors, a majority of whom are independent.

ii. Quorum of MeetingsA minimum of two (2) NC Members present in person shall constitute the quorum.

iii. nC MembersThe NC Members are as disclosed above.

Any other person(s) may be invited by the NC and/or the NC Chairman from time to time.

Nomination Committee


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iv. Majority DecisionAll decisions of the NC shall be decided on the votes of the simple majority of those Members present. Any decision or recommendation made at the NC shall be subject to the review and ultimate approval of the Company’s Board of Directors.

v. Casting VoteIn the event there be an equality of votes, then the Chairman of the meeting shall have a casting vote.

vi. Frequency of MeetingsThe Committee shall meet at least annually or at such other frequency as the Chairman may determine.

vii. notice of MeetingsMinimum seven (7) days or such shorter notice as the NC may deem fit depending on the nature and prevailing circumstances at hand.

viii. SecretaryThe Company’s Company Secretary(s) shall be the Secretary(s) for the NC. In the event any of the Company Secretary(s) is unable to attend, an assistant or deputy Secretary(s) may be appointed for that specific meeting.

ix. Minutes of MeetingsThe Secretary (which expression shall include the assistant or deputy Secretary appointed under item (viii)) shall table the minutes of each NC Meeting and shall circulate the same for each Member’s record. The Chairman’s confirmation of the Minutes shall be taken as a correct record of the proceedings thereat.

The Chairman shall report on each meeting to the Board.

x. Functions of the nCWithout prejudice to the generality of the foregoing, the NC shall:

a. Determine the core competencies and skills required of Board members to best serve the business and operations of the Group as a whole and the optimum size of the Board to reflect the desired skills and competencies;

b. Review the size of Non-Executive participation, Board balance and determine if additional Board members are required and also to ensure that at least one-third (1/3) of the Board is independent;

c. Recommend to the Board on the appropriate number of Directors to compose the Board which should fairly reflect the investments of the minority shareholders in the Company, and whether the current Board representation satisfies this requirement;

d. Recommend to the Board, candidates for directorships to be filled by the shareholders or the Board;

e. Consider in making its recommendations, candidates for directorships proposed by the Chief Executive Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder;

f. Recommend to the Board, Directors to fill the seats on Board Committees;

g. Undertake an annual review of the required mix of skills and experience and other qualities of Directors, including core competencies which Non-Executive Directors should bring to the Board and to disclose this forthwith in every Annual Report;

h. Assist the Board to introduce a criteria and to formulate and implement a procedure to be carried out by the NC annually for assessing the effectiveness of the Board as a whole, the Board Committees and for assessing the contributions of each individual Director;

i. Introduce any regulation which would enable the smooth administration and effective discharge of the Committee’s duties and responsibilities;

j. To furnish a report to the Board of any findings of the Committee;


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k. To recommend to the Board for continuation or discontinuation in service of Directors as an Executive Director or Non-Executive Director;

l. To recommend Directors who are retiring by rotation to be put forward for re-election;

m. To recommend to the Board the employment of the services of such advisers as it deems necessary to fulfill the Board’s responsibilities;

n. To review the appointment and termination of key officers of the Group as follows:

- Head Office - Group Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Group Company Secretary;

o. To review succession plans for key officers of the Group;

p. To review the appointment and resignation of Directors on the Board of subsidiaries, where necessary;

q. To review the composition, quality, capacity, competencies and effectiveness of the Board of the subsidiaries, where necessary; and

r. Generally, to decide and implement such other matters as may be delegated by the Company’s Board of Directors from time to time.

xi. VariationThe above Terms of Reference may be determined and/or varied by the Company’s Board of Directors at any time and from time to time.

boarD’S EFFECtiVEnESS aSSESSMEnt

The NC conducted an annual assessment of the Board’s effectiveness as a whole and the contribution of each individual Directors in respect of the financial year ended 31 December 2012 using a set of customised self-assessment questionnaires to be completed by the Directors. The results of the self-assessment by Directors and the Board’s effectiveness as a whole as compiled by the Company Secretary were tabled to the Board for review and deliberation.

The Board was satisfied with the results of the annual assessment and that the current size and composition of the Board is appropriate and well-balanced with the right mix of skills with the Board composition comprising individuals of high calibre, credibility and with the necessary skills and qualifications to enable the Board to discharge its responsibility effectively.


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Statement on Corporate Governance

The Board of Directors of Wah Seong Corporation Berhad (“WSC”) recognises the importance of upholding good corporate governance in the discharge of its duties and responsibilities to protect its shareholders’ interest and to reflect the status of the Group in the eyes of the public investors. Hence, the Board is pleased to report that the Company and its Group have complied with the relevant principles, recommendations and best practices of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) issued by the Securities Commission as well as the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“MMLR”).

The Board is pleased to present the report hereunder on the manner in which the principles and best practices of the MCCG 2012 have been applied across the Group.

1. boarD oF DirECtorS 1.1 Duties and responsibilities of the board

The Board is responsible towards the strategic planning, overseeing the resources and operational conduct, identifying and implementing appropriate systems to manage principal risks, reviewing the adequacy and integrity of its internal control and management information systems, ensuring a management succession plan as well as having a dedicated investor relation and shareholders’ communication policy are in place.

The Board together with the Managing Director/Group Chief Executive Officer and the respective Management team(s), where applicable, develop the Group’s corporate objectives, policies and positions descriptions and setting out the limits of empowerment of its respective Management/Committees’ authority, duties and responsibilities.

The Board exercises due care and diligence in discharging its duties and responsibilities and in ensuring that high ethical standards are applied in upholding good corporate governance and through the compliance with the relevant rules and regulations, directives and guidelines and the adoption of the best practices of the MCCG 2012 in addition to acting in the best interest of the shareholders, stakeholders and the Group.

The Board has adopted a Board Charter which sets out the Board’s strategic intent and outlines the Board’s roles and responsibilities including the key values, mission, principles and ethos of the Company. The Board Charter serves as a source of reference for Board members as well as a primary induction literature for new Board members in respect of their duties and responsibilities and the various legislations and regulations governing their conduct with the application of principles and practices of good corporate governance in their business conduct. The Board Charter would be reviewed and updated periodically as and when the need arises.

The Board Charter clearly spells out the following principal roles and responsibilities of the Board in enhancing Board’s effectiveness in the pursuit of corporate objectives:

• reviewingandadoptingthestrategicplansanddirectionoftheGroup;• overseeingandevaluatingtheconductoftheGroup’sbusinesses;• identifyingprincipalrisksandensuringthatappropriateinternalcontrolandmitigationmeasuresareimplemented

to manage these risks;• successionplanningincludingtheimplementationofappropriatesystemsforrecruitment,training,determining

compensation benefits and replacement of Senior Management staff;• developing and implementing an investor relations programme to enable effective communications with the

shareholders and stakeholders; and • reviewingtheadequacyandintegrityoftheinternalcontrolsystemsandmanagementinformationsystemswhich

includes sound system of reporting and in ensuring regulatory compliance with applicable laws, regulations, rules, directive and guidelines.

The Board Charter is available on the Company’s website at www.wahseong.com.

Apart from the aforesaid principal roles and responsibilities of the Board, the Board also delegates certain responsibilities to its Board Committees with clearly defined terms of reference to assist the Board in discharging its responsibilities. While the Board Committees have their own functions and delegated roles, duties and responsibilities, they will report to the Board with their decisions and/or recommendations. Hence the ultimate responsibility and decision on all matters lies with the Board.

The Board continues to observe high standard of ethical conducts based on the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.


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1.2 board Composition and balance

During the year under review, the Board is led by the Non-Executive Chairman, Mr. Robert Tan Chung Meng and altogether, comprises seven (7) members, which includes two (2) Executive Directors, two (2) Non-Independent Non-Executive Directors (including the Non-Executive Chairman) and three (3) Independent Non-Executive Directors.

The composition of the Board reveals their varied background as outlined on pages 20 to 24 of this Annual Report. The Board members are equipped with the relevant skills, knowledge and expertise required for the proper running of the Company’s affairs.

Generally, the Executive Directors along with the Management Team are responsible for making and implementing operational decisions. Non-Executive Directors play a key supporting role, contributing their skills, expertise and knowledge towards the formulation of the Group’s strategic and corporate objectives, policies and decisions.

1.3 board independence

The number of Independent Directors on the Board complies with Paragraph 15.02 of the MMLR, which states that at least two (2) Directors or one-third (1/3) of the Board, whichever is higher shall comprise of Independent Directors. The Independent Directors also fulfill the criteria of independence as defined in the MMLR. Their presence provides a check and balance in the discharge of the Board function and the Independent Directors’ views carry significant weight in all Board deliberations and decision-making. All Independent Directors act independently of Management and do not participate in any business dealings and are not involved in any other relationship with the Group that may impair their independent judgement and decision-making.

Recommendation 3.2 of MCCG 2012 states that the tenure of an Independent Director should not exceed a cumulative term of nine (9) years. However, the Nomination Committee and Board have duly assessed, determined and resolved that the Independent Non-Executive Directors of the Company namely, Tan Sri Ab Rahman Bin Omar and Encik Halim Bin Haji Din, who have served on the Board for more than nine (9) years, remain as Independent Directors based on the following justifications as well as contributions from Tan Sri Ab Rahman Bin Omar and Encik Halim Bin Haji Din, as members of the Board and also members of the Board Committees:

(i) they have fulfilled the criteria of independence as per the definition set out under Chapter 1 of the MMLR;

(ii) they have performed their duties diligently and provided independent judgements and balanced assessments hence ensured effective check and balance in the proceedings of the Board and the Board Committees; and

(iii) they have devoted sufficient time and attention to the duties and responsibilities as Independent Non-Executive Directors of the Company.

The Board acknowledges and takes cognisance of Recommendation 3.5 of MCCG 2012, which recommends that should the Chairman of the Board is not an Independent Director, the Board must comprise a majority of Independent Directors. The Company’s Chairman is not an Independent Director and there are three (3) Independent Directors out of seven (7) Board members. The Board believes that its current Board composition provides the appropriate balance in terms of skills, knowledge and experience in creating, protecting and enhancing the interests and values of all shareholders and stakeholders and to oversee the conduct of businesses and to properly run the Group effectively. As the Chairman is also a shareholder who has substantial interest in the Company, he is well placed to act on behalf of shareholders and stakeholders and in their best interest. As the MCCG 2012 is only issued recently during the financial year under review, the Board through the Nomination Committee will continuously evaluate suitable candidates for Independent Directors to form majority of the Board. However, the process should be exercised with due care and careful assessment has to be made based on merits, skills, knowledge and the appropriate experience to ensure that the candidates would be able to contribute to the effectiveness of the Board.

1.4 Division of roles and responsibilities between the Chairman, and the Managing Director/group Chief Executive officer

The Board is led by Mr. Robert Tan Chung Meng as the Non-Independent Non-Executive Chairman and Mr. Chan Cheu Leong as the Managing Director/Group Chief Executive Officer.


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There is a clear separation of the Chairman’s role to ensure a division of responsibilities and a balance of control, power and authority.

The Chairman leads and manages the Board with a keen focus on governance and compliance. In turn, the Board monitors the functions of the Board Committees in accordance with their respective terms of reference, to ensure its own effectiveness, while the Managing Director/Group Chief Executive Officer manages the businesses and operations of the Company and implements and develops the Board’s decisions, policies and strategies.

1.5 Senior independent non-Executive Director

The Board has identified Tan Sri Dato’ Dr. Lin See Yan as the Senior Independent Non-Executive Director of the Board, to whom concerns relating to the Group may be conveyed by shareholders and other stakeholders.

All concerns relating to the Group can be conveyed to him via his electronic mail address at [email protected].

1.6 board Meetings

The Board meetings for each financial year are scheduled before the end of the preceding financial year, to enable the Directors to plan ahead and fit the year’s meetings into their own schedules. The Board meets on a scheduled basis of at least four (4) times a year and has a formal schedule of matters specifically reserved for the Board to decide in order to ensure that the direction and control of the Company firmly rests in its hands, for example strategic financial and investment decisions. Additional or ad-hoc Board meetings can be convened as and when necessary.

During the financial year ended 31 December 2012, the Board met four (4) times and the details of the attendance of the Board members are as follows:

Director Directorship total Meetings attended

Robert Tan Chung Meng Non-Independent Non-Executive Chairman 4/4

Chan Cheu Leong Managing Director/Group Chief Executive Officer 4/4

Giancarlo Maccagno Deputy Managing Director 4/4

Tan Sri Dato’ Dr. Lin See Yan Senior Independent Non-Executive Director 4/4

Tan Sri Ab Rahman Bin Omar Independent Non-Executive Director 3/4

Pauline Tan Suat Ming Non-Independent Non-Executive Director 4/4

Halim Bin Haji Din Independent Non-Executive Director 4/4

To facilitate productive and meaningful deliberations, the proceedings of the Board meetings are conducted in accordance with a structured agenda with the supply of complete and timely information to enable the Board to discharge their responsibilities effectively and for them to make informed decisions. The Board reviews and deliberates on the Groups’ financial performance and results, business operations, budgets, reports of the various Board Committees, risks management, business plans, corporate exercises and strategic financials and investments decisions.

In the intervals between Board meetings, any matters requiring urgent Board decisions and/or approvals will be sought via circular resolutions which are supported with all the relevant information and explanations required for an informed decision to be made.

1.7 Supply of information

The Board is briefed on a timely manner on all major financial, operational and corporate matters. In order to maintain confidentiality, meeting papers on issues or corporate proposals which are deemed highly confidential and sensitive, would only be distributed to the Directors at the Board meeting itself.

The Board stresses on having timely reports and has full access to quality information which is not just historical or bottom line and financial oriented but information that goes beyond assessing the quantitative performance of the Group and other performance factors e.g. customer satisfaction, product and service quality, market share, market reaction, environmental protection, etc.


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The Directors have access to all information within the Company whether as a full Board or in their individual capacity, in furtherance of their duties. Through regular Board meetings, the Board receives updates, written reports and supporting/discussion documents on the development and business operations of the Group, as well as on potential corporate exercises, proposals, mergers and acquisitions. Minutes of the respective Board Committees’ meetings are presented at Board meetings. The respective Board Committees’ Chairman will brief the Board on major issues deliberated by each of the Board Committees.

The Board either collectively or individually is authorised to seek such independent professional advice as may be considered necessary in furtherance of their duties at the expense of the Company.

The Directors also have access to the advice and services of its qualified Group Company Secretary in the course of discharging their duties and responsibilities and in fulfilling their obligation to statutory requirements, the MMLR or other rules and regulations, either as a full Board or in their individual capacity.

1.8 appointments to the board

The Nomination Committee is responsible for assessing and making recommendations on any new appointments to the Board and its various Committees.

In making these recommendations, due consideration is given to the required mix of skills, expertise, knowledge, experience, professionalism and integrity that the proposed Directors shall bring to complement the Board.

The Directors take cognisance of Recommendation 4.1 of the MCCG 2012 that they are required to notify the Chairman of the Company before accepting any new directorships and the expected time to be spent on the new appointment.

1.9 re-appointment and re-election of Directors

The Company’s Articles of Association provide that all the Directors shall retire at least once (1) in every three (3) years and are eligible for re-election at each Annual General Meeting in compliance with the MMLR.

Pursuant to Section 129 of the Companies Act, 1965, a Director who has attained the age of seventy (70) years is required to submit himself/herself for re-appointment as Director annually at the Annual General Meeting of the Company.

1.10 board Committees

The Board delegates specific responsibilities to the respective Committees of the Board, each of which has clearly defined terms of reference and its own functions, delegated roles, duties and responsibilities. The Board reviews the functions and terms of reference of Board Committees from time to time to ensure that they are relevant and updated in line with the MCCG 2012, the MMLR and other related policies or regulatory requirements.

The Board Committees have the authority to examine specific issues and report to the Board with their proceedings, deliberations, findings and recommendations. The Board also reviews the minutes of the Board Committees’ meetings presented at Board meetings. During Board meetings, the Chairman of the various Committees provide summary reports of the decisions and recommendations made at the respective Board Committees’ meetings, and highlight to the Board on any further deliberation and/or approval that is required at the Board level. The Board Committees shall deliberate and thereafter recommend their decisions to the Board for its approval. The relevant decisions and recommendations of the Board Committees are incorporated into the minutes of the Board meetings accordingly.

The Board has established three (3) principal Board Committees namely, Audit Committee, Nomination Committee and Remuneration Committee. The Risk Management Committee is a sub-committee of the Audit Committee.

(a) Audit Committee

The composition, terms of reference, key functions and a summary of activities of the Audit Committee are set out separately in the Audit Committee Report as laid out on pages 28 to 30 of this Annual Report.



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(b) Nomination Committee

The Nomination Committee has been established comprising exclusively of three (3) Non-Executive Directors, a majority of whom are Independent Directors. The terms of reference, role and functions of the Nomination Committee are set out on pages 34 to 36 of this Annual Report.

(c) Remuneration Committee

The Remuneration Committee has been established comprising mainly of Independent Non-Executive Directors with the role of determining and recommending to the Board the remuneration of Executive Directors in all its forms, drawing from outside advice where necessary. The Executive Directors play no part in decisions on their own remuneration.

Determination of remuneration packages of Non-Executive Directors, including the Non-Executive Chairman is a matter of the Board as a whole. The individuals concerned will abstain from discussion of their own remuneration.

The information on Remuneration Committee, terms of reference and its functions are available on pages 31 to 33 of this Annual Report.

1.11 Directors’ training

All members of the Board have attended the Mandatory Accreditation Programme as required under the MMLR.

The Directors do and will undergo such similar or continuing training and education programmes from time to time to equip and keep themselves abreast of the latest developments in order to discharge their duties and responsibilities more effectively.

During the financial year under review, the Directors had participated in various programmes, courses and forums which they have individually or collectively considered as relevant and useful in contributing to the effective discharge of their duties as Directors.

A brief description of the type of training/courses attended by the Directors for the financial year under review is as set out below.

Directors Date of Course/name of organiser type of training/Courses attended

Robert Tan Chung Meng 21 - 22 February 2012/ Talk by Messrs KrisAssets Holdings Berhad PricewaterhouseCoopers on IFRS IGB Corporation Berhad Convergence

Pauline Tan Suat Ming 22 February 2012/ Talk by Messrs IGB Corporation Berhad PricewaterhouseCoopers on IFRS Convergence

21 June 2012/ Talk by Messrs Goldis Berhad PricewaterhouseCoopers on getting ready for IFRS Convergence

Tan Sri Ab Rahman Bin Omar 29 - 30 May 2012/ Invest Malaysia 2012 Bursa Malaysia Securities Berhad – Capitalise on Asean’s (“Bursa Malaysia”) Multinational Market Place 19 July 2012/ Malaysian Code on Corporate Boardroom Corporate Services Governance 2012 (KL) Sdn Bhd

Tan Sri Dato’ Dr. Lin See Yan 21 February 2012/ Talk by Messrs KrisAssets Holdings Berhad PricewaterhouseCoopers on IFRS Convergenceirectors Date Directors



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Directors Date of Course/name of organiser type of training/Courses attended 21 - 22 June 2012/ Directors’ Continuing Education Guinness Anchor Berhad and Programme 2012 Fraser & Neave Holdings Bhd 15 August 2012/ Listed Company Director Singapore Institute of Directors (“SID”), Programme Module 4 on Singapore Nominating Committee Essentials 23 August 2012/ Listed Company Director SID, Singapore Programme Module 5 on Remuneration Committee Essentials 12 September 2012/ SID Directors Conference on SID, Singapore Corporate Governance in the New Normal 27 September 2012/ Introduction to the Competition Act KrisAssets Holdings Berhad 2010 by Rahmat Lim & Partners

Halim Bin Haji Din 21 February 2012/ Talk by Messrs KrisAssets Holdings Berhad PricewaterhouseCoopers on IFRS Convergence 5 - 6 July 2012/ Talk on “The Thai Flood MNRB Holdings Berhad (“MNRB”) Catastrophe” and “An ICAAP Overview” at Bangkok 23 August 2012/ Luncheon talk with Mr Jeffrey R. Malaysian Industrial Developments Immelt, Chairman & Chief Authority and Khazanah Nasional Executive Officer, GE International Berhad Inc. on “Growth Through Innovation” 3 October 2012/ Bursa Malaysia’s Half Day Bursa Malaysia Governance Programme 10 October 2012/ Talk on “Customer Analytics Event” Ernst & Young and The Iclif Leadership and Governance Centre 1 - 2 November 2012 FIDE’s Elective Programme: The Financial Institution Directors’ ICAAP Programme Education (“FIDE”) Programme 7 - 8 November 2012 Course on Credit Derivatives BNP Paribas Malaysia Berhad Products 27 & 28 November 2012/ MIA Conference 2012 Malaysian Institute of Accountants (“MIA”) 13 December 2012/ Seminar on “Multipillar Pension Kumpulan Wang Simpanan Pekerja System After 18 Year: What has been learned”

Chan Cheu Leong 5 January 2012/ CIMB Asean Series 2012: CIMB Malaysia Corporate Day


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Directors Date of Course/name of organiser type of training/Courses attended 15 January 2012/ Market Outlook Seminar 2012 Credit Suisse 29 - 30 May 2012/ Invest Malaysia 2012 Bursa Malaysia – Capitalise on Asean’s Multinational Market Place 20 June 2012 / Hwang DBS Investment Bank Hwang DBS Berhad 2nd Half Market Outlook 3 July 2012/ AmBank Group Appreciation AmBank Group Evening 18 July 2012/ Market Outlook Lunch Credit Suisse Seminar 2012 20 - 21 July 2012/ OCBC Global Treasury OCBC Regional Forum 2012

Giancarlo Maccagno 3 April 2012/ Business of Leadership: What Got The London Speaker Bureau You Here Won’t Get You There

30 April 2012/ Offshore Technology Conference Offshore Technology Conference (OTC) 2012 13 July 2012/ Leading & Managing Change DPI Strategic Consultants 19 October 2012/ Building Productive Relationships DPI Strategic Consultants

2. DirECtorS’ rEMUnEration

The remuneration of the Board Members is broadly categorised into those paid to Executive Directors and Non-Executive Directors.

The Executive Directors are remunerated in cash and in kind by way of salary, performance bonus and other benefits and entitlements; taking into consideration their experience, responsibilities, length of service, their individual performance and contribution as well as the overall performance of the Group and the Company. Non-Executive Directors are paid fees based on their experience and level of responsibilities.

The Remuneration Committee is responsible to make any recommendation to the Board on the remuneration package and benefits extended to the Executive Directors; whereas, Non-Executive Directors’ remuneration is a matter to be decided by the Board as a whole. The individual concerned must abstain from deliberations and voting on decisions in respect of his individual remuneration.

For purposes of security, instead of presenting the remuneration details of each Director individually, the Board is of the opinion that such information will not add significantly to the understanding and evaluation of the Company’s standards of corporate governance and that the same can be disclosed as follows:


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The details of the remuneration for the Directors of the Company during the financial year ended 31 December 2012 are as follows:

Executive non-Executive Directors Directors total (rM’000) (rM’000) (rM’000)

Salaries and Other Emoluments 3,863 40 3,903 Bonus 2,424 - 2,424 Directors’ Fees 60 225 285

6,347 265 6,612

Benefits-in-kind- Leave passage 176 - 176- Others * 255 2 257

total 6,778 267 7,045

*Others under benefits-in-kind include motor vehicles, club subscription, etc.

The number of Directors whose total remuneration falls within the following bands:

no. of no. of Executive non-Executive Directors Directors total

Less than RM50,000 - 2 2 RM50,001 to RM100,000 - 3 3 RM2,900,000 to RM3,000,000 1 - 1 RM3,800,000 to RM3,900,000 1 - 1

total 2 5 7

3. SHarEHolDErS anD inVEStorS

3.1 Effective Communications policy

Besides the various announcements and disclosures including information on the quarterly and annual results released to Bursa Malaysia Securities Berhad, the Board maintains an effective communications policy that enables the Board (in particular the Executive Board Members) to communicate effectively with its shareholders, stakeholders and the public in general.

As part of the Group’s commitment towards having an effective investor relations and shareholders’ communication policy, the following have been established:

a) an interactive and dedicated website for the Group which can be accessed by the public at large at www.wahseong.com.

b) the Company’s Investor Relations and Communications Department attends to the Group’s communication needs and whenever required, the services of an external public relations firm will be engaged to promote the Group’s image and to create greater public awareness of the Group’s products and services aside from fostering and maintaining closer relations with the press and other members of the media.

c) Internally, the Corporate Secretarial Department headed by the Group Company Secretary maintains most of the official correspondences with the various authorities.

d) the Annual General Meeting provides an additional forum for shareholders’ interaction and feedback with the Company.

e) Media and Analyst Briefings are held by the Company to explain any major corporate exercises and/or to discuss the financial performance of the Group from time to time.



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3.2 Dialogue between the Company and investors

The Board values feedback and dialogues with its Investors. The Company will hold open discussions with Investors upon written request. Analyst Briefings are periodically held to introduce and update the Investors on the Company’s/the Group’s undertakings and financial performance from time to time.

In this respect, the Board and the Company shall ensure that any information sought is disseminated in strict adherence to the disclosure requirements under the MMLR.

The Company’s website at www.wahseong.com contains vital information concerning the Group. All Investors are encouraged at all times to log on and visit the Company’s website to be informed of the latest happenings and detailed information of the Group and all the announcements made to Bursa Malaysia Securities Berhad.

3.3 annual general Meeting

The Annual General Meeting is one of the platforms for the Company’s shareholders to meet and exchange views with the Board.

An open Question and Answer Session will be held whereby any shareholder may seek further details and clarification regarding any proposed resolutions as well as matters relating to the Group’s businesses and affairs.

The Chairman and the other members of the Board together with the Company’s External Auditors will be in attendance to provide explanations to all shareholders’ queries.

4. aCCoUntabilitY anD aUDit

4.1 Financial reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial position, performance and prospects at the end of the financial year primarily through the audited financial statements, annual report as well as the quarterly announcements of results to shareholders.

The Board is responsible for ensuring that the financial statements prepared are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the financial statements, the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates. The Board assisted by the Audit Committee, oversees the financial reporting processes and the quality of the financial reporting by the Group. The Audit Committee scrutinises information prior to their disclosure to ensure that their timeliness, accuracy and adequacy. The quarterly financial results and audited financial statements were reviewed by the Audit Committee and approved by the Board before being released to Bursa Malaysia Securities Berhad.

The Directors’ Responsibilities Statement in respect of the audited financial statements of the Company and the Group is set out in page 52 of this Annual Report.

4.2 internal Control

The Board has overall responsibility for maintaining a sound system of internal control, which encompasses risk management, financial, organisational, operational and compliance controls necessary for the Group to achieve its objectives within an acceptable risk profile.

These controls can only provide reasonable but not absolute assurance against material misstatement, errors of judgment, loss or fraud.

Information on the Group’s Internal Control is as set out in the Statement on Risk Management and Internal Control on pages 50 to 51 of this Annual Report.

The establishment of an Internal Audit Department since the Group first commenced operations followed by the formation of the Risk Management Committee in 2009 are testimony of the dedication and commitment that the Board and the Company have in identifying and mitigating potentially risks which affect the Group.


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4.3 principles and rules of business Conduct and Whistle-blowing policy

The Board is committed to achieving and maintaining high ethical standards with regards to behaviour at work. The Principles and Rules of Business Conduct of the Group is a formal document which sets out the guiding principles and standards in which the employees and Directors shall adhere to in conducting the day-to-day duties and operations.

In conjunction with the above, the Company has also disseminated its Whistle Blowing Policy and Procedures by which an employee or stakeholder can report or disclose in good faith, through the established channel, genuine concerns about unethical behaviour, malpractice, illegal act or failure to comply with regulatory requirements.

The Principles and Rules of Business Conduct and procedures of the Whistle Blowing Policy, in raising such genuine concerns to the established channels are set out in the Company’s website at www.wahseong.com.

4.4 relationship with auditors

The Board has established a formal and transparent relationship with all the External Auditors appointed by the Company and its subsidiaries within its fold.

The External Auditors are invited to attend the Audit Committee Meeting where the Group’s annual financial results are considered, as well as at meetings to review and discuss the Group’s audit findings, internal controls and accounting policies, whenever the need arises.

For the financial year under review, the Audit Committee had two (2) meetings with the External Auditors without the presence of Management, which has encouraged a greater exchange of independent, frank views and opinions / dialogue between both parties.

The Audit Committee will obtain a confirmation from the External Auditors towards the end of the financial year, confirming their independence throughout their terms of engagement for the financial year in compliance with the requirements of the relevant professional and regulatory bodies and/or authorities.

Further information on the role of Audit Committee in relation to the External Auditors is stated in the Audit Committee Report on pages 28 to 30 of this Annual Report.

4.5 internal audit Function

The Board has established an Internal Audit Function for the Group to review the adequacy of operational controls so as to provide reasonable assurance that such system continues to operate satisfactorily and effectively in the Group and to add value and improve the Group’s operations by providing independent and objective assurance.

The Internal Audit Function of the Group is performed in-house.

The internal audit function focused on:

a) reviewing the adequacy and effectiveness of key controls.

b) compliance to established policies and procedures as well as relevant statutory requirements.

c) recommending improvements to existing procedures and policies in order to improve efficiency and effectiveness within the Group and the Company.

d) performing special reviews requested by Management and/or the Audit Committee.

The Head, Group Internal Audit reports directly to the Audit Committee. The Internal Audit function of the Group is independent of the activities they audit and the audit reviews are performed with impartiality, proficiency and due professional care.

The Board and/or the Audit Committee determines the general direction or remits of the Internal Audit function, which encompasses its main role, that is to evaluate risk and monitor the effectiveness of the Group’s system of internal controls, consistent with the standards developed by the internal audit profession.


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The Internal Audit function is competently and adequately resourced and independently positioned to assist the Board and the Audit Committee in obtaining the assurance they require regarding the effectiveness of the Group’s system of internal controls.

Further details of the activities of the Internal Audit Function are set out in the Statement on Risk Management and Internal Control of this Annual Report.

5. CorporatE SoCial rESponSibilitY

Throughout 2012, the Group has undertaken various initiatives to create a positive and momentous impact on the lives of others, within the community and the environment in which it operates, as set out in the Corporate Social Responsibility statement in pages 26 to 27 of this Annual Report.

6. SUStainabilitY

The Company has come a long way from a medium sized Malaysian enterprise to where the Group is today. It is through resilience and fortitude that the Group has been growing from strength to strength, meeting challenges along the way and succeeding in branching further aloft. As at today, the Group is a significant player in all the core businesses and is sustaining growth on the global business landscape.

While maintaining sustainable growth, the Company is committed to creating an open, friendly and safe workplace which is part of the Group’s core values. Besides, the Company places utmost priority and is fully committed to its Health, Safety and Environment policy and objectives with the aim of ensuring health and safety of our people as well as protection of the environment that the Group operates in by maintaining an accident-free work environment, eliminating occupational injuries, preventing pollutions, preventing wastages, recycling initiatives, optimising the use of natural resources and conserving energy.

The Group is dedicated in supporting the local communities within which it operates and through its corporate social responsibility programmes, the Company will continue to implement initiatives to contribute back to the society and local communities.

7. CorporatE DiSCloSUrE poliCiES anD proCEDUrES

The Board has established a Corporate Disclosure Policies and Procedures aiming at effectively handling and disseminating the corporate information timely and accurately to its shareholders, stakeholders and the public in general as required by Bursa Malaysia Securities Berhad.

The Corporate Disclosure Policies and Procedures are available on the Company’s website at www.wahseong.com.

