press metal berhad - malaysiastock.biz 2 of our smelting project in samalaju industrial park,...

ALUMINIUM { The window to endless possibilities...

Annual Report 2011

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...& imagination }Aluminium is the world's most abundant metal. The human imagination is the world's most abundant source of creation. Meld them together, and you open a window of endless possibilities.

At Press Metal, we see no limits to the versatility of our product and to the potential of our growth. But like the most creative minds, we also temper our ambition to be a world leader in aluminium products with our simple yet solid beliefs – perseverance, determination, and belief.

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Press Metal at a Glance

Chairman’s Statement

Review of Operations by Group CEO

Event Highlights

Group Structure

Corporate Information

Profile of Directors

Group Financial Highlights

Corporate Social Responsibilities Statement

Corporate Governance Statement

Additional Compliance Information

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Audit Committee Report

Statement on Internal Control

Financial Statements

List of Properties

Analysis of Shareholdings

Analysis of RCSLS Holdings

Analysis of Warrant Holdings

Notice of Annual General Meeting

Appendix 1

Form of Proxy

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129

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136

139

143

Enclosed

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glancePRESS METAL at a

Press Metal Berhad is a Malaysian-based aluminium company with extensive

global presence. From our modest beginning as a private-owned local aluminium

extrusion company in 1986, Press Metal has come a long way to becoming a

globally integrated aluminium player today – with 210,000 tonne smelting

capacity and 190,000 tonne extrusion capacity per annum.

MALAYSIA

Press Metal is the leading aluminium extruder in Malaysia with a 40,000 tonne capacity per annum, completes with in-house tool and dies shop offering customers quick turnaround services. In addition, our plant is also equipped with modern surface finishing facilities that provide an extensive range of surface finishes – anodize, powder coated or bright dip.

Backed by our experience and expertise in the aluminium industry for the past 25 years, Press Metal ventured into the upstream activities in 2007 and has subsequently in 2009 successfully built a new smelter in Mukah, Sarawak – the first-ever aluminium smelting plant in Malaysia.

To continue on this successful expansion path, Press Metal has kick-started the development of Phase 2 of our smelting project in Samalaju Industrial Park, Bintulu, Sarawak.

The Samalaju smelter will have a larger capacity of 240,000 tonne per annum, employing the latest smelting technology, namely the 400kA technology. The technology will be more energy efficient, enabling a higher production output with lower energy consumption.

Press Metal strives to put Malaysia at the forefront as a leading primary aluminium producer in this region, employing the latest and most environmental-friendly technology complying with the world best standards.

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PRESS METAL at a glance cont’d

CHINA

In China, our subsidiary in Foshan, Press Metal International Limited, is one of the biggest exporters of aluminium products in China, with a production capacity of 120,000 tonne per annum.

Further, the Group also established an extrusion facility in Hubei, China, with a production capacity of 30,000 tonne per annum.

The Hubei extrusion operations will also complement our Hubei smelter which has a production capacity of 90,000 tonne per annum. The smelter is energy self-sufficient as our Hubei subsidiary owns and operates a 180 megawatt coal-fired power plant.

GLOBAL NETWORK

The overseas operations of Press Metal have firmly carved a niche in the global market and continue to expand. From our initial operational base established in the United Kingdom and Australia, our distribution centres have now extended to include the North America and the Middle East. Thanks to such solid local presence, we have been able to build strong relationship with our customers and cater for their needs and requirements

with various solutions instantly.

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Chairman’s Statement

On behalf of the Board of Directors ofPress Metal Berhad (Press Metal), I am pleased to present to you the Annual Report and Audited Financial Statements ofPress Metal and its Group for thefinancial year ended 31 December 2011.

FINANCIAL PERFORMANCE

The year 2011 started with a positive sentiment as the developed countries’ concern of a double dip recession in year 2010 had been averted. However, before the end of first quarter of the year, this sentiment of a continued growth for the global economy was interrupted by the earthquake and tsunami disaster in the northeastern part of Japan.

Coming to the second half of the year, it was quite apparent that the growth momentum had moderated. Although emerging economies showed resilience, other concerns, including the volatility of commodity prices, spill-over effects of the Japanese earthquake and the threat of financial contagion emanating from the Euro Zone had affected the strength of recovery of the global economy.

Despite these challenges and uncertainties, Press Metal Group managed to record a 35.3 per cent increase in its revenue, from RM1.7 billion in the year 2010 to RM2.3 billion in the year 2011. This improvement was primarily contributed by the increase in production output of our Mukah smelting plant, and the growth in the downstream businesses of our China operations.

In tandem with the increase in revenue, pre-tax profit of the Group had also increased to RM123.1 million in the year 2011, an increase of 19.2 per cent compared to RM103.3 million in the preceding year.

CORPORATE DEVELOPMENT & PROSPECT

Our Mukah smelting plant achieved its full commercial production in the second half of 2011. The vertical integration strategy of the Group continues with the development of Phase 2 of our smelting project in Samalaju Industrial Park, Bintulu, Sarawak which was kick-started last year and is progressing at a satisfactory pace.

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As for the downstream business of the Group, we will continue to focus on higher value products and activities. Further, we will continue to develop our marketing effort in the USA as the recovery is gathering pace there.

DIVIDENDS

An interim dividend of 1 sen per ordinary share less tax amounting to RM4,393,000 was declared and paid during the year. The Board is pleased to propose a final tax-exempt dividend of 1 sen per ordinary share, amounting to approximately RM4,395,000 in respect of the year ended 31 December 2011, for shareholders’ approval at the forthcoming Annual General Meeting.

APPRECIATION & ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to express our heartfelt gratitude and appreciation to all our shareholders, customers, business associates, suppliers, the financiers, the government agencies, regulatory authorities, the management as well as members of staff, for their continued support to our Group.

DATO’ (DR.) MEGAT ABDUL RAHMAN BIN MEGAT AHMADChairmanJune 2012

Chairman’s Statement cont’d

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Review of Operations by Group CEO

2011 is a year with astounding headline news.Firstly, the world was shocked by the earthquake in Japan and the extent of the destruction in the northeastern part of the country that led to the threat of nuclear disaster. Then there were the civil uprisings in the northern part of Africa which brought about a few government regime changes.

In Europe, the escalating sovereign debt and banking crisis caused investors going back and forth on risk-on and risk-off investments which created great volatility to the financial markets.

Further, the US government’s procrastination in dealing with the country and states deficits and the ongoing 2012 presidential election politics have also contributed much uncertainties to the consumers confidence.

For the emerging economies, the initial concern was inflation, particularly rising food prices and thus the measure to rein in inflation. However, with the developed economies struggling, this measure may have also slowed the growth more than anticipated besides achieving lower inflation target with key commodities prices softening.

In the first part of the year, investors saw global commodity prices advancing but by the end of third quarter, majority had given up all the gains. Aluminium price was not spared also, traded at the beginning of the year at USD2,468 per mt but ended the year at USD1,995 per mt.

PERFORMANCE OF THE GROUP IN 2011

Press Metal Group started the year with a positive expectation as the Group anticipated the smelting subsidiary in Mukah should reached full production capacity by the middle of the year. However, this milestone was not achieved until the 4th Quarter of the year. Nonetheless, the Group still managed to achieve another new record in terms of revenue and profit.

For the year, the Group recorded a revenue of RM2.3 billion, an increase of 35.3 per cent as compared to the preceding year of RM1.7 billion. And in line with higher revenue, the Group also chalked up higher pre-tax profit of RM123.1 million as compared to RM103.3 million of the preceding year.

Both the downstream and upstream operations contributed to this significant achievement.

LOOKING FORWARD TO 2012

In view of the poor ending of the financial market performances during the last quarter of 2011, many economists are very cautious of this year’s growth. This is more apparent for the developed economies such as those in the Euro Zone that are plagued with heavy debts and have adopted austerity measures to counter the deficits situation.