8. CoMplianCE StatEMEnt

The Company has complied throughout the year ended 31 December 2012 with the relevant principles and recommendations of the MCCG 2012 other than Recommendation 3.5 of MCCG 2012 where the Board must comprise of a majority of Independent Directors should the Chairman of the Board is not an Independent Director which is explained under item 1.3 above.



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1. UtiliSation oF proCEEDS raiSED FroM CorporatE propoSalS

There are no proceeds raised from corporate proposals during the financial year ended 31 December 2012.

2. optionS, ConVErtiblE SECUritiES EXErCiSED or SHarE iSSUanCE SCHEME

Warrants

The warrants 2008/2013 carry the rights to subscribe for new shares in WSC at an exercise price of RM3.17 per share. No warrants were exercised during the financial year ended 31 December 2012. On 25 March 2013, there were 500 warrants exercised to subscribe for new 500 WSC Shares and the balance of warrants remained unexercised is 135,961,820. The warrants expired on 25 March 2013.

The warrants were removed from the Official List of Bursa Malaysia Securities Berhad with effect from 26 March 2013.

irredeemable Convertible Unsecured loan Stocks (iCUlS)

On 21 May 2002, the Company issued RM89,499,999.00 nominal value of 3% Irredeemable Convertible Unsecured Loan Stocks 2002/2012 at RM1.00 per ICULS.

From 1 January 2012 until 18 May 2012 (last date for conversion of ICULS), there were 1,501,000 ICULS converted to 3,752,500 WSC Shares. 7,024,401 ICULS which remained outstanding on 21 May 2012 were automatically converted into 17,561,001 WSC Shares.

The ICULS were removed from the Official List of Bursa Malaysia Securities Berhad with effect from 22 May 2012.

Share issuance Scheme

There is no Share Issuance Scheme established during the financial year under review.

3. DEpoSitorY rECEipt prograMME

The Company has not sponsored any depository receipt programme for the financial year ended 31 December 2012.

4. Variation oF rESUltS

There is no significant variance in WSC’s audited financial results for the financial year ended 31 December 2012 from the unaudited results as previously announced. The Company has not released or announced any estimated profit, financial forecast and projection in the financial year ended 31 December 2012.

5. proFit gUarantEE

During the financial year ended 31 December 2012, WSC did not provide any profit guarantee nor is there any profit guarantee given to WSC.

6. rECUrrEnt rElatED partY tranSaCtionS oF a rEVEnUE or traDing natUrE anD proViSion oF FinanCial aSSiStanCE

The details of significant recurrent related party transactions conducted during the financial year ended 31 December 2012 pursuant to the shareholders’ mandate are disclosed in the Summary of Significant Recurrent Related Party Transactions as set out on pages 182 to 183 of this Annual Report.

Additional Compliance information


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Additional Compliance information

7. MatErial ContraCtS

There are no material contracts (not being contracts entered into in the ordinary course of business), entered into by the Company and its subsidiaries, involving Directors’ and major shareholders’ interests during the financial year ended 31 December 2012.

8. SHarES bUY-baCK

Details of the shares purchased during the financial year ended 31 December 2012 are as follows:

treasury shares

total lowest Highest Consideration price paid price paid average paid (includingMonth no. of par Value for each for each price per transactionbuy-back Shares per share share share share costs)2012 bought-back (rM) (rM) (rM) (rM) (rM)

January - - - - - -February - - - - - -March - - - - - -April 30,000 0.50 2.010 2.010 2.025 60,740.89May - - - - - -June 1,208,200 0.50 1.790 1.920 1.858 2,239,313.39July 719,500 0.50 1.860 1.990 1.931 1,388,203.79August 344,200 0.50 1.830 1.890 1.864 641,585.09September 714,800 0.50 1.720 1.820 1.779 1,272,950.76October 562,500 0.50 1.730 1.780 1.758 988,042.26November 180,000 0.50 1.750 1.790 1.780 320,125.98December 839,700 0.50 1.640 1.750 1.724 1,439,902.87

total 4,598,900 8,350,865.03

The funding of the share buy-back transactions is from internally generated funds. The purchased shares are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

A total of 6,970,292 treasury shares of WSC were distributed as special single tier share dividend on 3 April 2013 on the basis of one (1) WCS Share for every one hundred and ten (110) ordinary shares of RM0.50 each held as at the entitlement date on 13 March 2013.

There was no resale or cancellation of treasury shares during the financial year ended 31 December 2012.

9. iMpoSition oF SanCtionS anD/or pEnaltiES

There were no significant sanctions and/or penalties imposed on WSC Group and its subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year under review.

10. non-aUDit FEES

The amount of non-audit fees paid and payable to PricewaterhouseCoopers Malaysia and its affiliates by WSC Group for the financial year under review is RM534,000.


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Statement on Risk Management and internal Control

boarD rESponSibilitY

The Board of Directors (“Board”) is responsible for the adequacy and effectiveness of the Wah Seong Corporation Berhad’s Group (“the Group”) risk management and internal control system. This system is designed to ensure the Group’s key areas of risks are managed within an acceptable risk profile in order to increase the likelihood that the Group’s policies and business objectives will be achieved. Accordingly, it can only provide reasonable and not absolute assurance against material misstatement of management and financial information and records or against financial losses or fraud.

The Board has established an ongoing process for identifying, evaluating and managing significant risks faced by the Group. There is regular review of this process by the Board to ensure the effectiveness, adequacy and integrity of risk management and internal control system to safeguard the Group’s assets as guided by the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

The Board has received assurance from the Group Chief Executive Officer (“CEO”), Divisional CEOs/Presidents and Heads of Finance that the Group’s risk management and internal control system is operating adequately and effectively in all material aspects based on the existing risk management and internal control system of the Group.

The Board is of the view that the system of risk management and internal control in place for the year under review and up to the date of issuance of this annual report and financial statements is sound to safeguard shareholders’ interest in the Group, interest of customers, regulators, employees and the Group’s assets.

KEY ElEMEntS anD proCESSES on riSK ManagEMEnt anD intErnal ControlS

The key elements and processes that have been established in reviewing the adequacy and effectiveness of the risk management and internal control system include the following:-

riSK ManagEMEnt

The Risk Management Committee (“RMC”) was established by the Board to assist in fulfilling their stewardship responsibilities for a sound system of risk management for the Group. The RMC provides oversight on the effectiveness of the Group’s internal control processes in managing business risks in accordance with the approved Risk Management Policy and Framework.

The RMC consists of at least 5 members and is chaired by the Managing Director cum Group CEO / Deputy Managing Director.

The principal responsibilities of the RMC includes:-

• EstablishtheGroupRiskManagementPolicyandFrameworkforapprovalbytheBoard;• Developprocessestoidentify,assess,treat,monitorandreportonallmaterialbusinessrisks;• PerformriskoversightandreviewriskprofileoftheBusinessUnits;• ProvidingguidanceandstrategicdirectiontotheBusinessUnitsontheadequacyandeffectivenessofinternalcontrol

system for the identification and mitigation of material business risks; and• Establishproceduresfortheidentificationofandcompliancewithrelevantlaws,licensingandregulatoryrequirements.

As the effectiveness of the risk management system is dependent on constant awareness of potential risks and regular practice of risk assessment processes by all levels of an organisation, the level of success in the implementation of mitigation actions have been incorporated as one of the criteria in the annual performance appraisal of Senior Management.

To instill a strong sense of risk management culture throughout the Group, the risk management mitigation actions undertaken by the respective Business Units are regularly reviewed. With an evolving and dynamic global business environment, the Group Risk Management Framework is subject to continuous improvement with pragmatic enhancements from time to time by the RMC.


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Statement on Risk Management and internal Control

intErnal aUDit FUnCtion

The Internal Audit function provides assurance on the effectiveness of the risk management and internal control system through regular monitoring and reviewing of the internal control processes across the Group.

The annual internal audit plan is reviewed and approved by the Audit Committee. The scope of audit plan encompasses frequency and extent on the review of operational procedures of the Business Units throughout the Group.

Internal audit visits are undertaken to evaluate the adequacy and effectiveness of the risk management and internal control system, make recommendations for improvements to the system of internal control and ensure that the said recommendations are implemented expeditiously. Significant audit findings are tabled at the Audit Committee meeting for deliberation. Besides this, audit reviews were undertaken to ensure compliance with the respective statutory legislations including the Listing Requirements of Bursa Malaysia Securities Berhad. otHEr KEY ElEMEnt on intErnal Control SYStEM

Internal control processes which are embedded for effective Group’s operations includes :-

• Clearorganisationalnomenclatureanddefinedauthorisationlimits;• Grouppolicies,includingPrinciplesofBusinessConductandWhistleBlowingPolicyandStandardOperatingProcedures

to ensure compliance with internal controls, relevant laws and regulations are uploaded in the Group’s intranet;• Annual business plans of all Business Units are reviewed and approved by the respective Divisional Executive

Committee;• GroupbudgetsarereviewedandapprovedbytheBoard;• RegularExecutiveCommitteemeetingsatBusinessUnits areheld to review theoperationalperformanceandkey

performance indicators against the approved budget;• Utilisationofthecontracttenderingandevaluationprocessforlargeprojects;and• WeeklyreportonGroupcashpositionismonitoredbyGroupTreasury.

Periodic site visits to operating units are undertaken by the members of the Executive Committee and/or the members of the Board whenever deemed appropriate.

The Group’s system of risk management and internal control applies principally to WSC and its subsidiaries. Associate companies and joint ventures have been excluded because the Group does not have full management control and/or majority Board representation.

rEViEW oF tHiS StatEMEnt

As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their review was performed in accordance with Recommended Practice Guide (“RPG”) 5 issued by the Malaysian Institute of Accountants. RPG 5 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group. This Statement was approved by the Board on 16 May 2013.


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Statement of Directors’ Responsibilities

The Directors are responsible for ensuring that the annual audited financial statements of the Group and the Company are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia and the Listing Requirements of Bursa Malaysia Securities Berhad.

The Directors are also responsible for ensuring that the annual audited financial statements of the Group and the Company are prepared with reasonable accuracy from the accounting records of the Group and the Company so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2012, and of the results of their operations and cash flows for the year ended on that date.

In preparing the annual audited financial statements, the Directors have applied the appropriate and relevant accounting policies on a consistent basis; made judgements and estimates that are reasonable and prudent; and prepared the annual audited financial statements on a going concern basis.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and the Company to prevent and detect fraud and other irregularities.


52

Financial StatementsDirectors’ Report ........................................................................... 54

Statement by Directors ................................................................. 59

Statutory Declaration .................................................................... 59

Independent Auditors’ Report ...................................................... 60

Statements of Financial Position .................................................. 62

Statements of Comprehensive Income ........................................ 65

Consolidated Statement of Changes in Equity ............................ 67

Company Statement of Changes in Equity .................................. 71

Statements of Cash Flows ........................................................... 72

Notes to the Financial Statements ............................................... 75


54

Directors’ Report

The Directors have the pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and the provision of management services to its subsidiaries.

The principal activities of the Group consist of Specialised Pipe Coating and Corrosion Protection Services; EPC, Fabrication and Rental of Gas Compressors and Process Equipment; E&P Products and Services; Infrastructure and Building Materials; and Agro-based Engineering.

There have been no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS Group Company RM’000 RM’000

Net profit for the financial year attributable to: - Owners of the Company 52,538 53,109 - Non-controlling interests 8,090 -

Net profit for the financial year 60,628 53,109

DIVIDENDS

The dividends paid or declared since the end of the previous financial year were as follows:

In respect of financial year ended 31 December 2012:

(a) On 28 August 2012, the Directors declared a first interim cash dividend of 3.0 sen per share comprising:

(i) Gross dividend of 1.25 sen per share less 25% Malaysian income tax; and

(ii) Tax exempt dividend of 1.75 sen per share

amounting to net dividend payment of RM20,753,093, paid on 3 October 2012.

(b) On 26 February 2013, the Directors declared a second interim dividend comprising:

(i) Single-tier cash dividend of 2.5 sen per share amounting to RM19,180,954; and

(ii) Special single-tier share dividend of 6,970,292 treasury shares distributed to the shareholders of Wah Seong Corporation Berhad (“WSC”) on the basis of one (1) WSC share for every one hundred and ten (110) existing WSC ordinary shares of RM0.50 each held at the entitlement date on 13 March 2013. Based on the share price of WSC shares of RM1.65 each as at 31 December 2012, the value of the share dividend per WSC share is equivalent to a gross cash dividend of 1.50 sen per share.

The second interim dividend was paid/credited into the entitled shareholders’ securities accounts on 3 April 2013.

In respect of financial year ended 31 December 2011:

On 22 February 2012, the Directors declared a second interim tax exempt cash dividend of 3.0 sen per share amounting to RM22,716,637 paid on 2 April 2012.

The Directors do not recommend the payment of any final dividend in respect of the financial year ended 31 December 2012.


55

Directors’ Report

RESERVES AND PROVISIONS

All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the issued and paid-up share capital of the Company was increased from RM376,787,146.50 to RM387,443,897.00 by way of issuance of 21,313,501 new ordinary shares of RM0.50 each resulting from the conversion of 8,525,401 3% Irredeemable Convertible Unsecured Loan Stocks 2002/2012 (“ICULS”) at the rate of RM1.00 nominal amount of ICULS for two and a half fully paid ordinary shares of RM0.50 each in the Company, details of which are disclosed in Note 27 to the financial statements.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company except that the shares issued on conversion of ICULS (“New Shares”) were not entitled to any dividend, rights, allotment and/or other distribution that were declared, made or paid prior to the date of allotment of the New Shares.

The Company did not issue any debentures during the financial year.

TREASURY SHARES

During the financial year, the Company purchased 4,598,900 of its issued share capital from the open market on Bursa Malaysia Securities Berhad (“Bursa Malaysia”) for RM8,350,865. The average price paid for the shares purchased during the financial year was approximately RM1.82 per share.

As at 31 December 2012, the number of treasury shares held by the Company was 4,704,449 shares.

Subsequent to the financial year ended 31 December 2012, a total of 6,970,292 treasury shares (includes treasury shares purchased subsequent to 31 December 2012) were declared as special single-tier share dividend by the Directors on 26 February 2013, distributed to the shareholders for the financial year ended 31 December 2012, on the basis of one (1) WSC share for every one hundred and ten (110) existing WSC ordinary shares of RM0.50 each held at the entitlement date on 13 March 2013 (fractions of treasury shares to be disregarded).

Details of the treasury shares are set out in Note 25 to the financial statements.

DIRECTORS

The Directors in office since the date of the last report are:

Robert Tan Chung MengChan Cheu LeongGiancarlo MaccagnoHalim Bin Haji DinPauline Tan Suat MingTan Sri Dato’ Dr. Lin See YanTan Sri Ab Rahman Bin Omar


56

Directors’ Report

DIRECTORS’ INTERESTS IN SHARES, ICULS AND WARRANTS

According to the Register of Directors’ Shareholdings required to be kept under Section 134 of the Companies Act, 1965, none of the Directors who held office at the end of the financial year held any shares or had any interests in ICULS and/or Warrants in the Company and its related corporations during the financial year except as follows:

Number of ordinary shares of RM0.50 each As at ICULS As at 1.1.2012 Bought conversion Disposed 31.12.2012

The Company

Robert Tan Chung Meng- direct interest 10,734,921 - - - 10,734,921- deemed interest## 287,911,463 - 2,914,500 - 290,825,963

Chan Cheu Leong- direct interest 18,188,594 131,000 - - 18,319,594- deemed interest** 38,320,400 660,000 - - 38,980,400

Giancarlo Maccagno- direct interest 15,404,842 - - - 15,404,842

Pauline Tan Suat Ming- direct interest 2,087,128 - - (5,714) 2,081,414- deemed interest# 288,680,601 6,714 2,914,500 (20,000) 291,581,815

Number of ordinary shares of Baht 100 each As at As at 1.1.2012 Acquired Disposed 31.12.2012

PPSC (Thailand) Limited(a subsidiary company)

Chan Cheu Leong- direct interest^ 1 - - 1

Giancarlo Maccagno- direct interest^ 1 - - 1

Number of ICULS of RM1.00 each As at As at 1.1.2012 Acquired Converted Disposed 31.12.2012

The Company

Robert Tan Chung Meng- deemed interest@ 8,508,800 - (1,165,800) (7,343,000) -

Pauline Tan Suat Ming

- deemed interest@ 8,508,800 - (1,165,800) (7,343,000) -


57

Directors’ Report

DIRECTORS’ INTERESTS IN SHARES, ICULS AND WARRANTS (CONTINUED)

Number of Warrants with an exercise price of RM3.17 per ordinary share As at As at 1.1.2012 Acquired Disposed 31.12.2012

The Company

Robert Tan Chung Meng- direct interest 1,878,743 - - 1,878,743- deemed interest## 54,207,824 - - 54,207,824

Chan Cheu Leong- direct interest 3,185,450 - - 3,185,450- deemed interest* 4,677,474 - (1,174,600) 3,502,874

Giancarlo Maccagno- direct interest 1,180,000 - (1,180,000) -

Pauline Tan Suat Ming- direct interest 365,273 - (1,000) 364,273- deemed interest# 54,523,376 1,000 - 54,524,376

Tan Sri Ab Rahman Bin Omar- direct interest 62,501 - - 62,501

By virtue of their interests of more than 15% in the shares of the Company, Robert Tan Chung Meng and Pauline Tan Suat Ming are deemed to be interested in the shares of all the subsidiaries to the extent that the Company has an interest.

## Deemed interest held through Wah Seong (Malaya) Trading Co. Sdn. Bhd. (“WST”), Wah Seong Enterprises Sdn. Bhd. (“WSE”) and Tan Kim Yeow Sendirian Berhad (“TKYSB”) pursuant to Section 6A of the Companies Act, 1965 (“Act”).

* Deemed interest held through Midvest Asia Sdn. Bhd. (“MASB”) pursuant to Section 6A of the Act.** Deemed interest held through MASB pursuant to Section 6A of the Act and includes interests of his spouse and children.# Deemed interest held through WST, WSE and TKYSB pursuant to Section 6A of the Act and includes interests of her

spouse and children. ^ Held in trust for Wasco Coatings HK Limited.@ Deemed interest held through WST pursuant to Section 6A of the Act.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than the benefits shown in Notes 39 and 47 to the financial statements) by reason of a contract made by the Company or by a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Neither during nor at the end of the financial year was the Company or any of its subsidiaries a party to any arrangements whose object was to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

OTHER STATUTORY INFORMATION

(a) Before the income statements and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and


58

Directors’ Report

OTHER STATUTORY INFORMATION (CONTINUED)

(ii) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise.

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

(i) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or

(ii) which would render the values attributed to the current assets in the financial statements of the Group and of the Company 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.

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

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

(d) No contingent 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 financial year which, in the opinion of the Directors, will or may affect the ability of the Company and its subsidiaries to meet their obligations as and when they fall due.

(e) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the respective financial statements misleading.

(f) In the opinion of the Directors:

(i) the results of the operations of the Group and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment as auditors.

Signed on behalf of the Board of Directors in accordance with their resolution dated 23 April 2013.

CHAN CHEU LEONG HALIM BIN HAJI DINDIRECTOR DIRECTOR

Kuala Lumpur


59

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

We, Chan Cheu Leong and Halim Bin Haji Din, two of the Directors of Wah Seong Corporation Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 62 to 181 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2012 and of the results and cash flows of the Group and of the Company for the financial year ended on that date in accordance with the provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors dated 23 April 2013.

CHAN CHEU LEONG HALIM BIN HAJI DINDIRECTOR DIRECTOR

Kuala Lumpur

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965

I, Ramanathan A/L P.R. Singaram, the officer primarily responsible for the financial management of Wah Seong Corporation Berhad, do solemnly and sincerely declare that, the financial statements set out on pages 62 to 181 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.

RAMANATHAN A/L P.R.SINGARAM

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 23 April 2013.

Before me:

S. ARULSAMY (W.490)COMMISSIONER FOR OATHS


60

Independent Auditors’ Report To the Members of Wah Seong Corporation Berhad

(Incorporated In Malaysia)(Company No. 495846-A)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Wah Seong Corporation Berhad on pages 62 to 181 which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the statements of income, comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on Notes 1 to 54.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial 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 financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows 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 its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in note 7 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.


61

Independent Auditors’ Report To the Members of Wah Seong Corporation Berhad

(Incorporated In Malaysia)(Company No. 495846-A)

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 55 on page 181 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

1. As stated in Note 2 to the financial statements, Wah Seong Corporation Berhad adopted Malaysian Financial Reporting Standards on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the statement of income, comprehensive income, statement of changes in equity and statement of cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash flows for the year then ended.

2. 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.

PRICEWATERHOUSECOOPERS TIANG WOON MENG(No. AF: 1146) (No. 2927/05/14 (J))Chartered Accountants Chartered Accountant

Kuala Lumpur23 April 2013


62

Statements of Financial PositionAs at 31 December 2012

Group Company Note 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 Restated Restated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

NON-CURRENT ASSETS

Property, plant and equipment 4 478,400 511,628 541,463 5,375 359 335Prepaid lease payments 5 97,107 78,546 79,719 - - -Investment properties 6 11,253 4,930 6,172 22,533 - -Investment in subsidiaries 7 - - - 762,293 606,541 558,422Investment in associates 8 114,655 17,941 17,091 - - -Investment in jointly controlled entities 9 71,764 22,107 27,625 - - -Available-for-sale financial assets 10 1,142 1,173 1,137 - - -Derivative financial assets 11 61 1,580 10 - - -Goodwill 12 109,886 112,552 110,469 - - -Other intangible assets 13 68 544 549 - - -Deferred tax assets 14 10,498 8,693 9,581 1,029 1,029 690

894,834 759,694 793,816 791,230 607,929 559,447

CURRENT ASSETS

Inventories 15 251,324 284,159 243,115 - - -Amounts due from customers

on contracts 16 55,251 69,702 46,000 - - -Trade and other receivables 17 578,286 570,347 481,078 1,364 99 103Amounts owing by subsidiaries 18(a) - - - 52,157 169,305 42,003Amounts owing by associates 19(a) 1,442 3,815 4,079 - - -Amounts owing by jointly

controlled entities 20(a) 52,560 463 7,044 14 - -Tax recoverable 23,490 14,478 12,217 8,550 7,337 7,959Derivative financial assets 11 472 - 2,187 - - 1,205Time deposits 21 155,229 399,493 175,531 56,093 228,826 86,445Cash and bank balances 22 158,480 184,896 189,891 9,553 13,710 33,268

1,276,534 1,527,353 1,161,142 127,731 419,277 170,983

Assets of disposal groups heldfor sale 35 3,990 8,576 54,753 - - -

TOTAL ASSETS 2,175,358 2,295,623 2,009,711 918,961 1,027,206 730,430


63

Statements of Financial PositionAs at 31 December 2012 (Continued)


EQUITY AND LIABILITIES

CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE COMPANY

Share capital 23 387,444 376,787 361,971 387,444 376,787 361,971Share premium 24 160,254 162,385 165,348 160,254 162,385 165,348Treasury shares 25 (8,573) (222) (138) (8,573) (222) (138)Warrants reserve 28 25,786 25,786 25,786 25,786 25,786 25,786Exchange translation reserves 26 (1,561) 6,472 - - - -Equity component of Irredeemable

Convertible UnsecuredLoan Stocks (“ICULS”) 27 - 4,895 11,701 - 4,895 11,701

Hedging reserve 26 - - (439) - - -Available-for-sale reserve 26 54 77 41 - - -Retained profits 29 426,892 427,854 360,916 173,949 164,310 150,794

990,296 1,004,034 925,186 738,860 733,941 715,462Non-controlling interests 99,607 93,658 115,052 - - -

TOTAL EQUITY 1,089,903 1,097,692 1,040,238 738,860 733,941 715,462

NON-CURRENT ANDDEFERRED LIABILITIES

Irredeemable ConvertibleUnsecured Loan Stocks (“ICULS”) 27 - - 8,678 - - 8,678

Term loans 30 219,868 373,318 428,365 - - -Hire purchase liabilities 31 17 27 31 - - -Deferred tax liabilities 14 6,497 13,712 18,831 - - -Other liabilities 3,279 2,201 2,415 - - -

229,661 389,258 458,320 - - 8,678


64

Statements of Financial PositionAs at 31 December 2012 (Continued)


CURRENT LIABILITIES

Irredeemable ConvertibleUnsecured Loan Stocks (“ICULS”) 27 - 3,630 - - 3,630 -

Amounts due to customers on contracts 16 61,232 35,831 32,992 - - -Trade and other payables 32 313,019 302,442 246,238 8,686 5,969 5,613Provision for warranties 33 10,526 12,231 18,604 - - -Amounts owing to subsidiaries 18(b) - - - 21,947 140,478 677Amount owing to an associate 19(b) - - 68 - - -Amounts owing to jointly controlled entities 20(b) 2,901 1,331 279 - - -Derivative financial liabilities 11 - 3,808 414 - 182 -Hire purchase liabilities 31 8 8 24 - - -Term loans 30 81,662 38,262 75,635 - - -Other bank borrowings 34 382,917 398,169 116,042 149,468 143,006 -Dividend payable - - 1,343 - - -Current tax liabilities 3,529 12,961 9,183 - - -

855,794 808,673 500,822 180,101 293,265 6,290

Liabilities of disposal groupsheld for sale 35 - - 10,331 - - -

TOTAL LIABILITIES 1,085,455 1,197,931 969,473 180,101 293,265 14,968

TOTAL EQUITY AND LIABILITIES 2,175,358 2,295,623 2,009,711 918,961 1,027,206 730,430


65

Statements of Comprehensive IncomeFor the Financial Year Ended 31 December 2012

Group Company Note 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Gross revenue 36 1,951,552 1,889,111 75,141 72,490Cost of sales 37 (1,690,506) (1,509,277) - -

Gross profit 261,046 379,834 75,141 72,490

Other operating income 40,968 40,503 697 985Selling and distribution expenses (33,257) (32,697) - -Administrative and general expenses (169,209) (178,127) (16,627) (12,454)Other gains/(losses) - net 38 2,746 (9,687) 182 (1,387)

Profit from operations 39 102,294 199,826 59,393 59,634

Finance costs 40 (21,156) (21,952) (4,707) (3,129)Share of results of associates 2,538 1,055 - -Share of results of jointly controlled entities (1,195) (5,661) - -

Profit before tax 82,481 173,268 54,686 56,505

Tax expense 41 (21,853) (42,029) (1,577) (1,962)

Net profit for the financial year 60,628 131,239 53,109 54,543

Net profit for the financial year attributable to:Owners of the Company 52,538 110,374 53,109 54,543Non-controlling interests 8,090 20,865 - -


Earnings per share computed based on the net profit for the financial yearattributable to the owners of the Company:- basic (sen) 42(a) 6.86 14.48

- fully diluted (sen) 42(b) 6.86 14.48


66

Statements of Comprehensive IncomeFor the Financial Year Ended 31 December 2012 (Continued)



Other comprehensive income/(expense)

Available-for-sale financial assets 26- Fair value (losses)/gains (10) 36 - -- Transfer to profit or loss upon disposal (13) - - -

Cash flow hedge 26- Fair value gains - 407 - -- Tax charge on fair value gains - (69) - -- Realisation upon settlement - 101 - -

Foreign currency translationdifferences for foreign operations (7,944) 6,565 - -

Other comprehensive (expense)/income for the financial year, net of tax (7,967) 7,040 - -

Total comprehensive income for the financial year 52,661 138,279 53,109 54,543

Total comprehensive income for the financial year attributable to:Owners of the Company 44,482 117,321 53,109 54,543Non-controlling interests 8,179 20,958 - -

Total comprehensive income for the financial year 52,661 138,279 53,109 54,543


67

Consolidated Statement of Changes in EquityFor the Financial Year Ended 31 December 2012

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repu

rcha

sed

(incl

udin

g

tran

sact

ion

cost

s)

25

- -

- -

- -

(8,3

51)

- -

(8,3

51)

- (8

,351

)

Issu

ance

of s

hare

s:

- co

nver

sion

of I

CU

LS

23/2

7 8,

526

(4,8

95)

- -

- -

- -

- 3,

631

- 3,

631

- bo

nus

shar

es a

risin

g fr

om

conv

ersi

on o

f IC

ULS

23

/24

2,13

1 -

(2,1

31)

- -

- -

- -

- -

-

Div

iden

ds p

aid

to o

wne

rs o

f the

C

ompa

ny

43

- -

- -

- -

- -

(43,

470)

(4

3,47

0)

- (4

3,47

0)

Div

iden

ds p

aid

to n

on-c

ontr

ollin

g

in

tere

sts

-

- -

- -

- -

- -

- (1

,097

) (1

,097

)

Dis

posa

l of s

ubsi

dia

ries

4

5(a)

-

- -

- -

- -

- -

- (4

,776

) (4

,776

)

Liqu

idat

ion

of a

sub

sidi

ary

- -

- -

- -

- -

- -

37

37

Tota

l con

trib

utio

ns b

y an

d

dist

ribut

ions

to o

wne

rs

10

,657

(4

,895

) (2

,131

) -

- -

(8,3

51)

- (4

3,47

0)

(48,

190)

(5

,836

) (5

4,02

6)


68

Consolidated Statement of Changes in EquityFor the Financial Year Ended 31 December 2012 (Continued)

A

ttri

buta

ble

to o

wne

rs o

f the

Com

pany

Equ

ity

Exc

hang

e

A

vaila

ble-

N

on-

S

hare

co

mpo

nent

S

hare

W

arra

nts

tran

slat

ion

Cap

ital

Trea

sury

fo

r-sa

le

Ret

aine

d c

ontr

ollin

g To

tal

Not

e ca

pita

l of

ICU

LS

prem

ium

r

eser

ve

res

erve

s re

serv

e sh

ares

rese

rve

p

rofit

s

Tot

al

inte

rest

s

equ

ity

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Issu

e of

sha

res

to

no

n-co

ntro

lling

inte

rest

s an

d

th

e ef

fect

s of

dilu

tion

of e

quity

in

tere

st in

a s

ubsi

diar

y

- -

- -

- -

- -

160

160

5,10

7 5,

267

Acq

uisi

tion

of s

hare

s in

an

ex

istin

g su

bsi

diar

y fr

om

no

n-co

ntro

lling

inte

rest

44

(a)(i

)/(v)

-

- -

- -

- -

- (5

,022

) (5

,022

) (6

,669

) (1

1,69

1)

Effe

cts

aris

ing

from

the

ac

quis

ition

of n

ew s

hare

s

al

lott

ed b

y an

ex

istin

g su

bsid

iary

44

(a)(i

v)

- -

- -

- -

- -

(5,1

68)

(5,1

68)

5,16

8 -

Tota

l cha

nges

in o

wne

rshi

p

in

tere

st in

sub

sidi

arie

s th

at

d

id n

ot re

sult

in a

loss

of

co

ntro

l

- -

- -

- -

- -

(10,

030)

(1

0,03

0)

3,60

6 (6

,424

)

Tota

l tra

nsac

tions

with

ow

ners

10,6

57

(4,8

95)

(2,1

31)

- -

- (8

,351

) -

(53,

500)

(5

8,22

0)

(2,2

30)

(60,

450)

At 3

1 D

ecem

ber

2012

387,

444

- 16

0,25

4 25

,786

(1

,561

) -

(8,5

73)

54

426,

892

990,

296

99,6

07

1,08

9,90

3


69


A

ttri

buta

ble

to o

wne

rs o

f the

Com

pany

Equ

ity

Exc

hang

e

A

vaila

ble-

N

on-

S

hare

com

pone

nt

Sha

re

War

rant

s tr

ansl

atio

n C

apita

l Tr

easu

ry

Hed

ging

fo

r-sa

le

Ret

aine

d c

ontr

ollin

g To

tal

Not

e ca

pita

l of

ICU

LS

prem

ium

r

eser

ve

res

erve

s re

serv

e sh

ares

r

eser

ve

re

serv

e

pro

fits

T

otal

in

tere

sts

e

quity

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

At 1

Jan

uary

201

1

- as

pre

viou

sly

stat

ed

36

1,97

1 11

,701

16

5,34

8 25

,786

(9

,930

) 85

(1

38)