Even for power-house developing economies such as Brazil, China and India, many are of the view that the contagion effect from the slowed economies in Europe will also have a negative impact with consumers’ demand being affected.

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However, some indications such as positive job data from the US have also caused others to be less pessimistic as the US is the largest economy in the world. The positive growth in the US will also generate positive contagion effects to the rest of the world. Further, China has the financial means to boost its domestic demand and to continue its economy expansion albeit at a more moderate pace.

For Press Metal Group, it will continue to embark on its expansion plan as the demand for aluminium related products will continue to increase. The Phase 2 smelting expansion in Sarawak which was kick-started in April last year is progressing well. The State has approved this expansion to be located at Samalaju Industrial Park, Bintulu, Sarawak.

Samalaju, which is located 60km north of Bintulu town in central Sarawak, is one of the three growth nodes of SCORE for the development of heavy industries such as poly-silicon plant, aluminium smelter and the development of the Samalaju Port in Sarawak.

This new smelter will be employing the latest know-how to be provided by Chalco which is more energy efficient. More importantly, this smelter will be equipped with the latest environmental technology that meets the World Bank’s standard in terms of emission control. As for the downstream operations, the Group will continue to seek out higher value-added products and emphasizing more on customer services to differentiate ourselves from the competitors.

APPRECIATION

I would like extend my sincere appreciation to the government agencies and regulatory authorities for their support, guidance and assistance. To our customers, financiers and business associates, thank you for your continuous support and confidence in our Group.

We would not be able to achieve continuous growth amidst this challenging environment without the guidance and wisdom of the Board of Directors, as well as the dedication and commitment of the Management team and members of our staff. To every one of you, I say Thank You and let us continue to work together for mutual growth and success.

DATO’ KOON POH KEONGGroup Chief Executive OfficerJune 2012

Review of Operations by Group CEO cont’d

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The development of the Phase 2 Aluminium Smelting Project in Samalaju Industrial Park, Bintulu was kick-started in April 2011, with the groundbreaking ceremony officiated by the Honourable Chief Minister of Sarawak.

The project has been progressing smoothly and is expected to commission in the third quarter of 2012.

In April 2011, Press Metal International Ltd (“PMI”), our subsidiary in Foshan, China received the visit of the Honourable Deputy Prime Minister of Malaysia, together with Malaysia’s ambassador to China and other government officials.

The Deputy Prime Minister and his delegation showed great interest throughout the visit and congratulated the Company on its achievements in the aluminium industry.

In June 2011, the President & CEO of Sumitomo Corporation (“SC”), the partner and shareholder of our smelter in Mukah, Sarawak visited the plant, together with his senior management team.

The visit further enhanced the understanding and strengthened the collaboration between Press Metal and SC.

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he

Event Highlights

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During the year 2011, Press Metal, as a global company built on local relationships, continued to actively interact with the local communities and involved in various projects and activities with primary focus on education and aiding the underprivileged.

Amongst others, a Family Day with the local residents and a fishing competition opened to the staff and local communities for participation were held at the natural lake within the compound of our Mukah smelter.

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Event Highlights cont’d

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In November 2011, the Chairman of Maybank Group and his delegates visited our extrusion arm, PMI. The delegation was received by our Group CEO and the senior management of PMI.

The new R&D centre of PMI was completed in November 2011. The centre is equipped with sophisticated equipment and is managed by professional personnel specialised in the R&D and testing of aluminium extrusion products.

In June 2011, aluminium ingots produced by our Mukah smelter has been successfully listed on the London Metal Exchange as High Grade Primary Aluminium brand “PMS”.

The achievement again demonstrates our commitment and ability in providing quality products to the market.

The ncentrprofeextru


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PRESS METAL BERHAD

100% PRESS METAL UK LIMITED

70% PRESS METAL ALUMINIUM (AUSTRALIA) PTY. LTD.