(439

) 41

37

0,76

1 92

5,18

6 11

5,05

2 1,

040,

238

- ef

fect

s of

tran

sitio

ning

to

MFR

S

2.2(

c)

- -

- -

9,93

0 (8

5)

- -

- (9

,845

) -

- -

- as

rest

ated

361,

971

11,7

01

165,

348

25,7

86

- -

(138

) (4

39)

41

360,

916

925,

186

115,

052

1,04

0,23

8

Net

pro

fit fo

r the

fina

ncia

l

ye

ar

-

- -

- -

- -

- -

110,

374

110,

374

20,8

65

131,

239

Oth

er c

ompr

ehen

sive

inco

me

fo

r the

fina

ncia

l yea

r

- -

- -

6,47

2 -

- 43

9 36

-

6,94

7 93

7,

040

Tota

l com

preh

ensi

ve in

com

e

fo

r the

fina

ncia

l yea

r

- -

- -

6,47

2 -

- 43

9 36

11

0,37

4 11

7,32

1 20

,958

13

8,27

9

Tran

sact

ions

with

ow

ners

:

Sha

res

repu

rcha

sed

(in

clud

ing

tran

sact

ion

co

sts)

25

-

- -

- -

- (8

4)

- -

- (8

4)

- (8

4)

Issu

ance

of s

hare

s:

- co

nver

sion

of I

CU

LS

23/2

7 11

,853

(6

,806

) -

- -

- -

- -

- 5,

047

- 5,

047

- bo

nus

shar

es a

risin

g fro

m

conv

ersi

on o

f IC

ULS

23

/24

2,96

3 -

(2,9

63)

- -

- -

- -

- -

- -

Div

iden

ds p

aid

to o

wne

rs

of

the

Com

pany

43

-

- -

- -

- -

- -

(41,

027)

(4

1,02

7)

- (4

1,02

7)

Div

iden

ds p

aid

to

no

n-co

ntro

lling

inte

rest

s

- -

- -

- -

- -

- -

- (4

5,29

0)

(45,

290)

Dis

posa

l of s

ubsi

diar

ies

-

- -

- -

- -

- -

- -

(11,

334)

(1

1,33

4)

Tota

l con

trib

utio

ns b

y an

d

di

strib

utio

ns to

ow

ners

14,8

16

(6,8

06)

(2,9

63)

- -

- (8

4)

- -

(41,

027)

(3

6,06

4)

(56,

624)

(9

2,68

8)


70


A

ttri

buta

ble

to o

wne

rs o

f the

Com

pany

E

quity

E

xcha

nge

Ava

ilabl

e-

Non

-

Sha

re c

ompo

nent

S

hare

W

arra

nts

tran

slat

ion

Cap

ital

Trea

sury

H

edgi

ng

for-

sale

R

etai

ned

co

ntro

lling

To

tal

N

ote

capi

tal

of IC

ULS

pr

emiu

m

res

erve

r

eser

ves

rese

rve

shar

es

res

erve

rese

rve

p

rofit

s

Tot

al

inte

rest

s

equ

ity

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Issu

e of

sha

res

to

non-

cont

rolli

ng in

tere

sts

-

- -

- -

- -

- -

- -

431

431

Dis

posa

l of s

hare

s in

exi

stin

g

subs

idia

ries

to n

on-c

ontr

ollin

g

inte

rest

- -

- -

- -

- -

- (2

,409

) (2

,409

) 13

,841

11

,432

Tota

l cha

nges

in o

wne

rshi

p in

tere

st

in s

ubsi

diar

ies

that

did

not

resu

lt in

a lo

ss o

f con

trol

- -

- -

- -

- -

- (2

,409

) (2

,409

) 14

,272

11

,863

Tota

l tra

nsac

tions

with

ow

ners

14,8

16

(6,8

06)

(2,9

63)

- -

- (8

4)

- -

(43,

436)

(3

8,47

3)

(42,

352)

(8

0,82

5)

At 3

1 D

ecem

ber 2

011

37

6,78

7 4,

895

162,

385

25,7

86

6,47

2 -

(222

) -

77

427,

854

1,00

4,03

4 93

,658

1,0

97,6

92


71

Company Statement of Changes in EquityFor the Financial Year Ended 31 December 2012 (Continued)

N

on-

dis

trib

utab

le

Dis

trib

utab

le

Eq

uity

Sha

re

com

po

nent

S

hare

W

arra

nts

Trea

sury

R

etai

ned

To

tal

N

ote

cap

ital

of

ICU

LS

pre

miu

m

re

serv

e

shar

es

p

rofi

ts

e

qui

ty

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

At

1 Ja

nuar

y 20

12

37

6,78

7 4,

895

162,

385

25,7

86

(222

) 16

4,31

0 73

3,94

1

Tota

l com

pre

hens

ive

inco

me

for

the

finan

cial

yea

r

- -

- -

- 53

,109

53

,109

Tran

sact

ions

wit

h o

wne

rs:

Sha

res

rep

urch

ased

(inc

lud

ing

tran

sact

ion

cost

s)

25

- -

- -

(8,3

51)

- (8

,351

)Is

suan

ce o

f sha

res:

- co

nver

sion

of I

CU

LS

23/2

7 8,

526

(4,8

95)

- -

- -

3,63

1-

bon

us s

hare

s ar

isin

g fr

om c

onve

rsio

n of

ICU

LS

23/2

4 2,

131

- (2

,131

) -

- -

-D

ivid

end

s p

aid

to

owne

rs o

f the

Com

pan

y 43

-

- -

- -

(43,

470)

(4

3,47

0)

Tota

l con

trib

utio

ns b

y an

d d

istr

ibut

ions

to

owne

rs

10

,657

(4

,895

) (2

,131

) -

(8,3

51)

(43,

470)

(4

8,19

0)

At

31 D

ecem

ber

201

2

387,

444

- 16

0,25

4 25

,786

(8

,573

) 17

3,94

9 73

8,86

0

At

1 Ja

nuar

y 20

11

36

1,97

1 11

,701

16

5,34

8 25

,786

(1

38)

150,

794

715,

462

Tota

l com

pre

hens

ive

inco

me

for

the

finan

cial

yea

r

- -

- -

- 54

,543

54

,543

Tran

sact

ions

wit

h o

wne

rs:

Sha

res

rep

urch

ased

(inc

lud

ing

tran

sact

ion

cost

s)

25

- -

- -

(84)

-

(84)

Issu

ance

of s

hare

s:

- co

nver

sion

of I

CU

LS

23/2

7 11

,853

(6

,806

) -

- -

- 5,

047

- b

onus

sha

res

aris

ing

from

con

vers

ion

of IC

ULS

23

/24

2,96

3 -

(2,9

63)

- -

- -

Div

iden

ds

pai

d t

o ow

ners

of t

he C

omp

any

43

- -

- -

- (4

1,02

7)

(41,

027)

Tota

l con

trib

utio

ns b

y an

d d

istr

ibut

ions

to

owne

rs

14

,816

(6

,806

) (2

,963

) -

(84)

(4

1,02

7)

(36,

064)

At

31 D

ecem

ber

201

1

376,

787

4,89

5 16

2,38

5 25

,786

(2

22)

164,

310

733,

941


72

Statements of Cash FlowsFor the Financial Year Ended 31 December 2012


CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for:Property, plant and equipment:

- Depreciation charge 53,968 52,219 247 100- Impairment loss - 19,089 - -- Written off 1,067 1,112 1 -- Loss/(gain) on disposal 289 (322) (87) (2)

Amortisation of prepaid lease payments 1,320 1,173 - -Depreciation of investment properties 264 208 42 -Amortisation of other intangible assets 471 130 - -Gain on disposal of assets held for sale (236) - - -Gain on disposal of available-for-sale-financial assets (6) - - -Gain on disposal of subsidiaries (4,258) (199) - -Inventories:

- Allowance for obsolescence 313 2,125 - -- Write back of allowance for obsolescence - (140) - -- Written off 5,305 4,933 - -

Impairment loss on investment in associates 1,785 - - -Impairment loss on amount owing by associates 2,349 126 - -Share of results of associates (2,538) (1,055) - -Net reversal of impairment loss on amount owing

by jointly controlled entity (401) (1,805) - -Share of results of jointly controlled entities 1,195 5,661 - -Net impairment/(reversal of impairment) on trade and

other receivables 7,455 (4,704) - -Bad debts written off 370 1,464 - -Reversal of provision for warranties (527) (4,674) - -Net unrealised (gain)/loss on foreign exchange (4,220) 6,716 (460) 1,525Dividend income - - (67,414) (60,948)Interest income from loans and receivables (10,245) (11,137) (6,479) (10,280)Interest expense 21,156 21,952 4,707 3,129Fair value (gains)/losses on derivative financial

instruments 38 (2,746) 9,687 (182) 1,387

154,611 275,827 (14,939) (8,584)

Changes in working capital:Inventories 26,666 (47,962) - -Receivables (65,653) (94,717) (3,592) (552)Payables 40,168 59,414 2,717 356

Cash generated from/(used in) operations 155,792 192,562 (15,814) (8,780)

Interest received 10,245 11,137 6,479 10,280Interest paid (21,156) (21,952) (4,707) (3,129)Tax paid (47,428) (45,035) (2,214) (1,613)

Net cash generated from/(used in) operating activities 97,453 136,712 (16,256) (3,242)


73

Statements of Cash FlowsFor the Financial Year Ended 31 December 2012 (Continued)


CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (38,453) (39,199) (5,264) (124)Purchase of investment properties (197) - (22,575) -Purchase of prepaid lease payments (15,369) - - -Purchase of other intangible asset - (112) - -Subscription of additional shares in existing subsidiary - - (3,318) (124,692)Payment for subscription of interest

in jointly controlled entities (59,152) - - -Acquisition of interest in an associated company (96,936) - - -Acquisition of subsidiary - - (101,483) -Proceeds from disposal of property, plant and equipment 3,113 4,313 88 2Proceeds from assets of disposal groups held for sale 4,636 2,399 - -Proceeds from disposal of available-for-sale financial assets 15 - - -Net cash inflow from disposal of subsidiaries 45 6,454 17,517 - -Dividends received from:

- subsidiaries - - 16,950 24,572- jointly controlled entities 5,170 3,955 - -- associates 377 346 - -

Net (advances to)/repayment from subsidiaries - - (2,964) 130,090

Net cash (used in)/generated from investing activities (190,342) (10,781) (118,566) 29,848

CASH FLOWS FROM FINANCING ACTIVITIES

Purchase of treasury shares 25 (8,351) (84) (8,351) (84)Purchase of interest rate cap - (5,250) - -Proceeds from issue of shares to non-controlling interests - 431 - -Drawdown from other bank borrowings 596,370 621,272 241,209 274,423Repayments of other bank borrowings (605,168) (351,998) (231,426) (137,439)Drawdown from term loans - 1,587 - -Repayments of term loans (101,471) (105,692) - -Payment of hire purchase instalments (10) (18) - -Dividends paid to owners of the Company 43 (43,470) (41,027) (43,470) (41,027)Dividends paid to non-controlling interests (1,097) (46,633) - -Release of deposits pledged as security for term loans - 1,295 - -Proceeds from disposal of shares in subsidiaries

that did not result in loss of control - 11,626 - -Acquisition of additional shares in subsidiaries (11,066) - - -

Net cash (used in)/generated from financing activities (174,263) 85,509 (42,038) 95,873


74

Statements of Cash FlowsFor the Financial Year Ended 31 December 2012 (Continued)


NET CHANGES IN CASH AND CASH EQUIVALENTS (267,152) 211,440 (176,860) 122,479

CASH AND CASH EQUIVALENTS ATBEGINNING OF THE FINANCIAL YEAR 584,389 364,127 242,536 119,713

EFFECTS OF EXCHANGE RATE CHANGES (3,528) 8,822 (30) 344

CASH AND CASH EQUIVALENTS ATEND OF THE FINANCIAL YEAR 313,709 584,389 65,646 242,536

Represented by:

TIME DEPOSITS 21 155,229 399,493 56,093 228,826CASH AND BANK BALANCES 22 158,480 184,896 9,553 13,710

CASH AND CASH EQUIVALENTS 313,709 584,389 65,646 242,536


75

1 GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business are as follows:

Registered office and principal place of business:Suite 19.01, Level 19The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

The principal activities of the Company are investment holding and the provision of management services to its subsidiaries.

The principal activities of the Group consist of Specialised Pipe Coating and Corrosion Protection Services; EPC, Fabrication and Rental of Gas Compressors and Process Equipment; E&P Products and Services; Infrastructure and Building Materials; and Agro Based Engineering.

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency. Unless otherwise indicated, the amounts in these financial statements have been rounded to the nearest thousand.

These financial statements were authorised for issue by the Directors on 23 April 2013.

2 SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial statements.

2.1 Basis of preparation

The financial statements of the Group and Company have been prepared in accordance with the provisions of the Companies Act, 1965, Malaysian Financial Reporting Standards (“MFRS”) and International Financial Reporting Standards.

The financial statements have been prepared under the historical cost convention unless otherwise indicated in this summary of significant accounting policies.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Group’s and Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3 to the financial statements.

Notes to the Financial StatementsFor the Financial Year Ended 31 December 2012


76

Notes to the Financial StatementsFor the Financial Year Ended 31 December 2012 (Continued)

2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.2 First-time adoption of Malaysian Financial Reporting Standards

The financial statements of the Group and the Company for the financial year ended 31 December 2012 are the first set of financial statements prepared in accordance with MFRS, including MFRS 1 ‘First-time Adoption of Malaysian Financial Reporting Standards’. Subject to certain transition elections as disclosed below, the Group and Company have consistently applied the same accounting policies in its opening MFRS statement of financial position as at 1 January 2011 (transition date) and throughout all periods presented, as if these policies had always been in effect. Comparative figures for 2011 in these financial statements have been restated to give effect to these changes. Subsequent to the transition in the financial reporting framework to MFRS on 1 January 2012, the restated comparative information have not been audited under MFRS. However, the statements of financial position as at 31 December 2011, statements of income, comprehensive income, changes in equity and cash flows for the financial year ended 31 December 2011 have been audited under the previous financial reporting framework, Financial Reporting Standards in Malaysia. Note 2.2(c) discloses the impact of the transition to MFRS on the Group’s reported financial position.

(a) MFRS 1 mandatory exceptions

(i) MFRS estimates

MFRS estimates as at the date of transition are consistent with the estimates as at the same date made in conformity with Financial Reporting Standards in Malaysia (“FRS”).

(ii) Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to a hedging relationship that qualifies for hedge accounting under MFRS 139 ‘Financial Instruments: Recognition and Measurement’ at that date. Hedging relationships cannot be designated retrospectively.

(b) MFRS 1 exemption options

(i) Exemption for business combinations

MFRS 1 provides the option to apply MFRS 3 ‘Business Combinations’ prospectively for business combination that occurred from the transition date or from a designated date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date or a designated date prior to the transition date. The Group elected to apply MFRS 3 prospectively to business combinations that occurred from 1 January 2011 (date of transition) and onwards. Business combinations that occurred prior to 1 January 2011 have not been restated. In addition, the Group has also applied MFRS 127 ‘Consolidated and Separate Financial Statements’ from the same date.

(ii) Exemption for cumulative foreign currency translation differences

MFRS 1 permits cumulative foreign currency translation gains and losses for all foreign operations to be reset to zero at the transition date. This provides relief from determining cumulative foreign currency translation differences in accordance with MFRS 121 ‘The Effects of Changes in Foreign Exchange Rates’ from the date a foreign operation was acquired. The Group elected to reset all cumulative foreign currency translation differences to zero against its opening retained earnings as at 1 January 2011. The cumulative translation differences as at that date amounted to a loss of RM9,930,000.


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2.2 First-time adoption of Malaysian Financial Reporting Standards (continued)

(c) Reconciliation of equity balances

The table below reconciles equity balances previously reported in accordance with FRS to equity balances restated in accordance with MFRS on 1 January 2011 (date of transition) and 31 December 2011:

Group 31.12.2011 1.1.2011 RM’000 RM’000

Retained profits

Retained profits as reported under FRS 437,699 370,761

Transitional adjustments:Cumulative foreign currency translation

differences as at 1 January 2011transferred to retained earnings (9,930) (9,930)

Capital reserves as at 1 January 2011transferred to retained earnings 85 85

Effects of transitioning to MFRS (9,845) (9,845)

Retained profits restated under MFRS 427,854 360,916

Exchange translation reserves

Exchange translation reserves as reported under FRS (3,458) (9,930)

Transitional adjustments:Cumulative foreign currency translation

differences as at 1 January 2011transferred to retained earnings 9,930 9,930

Exchange translation reserves restated under MFRS 6,472 -

Capital reserves

Capital reserves as reported under FRS 85 85

Transitional adjustments:Capital reserves as at 1 January 2011

transferred to retained earnings (85) (85)

Capital reserves restated under MFRS - -


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2.3 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and Company but not yet effective

• MFRS10“ConsolidatedFinancialStatements”changesthedefinitionofcontrol.An investorcontrolsaninvestee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. It replaces all guidances on control and consolidation in MFRS 127 “Consolidated and Separate Financial Statements” and IC Interpretation 112 “Consolidation – special purpose entities”. The Group will apply this standard from financial year beginning on 1 January 2013.

• MFRS 11 “Joint Arrangements” requires a party to a joint arrangement to determine the type of jointarrangement in which it is involved by assessing its rights and obligations arising from the arrangement, rather than its legal form. There are two types of joint arrangements: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. The Group will apply this standard from financial year beginning on 1 January 2013.

• MFRS12“DisclosuresofInterestsinOtherEntities”setsouttherequireddisclosuresforentitiesreportingunder the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements currently found in MFRS 128 “Investments in Associates”. It requires entities to disclose information that helps readers of the financial statements to evaluate the nature, risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. The Group and the Company will apply this standard from financial year beginning on 1 January 2013.

• MFRS13“FairValueMeasurement”aimsto improveconsistencyandreducecomplexitybyprovidingaprecise definition of fair value and a single source of fair value measurement and disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. The enhanced disclosure requirements are similar to those in MFRS 7 “Financial Instruments: Disclosures”, but apply to all financial and non-financial assets and liabilities measured at fair value. The Group and Company will apply this standard from financial year beginning on 1 January 2013.

• The revised MFRS 127 “Separate Financial Statements” includes the provisions on separate financialstatements that are left after the control provisions of MFRS 127 have been included in the new MFRS 10. The Group and Company will apply this standard from financial year beginning on 1 January 2013.

• TherevisedMFRS128“InvestmentsinAssociatesandJointVentures”includestherequirementsforjointventures, as well as associates, to be equity accounted following the issuance of MFRS 11. The Group will apply this standard from financial year beginning on 1 January 2013.

• Amendments toMFRS7“Financial Instruments:Disclosure” requiresmoreextensivedisclosures focusingon quantitative information about recognised financial instruments that are offset in the statement of financial position and those that are subject to master netting or similar arrangements irrespective of whether they are offset. The Group and Company will apply this standard from financial year beginning on 1 January 2013.

• Amendments to MFRS 101 “Presentation of Financial Statements” requires entities to separate itemspresented in other comprehensive income (OCI) (within the statement of comprehensive income) into two groups, based on whether or not they may be recycled to profit or loss in the future. The Group and Company will apply this standard from financial year beginning on 1 January 2013.

• Amendment toMFRS132 “Financial Instruments: Presentation” does not change the current offsettingmodel in MFRS 132. It clarifies the meaning of ‘currently has a legally enforceable right of set-off’ that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. The Group and Company will apply this standard from financial year beginning on 1 January 2014.


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2.3 Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and Company but not yet effective (continued)

• MFRS 9 “Financial Instruments – Classification and Measurement of Financial Assets and Financial Liabilities” replaces the multiple classification and measurement models in MFRS 139 with a single model that has only two classification categories: amortised cost and fair value. The basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

The accounting and presentation for financial liabilities and for de-recognising financial instruments has been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income (OCI). There is no subsequent recycling of the amounts in OCI to profit or loss, but accumulated gains or losses may be transferred within equity.

The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.

Disclosures summarising the transition from MFRS 139 to MFRS 9 will be presented as required by MFRS 7.

The Group and Company will apply this standard from financial year beginning on 1 January 2015.

The adoption of the above standards that are applicable from the financial year beginning on 1 January 2013 is not expected to result in any material impact on the financial position and results of the Group and Company except for certain changes in the presentation of the statement of comprehensive income as guided by MFRS 101.

The Group and the Company will undertake an assessment on the impact of the adoption of the Amendment to MFRS 132 and MFRS 9 (applicable from financial year beginning on 1 January 2014 and 1 January 2015 respectively) on its results and financial position.

2.4 Subsidiaries

Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) over which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as the fair value of the assets given, equity interests issued and liabilities incurred or assumed at the date of exchange. Acquisition-related costs are expensed to profit or loss as and when incurred. The cost of acquisition includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill in the statement of financial position – see accounting policy 2.12(a) on goodwill. If the cost of acquisition is less than the fair value of the Group’s share of identifiable net assets of the subsidiary acquired, the difference is recognised directly in the profit or loss.

In a business combination achieved in stages, the previously held equity interest in the acquiree is re-measured to its fair value on the date it becomes a subsidiary and the resulting gain or loss is recognised in profit or loss.


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2.4 Subsidiaries (continued)

All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Non-controlling interests represent that portion of the profit or loss, other comprehensive income and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the Company. It is measured at the non-controlling’s share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition and the non-controlling’s share of changes in the subsidiaries’ equity since that date.

All earnings and losses of the subsidiary are attributed to the parent and non-controlling interest, even if the attribution of losses to the non-controlling interest results in a debit balance.

The gain or loss on disposal of a subsidiary, which is the difference between net disposal proceeds and the Group’s share of its net assets as of the date of disposal, including the cumulative amount of any exchange differences that relate to the subsidiary, is recognised in the consolidated profit or loss.

2.5 Transactions with non-controlling interests

The Group applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Group. Effects of transactions with non-controlling interests are directly recognised in equity to the extent that there is no change in control. The difference between the fair value of any consideration paid/received and the carrying amount of the share of net assets acquired/sold are recorded in equity. Accordingly, such transactions will no longer result in goodwill or gains and losses upon disposal.

2.6 Associates

An associate is an entity in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but not control or joint control over those policies.

Investment in associates is accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, investment in associates are initially recognised at cost and adjusted thereafter for post-acquisition changes in the Group’s share of net assets of the associates.

The Group’s share of the associate’s post-acquisition profit or loss and other comprehensive income are recognised in the consolidated profit or loss and other comprehensive income respectively. The cumulative post-acquisition movements are adjusted against the carrying amounts of the investments.

An investment in an associate is accounted for using the equity method from the date on which the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying value of the investment and is not tested for impairment separately.

Any excess of the Groups’ share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the financial period in which the investment is acquired.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred. Where necessary, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with those of the Group.


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2.6 Associates (continued)

Equity accounting is discontinued when the carrying amount of the investment in an associate diminishes by virtue of losses to zero, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

For incremental interest in an associate, the date of acquisition is the purchase date at each stage and goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified. There is no “step up to fair value” of net assets of the previously acquired stake and the share of profits and equity movements for the previously acquired stake is recorded directly through equity.

Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

On disposal, the difference between the net disposal proceeds and the net carrying amount of the associate disposed is taken to the profit or loss.

2.7 Jointly controlled entities

Jointly controlled entities are those corporations, partnerships or other entities over which there is contractually agreed sharing of control by the Group with one or more parties where the strategic financial and operating decisions relating to the entities require unanimous consent of the parties sharing control.

The Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.

Investments in jointly controlled entities are accounted for in the consolidated financial statements using the equity method of accounting. Equity accounting involves recognising the Group’s share of the post-acquisition profit or loss and other comprehensive income within consolidated profit or loss and other comprehensive income respectively. The cumulative post-acquisition movements are adjusted against the cost of investment and include goodwill on acquisition (net of accumulated impairment loss).

The Group recognises the portions of gains or losses on the sale of assets by the Group to the joint venture that is attributable to other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value of assets or an impairment loss.

Where necessary, adjustments have been made to the financial statements of jointly controlled entities to ensure consistency of accounting policies with those of the Group.

Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

On disposal, the difference between the net disposal proceeds and the carrying amount of the jointly controlled entity disposed is included in the profit or loss.


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2.8 Property, plant and equipment

(a) Measurement basis

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of property, plant and equipment includes expenditure that is directly attributable to the acquisition of the assets. Dismantlement, removal or restoration costs are included as part of the cost of property, plant and equipment if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.

Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the asset will flow to the Group and the Company and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. All other repair and maintenance costs are charged to the profit or loss during the financial year in which they are incurred.

At each reporting date, the Group and the Company assess whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from their use. Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in the profit or loss in the year the asset is derecognised.

(b) Depreciation

Freehold land is not depreciated as it has an indefinite life. Depreciation on capital work-in-progress commences when the assets are ready for their intended use.

Depreciation is calculated to write off the depreciable amount of other property, plant and equipment on a straight line basis over their estimated useful lives. The depreciable amount is determined after deducting residual value from cost. The estimated useful lives of the property, plant and equipment are as follows:

Buildings 10 – 50 yearsPlant, machinery, tools and equipment 2 – 25 yearsElectrical installations, office equipment and furniture and fittings 5 – 10 yearsComputer equipment 3 – 10 yearsRenovation and store extension 2 – 50 yearsMotor vehicles 3 – 5 years

Assets under construction included in plant and equipment are not depreciated as these assets are yet to be available for use.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each financial year.


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2.9 Leases

Accounting as lessee

(a) Finance lease

Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

Finance leases are capitalised at the lower of the fair value of the leased assets and the estimated present value of the minimum lease payments at the date of inception. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the lease principal outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Contingent rent, if any, are charged as expenses in the periods which they are incurred.

Property, plant and equipment acquired under finance lease contracts are depreciated over the shorter of the lease term and its useful life.

(b) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the profit or loss over the lease period.

Accounting as lessor

Operating leases

The Group leases its investment properties under operating leases to non-related parties.

Leases of investment properties where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases is recognised in profit or loss on a straight-line basis over the lease term. Contingent rents are recognised as revenue in the period in which they are earned.

2.10 Prepaid lease payments

Leasehold land that has a definite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as operating lease. Prepaid lease payments are carried at cost or surrogate carrying amount and are amortised on a straight line basis over the lease terms in accordance with the pattern of benefits provided.

At each reporting date, the Group assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the prepaid lease asset is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

Leasehold land is amortised over the remaining period of the respective leases ranging from 37 to 96 years (31.12.2011: 38 to 97 years, 1.1.2011: 39 to 98 years).


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2.11 Investment properties

Investment properties are properties held to earn rental income or for capital appreciation or both rather than for use in the production or supply of goods and services or for administrative purposes, or sale in the ordinary course of business.

(a) Measurement basis

Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

The cost of investment properties includes expenditure that is directly attributable to the acquisition of the asset.

Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repair and maintenance costs are charged to the profit or loss during the financial year in which they are incurred.

At each reporting date, the Group assesses whether there is any indication of impairment. Where an indication of impairment exists, the carrying value of the investment property is assessed and written down immediately to its recoverable amount. See accounting policy 2.23 on impairment of non-financial assets.

Investment properties are derecognised upon disposal or when they are permanently withdrawn from use and no future economic benefits are expected from their disposal. On disposal, the difference between the net disposal proceeds and the carrying amount is recognised in profit or loss.

Transfers are made to or from investment property only when there is a change in use. Transfers from investment property to owner-occupied property are made at the carrying amount as at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment as set out in Note 2.8 up to the date of change in use.

(b) Depreciation

Freehold land is not depreciated. Freehold buildings are depreciated over their estimated useful lives of 50 years.

Depreciation is calculated to write off the depreciable amount of other investment properties on a straight-line basis over their estimated useful lives. Depreciation amount is determined after deducting the residual value from the cost of the investment properties.

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each financial year.

2.12 Intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. See accounting policy 2.23 on impairment of non-financial assets. The amortisation period and the amortisation method are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.


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2.12 Intangible assets (continued)

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. See accounting policy 2.23 on impairment of non-financial assets. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(a) Goodwill

Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and associates over the fair value of the Group’s share of the identifiable net assets at the date of acquisition.

Goodwill on acquisition of subsidiaries is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill on acquisition of subsidiaries is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose.

Goodwill on acquisitions of jointly controlled entities and associates is included in the carrying amounts of investments in jointly controlled entities and associates respectively. Such goodwill is tested for impairment as part of the overall balance.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

(b) Intellectual property

Expenditure on acquired intellectual property is capitalised and amortised using the straight line method over their estimated useful life, not exceeding a period of 20 years.

2.13 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. In the case of finished goods and work-in-progress, cost comprises materials, direct labour, other direct charges and an appropriate proportion of factory overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and selling expenses.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.


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2.14 Provision for warranties

The Group recognises the estimated liability to repair or replace products when the underlying products or services are sold. The provision is calculated based on historical warranty data and specific circumstances related to products or services sold, after considering the various possible outcomes against their associated probabilities.

2.15 Share capital

(a) Issue of shares

Ordinary shares are recorded at nominal value and proceeds received in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Costs incurred that are directly attributable to the issuance of the shares are accounted for as a deduction from share premium, if any, otherwise it is charged to profit or loss. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument.

(b) Dividend to owners of the Company

Dividend to owners of the Company is recognised as a liability in the period in which they are declared.

(c) Treasury shares

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from equity attributable to owners of the Company. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to owners of the Company.

An amount equivalent to the original purchase cost of the treasury shares will be deducted from retained earnings upon the distribution of any treasury shares as share dividends.

2.16 Compound financial instruments

A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.

Compound financial instruments issued by the Company comprise Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

Upon conversion of any convertible financial instruments into equity shares, the amount credited to share capital and share premium is the aggregate of the carrying amounts of both equity and liability components at the time of conversion. No gain or loss is recognised.

The liability component of a compound financial instrument is classified as current liability, unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the financial period.


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2.17 Warrants reserve

Proceeds from the issuance of warrants, net of issue costs, are credited to warrants reserve which is non-distributable. Warrants reserve is transferred to the share premium account upon the exercise of warrants and the warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be transferred to retained earnings.

2.18 Foreign currencies

(a) Functional and presentation currencies

The financial statements of each entity within the Group are measured using the currency of the primary economic environment in which the respective entity operates (‘the functional currency’). The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.

(b) Transactions and balances

Transactions in foreign currencies are translated into the functional currency at the rate of exchange ruling at the dates of the transactions.

Monetary items denominated in foreign currencies at the reporting date are translated at the foreign currency exchange rates ruling at that date.

Non-monetary items which are measured in terms of historical costs denominated in foreign currencies are translated at the foreign currency exchange rates ruling at the date of the transaction.

Foreign exchange gains and losses arising on the settlement of monetary items and the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges.

When a gain or loss on a non-monetary item is recognised in the profit or loss, any corresponding exchange gain or loss is recognised in profit or loss. When a gain or loss on a non-monetary item is recognised directly in other comprehensive income, any corresponding exchange gain or loss is recognised directly in other comprehensive income.

(c) Translation of foreign operations

On consolidation, all assets and liabilities of foreign operations that have a functional currency other than Ringgit Malaysia, including goodwill and fair value adjustments arising on acquisition, are translated at the exchange rates ruling at the reporting date.

Income and expense items are translated at average exchange rates.

All exchange differences arising from the translation of the financial statements of foreign operations are taken to other comprehensive income. Upon disposal of a foreign operation, the exchange translation differences relating to those foreign operations that were recorded within other comprehensive income are recognised in the profit or loss as part of the gain or loss on disposal.

In the case of a partial disposal that does not result in the Group losing control over a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss.


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2.19 Financial assets

(a) Classification

The Group and the Company classify its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the nature of the asset and the purpose for which the assets were acquired. The classification of financial assets is determined at initial recognition.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are either financial assets held for trading or those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months after the reporting date. Otherwise, they are classified as non-current.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets.

(iii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented within non-current assets unless management intends to dispose of the assets within 12 months after the reporting date.

(b) Recognition and de-recognition

Regular purchases and sales of financial assets are recognised or derecognised on the trade date. Trade date refers to the date on which the Group and the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group or the Company has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in profit or loss. Any amount in the fair value reserve relating to that asset is transferred to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses within profit or loss.

(d) Subsequent measurement

(i) Financial assets at fair value through profit or loss

Subsequent to initial recognition, financial asset at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss within ‘other gains/(losses)-net’. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss.


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2.19 Financial assets (continued)

(d) Subsequent measurement (continued)

(ii) Loans and receivables

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

(iii) Available-for-sale financial assets

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of available-for-sale financial asset are recognised in other comprehensive income. When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised within other comprehensive income are included in profit or loss.

Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as other income. Dividends on available-for-sale financial assets are recognised in profit or loss when the Group’s right to receive payment is established.

Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

(e) Impairment of financial assets

The Group and Company assess at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.

(i) Financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.


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2.19 Financial assets (continued)

(e) Impairment of financial assets (continued)

(ii) Unquoted equity investments carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has occurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(iii) Available-for-sale financial assets - equity investments

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been previously recognised in other comprehensive income, and there is evidence that the decline in fair value is due to an impairment loss, the cumulative loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Instead, any increase in fair value subsequent to impairment loss is recognised in other comprehensive income.

2.20 Financial liabilities

(a) Classification

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

(i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Liabilities in this category are classified within current liabilities if they are either held for trading or are expected to be settled within 12 months after the reporting date. Otherwise, they are classified as non-current.

(ii) Other financial liabilities

The Group and the Company’s other financial liabilities include trade payables, other payables, intercompany payables and borrowings. Borrowings are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.


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2.20 Financial liabilities (continued)

(b) Recognition and de-recognition

A financial liability is recognised when, and only when, the Group or the Company becomes a party to the contractual provisions of the financial instrument.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(c) Initial and subsequent measurement

Derivative financial liabilities are initially measured at fair value and subsequently stated at fair value, with any resulting gains or losses recognised in profit or loss. Net gains or losses on the derivatives include exchange differences.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowing are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are de-recognised, and through the amortisation process.

2.21 Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.22 Derivative financial instruments and hedging activities

A derivative financial instrument is initially recognised at its fair value on the date the contract is entered into and is subsequently carried at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Gains or losses on derivatives that are not designated as a hedging instrument are recognised in profit or loss within ‘other gains/(losses) – net’.

The Group designates certain derivatives as hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge). The Group documents at the inception of the transaction the relationship between the hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives designated as hedging instruments are highly effective in offsetting changes in fair value or cash flows of the hedged items.

The carrying amount of a derivative designated as a hedge is presented as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months after the reporting date and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months from the reporting date. The fair value of a trading derivative is presented as a current asset or liability.


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2.22 Derivative financial instruments and hedging activities (continued)

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within ‘other gains/(losses) - net’.

Amounts recognised in other comprehensive income are reclassified to profit or loss when the hedged transaction affects profit or loss, such as when the hedged interest income or interest expense is recognised or when a forecast sale occurs. Where the hedged item is a non-financial asset or a non-financial liability, the amounts recognised previously in other comprehensive income are removed and included in the initial carrying amount of the non-financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in other comprehensive income remain in equity until the forecast transaction or firm commitment is ultimately recognised in profit or loss.

Fair value changes on derivatives that are not designated or do not qualify for hedge accounting are recognised in profit or loss when the changes arise.

2.23 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation or depreciation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.24 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

The Company has issued corporate guarantees to banks for borrowings of certain subsidiaries. These guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

The fair value of financial guarantee contracts is the estimated amount that would be payable to the holder for assuming the obligations.

2.25 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditure and borrowing costs are incurred. Capitalisation of borrowing costs is suspended or ceased when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.


93



2.25 Borrowing costs (continued)

All other borrowing costs are recognised in profit or loss using the effective interest method in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

2.26 Revenue recognition

Revenue is recognised when it is probable that economic benefits will flow to the Group and the Company and when they can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.

(a) Construction contracts

A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. The stage of completion of a construction contract is determined based on the proportion that the contract costs incurred for work performed to date bear to the estimated total costs for the contract. Costs incurred during the financial year in connection with future activity on a contract are excluded from costs incurred to date when determining the stage of completion of a contract. Such costs are shown as amounts due from/(to) customers on construction contracts in the statement of financial position unless it is not probable that such contract costs are recoverable from the customers, in which case such costs are recognised as an expense immediately.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract work and claims that can be measured reliably. A variation or a claim is only included in contract revenue when it is probable that the customer will approve the variation or negotiations have reached an advanced stage such that it is probable that the customer will accept the claim.

At the reporting date, the cumulative costs incurred plus recognised profit (less recognised loss) on each contract is compared against the progress billings. Where the cumulative costs incurred plus the recognised profits (less recognised losses) exceed progress billings, the balance is presented as ‘amount due from customers on contracts’ within current assets. Where progress billings exceed the cumulative costs incurred plus recognised profits (less recognised losses), the balance is presented as ‘amount due to customers on contracts’ within current liabilities.

Progress billings not yet paid by customers and retentions by customers are included within “trade and other receivables”.

(b) Sale of goods

Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the profit or loss when the significant risks and rewards of ownership have been transferred to the buyer.

(c) Service income

Service income is recognised on an accrual basis when services have been rendered.


94



2.26 Revenue recognition (continued)

(d) Dividend income

Dividend income is recognised when the right to receive payment is established.

(e) Rental income

Rental income is recognised on a time proportion basis over the lease term.

(f) Interest income

Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective interest rate applicable.

(g) Management fee

Management fee is recognised on an accrual basis when service is rendered.

(h) Hire of machinery and equipment

Income from hire of machinery and equipment is recognised on a time proportion basis over the term of hire.

(i) Commission income

Commission income is recognised on an accrual basis when service is rendered.

2.27 Income taxes

(a) Current tax

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group and the Company operates and includes all taxes based upon the taxable profits after taking into consideration available tax incentives.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is recognised in full, using the liability method, on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and jointly controlled entities, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets on any unutilised portion of tax incentives are recognised to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentives can be utilised.


95



2.27 Income taxes (continued)

(b) Deferred tax (continued)

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.

Deferred tax assets and liabilities are offset when the enterprise has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

2.28 Employee benefits

(a) Short term benefits

Salaries, wages, bonuses and social security contributions are recognised as an expense in the financial year in which the services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlements to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Non-monetary benefits such as medical care, housing and other staff related expenses are charged to the profit or loss as and when incurred.

(b) Post-employment benefits

The Group has post-employment benefit schemes in accordance with local conditions and practices in the countries in which it operates. These post-employment benefit schemes are defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee services in the current and prior periods.

As required by law, the Company and its subsidiaries in Malaysia make contributions to the Employees Provident Fund (“EPF”) which is a defined contribution plan, whereas subsidiaries in other countries make their respective local contributions, if required by law.

Such contributions are recognised as an expense in the profit or loss in the financial year to which they relate.

2.29 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group Chief Executive Officer has been identified as the chief operating decision-maker as he is responsible for allocating resources and assessing performance of the Group’s operating segments.

2.30 Cash and cash equivalents

Cash and cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and exclude fixed deposits pledged to secure banking facilities.


96



2.31 Disposal groups held for sale

Disposal groups are classified as assets/liabilities held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

2.32 Contingent liabilities

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

Contingent liability is not recognised on the statement of financial position of the Group, except for contingent liability assumed in a business combination that is a present obligation and which the fair values can be reliably determined.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Impairment of goodwill

The Group tests goodwill for impairment annually in accordance with the accounting policy in 2.12(a) and whenever events or changes in circumstances indicate that the goodwill may be impaired. For the purposes of assessing impairment, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. Judgement is required in the estimation of the present value of future cash flows generated by the cash-generating units or groups of cash-generating units, which involves uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Changes in assumptions could affect the results of the Group’s test for impairment of goodwill. Further details of the carrying amount and the key assumptions applied in the impairment assessment of goodwill are given in Note 12.

(b) Construction contracts

The Group recognises contract revenue based on the stage of completion method. The stage of completion is measured by reference to the contract costs incurred-to-date to the estimated total contract costs for the contract. When it is probable that the estimated total contract costs will exceed the total contract revenue, the expected loss is recognised as an expense immediately.

Judgement is required in the estimation of stage of completion, the extent of the contract costs incurred, as well as the recoverability of the construction contracts. The Group evaluates the estimates made using past experience.

(c) Impairment of non-financial assets

The Group assesses whether there is any indication that non-financial assets are impaired at the end of each reporting period. Impairment is measured by comparing the carrying amount of an asset with its recoverable amount. Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. The value-in-use is the net present value of the projected future cash flows to be derived from that asset. Projected future cash flows are calculated based on historical sector and industry trends, general market and economic conditions, changes in technology and other available information. Changes to any of these assumptions would affect the amount of impairment.


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101


4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Renovations,

office Freehold Computer equipment, land and and furniture Motor building equipment and fittings vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000

Company

2012

Cost At 1 January - 530 630 203 1,363Additions 4,025 64 67 1,108 5,264Transfer from a subsidiary - - - 680 680Disposals - - - (883) (883)Write-offs - (16) - - (16)

At 31 December 4,025 578 697 1,108 6,408

Accumulated depreciation At 1 January - 451 350 203 1,004Charge for the year 8 51 61 127 247Transfer from a subsidiary - - - 679 679Disposals - - - (882) (882)Write-offs - (15) - - (15)

At 31 December 8 487 411 127 1,033

Carrying amount at 31 December 4,017 91 286 981 5,375


102


4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Renovations, office Computer equipment, and furniture Motor equipment and fittings vehicles Total RM’000 RM’000 RM’000 RM’000

Company

2011

CostAt 1 January 486 591 203 1,280Additions 85 39 - 124Write-offs (41) - - (41)

At 31 December 530 630 203 1,363

Accumulated depreciation At 1 January 457 285 203 945Charge for the year 35 65 - 100Write-offs (41) - - (41)

At 31 December 451 350 203 1,004

Carrying amount at 1 January 29 306 - 335

Carrying amount at 31 December 79 280 - 359

Assets pledged to financial institutions

There were no items of property, plant and equipment of the Group and the Company that were pledged to financial institutions as at 31 December 2012.

Carrying amount of property, plant and equipment of the Group were pledged to financial institutions to secure borrowing facilities (Note 30 and Note 34) granted to the Group as at 31 December 2011 and 1 January 2011 were as follows:

Group 31.12.2011 1.1.2011 RM’000 RM’000

Leasehold buildings 2,226 58,473Plant, machinery, tools and equipment 1,719 59,203

3,945 117,676


103


4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Ownership

Included in property, plant and equipment of the Group as at year end is freehold land with a carrying amount of approximately RM574,000 (31.12.2011: RM585,000, 1.1.2011: RM568,000) for which the title has yet to be issued by the relevant authorities.

Impairment of property, plant and equipment

During the financial year ended 31 December 2011, the Group had recognised an impairment loss of approximately RM19,089,000 in respect of plant and equipment as the recoverable amounts were lower than the carrying amounts. The impairment loss was recognised within “Administrative and general expenses” line item of the income statement. The impairment loss is due to certain plant and equipment of a specialised nature for which there are currently no specific projects available for its use and certain damaged assets. The recoverable amount of the impaired plant and equipment was determined based on its fair value less cost to sell.

5 PREPAID LEASE PAYMENTS

Unexpired Unexpired period less period more than than Note 50 years 50 years Total RM’000 RM’000 RM’000

Group

2012

CostAt 1 January 18,282 68,809 87,091Additions - 20,958 20,958Transfer to investment properties 6 - (1,151) (1,151)

At 31 December 18,282 88,616 106,898

Accumulated amortisationAt 1 January 4,090 4,455 8,545Amortisation for the year 416 904 1,320Transfer to investment properties 6 - (74) (74)

At 31 December 4,506 5,285 9,791

Carrying amount at 31 December 13,776 83,331 97,107


104


5 PREPAID LEASE PAYMENTS (CONTINUED)

Unexpired Unexpired period less period more than than 50 years 50 years Total RM’000 RM’000 RM’000

Group

2011

Cost At 1 January/31 December 18,282 68,809 87,091

Accumulated amortisationAt 1 January 3,655 3,717 7,372Amortisation for the year 435 738 1,173

At 31 December 4,090 4,455 8,545

Carrying amount at 1 January 14,627 65,092 79,719


Ownership

The title deeds to certain leasehold land of the Group stated at a total carrying amount of approximately RM41,812,000 (31.12.2011: RM42,292,000, 1.1.2011: RM64,004,000) have yet to be issued by the relevant authorities.

Assets pledged to financial institutions

As at 1 January 2011, prepaid lease land and building with a total carrying amount of approximately RM33,774,000 were pledged to a financial institution to secure a borrowing facility granted to a subsidiary of the Group (Note 34). The pledge was released during the financial year ended 31 December 2011.


105


6 INVESTMENT PROPERTIES


Cost At 1 January 7,036 8,413 - -Additions 5,510 - 22,575 -Transfer to property, plant and equipment 4 - (811) - -Transfer to asset held for sale 35 - (566) - -Transfer from prepaid lease payments 5 1,151 - - -

At 31 December 13,697 7,036 22,575 -

Less: Accumulated depreciation and impairment loss At 1 January 2,106 2,241 - -Depreciation charge for the year 264 208 42 -Transfer to property, plant and equipment 4 - (225) - -Transfer to asset held for sale 35 - (118) - -Transfer from prepaid lease payments 5 74 - - -

At 31 December 2,444 2,106 42 -

Group Company 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Carrying amount 11,253 4,930 6,172 22,533 - -

Fair value 26,671 19,178 17,031 22,533 - -

The fair value of investment properties were estimated based on either valuation by independent professionally qualified valuers or estimates based on current prices in an active market.

On 27 June 2011, certain properties were valued by Jordan Lee & Jaafar, an independent firm of professional valuer, registered with the Board of Valuers, Appraisers & Estate Agents Malaysia using the comparison method of valuation. The Group and Company carried out a review towards the financial year end and there has been no significant change to the fair value of these properties since the last valuation.

7 INVESTMENT IN SUBSIDIARIES Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Unquoted shares, at cost 785,056 612,482 487,790Accumulated impairment losses (124,986) (124,986) (124,986)

660,070 487,496 362,804

Advances to subsidiaries treated as quasi-investment 102,223 119,045 195,618

762,293 606,541 558,422


106


7 INVESTMENT IN SUBSIDIARIES (CONTINUED)

Details of subsidiaries are as follows:

Group’s effective interest Country of 31.12.2012 31.12.2011 1.1.2011 incorporation Principal activities

% % % Wasco Energy Ltd 100 100 100 Bermuda Investment holding

WSC Capital (Labuan) Limited 100 100 100 Federal Territory Investment holding of Labuan, Malaysia

Wasco Management Services 100 100 100 Malaysia Provision of Sdn. Bhd. management support services

# Wasco Capital Pte. Limited 100 100 100 Singapore Investment holding * Wasco (Australia) Pty Ltd 100 100 100 Australia Provision of construction services for the oil and gas industry

# Wasco Coatings Limited 100 100 100 Hong Kong, Investment holding SAR

# Wasco Coatings Singapore Pte. Ltd. 100 100 100 Singapore Investment holding

* Wasco Coatings Denmark ApS - -^ 100 Denmark Dormant * Wasco Coatings Europe B.V. 100 100 100 Netherlands Dormant * Wasco Coatings UK Ltd 100 100 100 England and Dormant Wales ~ Wasco Coatings International Limited - && 100 100 British Virgin Dormant Islands PPSC Industrial Holdings Sdn. Bhd. 100 100 100 Malaysia Investment holding Wasco Coatings Malaysia Sdn. Bhd. 70 70Φ 78 Malaysia Coating of pipes for the oil and gas industry Wasco Coatings Insulation Sdn. Bhd. 70 70Φ 78 Malaysia Coating of pipes for the oil and gas industry

# Wasco Coatings HK Limited 100 100 100 Hong Kong, Investment holding, SAR marketing and provision of pipe coating and related services to the oil and gas industry


107



Details of subsidiaries are as follows (continued): Group’s effective interest Country of 31.12.2012 31.12.2011 1.1.2011 incorporation Principal activities

% % % Wasco Coatings Services Sdn. Bhd. 100 100π - Malaysia Provision of pipe coating services and related services to the oil and gas industry

~ PPSC (Thailand) Limited 100 100 100 Thailand Dormant

PPSC (Malaysia) Sdn. Bhd. 100 100 100 Malaysia Investment holding Wasco Resources Sdn. Bhd. 100 100 100 Malaysia Property investment holding PPSC Property Sdn. Bhd. 100 100 100 Malaysia Dormant Wasco Coatings Labuan Limited 100 100 100 Federal Territory Investment holding of Labuan, Malaysia Wasco Kanssen Limited 100 100 100 British Virgin Investment holding Islands and provision of pipe coating services ~ Kanssen (Yadong) International Pipe 100 100 100 British Virgin Provision of pipe Coating Services Limited Islands coating services and investment holding ~ Yadong Anti-Corrosion (Int) 100 100 100 British Virgin Investment holding Company Limited Islands * Jingzhou Kanssen Yadong Offshore 100 100 100 People’s Provision of pipe Pipe Coating Engineering Company Republic of coating services Limited China * Shashi Kanssen (Yadong) Coating 100 100 100 People’s Provision of pipe Services Company Limited Republic of coating services China

* Kanssen (Yadong) Coating Services 100 100 100 People’s Provision of pipe (Jingzhou) Company Limited Republic of coating services China * PPSC China Limited 100 100 100 Hong Kong, Investment holding SAR # Deepwater Corrosion Services, Inc. - + 51 51 United States Provision of corrosion of America control products and services to the offshore oil and gas industry


108



Details of subsidiaries are as follows (continued):


% % % # Inter Resources, Inc. - + 51 51 United States Dormant of America # Deepwater EU Ltd - + 51 51 England and Manufacturing and Wales selling of corrosion control products and services Asiana Emas Sdn. Bhd. 100 100 100 Malaysia Investment holding Petro-Pipe (Sabah) Sdn. Bhd. 60 60 60 Malaysia Manufacturing and sales of spiral welded pipes for the oil and gas industry Wasco Corrosion Services Sdn. Bhd. 63 63++ 74 Malaysia Supply and installation of sacrificial anodes, provision of cathodic protection services and equipment, corrosion protection services, passive fire protection services, special paint coating services and provision of technical training services Wasco Lindung Sdn. Bhd. 48 48& 63 Malaysia Manufacture, supply and installation of sacrificial anodes, provision of cathodic protection services and equipment, corrosion protection services, passive fire protection services and special paint coating services * PT. MPE Deepwater - 50++ 59 Indonesia Dormant (In Members’ Voluntary Liquidation)

* Petro-Pipe Engineering Services 100 100 100 Malaysia Provision of Sdn. Bhd. technical services

# Jutasama International Limited 100 100 100 Hong Kong, Dormant SAR


109





% % % Wasco Engineering Group Limited 100 100 100 British Virgin Investment holding Islands

Wasco Engineering & Technology Inc 65 65 65 British Virgin Investment holding Islands and provision of engineering works and services # Wasco Engineering International Ltd 100 100 100 British Virgin Leasing compressors Islands and designing, engineering and fabrication of oil and gas processing and compression systems and equipment * PT. Gas Services Indonesia 100 100 100 Indonesia Consulting services, rental, repair and maintenance of natural gas industry equipment

# Wasco Engineering Services 100 100 100 Singapore Design, engineering Singapore Pte. Ltd. and fabrication of oil and gas processing and compression systems and equipment

Gas Services International (M) 70 70 70 Malaysia Leasing of plant Sdn. Bhd. and equipment, parts sales and provision of operation and maintenance and other related services to the oil and gas industry

* Wasco Engineering Australia Pty Ltd 100 100 100 Australia Rental of gas compressors, fabrication of compressors packages, servicing of gas compression plant and machinery and sales of general spare parts


110





% % % * Mackenzie Hydrocarbons (Australia) 100 100 100 Australia Provision of Pty Ltd engineering consultancy and fabrication services ~ Excel Tradition Limited 100 100 100 British Virgin Dormant Islands # Wasco Engineering Technologies 92** 70 70 Singapore Engineering and Pte. Ltd. fabrication of oil and gas systems and equipment and parts sales

# PT. Wasco Engineering Indonesia 87** 67 67 Indonesia Provision of (formerly known as PT. Megaron engineering, design, Semesta) fabrication and construction services for oil and gas industry

# Wasco Engineering Equipment 100 100 100 Singapore Leasing of plant and Pte. Ltd. equipment, parts sales and provision of operation and maintenance and other related services to the oil and gas industry Jutasama Sdn. Bhd. 100 100 100 Malaysia Contracting of industrial engineering projects Jutasama Jaya Sdn. Bhd. 100ΦΦ 60 60 Malaysia Dormant Mackenzie Industries Sdn. Bhd. 60 60 60 Malaysia Undertaking of steam boilers and energy system projects Peakvest Sdn. Bhd. 100 100 100 Malaysia Dormant # WSM Oil & Gas Services Limited 80 80 80 Hong Kong, Dormant SAR # Wasco E&P Services Limited 100 100 100 Hong Kong, Investment holding SAR


111





% % % Wasco Oil Technologies Sdn. Bhd. 100 100 100 Malaysia Investment holding (formerly known as Total Oil and provision Technologies Sdn. Bhd.) of management services Wasco Oilfield Services Sdn. Bhd. 49 49++ 65 Malaysia Agent and (formerly known as Botco Sdn. Bhd.) representative for the supply of equipment and the provision of related services to the oil drilling and production industry

# WSN Investments Limited 100 100 100 Hong Kong, Investment holding SAR * LTT Oil & Gas Nigeria Limited 100 100 100 Nigeria Provision of engineering consultancy, product and related services to the oil and gas industry Driltools International FZCO@ _ _ 60 United Arab Marketing and Emirates provision of oilfield and water well supplies and services related to the oil and gas industry Driltools Equipment Trading L.L.C.@ _ _ 60 United Arab Trading of agricultural Emirates and workshop equipment, accessories and spare parts Drilbits International Private Limited@ _ _ 60 India Manufacturing and trading of oilfield tools and equipment # Wasco China International Limited 100α 80 80 Hong Kong, Investment holding, (formerly known as Wah Seong SAR marketing and China Limited) provision of services related to the oil and gas industry

* Ashburn International, Inc. 100α 80 80 United States International of America consulting and trading business


112





% % % * Ashburn International Trade 65α 52 52 People’s International trade, (Tianjin) Co. Ltd. Republic of processing and China assembling, storage of bonded goods and development of high technological products and consultancy services * Ashburn Offshore Oil & Gas 65α 52 52 People’s Design and Equipment & Engineering Company Republic of manufacturing of Ltd China products to the oil and gas industry

* Wasco China International Limited 80 80 80 British Virgin Dormant Islands * Petro-Pipe Industries (M) Sdn. Bhd. 100 100 100 Malaysia Manufacturing and sales of welded steel pipes and related products

* PPI Industries Sdn. Bhd. 100 100 100 Malaysia Manufacturing and sales of welded steel pipes and related products

* Syn Tai Hung Corporation Sdn. Bhd. 100 100 100 Malaysia Investment holding * Syn Tai Hung Trading Sdn. Bhd. 100 100 100 Malaysia Trading and distribution of building materials * STH Sri Bulatan Sdn. Bhd. 100 100 100 Malaysia Dormant * Stellar Marketing Sdn. Bhd. 100 100 100 Malaysia Dormant * PMT Industries Sdn. Bhd. 100 100 100 Malaysia Manufacturing and supplying of spare parts, equipment and provision of maintenance services for palm oil and other agricultural industries * Palmillvest Sdn. Bhd. - -$ 100 Malaysia Dormant * PMT Industries (HK) Limited 100 100 100 Hong Kong, Dormant SAR


113





% % % * PT. PMT Industri 100 100 100 Indonesia Supply of spare parts, equipment, provision of maintenance services and engineering consultation for palm oil and other agricultural industries

* PMT-Phoenix Industries Sdn. Bhd. 83 83 83 Malaysia Manufacturing and supply of industrial fans and component parts and provision of other related services * PMT-Dong Yuan Industries Sdn. Bhd. 100^^ 70 70 Malaysia Manufacturing and trading of machinery related to palm oil industries * PMT Industries (Labuan) Ltd 100 100 100 Federal Territory Supply of of Labuan, equipment for power, Malaysia palm oil and other agricultural industries * PT. PMT Phoenix Industries 60 60¥ - Indonesia Manufacturing of industrial fans, blowers and other related services * E-Green Technology Sdn. Bhd. 92 92 92 Malaysia Dormant * Wah Seong Industrial Holdings 100 100 100 Malaysia Investment holding Sdn. Bhd. * Sunrise Green Sdn. Bhd. 40π π 100 100 Malaysia Property holding * Wah Seong Ventures Sdn. Bhd. 100 100 100 Malaysia Investment holding * Petro-Pipe Industrial Corporation 100 100 100 Malaysia Investment holding Sdn. Bhd. # Wah Seong International Pte Limited 100 100 100 Hong Kong, Investment holding SAR * WSIPL Australia Pty Ltd 100 100 100 Australia Dormant ~ Delco Papua New Guinea Limited 100 100 100 Papua Dormant New Guinea


114





% % %

WS Agro Industries Pte. Ltd. 100 100∞ - Singapore Investment holding

* Triple Cash Sdn. Bhd. 79π π 79Ω - Malaysia Dormant

* Audited by a firm other than member firms of PricewaterhouseCoopers International Limited and PricewaterhouseCoopers Malaysia.

# Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers Malaysia.

~ Companies not required by their local laws to appoint statutory auditors.

^ On 1 December 2011, Wasco Coatings Denmark ApS, an indirect subsidiary of the Company was dissolved pursuant to Section 216 of the Danish Companies Act.

+ On 1 October 2012, Wasco Oil Technologies Sdn. Bhd. (formerly known as Total Oil Technologies Sdn. Bhd.), an indirect subsidiary of the Company, completed the disposal of Deepwater Corrosion Services, Inc., Deepwater Eu. Ltd and Inter Resources Inc. (refer to Note 45(a)).

&& On 15 February 2012, Wasco Coatings International Limited, an indirect wholly owned subsidiary of the Company, was dissolved and struck off from the Register of Companies by the Registrar of Corporate Affairs, British Virgin Islands.

++ On 31 March 2011, the Company disposed 16% of its indirect equity interest in Wasco Oilfield Services Sdn. Bhd. (formerly known as Botco Sdn. Bhd.) (“Wasco Oilfield”). The Company continues to retain the power to exercise control over the financial and operating activities of Wasco Oilfield. Accordingly, Wasco Oilfield remains a subsidiary of the Company. As a result of this disposal, the Company’s effective interest in Wasco Corrosion Services Sdn. Bhd. and PT. MPE Deepwater (In Members’ Voluntary Liquidation) had also reduced.

& On 31 March 2011, Wasco Corrosion Services Sdn. Bhd. disposed 82,950 ordinary shares of RM1.00 each, representing 7% of the equity interest in the issued and paid-up share capital of Wasco Lindung Sdn. Bhd.

Φ On 9 September 2011, the Company disposed 8% of its indirect equity interest in Wasco Coatings Malaysia Sdn. Bhd. As a result of this disposal, the Group’s effective interest in Wasco Coatings Insulation Sdn. Bhd. had also reduced.

@ On 23 June 2011, the Company completed the disposal of its indirect interests in Drilbits International Private Limited (“Drilbits”) and Driltools International FZCO (“Driltools”) respectively and as a result, both Drilbits and Driltools ceased to be the Company’s indirect subsidiaries.

$ Palmillvest Sdn. Bhd. was struck off from the Register of Companies Commission of Malaysia on 25 January 2011.

Ω On 12 December 2011, the Company acquired 79% of the equity interest in the issued and paid-up share capital of Triple Cash Sdn. Bhd.

∞ WS Agro Industries Pte. Ltd. was incorporated on 8 November 2011 as a private company limited by shares under the Companies Act (Chapter 50), Singapore.


115



π On 5 July 2011, Wasco Coatings Limited, an indirect subsidiary of the Company, acquired 100% equity interest in Wasco Coatings Services Sdn. Bhd.

¥ On 27 July 2011, the Group acquired 60% of the equity interest in PT. PMT Phoenix Industries for a cash consideration of RM176,010.

α On 16 January 2012, Wasco E&P Services Limited, a subsidiary of the Company acquired the remaining 20% equity interest in Wasco China International Limited (formerly known as Wah Seong China Limited) (“Wasco China”) upon which Wasco China became a wholly owned indirect subsidiary of the Company. Also, as a result of this acquisition, the Company’s effective interest in Ashburn International, Inc., Ashburn International Trade (Tianjin) Co. Ltd. and Ashburn Offshore Oil & Gas Equipment & Engineering Company Ltd have increased.

** On 23 October 2012, Wasco Engineering Technologies Pte. Ltd., an indirect subsidiary of the Company, issued and allotted 3,800,000 ordinary shares to Wasco Engineering Group Limited, a wholly-owned subsidiary of the Company. As a result of this, the Group’s indirect effective interest in Wasco Engineering Technologies Pte. Ltd. and PT. Wasco Engineering Indonesia (formerly known as PT. Megaron Semesta) have increased.

ππ On 17 August 2012, Sunrise Green Sdn. Bhd. (“SGSB”) issued 490,000 ordinary shares of RM1.00 each to Padu Genting Sdn. Bhd. (“PGSB”) pursuant to a Shareholder Agreement dated 17 August 2012. Triple Cash Sdn. Bhd., a direct subsidiary of the Company, further subscribed an additional 109,100 shares of RM1.00 each in SGSB on the same date. As a result, the effective interest of the Company in SGSB reduced from 79% to 40.29%. The effects of the changes in the Group’s effective equity interest are disclosed in the consolidated statement of changes in equity.

ΦΦ On 30 August 2012, Jutasama Sdn. Bhd., a wholly-owned subsidiary of the Company acquired the remaining 40% equity interest in Jutasama Jaya Sdn. Bhd. (“Jutasama Jaya”), upon which Jutasama Jaya became a wholly-owned subsidiary of the Company. This acquisition did not have any significant effects on the financial results of the Group.

^^ On 2 November 2012, PMT Industries Sdn. Bhd., a direct subsidiary of the Company acquired the remaining 30% equity interest in PMT-Dong Yuan Industries Sdn. Bhd. (“PMTDY”), upon which PMTDY became a wholly-owned subsidiary of the Company.


116


8 INVESTMENT IN ASSOCIATES

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Quoted shares in Malaysia at cost 96,936 - -Unquoted shares at cost 15,643 15,651 15,651Share of post-acquisition results and reserves 6,324 4,753 3,903

118,903 20,404 19,554Less: Accumulated impairment loss (4,248) (2,463) (2,463)

114,655 17,941 17,091

Share of net assets of associates 114,655 17,941 17,091

During the financial year, Wasco Energy Ltd, a wholly-owned subsidiary acquired 26.9% equity interest in the issued and paid-up capital of Petra Energy Berhad (“PEB”), a company listed on the Main Market of Bursa Malaysia Securities Berhad (refer to Note 44(a)(iii)).