100% ANGKASA JASA SDN. BHD.

100% BI-PMB WASTE MANAGEMENT SDN. BHD.

100% PMB RECYCLING MANAGEMENT SDN. BHD.

PMS MARKETING SDN. BHD.100%

100% PRESS METAL (HK) LIMITED

100% PRESS METAL INTERNATIONAL LIMITED

100% PMB MARKETING (H.K.) LIMITED

100% PRESS METAL INTERNATIONAL TRADING LTD

100% PRESS METAL INTERNATIONAL TECHNOLOGY LTD

100% PMB MARKETING SDN. BHD.

100% WESAMA SDN. BHD.

100% ACE EXTRUSION SDN. BHD.

80% PRESS METAL SARAWAK SDN. BHD.

100% PRESS METAL BINTULU SDN. BHD.

100% PMB DEVELOPMENT SDN. BHD.

60% PMB SPECTRUM SDN. BHD.

90% HUBEI PRESS METAL HUASHENG ALUMINIUM & ELECTRIC CO. LTD.

100% PRESS METAL INTERNATIONAL (HUBEI) LTD(f.k.a PMH Aluminium Extrusion Co. Ltd.)

100% PMH ELECTRIC ENGINEERING CO. LTD.

Group Structure

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Corporate Information

BOARD OF DIRECTORS

Dato’ (Dr.) Megat Abdul Rahman Bin Megat AhmadIndependent Non-Executive Chairman

Koon Poh MingExecutive Vice Chairman

Dato’ Koon Poh KeongGroup Chief Executive Officer

Koon Poh TatExecutive Director

Koon Poh WengExecutive Director

Koon Poh KongExecutive Director

Tuan Haji Mohamad Faiz Bin Abdul HamidIndependent Non-Executive Director

Loo Lean HockIndependent Non-Executive Director

Tan Heng KuiIndependent Non-Executive Director

COMPANY SECRETARIES

Tai Yit Chan (MAICSA 7009143)Tan Ai Ning (MAICSA 7015852)

SHARE REGISTRAR

Tricor Investor Services Sdn. Bhd.Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala LumpurMalaysiaTel : +603-2264 3883Fax : +603-2282 1886

CORPORATE OFFICE

Lot 6464, Batu 5 ¾, Jalan KaparSementa, 42100 KlangSelangor Darul Ehsan, MalaysiaTel : +603-3291 3188Fax : +603-3291 3637Website : www.pressmetal.com

REGISTERED OFFICE

Lot 6.05, Level 6KPMG Tower, 8 First AvenueBandar Utama, 47800 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : +603-7720 1188Fax : +603-7720 1111

PRINCIPAL BANKERS

Alliance Bank Malaysia BerhadCIMB Bank BerhadMalayan Banking BerhadRHB Bank BerhadRHB Islamic Bank BerhadStandard Chartered Bank Malaysia Berhad

AUDITORS

KPMGFirm No. AF 0758(Chartered Accountants)Level 10, KPMG Tower, 8 First AvenueBandar Utama, 47800 Petaling JayaSelangor Darul Ehsan, Malaysia

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad

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Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad, DSDKIndependent Non-Executive ChairmanMalaysian, 73 years of age

Dato’ (Dr.) Megat Abdul Rahman was appointed as the Non-Independent Non-Executive Director of the Company on 25 May 1995 and elected Chairman on the same day. On 29 May 2007, he was re-designated as the Independent Non-Executive Chairman of the Board. He is also the Chairman of the Remuneration and Nomination Committees and attended all four Board Meetings held during the financial year.