As at 31 December 2012, the fair value of the Group’s interest in PEB is RM90,589,000.

Impairment of investment in an associate

The movements for allowance for impairment loss on investment in associates during the financial year are as follows:

Group 2012 2011 RM’000 RM’000

At 1 January 2,463 2,463Impairment loss recognised 1,785 -

At 31 December 4,248 2,463

During the financial year ended 31 December 2012, the Group recognised an impairment loss of approximately RM1,785,000 (2011: Nil) in respect of an investment in an associate as its recoverable amount was lower than its carrying amount. The impairment loss was recognised within “Administrative and general expenses” line item within the income statement. The recoverable amount was determined based on fair value less costs to sell.


117


8 INVESTMENT IN ASSOCIATES (CONTINUED)

The Group’s share of revenue, profit, assets and liabilities of associates are as follows:

Group 2012 2011 RM’000 RM’000

Revenue 86,408 15,133Profit for the financial year 2,538 1,055

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Non-current assets 124,052 11,418 10,318Current assets 118,489 16,265 13,752Current liabilities (122,390) (11,934) (9,524)Non-current liabilities (13,617) (72) (104)

Net assets 106,534 15,677 14,442Goodwill 12,369 4,727 5,112Less: Accumulated impairment loss (4,248) (2,463) (2,463)

114,655 17,941 17,091


118



Details of associates are as follows: Country of Group’s effective interest incorporation 31.12.2012 31.12.2011 1.1.2011 Principal activities

% % %

Petra Energy Berhad Malaysia 27 - - Investment holding Petra Resources Sdn. Bhd. Malaysia 27 - - Provision of services in operations and maintenance, oil field optimisation, retrofits, domestic vessels recharter, geophysical, design and fabrication of process equipment and packaging and supply of engineered equipment for the oil and gas industry

Petra Fabricators Sdn. Bhd. Malaysia 27 - - Design, fabrication, supply and installation of pressure vessels, heat exchangers, skid packages and other process equipment primarily for the oil and gas and petrochemical industries

Petra Services Sdn. Bhd. Malaysia 27 - - Equipment rental and related services in the oil and gas industry

Petra Marine Sdn. Bhd. Malaysia 27 - - Ownership and supply of vessels

Petra Energy Development Malaysia 27 - - Investment holdingSdn. Bhd. (formerly known asPetra AWT Sdn. Bhd.) Jurutera Perunding Akal Malaysia 19 - - Engaged in Sdn. Bhd. engineering design and consultancy services

Petra Boilers Sdn. Bhd. Malaysia 27 - - Design, fabrication, supply and installation of industrial boilers and ancillary equipment


119



Details of associates are as follows (continued):

Country of Group’s effective interest incorporation 31.12.2012 31.12.2011 1.1.2011 Principal activities

% % %

Turn Key Pipeline Services BV Netherlands 40 40 40 Provision of engineering design, construction, installation services and supply of equipment for pipe coating plant and facilities for the oil and gas industry TOT Inspection Sdn. Bhd. Malaysia 45 45 45 Dormant Syarikat Beka Sdn. Bhd. Malaysia 48 48 48 Sales of hardware products Wah Seong Boustead Myanmar 50 50 50 PropertyCompany Limited development, trading and provision of auxiliary services

Spirolite (M) Sendirian Malaysia 49 49 49 Manufacturing andBerhad* trading of spiral pipes, straight pipes, tubes, tanks and containers Advanced Piping Systems Malaysia 49 49 49 Manufacturing andSdn. Bhd.* trading of straight pipes and fittings Spirolite Marketing Sdn. Bhd.* Malaysia 49 49 49 Trading of spiral pipes, straight pipes, tubes, tanks and containers

HICOM Petro-Pipes Sdn. Bhd. Malaysia 49 49 49 Dormant

* The Group completed its acquisition of the remaining 51% equity interest in the total issued and paid-up share capital of Spirolite (M) Sendirian Berhad (“Spirolite”) on 4 March 2013. Accordingly, Spirolite and its subsidiaries, Advanced Piping System Sdn. Bhd. and Spirolite Marketing Sdn. Bhd. became wholly-owned indirect subsidiaries from that date thereon.


120


The details of jointly controlled entities are as follows:


% % %

Ashburn (Huanghua) Hardware People’s Republic - - ß 33 DormantProducts Co. Ltd of China Boustead Wah Seong Sdn. Bhd. Malaysia 50 - - Dormant

Socotherm Shashi Pipe Coating People’s Republic 50 50 50 Provision of pipeCo. Ltd of China coating services and overseas investment holding PetroChina Socotherm Jingzhou People’s Republic -** 38 38 Provision of pipe Coating Technology Co. Ltd of China coating services

9 INVESTMENT IN JOINTLY CONTROLLED ENTITIES

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Unquoted shares at cost 77,194 17,440 19,188Share of post-acquisition results and reserves (5,430) 4,667 8,437

71,764 22,107 27,625

Share of net assets of jointly controlled entities 71,764 22,107 27,625

The Group’s share of revenue, loss, assets and liabilities of jointly controlled entities are as follows:

Group 2012 2011 RM’000 RM’000

Revenue 29,762 35,613Loss for the financial year (1,195) (5,661)

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Non-current assets 53,792 9,102 10,688Current assets 36,434 34,423 38,848Current liabilities (16,239) (22,169) (21,926)Non-current liabilities (20,063) (222) (929)

Net assets 53,924 21,134 26,681Goodwill 17,840 973 944

71,764 22,107 27,625


121


9 INVESTMENT IN JOINTLY CONTROLLED ENTITIES (CONTINUED)

The details of jointly controlled entities are as follows (continued):


% % %

Socotherm PPSC Ningbo (Daxie) People’s Republic 50 50 50 Marketing andPipe Coating Co Limited of China provision of pipe coating services to the oil and gas industry

Sichuan Chuanshi Kanssen People’s Republic 51 51 51 Provision of pipe(Yadong) Coating Services of China coating servicesCompany Limited Shaanxi Yadong Anti-Corrosion People’s Republic 55 55 55 Provision of pipeCompany Limited of China coating services Pesanan Dinamik Sdn. Bhd. Malaysia 51 51 51 Dormant Arabian Yadong Coating Co. Ltd. Saudi Arabia 50^ 50^ 50 Marketing and provision of pipe coating services WD International Limited Hong Kong, SAR - -∞ 50 Dormant Atama Resources Inc.* Republic of Mauritius 42 - - Investment holding Atama Plantation SARL* Republic of Congo 42 - - Business of agricultural development, cultivation of oil palm and other crops and its related activities Signet Plus Sdn. Bhd. * Malaysia 42 - - Provision of management services for its related companies Agro Commodities Inc.* Republic of Mauritius 42 - - Trading of commodities and provision of services Atama Forest SARL* Republic of Congo 42 - - Dormant WCU Corrosion Technologies Singapore 51 51 - Provision of pipe Pte. Ltd. corrosion protection services and related product sales Bayou Wasco Insulation, LLC United States 49 49 - Provision of thermal of America insulation coating services to pipes or pipelines


122


9 INVESTMENT IN JOINTLY CONTROLLED ENTITIES (CONTINUED)

The details of jointly controlled entities are as follows (continued):


% % % Wasco Engineering & Technology People’s Republic 36 36 36 Construction, (Nantong) Co., Ltd. of China building, repairing, installation of all types of offshore equipment and modules, platform and process modules, large modules, provision of engineering services including design, research and development, technical consultancy services, import and export material relating to the business

^ Yadong-Anti Corrosion (Int) Co. Ltd on 26 January 2011, entered into a sale and purchase agreement with Arabian Pipes Co to dispose its entire 50% shareholdings (equivalent to 60,000 shares of Saudi Riyals 50.00 each) in Arabian Yadong Coating Co. Ltd..

ß Ashburn (Huanghua) Hardware Products Co. Ltd, a dormant indirect jointly controlled entity of the Company was de-registered during the financial year ended 31 December 2011.

∞ On 3 June 2011, WD International Limited was de-registered from the Companies Registry of Hong Kong’s register of companies.

* On 31 January 2013, the Group subscribed an additional 16,000 shares in Atama Resources Inc. (“ARI”) for a cash consideration of USD9,300,000 (equivalent to RM28,672,000). With the completion of this subscription, the Group’s effective equity interest in ARI increased to 51%. Accordingly, ARI and its subsidiaries, Atama Plantation SARL, Signet Plus Sdn. Bhd., Agro Commodities Inc. and Atama Forest SARL became subsidiaries effective 31 January 2013.

** On 31 July 2012, PetroChina Socotherm Jingzhou Coating Technology Co. Ltd was liquidated (members’ voluntary liquidation).

On 22 April 2013, the Company announced that PMT Industries Sdn. Bhd. (“PMTI”), a wholly owned subsidiary of the Company, has entered into a joint venture agreement with Shinko Ind. Ltd. (“Shinko”) for the purpose of combining their capabilities and expertise in commencing and carrying out the business of manufacturing turbines and any other related ancillary equipment, parts and spares as specifically agreed by both parties, via an entity to be newly incorporated.

The proposed new entity will be incorporated in Malaysia with an authorised share capital of RM5,000,000 comprising five million ordinary shares of RM1.00 each. The eventual issued and paid-up share capital shall be RM1,000,000 comprising one million ordinary shares of RM1.00 each to be held in the proportions of 51% and 49% by Shinko and PMTI respectively.


123


10 AVAILABLE-FOR-SALE FINANCIAL ASSETS

Unquoted Quoted ICULS shares in shares in quoted in Malaysia Malaysia Malaysia Total RM’000 RM’000 RM’000 RM’000

Group

31.12.2012

At cost 1,050 - - 1,050At fair value - 20 72 92

1,050 20 72 1,142

Market value of quoted investments - 20 72 92

31.12.2011


1,050 42 81 1,173


1.1.2011


1,050 40 47 1,137



124


11 DERIVATIVE FINANCIAL INSTRUMENTS

Contract/ notional Assets Liabilities amount RM’000 RM’000 Group

31.12.2012

Current

Non-hedging derivativesFinancial assets at fair value through profit or loss - held for trading

- Forward currency contracts USD26,130,412 472 -

Non-current


- Interest rate cap USD115,000,000 61 -

31.12.2011

Current

Non-hedging derivativesFinancial liabilities at fair value through profit or loss - held for trading

- Forward currency contracts USD27,091,851 - (3,808)- Interest rate cap USD7,360,000 - *

- (3,808)

Non-current


- Interest rate cap USD115,000,000 1,580 -

1.1.2011

Current


- Forward currency contracts USD44,310,000 2,187 -

Derivative designated as hedging instrumentCash flow hedge - interest rate swap USD7,100,000 - (414)

2,187 (414)

Non-current


- Interest rate cap USD14,680,000 10 -


125


11 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Contract/ notional Assets Liabilities amount RM’000 RM’000

Company

31.12.2011

Current

Non-hedging derivativesFinancial liabilities at fair value through profit or loss - held for trading

- Forward currency contracts USD1,000,000 - 182

1.1.2011

Current


- Forward currency contracts USD28,000,000 1,205 -

The Company did not hold any derivative financial instruments as at 31 December 2012.

Non-hedging derivatives

The Group uses forward currency contracts and interest rate cap derivatives to manage some of the transaction exposures and limit its exposure to adverse fluctuation in foreign currency and interest rates respectively. These contracts are not designated as cash flow or fair value hedges.


126



Interest rate caps

The Group has entered into the following interest rate caps to limit its exposure from adverse fluctuations in interest rates of its borrowings.

Notional amount Strike rate Fair value USD’000 (per annum) Maturity date RM’000

As at 31 December 2012

40,000 1.50% 29 December 2014 7 40,000 0.94% 16 December 2014 19 35,000 1.28% 16 December 2015 35

61


7,360 2.35% 31 October 2012 * 40,000 1.50% 29 December 2014 311 40,000 0.94% 16 December 2014 544 35,000 1.28% 16 December 2015 725

1,580

As at 1 January 2011

14,680 2.35% 31 October 2012 10

* The fair value as at 31 December 2011 approximated RM257.

The Group will receive interest at the end of each contractual period if the USD London Interbank Offered Rate (“LIBOR”) exceeds the respective agreed strike rates. The floating interest rates will be repriced quarterly.


127



Forward currency contracts

The Group and Company enter into foreign currency forward contracts to protect the Group and Company from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward currency contracts are mainly used to hedge certain trade receivables denominated in US Dollar and payables denominated in Singapore Dollar for which firm commitments existed at the reporting date, extending to December 2013 (31.12.2011: August 2012, 1.1.2011: November 2011).

Derivative designated as hedging instrumentCash-flow hedge - interest rate swap

The interest rate swap was used to hedge cash flow interest rate risk arising from a floating rate secured term loan amounting to USD7,100,000 (approximately RM21,904,000). The Group receives a floating rate of interest equal to the 3 months USD Singapore Interbank Offered Rate per annum and pays a fixed all-in interest rate of 5.5% per annum on the notional amount (inclusive of credit spread of 1.65% per annum).

The management considered the interest rate swap as an effective hedging instrument as the floating rate bank loan and interest rate swap had identical critical terms.

The interest rate swap matured on 29 July 2011.

Gains or losses arising from fair value changes of its financial liabilities

During the financial year, the Group and Company recognised a gain of RM2,746,000 and RM182,000 (2011: loss of RM9,687,000 and RM1,387,000) respectively in the profit or loss arising from fair value changes of its derivative financial assets and liabilities. The method and assumptions applied in determining the fair value of derivatives are disclosed in Note 53.

During the financial year ended 31 December 2011, a gain of approximately RM338,000 was recognised in other comprehensive income and approximately a loss amounting to RM101,000 was reclassified from other comprehensive income to finance costs within the profit or loss.


128


12 GOODWILL

Group 2012 2011 RM’000 RM’000

CostAt 1 January 112,552 110,469Disposal of equity interest in a subsidiary that did not result in a loss of control - (193)Disposal of subsidiaries (Note 45) (1,077) -Effect of exchange rate changes (1,589) 2,276

At 31 December 109,886 112,552

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000


Impairment testing of goodwill

Goodwill arising from business combination has been allocated to the Group’s cash generating units (‘CGU’) identified according to operating divisions. The carrying amounts of goodwill allocated to the respective CGUs are as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Cash-generating units

Specialised Pipe Coating and Corrosion Protection Services (CGU A) 56,299 58,047 57,252EPC, Fabrication and Rental of Gas Compressors and

Process Equipment (CGU B) 53,126 54,025 52,769E&P Products and Services (CGU C) 461 480 448

109,886 112,552 110,469


129


12 GOODWILL (CONTINUED)

The recoverable amount of the CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a period of 5 years (31.12.2011: 5 years, 1.1.2011: 5 years). Cash flows beyond the 5-year period are extrapolated using a zero growth rate, which does not exceed the long term average growth rate for the industries in which the respective CGUs operates.

Value-in-use was determined by discounting the future cash flows generated from the CGUs and was based on the following key assumptions:

31.12.2012 31.12.2011 1.1.2011 Pre-tax Pre-tax Pre-tax Growth discount Growth discount Growth discount rate rate rate rate rate rate

CGU A 2.5% 12.6% 0.5% 13.1% 2.9% 13.0%CGU B 6.3% 13.7% 8.5% 13.4% 8.4% 14.0%CGU C 2.8% 16.0% 7.6% 15.7% 7.5% 15.0%

Other key assumptions used in calculating the value-in-use are described below:

(i) Overall assumptionThere will be no material changes in the principal activities of the Group.

(ii) Discount rateThe discount rates used reflect the weighted average cost of capital of the Group with a premium representing the business risk of the respective CGUs.

The key assumptions mentioned above are based on past performance.


130


13 OTHER INTANGIBLE ASSETS

Technical Intellectual know-how property Total RM’000 RM’000 RM’000

Group

2012

CostAt 1 January 112 3,316 3,428Effect of exchange rate changes - (52) (52)

At 31 December 112 3,264 3,376

Less : Accumulated amortisation and impairment lossAt 1 January 22 2,862 2,884Amortisation for the financial year 22 449 471Effect of exchange rate changes - (47) (47)

At 31 December 44 3,264 3,308

Carrying amount at 31 December 68 - 68

2011

CostAt 1 January - 3,229 3,229Additions 112 - 112Effect of exchange rate changes - 87 87

At 31 December 112 3,316 3,428

Less : Accumulated amortisation and impairment lossAt 1 January - 2,680 2,680Amortisation for the financial year 22 108 130Effect of exchange rate changes - 74 74

At 31 December 22 2,862 2,884

Carrying amount at 1 January - 549 549

Carrying amount at 31 December 90 454 544

Technical know-how and intellectual property have an unamortised useful life of 3 years (31.12.2011: 4 years, 1.1.2011: Nil) and Nil (31.12.2011: 1 year, 1.1.2011: 2 years) respectively.

The amortisation of technical know-how and intellectual property are included in “Administrative and general expenses” line item within profit or loss.


131


14 DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position:


Deferred tax assets 10,498 8,693 9,581 1,029 1,029 690Deferred tax liabilities (6,497) (13,712) (18,831) - - -

4,001 (5,019) (9,250) 1,029 1,029 690

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

At 1 January (5,019) (9,250) 1,029 690

(Charged)/credited to profitor loss (Note 41):

- Unused tax losses (93) 435 - -- Property, plant and equipment 8,854 5,817 - (1)- Provisions and accruals (313) (425) - 340- Incentives (942) (412) - -- Others 672 (892) - -

8,178 4,523 - 339Charged to other comprehensive income:

- Hedging reserve (Note 26) - (69) - -

Disposal of subsidiaries (Note 45(a)) 786 - - -Effect of exchange rate changes 56 (223) - -

At 31 December 4,001 (5,019) 1,029 1,029


132


14 DEFERRED TAX (CONTINUED)


Subject to income tax

Deferred tax assets (before offsetting)- Unused tax losses 4,387 4,480 - -- Property, plant and equipment 10,090 673 - -- Provisions and accruals 7,517 7,830 1,085 1,085- Incentives 1,180 2,122 - -- Others 903 341 - -

24,077 15,446 1,085 1,085Offsetting (13,579) (6,753) (56) (56)

Deferred tax assets (after offsetting) 10,498 8,693 1,029 1,029

Deferred tax liabilities (before offsetting)- Property, plant and equipment (16,846) (17,031) (56) (56)- Fair value surplus from freehold

and leasehold properties (3,230) (3,325) - -- Others - (109) - -

(20,076) (20,465) (56) (56)Offsetting 13,579 6,753 56 56

Deferred tax liabilities (after offsetting) (6,497) (13,712) - -

The Group did not recognise deferred tax assets arising from the following temporary differences of certain subsidiaries as it is not probable that future taxable profit will be available against which the deferred tax assets can be utilised in these subsidiaries.

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Deductible temporary differences on:- Unused tax losses 139,875 106,561 79,843- Unabsorbed capital allowances 25,755 23,980 4,561- Others 9,602 808 -

175,232 131,349 84,404

Deferred tax assets not recognised 36,551 34,566 23,904


133


15 INVENTORIES

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

At cost:

Raw materials 150,872 183,549 155,760Work-in-progress 30,774 17,176 20,596Manufactured goods and trading goods 35,570 32,330 40,931Consumables 16,833 14,964 12,990Goods in transit 9,370 29,073 7,717

243,419 277,092 237,994

At net realisable value:

Raw materials 4,633 7,067 5,121Work-in-progress 1,169 - -Manufactured goods and trading goods 2,103 - -

251,324 284,159 243,115

16 AMOUNTS DUE FROM/(TO) CUSTOMERS ON CONTRACTS

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Aggregate costs incurred to date 627,001 517,003 800,460Attributable profits recognised to date less

recognised losses 81,042 60,778 165,545

708,043 577,781 966,005Less: Progress billings on contracts (714,024) (543,910) (952,997)

(5,981) 33,871 13,008

Represented by:

Amounts due from customers on contracts 55,251 69,702 46,000Amounts due to customers on contracts (61,232) (35,831) (32,992)

(5,981) 33,871 13,008

Retention sums on contracts (included within trade receivables) 2,758 1,672 3,495


134


17 TRADE AND OTHER RECEIVABLES


Gross trade receivables 546,894 528,093 464,791 - - -Less: Allowance for

impairment loss (22,967) (20,008) (37,556) - - -

523,927 508,085 427,235 - - -

Other receivables, deposits andprepayments 57,689 62,322 54,148 1,364 99 103

Less: Allowance forimpairment loss (3,330) (60) (305) - - -

54,359 62,262 53,843 1,364 99 103

Total net receivables 578,286 570,347 481,078 1,364 99 103

Trade receivables are non-interest bearing and are generally on 30 to 90 days (31.12.2011: 30 to 90 days, 1.1.2011: 30 to 90 days) credit terms. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.

Credit risk concentration profile

The Group determines concentration of credit risk by monitoring the business segment of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date is as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Oil & gas 221,856 269,632 237,972Renewable energy 78,978 58,703 54,348Industrial trading & services 199,761 165,462 123,442Others 23,332 14,288 11,473

Total 523,927 508,085 427,235

Concentration of credit risk exists within the oil & gas segment which primarily trades with oil majors. However, the Group considers the risk of default by these oil majors to be negligible.

There is no concentration of credit risk within the Renewable Energy and Industrial Trading & Services segments as the balances are distributed over a large number of customers.


135


17 TRADE AND OTHER RECEIVABLES (CONTINUED)

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

Gross trade Impairment Net trade receivables loss receivables RM’000 RM’000 RM’000

31.12.2012

Not past due 233,656 - 233,6561 to 30 days overdue 118,824 - 118,82431 to 60 days overdue 56,093 - 56,09361 to 90 days overdue 36,247 - 36,24791 to 180 days overdue 61,211 (3,586) 57,625181 to 365 days overdue 13,534 (5,850) 7,684More than 365 days overdue 27,329 (13,531) 13,798

Total 546,894 (22,967) 523,927

31.12.2011


Total 528,093 (20,008) 508,085

1.1.2011


Total 464,791 (37,556) 427,235


136



Receivables that are neither past due nor impaired

Trade receivables and other receivables of the Group and the Company that are not impaired are in respect of creditworthy debtors with reliable payment records and have a low risk of default. Most of the Group’s trade receivables arise from customers with more than 5 years of experience with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

The movements in the allowance for impairment loss of trade receivables during the financial year are as follows:

Group 2012 2011 RM’000 RM’000

At 1 January 20,008 37,556Impairment loss recognised 6,690 3,921Impairment loss reversed (2,505) (8,685)Impairment loss written off (1,156) (12,709)Disposal of subsidiaries (46) -Effect of exchange rate changes (24) (75)

At 31 December 22,967 20,008

Trade receivables that are individually determined to be impaired at the reporting date relate to balances for which recoveries are doubtful. These receivables are not secured by any collateral.

The movements in the Group’s allowance for impairment loss of other receivables during the financial year are as follows:

Group 2012 2011 RM’000 RM’000

At 1 January 60 305Impairment loss recognised 3,330 60Impairment loss reversed (60) -Impairment loss written off - (303)Effect of exchange rate changes - (2)

At 31 December 3,330 60


137



The currency profile of trade receivables is as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Gross trade receivables

- Ringgit Malaysia 279,394 255,223 207,939- US Dollar 224,343 245,951 229,794- Singapore Dollar 4,611 3,232 6,666- China Renminbi 2,938 4,149 9,543- Euro Dollar 14,096 7,690 1,411- Japanese Yen 5,734 5,286 6,057- Australian Dollar 13,648 894 1,326- British Pound 3 2,454 1,606- Indonesian Rupiah 2,096 240 402- United Arab Emirates Dirham - 2,910 -- Others 31 64 47

546,894 528,093 464,791

The currency profile of other receivables, deposits and prepayments is as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Other receivables, deposits and prepayments

- Ringgit Malaysia 31,409 31,128 18,910- US Dollar 13,302 13,431 25,274- Singapore Dollar 2,833 1,234 875- China Renminbi 4,322 5,072 3,767- Euro Dollar 7 5 12- Australian Dollar 378 216 169- Indonesian Rupiah 1,895 1,782 1,733- Japanese Yen 1,105 1,845 1,660- Hong Kong Dollar 1,606 1,924 1,591- British Pound - 221 157- United Arab Emirates Dirham 767 3,661 -- Others 65 1,803 -

57,689 62,322 54,148

Other receivables, deposits and prepayments of the Company are denominated in Ringgit Malaysia.


138


18 AMOUNTS OWING BY/(TO) SUBSIDIARIES

(a) Amounts owing by subsidiaries are analysed as follows:

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Interest bearing loans (unsecured) 47,256 130,274 24,779Interest free advances (unsecured) 4,901 7,997 4,175Dividends receivable - 31,034 13,049

52,157 169,305 42,003

The effective interest rate of interest bearing loans as at 31 December 2012 ranges between 1.00% and 4.15% (31.12.2011: 1.00% and 3.75%, 1.1.2011: 2.84% and 3.61%) per annum. The loans and advances are recoverable on demand.

The currency profile of the amounts owing by subsidiaries is as follows:

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

- Ringgit Malaysia 36,086 25,227 27,367- US Dollar 16,016 144,078 14,636- Singapore Dollar 55 - -

52,157 169,305 42,003

(b) Amounts owing to subsidiaries are analysed as follows:

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Interest bearing loans (unsecured) 21,883 140,385 -Interest-free advances (unsecured) 64 93 677

21,947 140,478 677

The effective interest rate of interest bearing loans as at 31 December 2012 ranges between 2.80% and 3.25% (31.12.2011: 3.25%, 1.1.2011: 1.50% and 1.65%) per annum. The loans and advances are repayable on demand.


139


18 AMOUNTS OWING BY/(TO) SUBSIDIARIES (CONTINUED)

(b) The amounts owing to subsidiaries are analysed as follows (continued):

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

The currency profile of amounts owing to subsidiaries is as follows:

- Ringgit Malaysia 13,234 140,478 615- US Dollar 8,713 - 62

21,947 140,478 677

19 AMOUNTS OWING BY/(TO) ASSOCIATES

(a) Amounts owing by associates are analysed as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Trade accounts 712 2,462 1,603Advances 3,243 1,479 2,476Less: Allowance for impairment loss (2,513) (126) -

1,442 3,815 4,079

The movements in the allowance for impairment loss of amounts owing by associates during the financial year are as follows:

Group 2012 2011 RM’000 RM’000

At 1 January 126 -Impairment loss recognised 2,349 126Effect of exchange rate changes 38 -

At 31 December 2,513 126

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

The currency profile of amounts owing byassociates are as follows:

- Ringgit Malaysia 1,442 2,336 2,458- US Dollar - 46 255- Euro Dollar - 1,433 1,366

1,442 3,815 4,079

The trade accounts are unsecured, interest free and recoverable within the normal credit period. The advances are unsecured, interest free and recoverable on demand.


140


19 AMOUNTS OWING BY/(TO) ASSOCIATES (CONTINUED))

(b) Amount owing to an associate is analysed as follows:

Amount owing to an associate as at 1 January 2011 relates to an advance denominated in Euro Dollar, unsecured, interest free and repayable on demand.

20 AMOUNTS OWING BY/(TO) JOINTLY CONTROLLED ENTITIES

(a) Amounts owing by jointly controlled entities are analysed as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Trade accounts 1,176 - -Advances 51,808 1,304 9,681Less: Allowance for impairment loss (424) (841) (2,637)

52,560 463 7,044

The movements in the allowance for impairment loss on amounts owing by jointly controlled entities during the financial year are as follows:

Group 2012 2011 RM’000 RM’000

At 1 January 841 2,637Impairment loss recognised 91 -Impairment loss reversed (492) (1,805)Effect of exchange rate changes (16) 9

At 31 December 424 841

The currency profile of the amounts owing by jointly controlled entities are as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

- Ringgit Malaysia 57 53 125- US Dollar 48,124 410 4,929- China Renminbi 4,379 - 1,990

52,560 463 7,044


141


20 AMOUNTS OWING BY/(TO) JOINTLY CONTROLLED ENTITIES (CONTINUED)

(a) Amounts owing by jointly controlled entities are analysed as follows (continued):

Advances made to jointly controlled entities are unsecured, interest free and are recoverable on demand. As at 1 January 2011, an amount of approximately RM1,778,000 was subject to interest at an effective rate of 5.1% per annum.

Company

Amount owing by a jointly controlled entity relates to an advance which is unsecured, interest free and recoverable on demand.

(b) Amounts owing to jointly controlled entities are analysed as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Trade accounts 419 - -Advances 2,482 1,331 279

2,901 1,331 279

The currency profile of the amounts owing to jointly controlled entities are as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

- US Dollar 2,074 1,252 -- China Renminbi 827 79 279

2,901 1,331 279

The advances are unsecured, interest free and repayable on demand.


142


21 TIME DEPOSITS


Time deposits placed with:- licensed banks in Malaysia 65,149 329,420 137,980 8,075 228,826 86,445- licensed financial institution

in Malaysia 48,018 - - 48,018 - -- licensed overseas banks 42,062 70,073 37,551 - - -

155,229 399,493 175,531 56,093 228,826 86,445

The currency profile of timedeposits is as follows:- Ringgit Malaysia 109,889 329,292 131,810 52,815 228,698 80,275- US Dollar 1,245 1,402 7,404 - 128 6,170- China Renminbi 40,817 54,150 36,317 - - -- Singapore Dollar 3,052 14,649 - 3,052 - -- Australian Dollar 226 - - 226 - -

155,229 399,493 175,531 56,093 228,826 86,445

The effective interest rates of time deposits of the Group and Company are as follow:

Group Company 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 % % % % % %

Time deposits 0.25 - 3.25 0.26 - 3.35 1.55 - 5.00 0.25 - 3.25 2.75 - 3.35 2.93

22 CASH AND BANK BALANCES

The currency profile of cash and bank balances is as follows:


- Ringgit Malaysia 26,530 21,838 95,965 446 3,409 24,412- US Dollar 75,615 121,237 51,662 8,277 6,890 1,855- Singapore Dollar 10,984 10,634 9,857 42 2,344 6,230- China Renminbi 18,504 12,222 12,211 - - -- Euro Dollar 15,950 14,615 10,920 761 720 529- British Pound 374 642 61 14 13 14- Japanese Yen 7,162 1,898 7,859 1 1 1- Australian Dollar 1,547 764 541 12 333 227- Indonesian Rupiah 1,643 774 251 - - -- Others 171 272 564 - - -

158,480 184,896 189,891 9,553 13,710 33,268

Cash and bank balances are deposits held at call with banks and earn no interest.


143


23 SHARE CAPITAL

Group and Company 31.12.2012 31.12.2011 1.1.2011 Number Nominal Number Nominal Number Nominal of shares value of shares value of shares value ’000 RM’000 ’000 RM’000 ’000 RM’000

Authorised:Ordinary shares of RM0.50

each at 1 January/31 December 2,000,000 1,000,000 2,000,000 1,000,000 2,000,000 1,000,000

Group and Company 2012 2011 Number Nominal Number Nominal of shares value of shares value ’000 RM’000 ’000 RM’000

Issued and fully paid:Ordinary shares of RM0.50 eachAt 1 January: 753,573 376,787 723,941 361,971

Issue of shares- conversion of ICULS 17,052 8,526 23,706 11,853- bonus shares arising from

conversion of ICULS 4,262 2,131 5,926 2,963

At 31 December 774,887 387,444 753,573 376,787

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share and rank equally with regard to the Company’s residual assets.