Dato’ (Dr.) Megat Abdul Rahman graduated with a Bachelor of Commerce degree from University of Melbourne, Australia. He is a fellow of the Institute of Chartered Accountants in Australia, a life member and past president of the Malaysian Institute of Certified Public Accountants, as well as a member of the Malaysian Institute of Accountants. He had served as Executive Director in Kumpulan Guthrie Berhad from 1983-1994, and was a Partner/Managing partner of KPMG Desa Megat & Co from 1973 to 1983. Currently, he is also a director of Boustead Holdings Berhad, UAC Berhad and Yayasan Tenaga Nasional and also serves as member on the Boards of Universiti Kebangsaan Malaysia and Pusat Perubatan Universiti Kebangsaan Malaysia.

Dato’ (Dr.) Megat Abdul Rahman has no conflict of interest with the Group, and has no family relationship with any other director and/or substantial shareholder of the Group. He maintains a clean record with regard to convictions for offences.

Profile of Directors

Koon Poh MingExecutive Vice ChairmanMalaysian, 56 years of age

Mr. Koon Poh Ming has been a director of the Company since its incorporation on 13 May 1986. He is also a member of the Remuneration Committee and attended all four Board Meetings held during the financial year.

After graduating with a degree in Civil Engineering from the University of Wales in United Kingdom, he started his career with an international consulting engineering firm based in Kuala Lumpur. He is currently a professional engineer registered with the Board of Engineers and The Institute of Engineers, Malaysia.

While in Press Metal, Mr. Koon Poh Ming has been actively involved in the management and business development of the Company. Currently, he also holds the position of Chief Executive Officer of PMB Technology Berhad.

He is the brother to Dato’ Koon Poh Keong, Koon Poh Kong, Koon Poh Weng and Koon Poh Tat. He maintains a clean record with regard to convictions for offences.

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Dato’ Koon Poh KeongGroup Chief Executive OfficerMalaysian, 51 years of age

Dato’ Koon Poh Keong is one of the founding members of the Company and has been the Group Chief Executive Officer since the Company’s listing on Bursa Malaysia Securities Berhad in 1993. He attended all four Board meetings held during the financial year.

Dato’ Koon Poh Keong graduated with a Bachelor of Science degree in Electrical Engineering from The University of Oklahoma, United States of America, in 1986. He has more than 20 years of experience in the aluminium industry. Currently, he is also the Executive Chairman of PMB Technology Berhad.

He is the brother to Koon Poh Ming, Koon Poh Kong, Koon Poh Weng and Koon Poh Tat. He maintains a clean record with regard to convictions for offences.

Koon Poh TatExecutive DirectorMalaysian, 53 years of age

Mr. Koon Poh Tat has been appointed as the Executive Director of the Company since 7 June 1999 and has attended all four Board meetings held during the financial year.

Mr. Koon Poh Tat is a co-founder of Press Metal Berhad and has been actively involved in the Company’s operations including forming up new business outlets both domestic and overseas to enlarge the Company’s networking and market share. His hard work and dedication has led the Company to be the pioneer in the aluminium industry. Currently, he is also an Executive Director of PMB Technology Berhad.

He is the brother to Koon Poh Ming, Dato’ Koon Poh Keong, Koon Poh Kong and Koon Poh Weng. He maintains a clean record with regard to convictions for offences.

Profile of Directors cont’d

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Koon Poh WengExecutive DirectorMalaysian, 57 years of age

Mr. Koon Poh Weng has been appointed as the Executive Director of the Company since 13 May 1986 and has attended all four Board meetings held during the financial year.

Being a key founder of the Company, Mr. Koon Poh Weng continually strives on the changing and creative ideas to meet today’s complex and advanced technical skills to all aspects of aluminium and glazing industry.

Mr. Koon Poh Weng has also widely involved himself in the management of major projects both locally and overseas. He has been responsible for the design, engineering and development of cost-effective, innovative and versatile system solutions and in producing satisfactory results on large variety of projects ranging from commercial buildings, government complexes to prominent hotels. He is also an Executive Director of PMB Technology Berhad and Managing Director of Angkasa Jasa Sdn Bhd, a company within the Group involved in contracting and fabrication of aluminium and glazing works, as well as stainless steel products.