24 SHARE PREMIUM Group and Company 2012 2011 RM’000 RM’000

At 1 January 162,385 165,348Shares issued upon conversion of ICULS (2,131) (2,963)

At 31 December 160,254 162,385


144


25 TREASURY SHARES Group and Company 2012 2011 Number Number of shares Amount of shares Amount RM RM

At 1 January 105,549 221,888 65,549 137,575Shares repurchased 4,598,900 8,350,865 40,000 84,313

At 31 December 4,704,449 8,572,753 105,549 221,888

The shareholders of the Company had approved an ordinary resolution at the Twelfth Annual General Meeting held on 15 June 2012 for the Company to purchase its own shares up to a maximum of 10% of the issued and paid-up capital of the Company. The Directors of the Company are committed to enhancing the value of the Company and believe that the purchase plan is being implemented in the best interest of the Company and its shareholders.

During the financial year, the Company purchased 4,598,900 (2011: 40,000) of its issued share capital from the open market on Bursa Malaysia for RM8,350,865 (2011: RM84,313). The prices paid for the shares purchased ranged from RM1.64 to RM2.01 (2011: RM2.04 to 2.23) per share. The purchase transactions were financed by internally generated funds. Pursuant to the provisions of Section 67A of the Companies Act, 1965 (the “Act”), the Company may either retain the purchased shares as treasury shares or cancel the purchased shares or a combination of both. The purchased shares held as treasury shares may either be distributed as share dividends, resold on Bursa Malaysia in accordance with the relevant rules of Bursa Malaysia, subsequently cancelled or any combination of the three.

As treasury shares, the rights attached as to voting, dividends and participation in other distribution and otherwise are suspended and the treasury shares shall not be taken into account in calculating the number or percentage of shares or of a class of shares for any purposes including substantial shareholdings, takeovers, notices, the requisitioning of meetings, the quorum for a meeting and the result of a vote on a resolution at a meeting.

On 3 April 2013, 6,970,292 treasury shares (includes treasury shares purchased subsequent to 31 December 2012) were distributed to the shareholders on the basis of one (1) treasury share for every one hundred and ten (110) existing Wah Seong Corporation Berhad ordinary shares of RM0.50 held at the entitlement date of 13 March 2013 as special single-tier share dividend.


145


26 OTHER RESERVES

Exchange Available- Capital translation Hedging for-sale reserve reserve reserve reserve RM’000 RM’000 RM’000 RM’000

Group

2012

At 1 January- as previously reported 85 (3,458) - 77- effects of transitioning to MFRS (Note 2.2(c)) (85) 9,930 - -

- as restated - 6,472 - 77

Fair value losses - - - (10)Transfer to profit or loss upon disposal - - - (13)Tax charge on fair value gains - - - -Realisation upon settlement

(recognised within finance costs) - - - -Foreign currency translation differences

for foreign operations - (8,033) - -

At 31 December - (1,561) - 54

2011

At 1 January- as previously reported 85 (9,930) (439) 41- effects of transitioning to MFRS (Note 2.2(c)) (85) 9,930 - -

- as restated - - (439) 41

Fair value gains - - 407 36Tax charge on fair value gains - - (69) -Realisation upon settlement

(recognised within finance costs) - - 101 -Foreign currency translation differences

for foreign operations - 6,472 - -

At 31 December - 6,472 - 77

The hedging reserve comprise the effective portion of the cumulative fair value changes, net of tax, of cash flow hedging instruments related to hedged transactions that have yet to occur.

Available-for-sale reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed or impaired.


146


27 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Group and Company 2012 2011 Equity Liability Equity Liability RM’000 RM’000 RM’000 RM’000

At 1 January 4,895 3,630 11,701 8,678Converted during the financial year (4,895) (3,630) (6,806) (5,048)

At 31 December - - 4,895 3,630

The ICULS represent the unconverted portion of the original RM89,499,999 nominal value of ICULS issued and allotted in 2002 at 100% of the nominal value.

The ICULS were in registered form and constituted by a Trust Deed dated 9 January 2001 and a Supplementary Deed dated 16 May 2002, collectively referred to as “the Trust Deeds”. The ICULS had a tenure of ten (10) years from the date of issue and will not be redeemable in cash. Unless previously converted, all outstanding ICULS will be mandatorily converted by the Company into new ordinary shares at the conversion price applicable on the maturity date. The ICULS are convertible into fully paid ordinary shares of RM0.50 each at any time during the tenure of the ICULS from 21 May 2002 to the maturity date on 21 May 2012 (“Maturity Date”), at the rate of RM1.00 nominal amount of ICULS for two fully paid ordinary shares of RM0.50 each in the Company in accordance to the Trust Deed.

Pursuant to the increase in the share capital relating to the bonus and rights issue together with the free detachable warrants (Note 28), the exercise entails an ICULS adjustment whereby the issuance of new shares is revised upon full conversion of the outstanding ICULS into ordinary shares of the Company at the rate of RM1.00 nominal amount of ICULS for two and a half fully paid ordinary shares of RM0.50 each in the Company.

Upon conversion of the ICULS into new ordinary shares, such shares would rank pari passu in all material respects with the existing ordinary shares of the Company in issue at the date of allotment of the new ordinary shares except that the newly converted ordinary shares shall not be entitled to any rights, allotments of dividends, and/or other distribution if the dividend entitlement date is on or before the relevant conversion date.

The interest on the ICULS at the rate of 3% per annum on the nominal value of the ICULS was payable semi-annually in arrears on 30 June and 31 December in each year commencing 21 May 2002.

The ICULS contained a covenant that the group borrowing should not exceed ten (10) times the shareholders’ fund as disclosed in the latest consolidated statement of financial position.

7,024,401 ICULS remained unconverted on the Maturity Date. These ICULS were automatically converted into 17,561,001 ordinary shares of RM0.50 each as paid-up share capital of the Company on the same date. Accordingly, the ICULS were removed from the Official List of Bursa Malaysia Securities Berhad with effect from 22 May 2012.

28 WARRANTS RESERVE

Group and Company 2012 2011 RM’000 RM’000

At beginning/end of financial year 25,786 25,786

The Warrants 2008/2013 are constituted by a Deed Poll dated 18 February 2008.


147


28 WARRANTS RESERVE (CONTINUED)

On 26 March 2008, the Company allotted the rights issue of 90,641,547 new ordinary shares at an issue price of RM2.23 per share (“Rights Shares”), together with 135,962,320 warrants to the holders of the ordinary shares and ICULS on the basis of:

a) two (2) Rights Shares and three (3) free detachable warrants for every twelve (12) existing ordinary shares held; and

b) two (2) Rights Shares and three (3) free detachable warrants for every six (6) existing ICULS held.

Each warrant entitles the registered holder to subscribe for one new ordinary share in the Company at any time on or after 26 March 2008 up to the date of expiry on 25 March 2013, at an exercise price of RM3.17 per share or such adjusted price in accordance with the provisions in the Deed Poll. The Warrants 2008/2013 was listed on the Main Market of Bursa Malaysia Securities Berhad with effect from 28 March 2008.

No warrant was exercised during the financial year ended 31 December 2012.

As at 31 December 2012, 135,962,320 (31.12.2011: 135,962,320, 1.1.2011: 135,962,320) Warrants 2008/2013 remain unexercised.

On 25 March 2013, there were 500 warrants exercised to subscribe for new Wah Seong Corporation Berhad shares, 135,961,820 warrants which remained unexercised expired on 25 March 2013. These expired warrants were removed from the Official List of Bursa Malaysia Securities Berhad with effect from 26 March 2013.

29 RETAINED PROFITS

Prior to year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and each dividend will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the Section 108 balance and opt to pay dividends under the single-tier system. Subsequent to the financial year ended 31 December 2012, the Company has opted to pay dividends under the single-tier system and has declared single-tier cash and share dividends on 26 February 2013 (refer to Note 43).

As at 31 December 2012, the Company has tax exempt income to frank the payment of net dividends of approximately RM14,583,000.

The Company had sufficient tax credits under Section 108 of the Income Tax Act, 1967 and tax exempt income to frank the payment of net dividends of approximately RM51,186,000 and RM72,663,000 as at 31 December 2011 and 1 January 2011 respectively.

30 TERM LOANS

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Current: Unsecured 81,662 38,262 75,635

Non-current: Secured - 2,903 2,932Unsecured 219,868 370,415 425,433

219,868 373,318 428,365

301,530 411,580 504,000


148


30 TERM LOANS (CONTINUED)

The remaining maturities of the term loans as at 31 December 2012 are as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Within 1 year 81,662 38,262 75,635More than 1 year and less than 2 years 172,169 147,201 54,550More than 2 years and less than 5 years 47,699 226,117 373,815

301,530 411,580 504,000

The currency profile of term loans is as follows:

Ringgit Malaysia - - 33,191US Dollar 301,530 411,580 470,809

301,530 411,580 504,000

Secured loans as at 31 December 2011 and 1 January 2011 were secured over certain property, plant and equipment of the Group as indicated in Note 4 to this financial statements.

The net exposure of term loans to interest rate cash flow risk and the periods in which they mature or reprice (whichever is earlier) are as follows:

Total Floating Effective carrying Fixed interest rate interest rateCurrency interest rate amount <1 year 1-2 years 2-3 years <1 year % p.a. RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2012

Unsecured

USD 2.82 – 6.30 301,530 7,292 - - 294,238

At 31 December 2011

Secured

USD 6.75 2,903 626 474 1,803 -

Unsecured

USD 2.83 – 6.30 408,677 14,873 7,414 - 386,390

411,580 15,499 7,888 1,803 386,390


149


30 TERM LOANS (CONTINUED)

Total Floating Effective carrying Fixed interest rate interest rateCurrency interest rate amount <1 year 1-2 years 2-3 years 3-4 years <1 year % p.a. RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 1 January 2011

Secured

USD 6.50 - 6.75 2,932 - 552 307 2,073 -

Unsecured

RM 3.99 - 4.20 33,191 - - - - 33,191USD 2.69 - 6.30 467,877 13,637 14,438 7,195 - 432,607

504,000 13,637 14,990 7,502 2,073 465,798

31 HIRE PURCHASE LIABILITIES

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Future minimum hire purchase payments:- Payable within 1 year 8 8 29- More than 1 year and less than 5 years 19 29 32

27 37 61Less: Future finance charges (2) (2) (6)

Present value of hire purchase liabilities 25 35 55

Analysis of present value of hire purchase liabilities:- Payable within 1 year 8 8 24- More than 1 year and less than 5 years 17 27 31

25 35 55

The currency profile of hire purchase liabilities is as follow:

Ringgit Malaysia 25 35 40Indonesian Rupiah - - 15

25 35 55

At 31 December 2012, the effective interest rates of the hire purchase liabilities is 5.39% (31.12.2011: 5.39%, 1.1.2011: 5.39% to 13.60%) per annum.


150


32 TRADE AND OTHER PAYABLES


Trade payables 128,410 115,388 98,643 - - -Other payables and accruals 184,609 187,054 147,595 8,686 5,969 5,613

313,019 302,442 246,238 8,686 5,969 5,613

Trade payables

Credit terms of trade payables range from 30 to 90 days (31.12.2011: 30 to 90 days, 1.1.2011: 30 to 90 days).

Other payables

Credit terms of other payables range from 30 to 90 days (31.12.2011: 30 to 90 days, 1.1.2011: 30 to 90 days).

Currency profile of trade payables

The currency profile of trade payables is as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

- Ringgit Malaysia 73,359 62,097 58,843- US Dollar 29,442 20,316 25,283- Singapore Dollar 9,520 23,970 7,179- China Renminbi 1,540 1,463 1,746- Euro Dollar 846 1,409 355- United Arab Emirates Dirham 2,917 1,479 1,435- Japanese Yen 5,529 3,032 1,921- British Pound 63 459 395- Australian Dollar 4,356 583 554- Indonesian Rupiah 838 550 856- Others - 30 76

128,410 115,388 98,643


151


32 TRADE AND OTHER PAYABLES (CONTINUED)

Currency profile of other payables and accruals

The currency profile of other payables and accruals is as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Other payables and accruals- Ringgit Malaysia 91,130 72,011 58,445- US Dollar 68,064 80,840 61,111- Singapore Dollar 3,393 6,758 4,655- China Renminbi 4,365 6,311 5,197- Euro Dollar 4,289 4,611 761- Japanese Yen 7,158 11,642 12,846- Australian Dollar 3,330 101 2,763- Hong Kong Dollar 298 2,061 591- Indonesian Rupiah 2,006 1,446 957- British Pound 19 1,046 266- Others 557 227 3

184,609 187,054 147,595

Other payables and accruals balances of the Company are denominated in Ringgit Malaysia.

33 PROVISION FOR WARRANTIES

Group 2012 2011 RM’000 RM’000

At 1 January 12,231 18,604Reversals (527) (4,674)Utilisation (944) (1,947)Effect of exchange rate changes (234) 248

At 31 December 10,526 12,231

The Group recognises the estimated liability to repair or replace products when the underlying products or services are sold. It is expected that most of these costs will be incurred over the warranty period which extends up to 4 years. Provision for warranties is calculated based on historical warranty data and specific circumstances related to products or services sold, after considering the various possible outcomes against their associated probabilities.


152


34 OTHER BANK BORROWINGS


Secured:

Revolving credits - 1,805 7,431 - - -

Unsecured:Revolving credits 285,359 294,225 53,204 149,468 143,006 -Bankers’ acceptances 97,558 102,139 55,407 - - -

382,917 398,169 116,042 149,468 143,006 -

The currency profile of other bank borrowings is as follows:


Ringgit Malaysia 60,522 53,185 60,258 25,000 - -US Dollar 322,395 336,771 47,607 124,468 143,006 -Euro Dollar - 8,213 8,177 - - -

382,917 398,169 116,042 149,468 143,006 -

The effective interest rates of other bank borrowings of the Group as at 31 December 2012 are as follows:

Group Company 31.12.2012 31.12.2011 1.1.2011 31.12.2012 31.12.2011 1.1.2011 % % % % % %

Revolving credits 0.76 – 4.36 0.61 – 4.75 1.28 – 4.86 0.91 – 3.75 0.66 – 1.25 -Bankers’ acceptances 0.95 – 5.10 3.49 – 4.29 1.20 – 3.71 - - -

Revolving credits of a subsidiary as at 31 December 2012 and 1 January 2011 were secured by property, plant and equipment and prepaid lease assets as disclosed in Note 4 and Note 5.


153


35 DISPOSAL GROUPS HELD FOR SALE

(a) Proposed disposal of the shares and assets held in a joint venture company, Arabian Yadong Coating Co. Ltd (“AYC”)

On 26 January 2011 and 31 January 2011, the Company’s wholly-owned indirect subsidiary, Yadong-Anti Corrosion (Int) Co. Ltd. (“YAC”), commenced the disposal of the shares and assets held in a joint venture company, AYC pursuant to two (2) separate Sale and Purchase Agreements dated 26 January 2011:

(i) to dispose YAC’s 60,000 shares (50% equity interest) in AYC to Arabian Pipes Co., (“APC”), for a total consideration of USD2,552,000; and

(ii) to dispose the machinery and equipment for the external coating of steel pipes, including auxiliary equipment, industrial utilities, attachments, tooling, spare parts and as available, all designs and drawings, plans, manufacturing data, technical publications and other documents related thereto to APC, for a total consideration of USD900,000.

The Group completed the disposal of the machinery and equipment during the financial year ended 31 December 2011.

Notwithstanding this, as at the reporting date, the transfer of share title is pending approvals from the Ministry of Commerce & Industry and the Saudi Arabia General Investment Authority.

(b) Disposals of indirect equity interests in Drilbits International Private Limited (“Drilbits”) and Driltools International FZCO (“Driltools”)

On 28 December 2010, the Company commenced the disposal of shares in the following indirect subsidiaries pursuant to two (2) separate Sale and Purchase Agreements dated 27 December 2010:

(i) disposal of 2,182,800 shares (60% equity interest) in Drilbits to Omni Oil Technology Holdings Limited (a Jebel Ali Offshore Free Zone Company), for a total consideration of USD2,700,000; and

(ii) disposal of 24 shares (60% equity interest) in Driltools to Omni Oil Technology Holdings Ltd. (a company incorporated in British Virgin Islands), for a total consideration of USD4,800,000.

The aforementioned disposals of shares were completed simultaneously in June 2011. Upon completion, Drilbits and Driltools ceased to be indirect subsidiaries of the Company. Refer to Note 45(b) for the effects arising from this disposal to the Group.

(c) The Group has entered into a commitment to sell certain investment properties as of 31 December 2011. The disposal of these investment properties were completed in March 2012.


154


35 DISPOSAL GROUPS HELD FOR SALE (CONTINUED)

(d) The classes of assets and liabilities classified as held for sale as at 31 December 2012 in relation to the above-mentioned proposed disposals are summarised below:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Assets:

Property, plant and equipment - - 9,274Investment properties - 448 -Goodwill - - 6,629Intangible assets - - 1,559Investment in a jointly controlled entity 3,990 8,128 7,876Inventories - - 9,621Trade and other receivables - - 15,568Time deposits - - 1,057Cash and bank balances - - 3,169

Assets of disposal groups held for sale 3,990 8,576 54,753

Liabilities:

Trade and other payables - - 8,014Current tax liabilities - - 1,464Deferred tax liabilities - - 565Other liabilities - - 288

Liabilities of disposal groups held for sale - - 10,331

36 GROSS REVENUE Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Contract revenue 488,500 369,089 - -Sales of goods and services 1,380,274 1,420,744 - -Engineering services 14,281 22,708 - -Rental income 67,001 74,579 - -Dividend income - - 67,414 60,948Commission income 1,496 1,991 - -Interest income - - 6,479 10,280Management fees - - 1,248 1,262

1,951,552 1,889,111 75,141 72,490


155


37 COST OF SALES Group 2012 2011 RM’000 RM’000

Contract costs 462,376 352,813Cost of goods sold and services 1,177,683 1,088,248Cost of engineering services 9,224 20,935Direct operating costs relating to rental income 41,223 47,281

1,690,506 1,509,277

38 OTHER GAINS/(LOSSES) - NET


Fair value gains/(losses) arising from fair value changes of derivative financial instruments:- Forward currency contracts 4,224 (5,914) 182 (1,387)- Interest rate cap (1,478) (3,773) - -

2,746 (9,687) 182 (1,387)

39 PROFIT FROM OPERATIONS


Profit from operations is stated after charging:

Impairment loss on financial assets- trade receivables 6,690 3,921 - -- other receivables 3,330 60 - -

Allowance for obsolete inventories 313 2,125 - -Staff costs (Note 47) 161,243 176,952 9,406 6,699Directors’ fees 285 315 285 315Amortisation of other intangible assets 471 130 - -Amortisation of prepaid lease payments 1,320 1,173 - -Auditors’ remuneration

- statutory audit- current year 2,554 2,317 100 100

- fees for non-audit services* 519 1,303 273 241Bad debts written off 370 1,464 - -Depreciation of property, plant and equipment 53,968 52,219 247 100Depreciation of investment properties 264 208 42 -Impairment loss on property, plant and equipment - 19,089 - -Impairment loss on investment in associates 1,785 - - -Inventories written off 5,305 4,933 - -Loss on foreign currency exchange:

- realised 10,379 3,771 4,035 1,606- unrealised 816 12,287 - 2,508

Operating lease rental 11,567 11,651 - -Property, plant and equipment written off 1,067 1,112 1 -Loss on disposal of property, plant and equipment 289 - - -


156


39 PROFIT FROM OPERATIONS (CONTINUED)


Profit from operations is stated after charging (continued):

Rental of equipment 20,788 11,585 - -Rental of premises 9,827 9,990 354 373Impairment loss on amount owing by an associate 2,349 126 - -

and crediting:

Reversal of impairment loss on trade and other receivables 2,565 8,685 - -Net reversal of impairment loss on amount owing

by a jointly-controlled entity 401 1,805 - -Gain on disposal of property, plant and equipment - 322 87 2Gain on disposal of asset held for sale 236 - - -Gross dividend income from subsidiaries - - 67,414 60,948Gain on foreign exchange

- realised 9,930 8,935 - 420- unrealised 5,036 5,571 460 983

Bad debts recovered 240 5,585 - -Interest income from loans and receivables 10,245 11,137 6,479 10,280Write back of allowance for obsolescence of inventories - 140 - -Reversal of provision for warranties 527 4,674 - -Rental income 1,436 2,706 - -Gain on disposal of subsidiaries (Note 45) 4,258 199 - -Insurance compensation for property, plant

and equipment that were impaired - 2,822 - -

* Included in fees for non-audit services are fees payable to PricewaterhouseCoopers Malaysia and its local affiliates for the Group and Company of RM356,000 (2011: RM1,059,900) and RM273,000 (2011: RM240,500) respectively.

40 FINANCE COSTS


Interest expense on:- ICULS 81 355 81 355- bank borrowings and term loan 20,452 20,884 1,743 1,152- hire purchase liabilities 4 4 - -- others 619 709 2,883 1,622

21,156 21,952 4,707 3,129


157


41 TAX EXPENSE


Current tax:- Malaysian income tax 25,317 41,206 1,577 2,301- Foreign taxation 4,714 5,346 - -

30,031 46,552 1,577 2,301Deferred taxation (Note 14) (8,178) (4,523) - (339)

21,853 42,029 1,577 1,962

Current tax:- Current year 26,178 57,175 1,800 2,070- Benefits from previously unrecognised temporary

differences (981) (3,156) - -- Under/(over) accrual in prior years 4,834 (7,467) (223) 231

30,031 46,552 1,577 2,301Deferred taxation (Note 14)

- Origination and reversal of temporary differences (8,178) (4,523) - (339)

Tax expense recognised in profit or loss 21,853 42,029 1,577 1,962

Deferred taxation (Note 14)- Origination and reversal of temporary differences - 69 - -

Tax expense recognised in other comprehensive income - 69 - -

The numerical reconciliation between the tax expense and the product of accounting profit multiplied by the statutory tax rate is as follows:



Calculated at the Malaysian tax rate of 25% (2011: 25%) 20,620 43,317 13,672 14,126Expenses not deductible for tax purposes 9,221 15,480 4,855 5,630Income not subject to tax (12,881) (14,365) (16,727) (18,025)Utilisation of previously unrecognised tax losses and

unabsorbed capital allowances (981) (3,156) - -Current year deferred tax assets not recognised 8,861 13,404 - -Reversal of previously recognised deferred tax assets - 181 - -Utilisation of tax incentives (3,018) (5,201) - -Effect of different tax rates in other countries 4,406 1,569 - -Under/(over) provision in prior years 4,834 (7,467) (223) 231Reversal of taxable temporary differences during

tax holiday period (10,170) - - -Share of associates and jointly controlled entities results (355) (280) - -Others 1,316 (1,448) - -

Tax expense recognised in profit or loss 21,853 42,029 1,577 1,962


158


42 EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

(a) Basic

The basic earnings per share for the financial year has been calculated by dividing the Group’s profit attributable to owners of the Company for the financial year of RM52,538,000 (2011: RM110,374,000) by the weighted average number of ordinary shares in issue, after adjusting for movements in treasury shares during the financial year, and the potential ordinary shares that would be issued upon conversion of all outstanding ICULS during the financial year.

Weighted average number of shares

Group 2012 2011 ’000 ’000

Issued ordinary shares at 1 January 753,573 723,941Effect of shares issued from conversion of ICULS 13,844 17,160Effect of shares repurchased (1,646) (75)Adjustment for number of shares assuming conversion

of remaining ICULS - 21,314

Weighted average number of ordinary shares in issue 765,771 762,340

Basic earnings per ordinary share (sen) 6.86 14.48

(b) Fully diluted

As at 31 December 2012, 135,962,320 (2011: 135,962,320) Warrants 2008/2013 remain unexercised. Each warrant entitles the registered holder to subscribe for one new ordinary share at an exercise price of RM3.17 per share. Hence, the warrants are anti-dilutive and the calculation of diluted earnings per share for the financial year ended 31 December 2012 and 31 December 2011 does not assume the exercise of Warrants.

43 DIVIDENDS

Group and Company 2012 2011 RM’000 RM’000

In respect of the financial year ended 31 December 2012:

1st interim gross cash dividend of 1.25 sen per share less 25% Malaysian income taxand tax exempt cash dividend of 1.75 sen per share, both paid on 3 October 2012 20,753 -


1st interim tax exempt cash dividend of 3.0 sen per share paid on 17 October 2011 - 22,605

2nd interim tax exempt cash dividend of 3.0 sen per share paid on 2 April 2012 22,717 -


2nd interim tax exempt cash dividend of 2.5 sen per share paid on 1 April 2011 - 18,422

43,470 41,027


159


43 DIVIDENDS (CONTINUED)

On 26 February 2013, the Directors declared a second interim dividend comprising:

(i) Single-tier cash dividend of 2.5 sen per share amounting to RM19,180,954; and

(ii) Special single-tier share dividend of 6,970,292 treasury shares (includes treasury shares purchased subsequent to 31 December 2012) distributed to the shareholders of Wah Seong Corporation Berhad ("WSC") on the basis of one (1) WSC share for every one hundred and ten (110) existing WSC ordinary shares of RM0.50 each held at the entitlement date on 13 March 2013.

The second interim dividend was paid/credited into the entitled shareholders' securities accounts on 3 April 2013.

44 SIGNIFICANT ACQUISITIONS

(a) Acquisition during the financial year

(i) On 16 January 2012, Wasco E&P Services Limited, a wholly owned indirect subsidiary of the Company, completed the acquisition of 975,000 ordinary shares of HKD1.00 each and 5,460,000 redeemable preference shares of HKD1.00 each, representing 20% equity interest in the issued and paid-up share capital of Wasco China International Limited (formerly known as Wah Seong China Limited) (“WCIL”) for a total purchase consideration of USD2,000,000 (equivalent to RM6,331,000). As a result, WCIL became a wholly owned indirect subsidiary of the Company. The effects of this transaction is disclosed in the consolidated statement of changes in equity.

(ii) On 28 February 2012, the Company subscribed to 35,000 ordinary shares in Atama Resources Inc. (“ARI”) via its wholly-owned subsidiary, WS Agro Industries Pte. Ltd. (“WS Agro”), equivalent to a 41.7% effective equity interest in ARI for a cash consideration of USD15,700,000. On 31 January 2013, the Company subscribed to a further 16,000 ordinary shares for a cash consideration of USD9,300,000, effectively increasing the Group’s effective interest to 51%. Following this, ARI and its subsidiaries, Atama Plantation SARL, Agro Commodities Inc., Atama Forest SARL and Signet Plus Sdn. Bhd. became subsidiaries of the Group effective from 31 January 2013.

(iii) On 3 September 2012, the Company completed the acquisition of 57,700,000 ordinary shares of RM0.50 each (“the Sale Shares”) constituting approximately 26.90% of the equity interest in the issued and paid-up capital of Petra Energy Berhad (“PEB”), a company listed on the Main Board of Bursa Malaysia Securities Berhad, for a total consideration of approximately RM96,936,000. With the completion of this acquisition, PEB and its subsidiaries became associated companies of the Group. Based on the provisional fair value assessment performed on Petra's net assets, a bargain purchase of approximately RM7,705,000 was recognised.

(iv) On 23 October 2012, the Company, via its wholly-owned indirect subsidiary, Wasco Engineering Group Limited (“WEGL”), subscribed to an additional 3,800,000 ordinary shares in the share capital of Wasco Engineering Technologies Pte. Ltd. (“WET”) at SGD1.00 per share, which were satisfied by way of a cash payment of SGD147,200 (equivalent to RM367,068) and the remaining amount was satisfied by way of capitalising an amount of SGD3,652,800 (equivalent to RM9,686,412) owing by WET to WEGL. As a result of the above, the indirect effective interest of the Group in WET had increased from 70% to 91.99%. The effects of this transaction is disclosed in the consolidated statement of changes in equity.

(v) On 2 November 2012, PMT Industries Sdn. Bhd. (“PMTI”), a wholly owned subsidiary of the Company, acquired an additional 300,000 ordinary shares of RM1.00 each, representing 30% equity interest in the issued and paid-up capital of PMT-Dong Yuan Industries Sdn. Bhd. (“PMT-Dong Yuan”) for a total cash consideration of RM5,360,000. Accordingly, PMT-Dong Yuan became a wholly owned indirect subsidiary of the Company. The effects of this transaction is disclosed in the consolidated statement of changes in equity.

(b) Acquisition in the preceding financial year

There were no significant acquisitions during the financial year ended 31 December 2011.


160


45 DISPOSAL OF SUBSIDIARIES/INTEREST IN A SUBSIDIARY

(a) Disposal of subsidiaries during the financial year ended 31 December 2012

On 28 September 2012, Wasco Oil Technologies Sdn. Bhd. (formerly known as Total Oil Technologies Sdn. Bhd.) (“WOT”), a wholly owned subsidiary of the Company, entered into a Stock Redemption Agreement (“SRA”) with Deepwater Corrosion Services, Inc. (“DCS”), James N. Britton and Valeria A. Britton (both Britton’s, collectively the “Remaining Shareholders”), for the disposal of 255 shares of common stock of USD1.00 each in DCS, representing a 51% ownership interest in the issued and paid-up share capital of DCS via a stock redemption by DCS for a total cash consideration of RM10,053,663 (USD3,207,524) (hereinafter referred to as “Stock Redemption”).

The Stock Redemption includes the disposal by WOT, of its 255 shares of common stock of USD1.00 each in Inter Resources, Inc. (“IRI") representing a 51% ownership interest in IRI. The remaining 49% of ownership interest in IRI is held by the Remaining Shareholders. The Stock Redemption was completed on 1 October 2012.

As a result of the disposals, DCS, Deepwater EU Ltd (a wholly owned subsidiary of DCS) and IRI ceased to be indirect subsidiaries of the Company.

Details of the disposal and the net cash flow on disposal are as follows:

At the date of disposal RM’000

Property, plant and equipment 4,797Goodwill 1,077Deferred tax assets 246Inventories 4,255Trade and other receivables 13,858Cash and bank balances 3,600Term loan (2,462)Trade and other payables (12,718)Current tax liabilities (1,049)Deferred tax liabilities (1,032)

Net assets 10,572Less: Non-controlling interests (4,776)

Total net assets disposed 5,796Gain on disposal 4,258

Net disposal proceeds 10,054Less: Cash and bank balances of subsidiaries disposed (3,600)

Net cash inflow on disposal 6,454


161


45 DISPOSAL OF SUBSIDIARIES/INTEREST IN A SUBSIDIARY (CONTINUED)

(b) Disposal of subsidiaries during the financial year ended 31 December 2011

On 23 June 2011, the Group completed the disposal of its 60% equity interest in Drilbits International Private Limited (“Drilbits”) and Driltools International FZCO (“Driltools”) for a total consideration of USD7,500,000 (equivalent to RM22,825,000). As a result, Drilbits and Driltools ceased to be the Company’s indirect subsidiaries. Details of the disposal and the net cash flow on disposal are as follows:

At the date of disposal RM’000

Property, plant and equipment 6,339Goodwill 6,540Other intangible assets 1,412Inventories 14,550Trade and other receivables 16,260Cash and bank balances 5,308Trade and other payables (14,209)Current tax liabilities (1,653)Deferred tax liabilities (587)

Net assets 33,960Less: Non-controlling interests (11,334)

Total net assets disposed 22,626Gain on disposal 199

Net disposal proceeds 22,825Less: Cash and bank balances of subsidiaries disposed (5,308)

Net cash inflow on disposal 17,517

(c) Disposal of interest in a subsidiary without loss of control during the financial year ended 31 December 2011

(i) On 31 March 2011, Wasco Oil Technologies Sdn. Bhd. (“WOT”) (formerly known as Total Oil Technologies Sdn. Bhd.), an indirect wholly-owned subsidiary of the Company, completed the disposal of 16% of its equity interest in Wasco Oilfield Services Sdn. Bhd. (formerly known as Botco Sdn. Bhd.) for a total consideration of RM768,541, effectively reducing its indirect interest in WOT to 48.51%.

(ii) On 31 March 2011, Wasco Corrosion Services Sdn. Bhd., an indirect subsidiary of the Company, completed the disposal of 7% of its equity interest in Wasco Lindung Sdn. Bhd. (“Wasco Lindung”) for a total consideration of RM509,272, effectively reducing its indirect interest in Wasco Lindung to 48.48%.

(iii) On 9 September 2011, PPSC Industrial Holdings Sdn. Bhd., a wholly owned subsidiary of the Company, completed the disposal of 8% of its equity interest in Wasco Coatings Malaysia Sdn. Bhd. for a total consideration of RM10,348,000, effectively reducing its indirect interest in the Company to 70%.

The above disposals did not have any significant impact on the results of the Group for the financial year ended 31 December 2011.


162


46 SIGNIFICANT RELATED PARTY DISCLOSURES

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

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly.

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions. The transactions described below were carried out on agreed terms.

Group 2012 2011 RM’000 RM’000

Significant transactions with companies in which a Directorof the Company, Robert Tan Chung Meng, has interest

Rental of premises paid/payable 1,001 1,001

Company 2012 2011 RM’000 RM’000

Significant transactions with subsidiaries

Dividend income:- Wah Seong Industrial Holdings Sdn. Bhd. 9,747 -- Wasco Energy Ltd 17,088 36,297- Jutasama Sdn. Bhd. 30,000 -- Petro-Pipe Industrial Corporation Sdn. Bhd. - 13,666- Wah Seong International Pte. Limited - 10,985- PMT Industries Sdn. Bhd. 10,579 -

Interest income:

- Asiana Emas Sdn. Bhd. - 3,095- Syn Tai Hung Trading Sdn. Bhd. 894 460- Wasco Coatings Malaysia Sdn. Bhd. 258 1,149

Management fees:

- Wasco Management Services Sdn. Bhd. - 734- Jutasama Sdn. Bhd. 720 -


163


46 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)

Company 2012 2011 RM’000 RM’000

Net advances to / (repayment from) subsidiaries: - PPI Industries Sdn. Bhd. 10,000 (3,601)- Syn Tai Hung Trading Sdn. Bhd. (20,229) 14,645- Wasco Energy Ltd (18,670) 28,601- Wasco Management Services Sdn. Bhd. - 932- Wasco Coatings Malaysia Sdn. Bhd. (52,250) 51,343- Petro-Pipe Engineering Services Sdn. Bhd. (12,632) 13,297- Wah Seong Industrial Holdings Sdn. Bhd. - 15,470- PMT Industries Sdn. Bhd. 2,614 2,478- Jutasama Sdn. Bhd. (6,954) 14,301- Mackenzie Industries Sdn. Bhd. (1,820) 1,907- Petro-Pipe Industrial Corporation Sdn. Bhd - 5,000- Wasco Lindung Sdn. Bhd. (1,153) 1,176- Peakvest Sdn.Bhd. 12,000 -- Triple Cash Sdn. Bhd. 100 -

Net (advances from) / repayment to subsidiaries: - PPSC Property Sdn. Bhd. (1,529) -- Wasco Coatings HK Limited (8,713) -- Wah Seong Industrial Holdings Sdn. Bhd. - (80)- Wasco Coatings Malaysia Sdn. Bhd. - 625- PMT Industries Sdn. Bhd. - (2,400)- Jutasama Sdn. Bhd. 20,000 (19,850)- Mackenzie Industries Sdn. Bhd. 8,000 (8,000)- PPSC Industrial Holdings Sdn Bhd 99,441 (109,273)

Significant outstanding balances with related parties at the financial year end are as follows:

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Amounts due from/(to) subsidiaries

Wasco Energy Ltd 8,944 58,094 14,628Syn Tai Hung Trading Sdn. Bhd. 3,738 23,222 8,125Wasco Coatings Malaysia Sdn. Bhd. 14 52,450 96Petra-Pipe Engineering Services Sdn. Bhd. - 13,331 -PPSC Industrial Holdings Sdn Bhd. (11,641) (109,921) -Jutasama Sdn. Bhd. 7,770 (5,738) 4Mackenzie Industries Sdn. Bhd. (24) (6,097) 4Wasco Oilfield Services Sdn. Bhd. (formerly known as Botco Sdn. Bhd.) - - 3,732Wasco Management Services Sdn. Bhd. 401 475 11,700Wasco Lindung Sdn. Bhd. - 1,178 13Wah Seong Industrial Holdings Sdn. Bhd. - - (615)Wah Seong International Pte Limited - (20) (19)PPI Industries Sdn. Bhd. 10,099 47 3,625PMT Industries Sdn. Bhd. 5,096 274 43


164


46 SIGNIFICANT RELATED PARTY DISCLOSURES (CONTINUED)

Significant outstanding balances with related parties at the financial year end are as follows (continued):

Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Wasco Coatings HK Limited. (8,713) - -Peakvest Sdn.Bhd. 15,425 - -Signet Plus Sdn. Bhd. 362 - -Triple Cash Sdn Bhd 149 - -PPSC Property Sdn. Bhd. (1,529) - -

Compensation of key management personnel are as follows:


Key management personnel:- short-term employee benefits

(including monetary value of benefits-in-kind) 11,075 9,222 3,795 2,906- post-employment benefits 509 417 442 335

47 STAFF COSTS Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000

Salaries, wages and bonus 151,187 167,751 8,941 6,274Defined contribution plan 10,056 9,201 465 425

161,243 176,952 9,406 6,699

Included within staff costs are remuneration of Executive Directors of the Group and the Company, as follows:


Salaries, wages and bonus 5,985 4,709 2,589 2,010Defined contribution plan 310 240 310 240

6,295 4,949 2,899 2,250

The estimated monetary value of benefits-in-kind received and receivable by Directors of the Group and Company are RM431,000 (2011: RM357,400) and RM44,500 (2011: RM58,400) respectively.


165


48 COMMITMENTS

(a) Capital commitments

Capital expenditure as at the reporting date is as follows:


Commitment to acquire property, plant and equipmentnot provided for in the financial statements:

Approved and contracted 34,561 24,591 - -

Approved but not contracted 39,005 11,908 - -

(b) Operating lease commitments - The Group as lessee

In addition to the prepaid lease payments disclosed in Note 5, the Group has entered into commercial leases of land and operating equipment. These leases have an average tenure between 1 and 2 years with no renewal option or contingent rent provision included in the contracts.

Future minimum rental payable under non-cancellable operating leases (excluding prepaid lease payments) at the reporting date are as follows:

Group 2012 2011 RM’000 RM’000

Payable not later than one year 2,265 3,043Payable later than one year but not later than five years 835 3,612

(c) Operating lease commitments - The Group as lessor

The Group leases out equipment to non-related parties under non-cancellable operating leases.

Total future minimum lease receivables under non-cancellable operating leases contracted for at the reporting date but not recognised as receivables, are as follows:

Group 2012 2011 RM’000 RM’000

Not later than one year 19,700 52,002More than one year but not later than five years 12,490 45,562


166


49 CONTINGENT LIABILITIES

On 17 December 2008, Socotherm S.p.A. (“Socotherm”) commenced a Request for Arbitration against the Company and its indirect wholly-owned subsidiary, Wasco Coatings Limited (“WCL”).

At the relevant time, Socotherm and WCL were shareholders of PPSC Industrial Holdings Sdn Bhd (“PPSCIH”), an investment holding company where Socotherm held 32.52% and WCL held 67.48% in the total paid-up capital of PPSCIH. PPSCIH in turn held 78.00% of the paid-up capital of Wasco Coatings Malaysia Sdn Bhd (“WCM”), a company principally involved in the coating of pipes for the oil and gas industry. In October 2009, WCL acquired Socotherm’s 32.52% interest in PPSCIH and currently, PPSCIH holds 70% of the paid-up capital of WCM.

Socotherm alleged that the transfer of 25,508,858 shares in PPSCIH (“PPSCIH Shares”) from the Company to WCL, as part of an internal restructuring, is in breach of the Joint Venture Agreement dated 16 December 1991 (“JVA”) and Supplemental Agreement dated 14 July 1997 (“SA”) (collectively known as the “said Agreements”) and that the Company and WCL have breached certain territorial limit provisions under the said Agreements. Socotherm is seeking for an order for damages to be assessed by the Arbitral Tribunal for the breach of the territorial limits provisions and the transfer of shares.

On 24 February 2009, WCM commenced a Request for Arbitration against Socotherm, which is consolidated as a counter-claim in the above-mentioned arbitration. WCM alleged that the Respondent has also breached certain territorial limit provisions under the said Agreements arising from its activities in the extended territories as defined in the SA which directly competes with WCM’s activities in those territories, in particular Vietnam, India, Australia, Indonesia and China.

A partial award was received from the Arbitral Tribunal concerning only the issue of liability of the parties to the two arbitral proceedings to each other under the various claims and counterclaims. The Arbitral Tribunal inter alios held that:

1) The Company and WCL were in breach of certain provisions on transfer of PPSCIH shares. However, Socotherm’s claim for a re-transfer of the PPSCIH Shares for breach is dismissed.

2) The Company and WCL are liable to Socotherm for breach of certain provisions in the JVA and the SA respectively that placed certain territorial limits under the JVA and the SA on the pipe coating services that could be provided and on the sale of pipe-coating plants.

3) WCM is liable to pay Socotherm a fee of 5% on the net profit on projects procured within the countries defined in the SA.

4) Socotherm is liable to WCM for the breach of the territorial restrictions in the SA in respect of certain projects undertaken by Socotherm in Vietnam and China.

5) WCM’s claims against Socotherm for breach of the territorial restrictions in the SA in respect of certain projects undertaken by Socotherm in India, Indonesia and Australia were dismissed.

6) Costs of the proceedings are reserved.

The consolidated arbitral proceedings will proceed to the next phase for the determination of the compensation payable by the parties to each other in respect of the findings on liability as described above.

The hearing date for the next phase of the arbitral proceedings is tentatively set for May 2013.

The Directors are unable to ascertain the impact of the award at this point, pending the next phase of arbitral proceedings for the determination of the compensation payable by each party.


167


50 SEGMENTAL ANALYSIS

For management purposes, the Group is organised into business units based on their products and services. The Group’s operating segments have been realigned to reflect the new organisation structure adopted in the preceding financial year.

A brief description of the Group’s operating segments are as follows:

(a) Oil & gas division: Pipe coating, pipe manufacturing for the oil and gas industry, building and operating offshore/onshore field development facilities and the provision of highly specialised equipment and services to the power generation, oleochemical and petrochemical industries.

(b) Renewable energy division: Supplier and manufacturer of specialised equipment for biomass power plants; such as industrial fans, boilers and turbines that run primarily on biomass fuels.

(c) Industrial trading & services division: Trading and distribution of building materials and the manufacturing and trading of industrial pipes for the construction industry.

(d) Others: All other units within the group that do not constitute a separately reportable segment.

Management monitors the operating results of its divisions separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on revenue and profitability measures as shown in the table below.

Transactions between segments were entered into in the normal course of business and were established on agreed terms. The effects of such inter-segmental transactions are eliminated on consolidation.

The assets are allocated based on the operations of the respective segments. The amounts provided to the Group Chief Executive Officer with respect to total assets are measured in a manner consistent with the disclosure of segment assets below.

Industrial Renewable Trading & Oil & Gas Energy Services Others Total RM’000 RM’000 RM’000 RM’000 RM’000

RESULTS

Year ended 31 December 2012

Revenue 872,120 302,331 709,522 102,622 1,986,595Less: Inter segment revenue (28,375) - (3,937) (2,731) (35,043)

External revenue 843,745 302,331 705,585 99,891 1,951,552

Segment profits 46,662 43,041 7,194 6,639 103,536Share of results of associates 2,538Unallocated expenses relating to

financing activities (15,889)Unallocated corporate expenses (7,704)

Profit before tax 82,481


168


50 SEGMENTAL ANALYSIS (CONTINUED)


TOTAL ASSETS


Segment assets 1,186,289 272,015 310,062 77,612 1,845,978Investment in associates 100,969 - 13,686 - 114,655Investment in jointly controlled entities 26,236 - - 45,528 71,764

1,313,494 272,015 323,748 123,140 2,032,397

Assets of disposal groups held for sale 3,990Unallocated corporate assets - Deferred tax assets 10,498- Tax recoverable 23,490- Cash and cash equivalents 75,708- Others 29,275

Total assets 2,175,358

OTHER INFORMATION


Depreciation of:- Property, plant and equipment 46,031 3,692 3,194 1,051 53,968- Investment properties - - 92 172 264

Amortisation of:- Prepaid lease payments 901 - 419 - 1,320- Other intangible assets 449 22 - - 471 Additions of:- Property, plant and equipment 29,569 6,325 796 1,763 38,453- Prepaid lease payments 20,958 - - - 20,958- Investment properties - - - 5,510 5,510

RESULTS


Revenue 926,042 224,951 667,385 83,329 1,901,707Less: Inter segment revenue (445) (1,016) (4,923) (6,212) (12,596)

External revenue 925,597 223,935 662,462 77,117 1,889,111

Segment profits 143,372 29,661 14,940 6,028 194,001Share of results of associates 1,055Unallocated expenses relating to

financing activities (19,375)Unallocated corporate expenses (2,413)

Profit before tax 173,268


169




TOTAL ASSETS


Segment assets 1,401,744 223,608 284,803 58,100 1,968,255Investment in associates 4,325 - 13,616 - 17,941Investment in jointly controlled entities 22,107 - - - 22,107

1,428,176 223,608 298,419 58,100 2,008,303

Assets of disposal groups held for sale 8,576Unallocated corporate assets - Deferred tax assets 8,693- Tax recoverable 14,478- Cash and cash equivalents 255,115- Others 458


OTHER INFORMATION


Depreciation of:- Property, plant and equipment 44,675 3,727 2,969 848 52,219- Investment properties 117 - 37 54 208

Amortisation of:- Prepaid lease payments 738 - 418 17 1,173- Other intangible assets 108 22 - - 130

Impairment of:- Property, plant and equipment 19,089 - - - 19,089

Additions of:- Property, plant and equipment 35,889 2,502 305 503 39,199- Other intangible assets - 112 - - 112


170




TOTAL ASSETS


Segment assets 1,255,027 209,835 246,478 45,273 1,756,613Investment in associates 3,445 - 13,007 639 17,091Investment in jointly controlled entities 27,259 - - 366 27,625

1,285,731 209,835 259,485 46,278 1,801,329

Assets of disposal groups held for sale 54,753Unallocated corporate assets - Deferred tax assets 9,581- Tax recoverable 12,217- Cash and cash equivalents 131,393- Others 438


Geographical information

Revenue and non-current assets information is based on the geographical location of customers and assets respectively as follows:

Revenue Non-current assets* 2012 2011 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 RM’000 RM’000

Attributed to the country of domicile:

Malaysia 997,892 941,117 511,644 402,941 447,517

Attributed to foreign countries:South East Asia excluding Malaysia 396,079 330,241 238,123 248,386 230,119Australia 231,208 336,723 17,037 17,907 25,475China 23,012 25,801 57,487 60,157 65,675Middle East 75,856 63,736 1,289 2,200 1,442Africa 96,430 51,099 46,608 1,336 1,703Others 131,075 140,394 10,945 15,321 11,157

1,951,552 1,889,111 883,133 748,248 783,088

* Non-current assets other than available-for-sale financial assets, financial instruments and deferred tax assets.


171


51 FINANCIAL INSTRUMENTS BY CATEGORY

Group Company RM’000 RM’000


Financial assets

Financial assets measured at fair value through profit or loss:- Derivatives financial assets (held for trading) 533 -

Available-for-sale financial assets 1,142 -

Loans and receivables at amortised cost:- Trade and other receivables (excluding prepayments) 558,551 1,302- Amounts owing by subsidiaries - 52,157- Amounts owing by associates 1,442 -- Amounts owing by jointly controlled entities 52,560 14- Time deposits 155,229 56,093- Cash and bank balances 158,480 9,553

926,262 119,119

Total 927,937 119,119

Financial liabilities Other financial liabilities at amortised cost:- Trade and other payables 313,019 8,686- Amounts owing to subsidiaries - 21,947- Amount owing to a jointly controlled entity 2,901 -- Hire purchase liabilities 25 -- Term loans 301,530 -- Other bank borrowings 382,917 149,468- Other liabilities 3,279 -

Total 1,003,671 180,101


172


51 FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)



Financial assets

Financial assets measured at fair value through profit or loss:- Derivatives financial assets (held for trading) 1,580 -


Loans and receivables at amortised cost:- Trade and other receivables (excluding prepayments) 548,506 91- Amounts owing by subsidiaries - 169,305- Amounts owing by associates 3,815 -- Amounts owing by jointly controlled entities 463 -- Time deposits 399,493 228,826- Cash and bank balances 184,896 13,710

1,137,173 411,932

Total 1,139,926 411,932

Financial liabilities Financial liabilities measured at fair value through profit or loss:- Derivative financial liabilities 3,808 182

Other financial liabilities at amortised cost:- Trade and other payables 302,442 5,969- Amounts owing to subsidiaries - 140,478- Amount owing to a jointly controlled entity 1,331 -- Hire purchase liabilities 35 -- Term loans 411,580 -- Other bank borrowings 398,169 143,006- Other liabilities 2,201 -- Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) 3,630 3,630

1,119,388 293,083

Total 1,123,196 293,265


173


51 FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)



Financial assets

Financial assets measured at fair value through profit or loss:- Derivatives financial assets (held for trading) 2,197 1,205


Loans and receivables at amortised cost:- Trade and other receivables (excluding prepayments) 468,959 103- Amounts owing by subsidiaries - 42,003- Amounts owing by associates 4,079 -- Amounts owing by jointly controlled entities 7,044 -- Time deposits 175,531 86,445- Cash and bank balances 189,891 33,268

845,504 161,819

Total 848,838 163,024

Financial liabilities

Financial liabilities measured at fair value through profit or loss:- Derivative financial liability 414 -

414 -

Other financial liabilities at amortised cost:- Trade and other payables 254,252 5,613- Amounts owing to subsidiaries - 677- Amounts owing to an associate 68 -- Amount owing to a jointly controlled entity 279 -- Hire purchase liabilities 55 -- Term loans 504,000 -- Other bank borrowings 116,042 -- Dividend payable 1,343 -- Other liabilities 2,415 -- Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) 8,678 8,678

887,132 14,968

Total 887,546 14,968

The above balances include carrying amounts of financial assets and liabilities included within disposal groups held for sale.


174


52 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s and Company‘s overall financial risk management objectives and policies are to ensure that the Group and the Company create value and maximise returns for its shareholders. Financial risk management is carried out through risk review, internal control systems, benchmarking to the industry’s best practices and adherence to the Group’s financial risk management policies.

The main risks arising from the financial instruments of the Group and the Company are credit risk, market risk, and liquidity risk. Management monitors the Group’s and the Company’s financial position closely with the objective to minimise potential adverse effects on the financial performance of the Group and of the Company.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for managing these risks.

Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group and the Company.

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amounts of each class of financial assets recognised in the statements of financial position, including derivative financial instruments with positive fair values.

(a) Receivables

The Group’s and Company’s exposure to credit risk is monitored on an ongoing basis. The Group and the Company have credit policies in place to manage the credit risk exposure. The risk is managed through the application of the Group’s and Company’s credit management procedures which include the application of credit evaluations/approvals and follow up procedures.

The Group and the Company actively monitor the utilisation of credit limits to manage the risk of any material loss from the non-performance of its counter-parties.

(b) Inter company balances

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

As at 31 December 2012, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that intercompany receivables are stated at the realisable values. As at 31 December 2012, there was no indication that the loans and advances extended to the subsidiaries are not recoverable.

(c) Derivative financial instruments

Transactions involving derivative financial instruments are with approved financial institutions and reputable banks.

As at the end of the reporting period, the maximum exposure to credit risk arising from derivatives financial assets is represented by the carrying amounts in the statement of financial position.

In view of the counterparties being reputable licensed financial institutions, management does not expect any of the counterparties to fail to meet their obligations.


175


52 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Credit risk (continued)

(d) Financial guarantees

The Company provides unsecured financial 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 repayment made by the subsidiaries.

The maximum exposure to credit risk amounts to RM367,186,777 (31.12.2011: RM450,976,000, 1.1.2011: RM375,148,000) representing banking facilities utilised by the subsidiaries as at the end of the reporting period.

As at 31 December 2012, there was no indication that any subsidiary would default on repayment.

Financial guarantees have not been recognised since the fair value on initial recognition was not material as the probability of the subsidiaries defaulting on its banking facilities is remote.

(e) Time deposits and cash and bank balances

Time deposits and cash and bank balances are placed with approved financial institutions and reputable banks. The likelihood of non-performance by these financial institutions is remote based on their high credit ratings.

Market risk

Market risk refers to the risk that changes in market prices, such as foreign exchange rates, interest rates and prices will affect the Group’s and the Company’s financial position and cash flows.

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the functional currencies of the Group entities. The foreign currencies in which these transactions are denominated are mainly US Dollar.

The Group maintains a natural hedge, whenever possible, by maintaining receivables and payables in matching foreign currencies. Foreign exchange exposures in transactional currencies other than the functional currencies of the operating entities are kept to an acceptable level.

The Group also uses forward currency contracts to minimise exposure on currency fluctuations for which receipts or payments are anticipated more than one month after the Group has entered into a firm commitment for a sale or purchase. The forward currency contracts entered are in the same currency as the hedged item. It is the Group’s policy to negotiate the terms of the forward currency contracts to match the terms of the hedged item to maximise its effectiveness.

The Group is mainly exposed to fluctuation in the US Dollar exchange rate against the respective functional currencies of the Group entities. The Group considers a 5% strengthening or weakening of the US Dollar as a possible change. A 5% strengthening or weakening of the US Dollar would result in the pre-tax profit being approximately RM5,230,000 (2011: RM1,071,000) and RM5,810,000 (2011: RM334,000) higher/lower for the Group and Company respectively. The Group considers that the foreign currency risk attributable to currencies other than the US Dollar to be insignificant.


176



Market risk (continued)

(b) Interest rate risks

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rates.

The Group’s and the Company‘s exposure to interest rate risks relates primarily to the Group’s and Company’s time deposits and interest bearing borrowings.

Surplus funds are placed with licensed financial institutions to earn interest income based on prevailing market rates. The Group and Company manages its interest rate risks by placing such funds on short tenures of 12 months or less.

The Group and the Company generally borrow principally on a floating rate basis and ensure that interest rates obtained are competitive. The Group has entered into interest cap and interest rate swap contracts (Note 11) to limit the Group’s exposure to adverse interest rate fluctuations.

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instrument have been presented in Notes 18, 21, 27, 30, 31 and 34.

Fair value sensitivity for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as a fair value hedge. Therefore, a change in interest rates for these financial instruments at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s pre-tax profit would have been approximately RM1,471,000 (2011: RM3,335,500) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

Liquidity risk

Liquidity risk is the risk that the Group or the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from its payables and borrowings. The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.


177



Liquidity risk (continued)

All financial liabilities of the Group and Company that will be due and payable within the next 12 months are classified within current liabilities. The contractual cash flows of derivative financial liabilities and non-derivative long term financial liabilities are presented below:

More than More than Total 1 year and 2 years and contractual Total Within 1 less than less than undiscounted carrying year 2 years 5 years cash flows amount RM’000 RM’000 RM’000 RM’000 RM’000

Group

31.12.2012

Non-derivative financial liabilitiesTerm loans 90,393 176,577 48,500 315,470 301,530Hire purchase liabilities 8 11 8 27 25

90,401 176,588 48,508 315,497 301,555

Derivative financial assetsForward currency contracts - gross settled

- Outflow 78,198 - - 78,198- Inflow (78,669) - - (78,669)

(471) - - (471) (471)

89,930 176,588 48,508 315,026 301,084

31.12.2011


48,699 154,919 228,241 431,859 411,615

Derivative financial liabilitiesForward currency contracts - gross settled

- Outflow 86,171 - - 86,171- Inflow (82,363) - - (82,363)

3,808 - - 3,808 3,808

52,508 154,919 228,239 435,666 415,423


178



Liquidity risk (continued)

More than More than Total 1 year and 2 years and contractual Total Within 1 less than less than undiscounted carrying year 2 years 5 years cash flows amount RM’000 RM’000 RM’000 RM’000 RM’000

Group

1.1.2011


90,627 67,094 388,364 546,085 504,055

Company

31.12.2011

Derivative financial liabilitiesForward currency contracts - gross settled

- Outflow 3,184 - - 3,184 - Inflow (3,002) - - (3,002)

182 - - 182 182

The Company did not have any derivative financial liabilities and non-derivative long term financial liabilities as at 31 December 2012 and 1 January 2011.


179


53 FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities classified within current assets and current liabilities respectively approximate their fair values due to the relatively short term nature of these financial instruments.

Fair value of quoted equity instruments and debts securities are determined by reference to their respective published market bid price as at 31 December 2012.

The fair values of forward exchange contracts are 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.

The fair values of interest rate swaps and interest rate cap are determined by using valuation techniques based on observable market data.

Fair values of non-derivative financial liabilities are calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. In respect of the liability component of ICULS, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option.

The carrying amount of financial liabilities measured at amortised cost and their respective fair values are as follows:

Group Company Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000

31 December 2012

Non-current liabilitiesTerm loans* 219,868 219,868 - -

31 December 2011

Non-current liabilitiesTerm loans 373,318 375,257 - -

1 January 2011

Non-current liabilitiesTerm loans 428,365 429,869 - -ICULS 8,678 8,673 8,678 8,673

* Fair value approximates to the carrying amount as non-current term loans are subject to floating interest rates.


180


53 FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

Fair value hierarchy

The table below summarises all financial instruments carried at fair value as at 31 December 2012, based on a hierarchy that reflects the significance of the inputs used in measuring its respective fair values. The levels are defined as follows:

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

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

31 December 2012

Financial assetsAvailable-for-sale financial assets 92 - - 92Derivative financial assets - 61 - 61

92 61 - 153

31 December 2011

Financial assetsAvailable-for-sale financial assets 123 - - 123Derivative financial assets - 1,580 - 1,580

123 1,580 - 1,703

Financial liabilitiesDerivative financial liabilities - 3,808 - 3,808


181


54 CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group considers capital and reserves attributable to owners of the Company as capital. The Group manages its capital in order to ensure that the net gearing ratio of the Group does not exceed 1.0 time, which is well within the requirements of the Group’s banking facilities.

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

The Group and the Company are in compliance with all externally imposed capital requirements.

55 SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS

The following analysis of realised and unrealised retained profits is prepared pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Securities Berhad Listing Requirements and in accordance with the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses as issued by the Malaysian Institute of Accountants. This disclosure is based on the format prescribed by Bursa Malaysia Securities Berhad.

The retained earnings as at the reporting date are analysed as follows:

Group Company 31.12.2012 31.12.2011 31.12.2012 31.12.2011 RM’000 RM’000 RM’000 RM’000

Total retained profits (excluding retained profits fromassociates and jointly controlled entities)- Realised gains 423,987 452,127 172,460 164,854- Unrealised (losses)/gains (2,158) (22,916) 1,489 (544)

Total share of retained profits from associates- Realised gains 8,731 4,958 - -- Unrealised gains (1,442) - - -

Total share of retained profits fromjointly controlled entities- Realised gains 3,469 2,783 - -- Unrealised gains/(losses) 5 (7) - -

At 31 December 432,592 436,945 173,949 164,310

Less: Consolidation adjustments (5,700) (9,091) - -

426,892 427,854 173,949 164,310


182

Summary of Significant Recurrent Related Party Transactions

Interested Related Party

Provider of Products / Services

Recipient of Products / Services

Actual Value Transacted for the Financial Year Ended 31 December 2012 (RM’000)

Nature of Transaction

Karim Tanado PT Wasco Engineering Indonesia

Wasco Engineering Technologies Pte Ltd

39,906 Sub-contract of fabrication work

Karim Tanado is a Director of PT Wasco Engineering Indonesia and shareholder by virtue of him holding 5% and 10% shares in PT Wasco Engineering Indonesia and Wasco Engineering Technologies Pte Ltd (the immediate holding company of PT Wasco Engineering Indonesia), respectively.

Dato’ Mohamed Nizam Bin Abdul Razak; Mohd Azlan Bin Mohammed

Wasco Corrosion Services Sdn Bhd and its subsidiaries

Wasco Coatings Malaysia Sdn Bhd and its subsidiaries

9,806 Sale/Purchase of sacrificial anodes and sub-contracting

Deepwater Corrosion Services, Inc. #

Wasco Lindung Sdn Bhd

493 Sale/Purchase of offshore corrosion control product and system

Dato’ Mohamed Nizam Bin Abdul Razak is a common Director of Wasco Corrosion Services Sdn Bhd, Wasco Coatings Malaysia Sdn Bhd and Wasco Lindung Sdn Bhd and Major Shareholder by virtue of him holding 34.81% shares in Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd), the immediate holding company of Wasco Corrosion Services Sdn Bhd.

Mohd Azlan Bin Mohammed is a common Director of Wasco Corrosion Services Sdn Bhd, Deepwater Corrosion Services, Inc., Wasco Coatings Malaysia Sdn Bhd and Wasco Lindung Sdn Bhd and Major Shareholder by virtue of him holding 16.68% shares in Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd) (the immediate holding company of Wasco Corrosion Services Sdn Bhd), and 22.61% shares in Wasco Lindung Sdn Bhd (the indirect subsidiary of Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd)), respectively. # Deepwater Corrosion Services, Inc. was divested on 28 September 2012.

Robert Tan Chung Meng; Pauline Tan Suat Ming; Tony Tan @ Choon Keat; Tan Chin Nam Sdn Bhd; Tan Kim Yeow Sendirian Berhad; Wah Seong (Malaya) Trading Co. Sdn Bhd

IGB Corporation Berhad and its subsidiaries

Wasco Management Services Sdn Bhd

1,032 Rental of premise and related facilities

Robert Tan Chung Meng is a Director of Wah Seong Corporation Berhad Group and IGB Corporation Berhad Group and also a common Major Shareholder of Wah Seong Corporation Berhad and IGB Corporation Berhad. His total direct and indirect shareholdings in IGB Corporation Berhad are 36.50%.

Pauline Tan Suat Ming is a common Director and common Major Shareholder of Wah Seong Corporation Berhad and IGB Corporation Berhad. Her total direct and indirect shareholdings in IGB Corporation Berhad are 36.30%.

Tony Tan @ Choon Keat, Tan Chin Nam Sdn Bhd, Tan Kim Yeow Sendirian Berhad and Wah Seong (Malaya) Trading Co. Sdn Bhd are common Major Shareholders of Wah Seong Corporation Berhad and IGB Corporation Berhad. Their total direct and/or indirect shareholdings in IGB Corporation Berhad are 36.23%, 38.01%, 36.23% and 33.96% respectively.

Toni Karmawan PT PMT Phoenix Industries

PT Agrindo Prima Lestari

477 Sale/Purchase of industrial fans and component parts

Tony Karmawan is a common Director of PT PMT Phoenix Industries and PT Agrindo Prima Lestari. He is also a Major Shareholder by virtue of him holding 30% shares in PT Agrindo Prima Lestari.