He is the brother to Koon Poh Ming, Dato’ Koon Poh Keong, Koon Poh Kong and Koon Poh Tat. He maintains a clean record with regard to convictions for offences.

Koon Poh KongExecutive DirectorMalaysian, 59 years of age

Mr. Koon Poh Kong was appointed as the Executive Director of the Company on 13 May 1986. He attended all four Board Meetings held during the financial year.

As a key founder of the Company, his experiences include the management of major projects throughout the country. He has been responsible for all aspects of the management and for producing satisfactory results on large variety of projects ranging from schools, government complexes to prominent hotels. Currently, he is the Executive Director of Angkasa Jasa Sdn Bhd, a company within the Group involved in contracting and fabrication of aluminium and stainless steel products.

He is the brother to Koon Poh Ming, Dato’ Koon Poh Keong, Koon Poh Weng and Koon Poh Tat. He maintains a clean record with regard to convictions for offences.


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Tuan Haji Mohamad Faiz Bin Abdul HamidIndependent Non-Executive DirectorMalaysian, 72 years of age

Tuan Haji Mohamad Faiz was appointed as a director of the Company on 7 May 1993. He is the Chairman of the Audit Committee and a member of the Remuneration Committee and the Nomination Committee. He attended all four Board Meetings held during the financial year.

Tuan Haji Mohamad Faiz is a Fellow of the Royal Institution of Chartered Surveyors England and the Royal Institution of Surveyors Malaysia since 1981. He was a consultant quantity surveyor since 1968 and was the past President of the Royal Institution of Surveyors, Malaysia. Currently, he is also an Independent Director of PMB Technology Berhad.

He has no conflict of interest with the Group and has no family relationship with any director and/or substantial shareholder of the Group. He maintains a clean record with regard to convictions for offences.

Loo Lean HockIndependent Non-Executive DirectorMalaysian, 53 years of age

Mr. Loo Lean Hock was appointed as an Independent Non-Executive Director of the Company on 14 September 2001. He is a member of the Audit Committee and the Nomination Committee and has attended all four Board meetings held during the financial year.

Mr. Loo is a Chartered Accountant of the Malaysian Institute of Accountants, a practising member of Malaysian Institute of Certified Public Accountants, a Fellow of CPA Australia and an associate member of Chartered Tax Institute of Malaysia and Malaysian Institute of Management. He obtained his Master of Business Administration from University of Bath, United Kingdom in 1992. He started his professional career in Coopers & Lybrand from 1980 to 1990. He joined Press Metal Berhad in 1990 as the Financial Controller. Thereafter, he joined The Crown Princess Kuala Lumpur (a hotel division of Asia Pacific Land Berhad) as the Financial Controller. He set up his own auditing firm, L.H. Loo & Co. in July 1993 as the sole practitioner. He is also a Director of LH Loo Taxation Services Sdn. Bhd., Executive Director of STX Precision Corporation Sdn. Bhd. and its group of companies and an Independent Non-Executive Director of PMB Technology Berhad.



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Tan Heng KuiIndependent Non-Executive DirectorMalaysian, 55 years of age

Mr. Tan Heng Kui has been a director of the Company since 26 December 2001. He is also a member of the Audit Committee. He attended all four Board meetings held in the financial year.

Mr. Tan obtained his Bachelor of Science Honours in Civil Engineering from The University of Wales, United Kingdom. He was a Vice President for The Institution of Engineers, Malaysia from 2000 to 2004, and was a member of the Professional Practice Committee, Board of Engineers Malaysia. He set up his own consulting firm, Perunding Pertama Consulting Engineers in 1988. He is also the Executive Director of Kumpulan IKRAM (Sabah) Sdn. Bhd. since 1997.