183

Summary of Significant Recurrent Related Party Transactions (Continued)

Interested Related Party

Lender Borrower Actual Value Transacted for the Financial Year Ended 31 December 2012 (RM’000)

Nature of Transaction

Karim Tanado Wasco Engineering Technologies Pte Ltd

PT Wasco Engineering Indonesia

3,444 Interest bearing advances for purpose of working capital requirement

Karim Tanado is a Director of PT Wasco Engineering Indonesia and shareholder by virtue of him holding 5% and 10% shares in PT Wasco Engineering Indonesia and Wasco Engineering Technologies Pte Ltd (the immediate holding company of PT Wasco Engineering Indonesia), respectively.

Dato’ Mohamed Nizam Bin Abdul Razak; Mohd Azlan Bin Mohammed

Wasco Coatings Malaysia Sdn Bhd

Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd) and its subsidiaries

740 Interest bearing advances for purpose of working capital requirement

Dato’ Mohamed Nizam Bin Abdul Razak is a common Director of Wasco Coatings Malaysia Sdn Bhd, Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd), Wasco Corrosion Services Sdn Bhd and Wasco Lindung Sdn Bhd and Major Shareholder by virtue of him holding 34.81% shares in Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd), the immediate holding company of Wasco Corrosion Services Sdn Bhd.

Mohd Azlan Bin Mohammed is a common Director of Wasco Coatings Malaysia Sdn Bhd, Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd), Wasco Corrosion Services Sdn Bhd and Wasco Lindung Sdn Bhd and Major Shareholder by virtue of him holding 16.68% shares in Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd) (the immediate holding company of Wasco Corrosion Services Sdn Bhd), and 22.61% shares in Wasco Lindung Sdn Bhd (the indirect subsidiary of Wasco Oilfield Services Sdn Bhd (formerly known as Botco Sdn Bhd)), respectively.

Robert Tan Chung Meng; Pauline Tan Suat Ming; Tony Tan @ Choon Keat; Tan Kim Yeow Sendirian Berhad

Wah Seong Corporation Berhad

Triple Cash Sdn Bhd 750 Interest bearing advances for purpose of working capital requirement

Robert Tan Chung Meng is a Director of Wah Seong Corporation Berhad Group and also a Major Shareholder of Wah Seong Corporation Berhad by virtue of his total direct and indirect shareholdings in Wah Seong Corporation Berhad of 39.442%. He is a Major Shareholder of Triple Cash Sdn Bhd by virtue of his indirect shareholding through Tan Kim Yeow Sendirian Berhad.

Pauline Tan Suat Ming is a Director of Wah Seong Corporation Berhad Group and also a Major Shareholder of Wah Seong Corporation Berhad by virtue of her total direct and indirect shareholdings in Wah Seong Corporation Berhad of 38.401%. She is also a Director of Triple Cash Sdn Bhd and a Major Shareholder of Triple Cash Sdn Bhd by virtue of her indirect shareholding through Tan Kim Yeow Sendirian Berhad.

Tony Tan @ Choon Keat is a Major Shareholder of Wah Seong Corporation Berhad by virtue of his indirect shareholding in Wah Seong Corporation Berhad of 38.024%. He is also a Major Shareholder of Triple Cash Sdn Bhd by virtue of his indirect shareholding through Tan Kim Yeow Sendirian Berhad.

Tan Kim Yeow Sendirian Berhad is a Major Shareholder of Wah Seong Corporation Berhad by virtue of its total direct and indirect shareholdings in Wah Seong Corporation Berhad of 38.024% and a Major Shareholder of Triple Cash Sdn Bhd by virtue of its 21% shares.

NOTE:The Interested Related Party Relationships are as per the Circular to Shareholders on Proposed Renewal of Existing and New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature and Provision of Financial Assistance dated 23 May 2012 which was approved by the shareholders on 15 June 2012.


184

Summary of Landed PropertiesAs at 31 December 2012

Audited NBV Description/ Approximate Approximate as at existing age of the land/built-up 31.12.2012 Title/ Location use building area Tenure RM

Sub Lot 2, Kawasan Industrial 10 - 21 years 55,565 sq m Leasehold 99 years 30,864,605Perindustrian MIEL building (leasehold title not Gebeng, KM25 issued yet)Jalan Kuantan-KemamanP.O. Box 14025720 KuantanPahang Darul Makmur

Lot. A/D and one sub-unit of Industrial N/A 45 acres Leasehold 99 years 11,086,442 Lot C Kawasan MIEL land expiring onTanjong Gelang 8 November 2109Kuantan, Pahang Darul Makmur

Lot. B, Kawasan MIEL Industrial N/A 22 acres Leasehold 99 years 5,527,411 Tanjong Gelang land expiring onKuantan, Pahang Darul Makmur 8 November 2109

Lot C, Kawasan MIEL Industrial N/A 20 acres Leasehold 99 years 4,166,101 Tanjong Gelang land expiring onKuantan, Pahang Darul Makmur 8 November 2109

Pasdec Land Lot A Industrial N/A 40 acres Leasehold 99 years 8,827,140 Tanjong Gelang land (leasehold titleKuantan, Pahang Darul Makmur not issued yet)

PKNP Land Lot Fiz Industrial N/A 36 acres Leasehold 99 years 20,732,214 Kawasan Perindustrian Fiz land expiring onTg Gelang, Mukim Sg. Karang 19 December 2096Kuantan, Pahang Darul Makmur

No. 59, The Boulevard 11-storey 12 years 33,026 sq ft Leasehold 99 years 6,501,702 Mid Valley City office building expiring onLingkaran Syed Putra 14 December 209959200 Kuala Lumpur

No. 5 Pandan Road Office buildings 23 years 13,723 sq m Leasehold 9,481,857 Singapore 609299 28 yrs 1 mth expiring on 30 December 2037

Geran No. 32544, 32546 Industrial land 8 years 12 acres Freehold 26,752,973and 32547 with office and (Land)Lot No. 1930, 1944, 1945 factory building 22,000 sq mDaerah & Mukim of Klang (Building)Negeri Selangor Darul Ehsan

Geran No. 32545, Lot 1943 Industrial land N/A 4 acres Freehold 5,645,752 Daerah & Mukim of KlangNegeri Selangor Darul Ehsan

One unit of two storey shop/office Shop / Office 13 years 1,650 sq ft Leasehold 99 years 237,700 Lot No. 6454 Lot CP 855 (Land) expiring onMukim of Sungai Raja 3,300 sq ft 8 November 2098Daerah Kinta, Perak (Building)Bandar Cyber Ipoh


185

Summary of Landed PropertiesAs at 31 December 2012 (Continued)


Province : Nusa Tenggara Agriculture land N/A 13,900 sq m Freehold 572,273 District : Lombok BaratSub-District : TANJUNGVillage : SOKONGCountry : INDONESIA

Lot 11-08, Sino Life Tower Commercial 8 years 334 sq m Leasehold 1,212,493 No. 707, Zhang yang Road office lot 40 years expiring Pudong 200120 Shanghai on 6 January 2045People’s Republic of China

KKIP Timor, Industrial Zone 13 Industrial land 5 years 22 acres Leasehold 99 years 65,408,769 General Industrial Zone with factory and (Land) expiring onKota Kinabalu Industrial Park office building 232,956 sq ft 31 December 2098 Mile 15 Jalan Telipok, Telipok (Building)Kota Kinabalu, Sabah

KKIP Timor, Industrial Zone 10 Industrial land N/A 30 acres Leasehold 99 years 21,095,769 General Industrial Zone for storage expiring on Kota Kinabalu Industrial Park 31 December 2096Mile 15 Jalan Telipok, TelipokKota Kinabalu, Sabah

Lot 1929, Jalan Bukit Kemuning Industrial land 7 years 18,363 sq m Freehold 7,384,757 Seksyen 32, 40460 Shah Alam with 2 1/2 (Land)Selangor Darul Ehsan storey office 198,320 sq ft and single (Building) storey factory

Parcel No. G1-02-10 Residential 19 years 94 sq m Freehold 1 Strata Grant No. 39419/M5/3/310 (1 ApartmentMukim Damansara, Unit)District of Petaling(Unit No. G1-02-10, Goodyear Court 6Jalan Kewajipan, Subang Perdana47600 Subang Jaya,Selangor Darul Ehsan)

HS(D) Nos. 40386, 40387 Industrial land 12 - 29 years 97,896 sq m Leasehold 21,406,752and 39789 with office (Land) Lot P.T Nos. 18 & 19PT No. 18, 19 and 1554 and factory 24,009 sq m Expiring onrespectively Mukim 1 building (Building) 31 January 2039Seberang Perai Tengah Lot P.T Nos. 1554Pulau Pinang Expiring on 5 June 2046

Parcel G-53, Megamall Penang Commercial 14 years 3,210 sq ft Freehold 617,189

Parcel B3-3-7G-3A Residential 13 years 1,113 sq ft Freehold 21,469 PD Marina International ResortPhase 3 (Bay View Villas)Port DicksonNegeri Sembilan Darul Khusus


186

Summary of Landed PropertiesAs at 31 December 2012 (Continued)


PT3745 Agricultural N/A 3 acres Leasehold 99 years 514,286 3745, Mukim of Kapar land (pending expiring onDistrict of Klang approval for 2 September 2085Selangor Darul Ehsan conversion to industrial land)

PN 37309, Lot No. 476 Vacant land N/A 1,757 sq m Leasehold 99 years 4,530,325 Seksyen 90 expiring onBandar Kuala Lumpur 27 August 2075Daerah Kuala Lumpur

PN 4460, Lot No. 487 Double storey 26 years 466 sq m Leasehold 99 years 489,061 Seksyen 90 link house expiring onBandar Kuala Lumpur 14 October 2076No. 2 Jalan 1/75Off Jalan Kampong PandanKuala Lumpur




Parcel Lot No. L-33 Commercial 11 years 517 sq m Leasehold 99 years 100,902 H.S. (D) 23128 No PT 464 (Shoplot) expiring onPlaza Melaka Raya 19 January 2045District of Melaka Tengah


187

Analysis of Shareholdings

1. Ordinary Shares

Share Capital as at 19 April 2013Authorised Capital : RM1,000,000,000.00Issued and Fully Paid-up Capital : RM387,444,147.00Nominal/Par value per share : RM0.50 Class of Equity Securities : Ordinary SharesStock Name : WASEONGVoting Rights : On a show of hands - one (1) vote per shareholder On a poll - one (1) vote per ordinary share heldTotal Shareholders : 9,334

Distribution of Shareholders as at 19 April 2013

Size of No. of No. ofShareholdings Shareholders % Shares %

Less than 100 1,276 13.6705 41,531 0.0053100 - 1,000 1,999 21.4163 642,162 0.0829 1,001 - 10,000 4,450 47.6752 14,930,230 1.926810,001 - 100,000 1,394 14.9346 31,933,147 4.1210100,001 to less than 5% of issued share capital 213 2.2820 433,734,706 55.97385% and above of issued share capital 2 0.0214 293,606,518 37.8902

Total 9,334 100.0000 774,888,294 100.0000

List of Substantial Shareholders as at 19 April 2013

No. of Ordinary Shares of RM0.50 eachName of Substantial Shareholders Direct Interest % (a) Deemed Interest % (a)

1. Wah Seong (Malaya) Trading Co. Sdn Bhd 253,076,483 32.7594 2,557,354(b) 0.33102. Midvest Asia Sdn Bhd 39,553,871 5.1200 - -3. Tan Kim Yeow Sendirian Berhad 37,835,997 4.8977 255,633,837(c) 33.09044. Pauline Tan Suat Ming 2,100,335 0.2719 293,469,834(d) 37.98815. Tan Chin Nam Sdn Bhd - - 255,633,837(c) 33.09046. Tony Tan @ Choon Keat - - 293,469,834(d) 37.98817. Robert Tan Chung Meng 10,832,511 1.4022 293,469,834(d) 37.98818. Chan Cheu Leong 18,551,134 2.4013 39,553,871(e) 5.12009. Lembaga Tabung Haji 40,530,035 5.2464 - -10. Employees Provident Fund Board 40,407,218 5.2305 - -


188


Directors’ Shareholdings as at 19 April 2013

No. of Ordinary Shares of RM0.50 eachName of Directors Direct Interest % (a) Deemed Interest % (a)

1. Robert Tan Chung Meng 10,832,511 1.4022 293,469,834 (d) 37.98812. Chan Cheu Leong 18,551,134 2.4013 39,706,493 (f) 5.1398 3. Tan Sri Ab Rahman Bin Omar - - - -4. Pauline Tan Suat Ming 2,100,335 0.2719 294,207,326 (g) 38.08355. Halim Bin Haji Din - - - -6. Giancarlo Maccagno 15,544,886 2.0122 - -7. Tan Sri Dato’ Dr. Lin See Yan - - - -

Notes:

(a) Based on 772,531,337 (Issued and paid-up share capital of 774,888,294 less Treasury Shares of 2,356,957). (b) Deemed interest held through Wah Seong Enterprises Sdn Bhd (“WSE”) pursuant to Section 6A of the Companies

Act, 1965 (“the Act”). (c) Deemed interest held through WSE and Wah Seong (Malaya) Trading Co. Sdn Bhd (“WST”) pursuant to Section

6A of the Act. (d) Deemed interest held through WSE, WST and Tan Kim Yeow Sendirian Berhad (“TKYSB”) pursuant to Section 6A

of the Act. (e) Deemed interest held through Midvest Asia Sdn Bhd (“MASB”) pursuant to Section 6A of the Act. (f) Deemed interest held through MASB pursuant to Section 6A of the Act and include interests of his spouse and

children. (g) Deemed interest held through WSE, WST and TKYSB pursuant to Section 6A of the Act and include interests of

her spouse and children.

Note : By virtue of their interests of more than 15% in the shares of the Company, Robert Tan Chung Meng and Pauline Tan Suat Ming are also deemed to be interested in the shares of all its subsidiaries to the extent the Company has an interest.


189


Thirty (30) Largest Shareholders as at 19 April 2013

Name No. of Shares % (a)

1. Wah Seong (Malaya) Trading Co. Sdn Bhd 249,178,036 32.25472. Lembaga Tabung Haji 40,530,035 5.24643. Tan Kim Yeow Sendirian Berhad 37,835,997 4.89774 Amanahraya Trustees Berhad 37,712,724 4.8817 Skim Amanah Saham Bumiputera 5. Lembaga Tabung Angkatan Tentera 35,416,476 4.58456. Midvest Asia Sdn Bhd 33,911,372 4.38967. Citigroup Nominees (Tempatan) Sdn Bhd 21,557,670 2.7905 Employees Provident Fund Board 8 HSBC Nominees (Asing) Sdn Bhd 16,808,339 2.1757 Exempt AN for Credit Suisse (SG BR-TST-ASING) 9. Karya Insaf (M) Sdn Bhd 15,856,041 2.052510. HSBC Nominees (Asing) Sdn Bhd 15,544,886 2.0122 Giancarlo Maccagno 11. Chan Cheu Leong 15,325,579 1.983812. HSBC Nominees (Asing) Sdn Bhd 13,568,207 1.7563 Exempt AN for Credit Suisse (HK BR-TST-ASING) 13. Cartaban Nominees (Asing) Sdn Bhd 12,224,934 1.5825 SSBT Fund D26J for Emerging Markets Global Small Capitalisation Fund (TEMMUF) 14. Robert Tan Chung Meng 10,832,511 1.402215. HSBC Nominees (Asing) Sdn Bhd 10,569,472 1.3682 Exempt AN for HSBC Private Bank (Suisse) S.A. (SPORE TST AC CL) 16. Citigroup Nominees (Tempatan) Sdn Bhd 8,602,500 1.1135 Employees Provident Fund Board (AM INV) 17. HSBC Nominees (Asing) Sdn Bhd 8,508,285 1.1014 Exempt AN for HSBC Private Bank (Suisse) S.A. (HONG KONG AC CL) 18. Citigroup Nominees (Tempatan) Sdn Bhd 8,165,294 1.0570 Employees Provident Fund Board (NOMURA) 19. Maybank Securities Nominees (Asing) Sdn Bhd 6,397,636 0.8281 Maybank Kim Eng Securities Pte Ltd for MICASA Investments (S) Pte Ltd 20. UOBM Nominees (Tempatan) Sdn Bhd 5,642,499 0.7304 Pledged Securities Account for Midvest Asia Sdn Bhd (KD) 21. Cartaban Nominees (Asing) Sdn Bhd 4,983,294 0.6451 SSBT Fund C021 for College Retirement Equities Fund 22. Valuecap Sdn Bhd 4,493,900 0.581723. Citigroup Nominees (Asing) Sdn Bhd 4,284,611 0.5546 CBNY for Dimensional Emerging Markets Value Fund 24. Wah Seong (Malaya) Trading Co. Sdn Bhd 3,898,447 0.504625. Hong Leong Assurance Berhad 3,451,090 0.4467 As Beneficial Owner (UNITLINKED GF) 26. Lee La Kim 3,084,994 0.399327. HSBC Nominees (Asing) Sdn Bhd 2,960,810 0.3833 Exempt AN for the Bank of New York Mellon (MELLON ACCT) 28. Amanahraya Trustees Berhad 2,704,363 0.3501 Public Islamic Select Treasures Fund 29. Goldhill Gardens Sdn Bhd 2,694,272 0.348830. Wah Seong Enterprises Sdn Bhd 2,557,354 0.3310

TOTAL: 639,301,628 82.7541

Note:(a) Based on 772,531,337 (Issued and paid-up share capital of 774,888,294 less Treasury Shares of 2,356,957).


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As Ordinary Business

1. To receive and adopt the Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2012 and the Reports of the Directors and Auditors thereon.

2. To approve the Directors’ Fees of RM285,000 for the financial year ended 31 December 2012.

3. To re-elect the following Directors who retire pursuant to Article 110 of the Company’s Articles of Association: (i) Chan Cheu Leong(ii) Giancarlo Maccagno

4. To re-appoint Tan Sri Dato’ Dr. Lin See Yan who retires pursuant to Section 129(2) of the Companies Act, 1965 as Director of the Company and to hold office until the next Annual General Meeting of the Company pursuant to Section 129(6) of the Companies Act, 1965.

5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

As Special Business

To consider, and if thought fit, to pass the following Ordinary Resolutions, with or without modifications thereto: 6. Ordinary Resolution

Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT, subject always to the Companies Act, 1965 (“the Act”), the Articles of Association of the Company and approvals from the relevant governmental and/or regulatory bodies where such approvals shall be necessary, authority be and is hereby given to the Directors of the Company pursuant to Section 132D of the Act, to issue and allot shares from the unissued share capital of the Company from time to time upon such terms and conditions and for such purposes as may be determined by the Directors of the Company to be in the interest of the Company provided always that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of the issued share capital of the Company for the time being AND THAT the Directors of the Company be also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting (“AGM”) of the Company or the expiration of the period within which the next AGM is required by law to be held, whichever is the earlier; but any approval may be previously revoked or varied by the Company in general meeting.”

7. Ordinary Resolution

Proposed Renewal of Authority to Buy-Back its Own Shares by the Company

“THAT, subject to the provisions of the Companies Act, 1965 (“the Act”), the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other applicable laws, rules, orders, requirements, regulations and guidelines for the time being in force, the Directors of the Company be hereby unconditionally and generally authorised to make purchase(s) of ordinary shares of RM0.50 each in the Company’s issued and paid-up share capital through Bursa Securities at any time and upon such terms and conditions and for such purposes as the Directors of the Company may, in their discretion deem fit, subject to the following:

Notice of Thirteenth Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Thirteenth Annual General Meeting of WAH SEONG CORPORATION BERHAD (“the Company”) will be held at Perdana IV, Level 3, Cititel Hotel, 66 Jalan Penang, 10000 Penang, Malaysia on Friday, 21 June 2013 at 10.00 a.m. for the following purposes:

AGENDA

Ordinary Resolution 1


Ordinary Resolution 3Ordinary Resolution 4






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i) the maximum number of ordinary shares which may be purchased and/or held by the Company shall be ten per centum (10%) of the issued and paid-up ordinary share capital of the Company for the time being (“WSC Shares”);

ii) the maximum fund to be allocated by the Company for the purpose of purchasing the WSC Shares shall not exceed the aggregate of the retained profits and share premium account of RM173.9 million and RM160.3 million respectively of the Company as at 31 December 2012;

iii) the authority conferred by this resolution will be effective immediately upon the passing of this resolution and will continue in force until:

a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time the authority shall lapse, unless by ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions;

b) the expiration of the period within which the next AGM after that date it is required by law to be held; or

c) revoked or varied by an ordinary resolution of the shareholders of the Company at a general meeting;

whichever is earlier but not so as to prejudice the completion of the purchase(s) made by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the MMLR of Bursa Securities or any other relevant authorities;

iv) upon completion of the purchase(s) of the WSC Shares by the Company, the Directors of the Company be hereby authorised to deal with the WSC Shares in the following manner:

a) to cancel the WSC Shares so purchased; orb) to retain the WSC Shares so purchased as treasury shares for distribution as

dividend to the shareholders and/or resell on the market of Bursa Securities and/or for cancellation subsequently; or

c) to retain part of the WSC Shares so purchased as treasury shares and cancel the remainder; or

d) in such other manner as the Bursa Securities and such other relevant authorities may allow from time to time.

AND THAT the Directors of the Company be and are hereby authorised to take all such steps that are necessary or expedient and/or appropriate to implement, finalise and to give full effect to the purchase(s) of WSC Shares with full power to assent to any conditions, variations, and/or amendments that may be imposed by the relevant authorities.”

8. Ordinary Resolution

Proposed Renewal of Shareholders’ Mandate for the Existing Recurrent Related Party Transactions and Provision of Financial Assistance

“THAT, subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company and/or its subsidiaries (“WSC Group”) to enter into recurrent related party transactions of a revenue or trading nature and the provision of financial assistance as specified in Section 2.5 of Part B of the Circular to Shareholders dated 29 May 2013 which transactions are necessary for the day-to-day operations in the ordinary course of business of WSC Group on terms 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 the shareholders’ mandate is subject to annual renewal and disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year and that such approval shall continue to be in force until:

i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time the proposed shareholders’ mandate will lapse, unless renewed by a resolution passed at the meeting;


192

ii) the expiration of the period within which the next AGM of the Company 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 extension as may be allowed pursuant to Section 143(2) of the Act); or

iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and to 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 transactions contemplated and/or authorised by this resolution.”

9. Ordinary Resolution Retention of Independent Non-Executive Directors

(i) “THAT approval be and is hereby given to Tan Sri Ab Rahman Bin Omar who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”

(ii) “THAT approval be and is hereby given to Halim Bin Haji Din who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than eleven (11) years, to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”

10. To transact any other business that may be transacted at an Annual General Meeting of which due notice shall have been given in accordance with the Companies Act, 1965 and the Company’s Articles of Association.

FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this Thirteenth AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd., in accordance with Article 81(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a Record of Depositors as at 17 June 2013 (“General Meeting Record of Depositors”). Only a Depositor whose name appears on the General Meeting Record of Depositors shall be regarded as a member entitled to attend, speak and vote at the Thirteenth AGM or appoint proxies to attend, speak and vote on his/her behalf.

BY ORDER OF THE BOARD

WOO YING PUN (MAICSA 7001280)Group Company SecretaryKuala LumpurDated: 29 May 2013





193

Notes:1. 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 to the Company. If a Member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

2. Where a Member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”) which holds ordinary shares in the Company for multiple beneficial 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.

3. Where a Member of the Company is an authorised nominee as defined under SICDA, 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.

4. If the appointer is a corporation, the proxy form must be executed under the common seal or under the hand of its officer or attorney duly authorised in writing.

5. In order for the proxy form to be valid, it must be deposited at the Company’s Registered Office at Suite 19.01, Level 19, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia, not less than forty-eight (48) hours before the time appointed for holding the meeting or at any adjournment thereof.

Explanatory Notes on Special Business

1. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

The Ordinary Resolution 7, if passed, will give authority to the Directors of the Company to issue and allot shares from the unissued share capital of the Company for such purposes as the Directors of the Company in their absolute discretion consider to be in the interest of the Company without having to convene a general meeting. This authority shall continue to be in force until the conclusion of the next Annual General Meeting (“AGM”) or the expiration of the period within which the next AGM is required by law to be held, whichever is the earlier; but any approval may be previously revoked or varied by the Company in general meeting.

The Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general mandate which was approved at the Twelfth AGM of the Company held on 15 June 2012 and which will lapse at the conclusion of the Thirteenth AGM. A renewal of this authority is being sought at the Thirteenth AGM.

The authority to issue shares pursuant to Section 132D of the Companies Act, 1965 will provide flexibility and expediency to the Company for any possible fund raising involving the issuance or placement of shares to facilitate business expansion or strategic merger and acquisition opportunities involving equity deals or part equity or to fund future investment project(s) or for working capital requirements, which the Directors of the Company consider to be in the best interest of the Company.

As such, any additional cost to be incurred or delay arising from the need to convene a general meeting to approve such issuance of shares could be eliminated.

2. Proposed Renewal of Authority to Buy-Back its Own Shares by the Company

The Ordinary Resolution 8, if passed, will allow the Directors of the Company to exercise the power of the Company to purchase not more than ten per centum (10%) of the issued and paid-up share capital of the Company for the time being. This authority will expire at the conclusion of the next Annual General Meeting unless earlier revoked or varied by ordinary resolution passed by shareholders at a general meeting.

Please refer to Part A of the Circular to Shareholders dated 29 May 2013, which is enclosed and despatched together with the Annual Report 2012, for information pertaining to Ordinary Resolution 8.



194

3. Proposed Renewal of Shareholders’ Mandate for the Existing Recurrent Related Party Transactions and Provision of Financial Assistance

The Ordinary Resolution 9, if passed, will allow the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with the related parties and the provision of financial assistance in the ordinary course of business which are necessary for the day-to-day operations based on 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.

Please refer to Part B of the Circular to Shareholders dated 29 May 2013, which is enclosed and despatched together with the Annual Report 2012, for information pertaining to Ordinary Resolution 9.

4. Retention of Independent Non-Executive Directors of the Company in accordance with the Malaysian Code on Corporate Governance 2012

(i) Tan Sri Ab Rahman Bin Omar

Tan Sri Ab Rahman Bin Omar was appointed as an Independent Non-Executive Director of the Company on 1 October 2003, and has, therefore served the Company for more than nine (9) years. He met the criteria of an Independent Director as defined in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. He has performed his duty diligently and in the best interest of the Company and has provided independent judgement and broader views and balanced assessments to the proposals from the Management with his diverse experience and expertise. The Board, therefore recommends that he should be retained as an Independent Non-Executive Director.

(ii) Halim Bin Haji Din

Halim Bin Haji Din was appointed as an Independent Non-Executive Director of the Company on 22 May 2002, and has, therefore served the Company for more than eleven (11) years. He met the criteria of an Independent Director as defined in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. He has performed his duty diligently and in the best interest of the Company and has provided independent judgement and broader views and balanced assessments to the proposals from the Management with his diverse experience and expertise. The Board, therefore recommends that he should be retained as an Independent Non-Executive Director.



195

1. Re-election and Re-appointment of Directors

1.1 Directors who are standing for re-election pursuant to Article 110 of the Company’s Articles of Association

(i) Chan Cheu Leong(ii) Giancarlo Maccagno

1.2 Re-appointment of Director who retires pursuant to Section 129(6) of the Companies Act, 1965

(i) Tan Sri Dato’ Dr. Lin See Yan

Details of attendance of Directors who are standing for re-election and re-appointment are set out as below:

Director Directorship Total Meetings Attended

Chan Cheu Leong Managing Director/Group Chief Executive Officer 4/4

Giancarlo Maccagno Deputy Managing Director 4/4

Tan Sri Dato’ Dr. Lin See Yan Senior Independent Non-Executive Director 4/4

Profile of the above Directors are set out in the section of Profile of Directors of this Annual Report from pages 21 to 23.

Information in relation to the Directors' interests in the Company is stated in the Analysis of Shareholdings on pages 187 to 189 of this Annual Report.

2. Date, time and place of the Thirteenth AGM

Date : Friday, 21 June 2013 Time : 10.00 a.m.Place : Perdana IV, Level 3, Cititel Hotel, 66 Jalan Penang, 10000 Penang, Malaysia

Statement Accompanying Notice of Thirteenth Annual General Meeting

This page has been intentionally left blank.

PROXY FORM

I/We (Full name in block letters)

NRIC or Company No. CDS Account No.

of (Full address)

being a *member/members of WAH SEONG CORPORATION BERHAD hereby appoint

NRIC No. (Full name in block letters)

of (Full address)

or failing *him/her, NRIC No. (Full name in block letters)

of (Full address)

(Please indicate with an “x” in the space provided above as to how you wish to cast your vote. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion.)* Strike out whichever not applicable

Signature of Member Company Seal to be affixed here if Member is a Corporation

Signed this: day of 2013

Notes:1. 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 to the Company. If a Member appoints two (2) proxies,

the appointments shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

2. Where a Member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”) which holds ordinary shares in the Company for multiple beneficial 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.

3. Where a Member of the Company is an authorised nominee as defined under SICDA, 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.

4. If the appointer is a corporation, the proxy form must be executed under the common seal or under the hand of its officer or attorney duly authorised in writing.

5. In order for the proxy form to be valid, it must be deposited at the Company’s Registered Office at Suite 19.01, Level 19, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia, not less than forty-eight (48) hours before the time appointed for holding the meeting or at any adjournment thereof.

6. For the purpose of determining a member who shall be entitled to attend this Thirteenth AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd., in accordance with Article 81(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue a Record of Depositors as at 17 June 2013 (“General Meeting Record of Depositors”). Only a Depositor whose name appears on the General Meeting Record of Depositors shall be regarded as a member entitled to attend, speak and vote at the Thirteenth AGM or appoint proxies to attend, speak and vote on his/her behalf.

Number of Ordinary Shares held

or failing *him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf, at the Thirteenth Annual General Meeting (“AGM”) of the Company to be held at Perdana IV, Level 3, Cititel Hotel, 66 Jalan Penang, 10000 Penang, Malaysia on Friday, 21 June 2013 at 10.00 a.m. and at any adjournment thereof in the manner indicated below.

FOR AGAINST

To receive and adopt the Audited Financial Statements of the Company and the Group for the financial year ended 31 December 2012 and the Reports of the Directors and Auditors thereon.

To approve the Directors’ Fees of RM285,000 for the financial year ended 31 December 2012.

To re-elect Chan Cheu Leong who retires pursuant to Article 110 of the Company’s Articles of Association.

To re-elect Giancarlo Maccagno who retires pursuant to Article 110 of the Company’s Articles of Association.

To re-appoint Tan Sri Dato’ Dr. Lin See Yan who retires pursuant to Section 129(6) of the Companies Act, 1965.

To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration.

To authorise the Directors to issue and allot ordinary shares pursuant to Section 132D of the Companies Act, 1965.

Proposed Renewal of Authority to Buy-Back its Own Shares by the Company.

Proposed Renewal of Shareholders’ Mandate for the Existing Recurrent Related Party Transactions and Provision of Financial Assistance.

To retain Tan Sri Ab Rahman Bin Omar as an Independent Non-Executive Director.

To retain Halim Bin Haji Din as an Independent Non-Executive Director.












WAH SEONG CORPORATION BERHAD(COMPANY NO. : 495846-A)(INCORPORATED IN MALAYSIA)

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Fold this flap for sealing

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THE COMPANY SECRETARYWAH SEONG CORPORATION BERHAD

(Company No. : 495846-A)Registered Office:

Suite 19.01, Level 19, The Gardens North TowerMid Valley City, Lingkaran Syed Putra

59200 Kuala Lumpur Malaysia

AFFIXSTAMP

Suite 19.01, Level 19, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia

Tel : (603) 2685 6800 Fax : (603) 2685 6999 Website : www.wahseong.com

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