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Revenue(RM’000)

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2,26

8,75

1

10

1,69

8,83

9

09

1,13

3,18

1

08

1,16

0,71

3

07

1,32

8,34

9

Net Tangible Assets(RM’000)

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1,02

4,03

3

10

788,

177

09

722,

261

08

706,

916

07

644,

296

Shareholders’ Funds(RM’000)

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1,03

7,58

2

10

801,

364

09

735,

376

08

719,

668

07

657,

780

Profit Attributable to Shareholders(RM’000)

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90,2

91

10

83,4

93

09

27,4

76

08

10,4

76

07

434,

379

Dividends Per Share(%)

11

4.0

10

4.0

09

3.5

08

3.5

07

7.0

2011 2010 2009 2008 2007

FYE 31 December RM’000 RM’000 RM’000 RM’000 RM’000

REVENUE 2,268,751 1,698,839 1,133,181 1,160,713 1,328,349

PROFIT BEFORE TAX 123,077 103,315 40,125 34,745 444,116

PROFIT AFTER TAX 101,106 89,610 28,695 8,537 441,766

PROFIT ATTRIBUTABLE TO SHAREHOLDERS 90,291 83,493 27,476 10,476 434,379

SHAREHOLDERS’ FUNDS 1,037,582 801,364 735,376 719,668 657,780

NET TANGIBLE ASSETS (RM) 1,024,033 788,177 722,261 706,916 644,296

NET EARNINGS PER SHARE (SEN) 21 22 8 3 121

GROSS DIVIDEND (%) 4.0 4.0 3.5 3.5 7.0

Group Financial Highlights

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At Press Metal, the sense of duty to give back to the society has always been a conscientious commitment we have kept close to our hearts. Such is the principle of Press Metal, as we firmly believe that it was these integral values that helped us grow from a single press producer to become a leading integrated aluminium specialist in Asia. As such, we are always mindful of our responsibilities towards our employees, the stakeholders, the community, as well as the environment as we build up our corporate values and ensure sustainable growth in tandem with society.

WITH OUR COMMUNITIES & SOCIETY

As a global company built on local relationships, we believe that responsible corporate citizen is essential to the vitality of our communities. We encourage volunteer activities and actively create opportunities for interaction with the local communities, emphasizing on continuity to establish our roots firmly with them.

Press Metal has been supporting and will continue to contribute to a broad array of charities, with a primary focus directed in aiding the underprivileged. Besides regular donations, we also encourage our employees to pay visits together with their own families to old folks home, orphanages and local communities, to promote better kinship and social awareness.

By strongly supporting our employees’ involvement in the community, we aim to inculcate such essential values upon them. Hence, we will continue to actively pursue more activities that will match the sentiments of our local communities – because they are our strong foundation that will help propel mutual growth and success.

WITH OUR PEOPLE & WORKPLACE

At Press Metal, our employees are our vital assets. We believe in nurturing the personal growth of our employees, as they are the wheels that drive Press Metal. In keeping with good employment practices, we strive to create a stable and healthy working environment that promotes mutual respect, productivity and diversity. By regularly conducting high-performance trainings for our employees, we ensure that they maximize their potential and deliver exceptional value to our customers.

We also designed various teambuilding activities and awards for our employees to foster their relationships and to boost their morale.

Press Metal also emphasizes in maintaining a safe and healthy working environment for our employees. Having successfully secured the OHSAS 18001 award for our occupational safety and health management system in 2001, our smelting plant in Hubei and extrusion plant in Foshan, China have also successfully passed the similar authentication. We also conduct frequent occupational and safety awareness programmes to educate better awareness, and continuously improve on equipment safety measures.

Corporate Social Responsibilities Statement

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WITH OUR MARKET PLACE

Throughout the years, Press Metal has built a reputation as a manufacturer of quality products. Not only we are the first aluminium extruder in Malaysia to be awarded the internationally recognized ISO 9001 certification in 1993, but both our extrusion and smelting plants in Foshan and Hubei, China as well as Mukah, Sarawak, have also been accredited with ISO 9001 respectively. Quality remained the main emphasis in all our production and management systems. Stringent control system is carried out right from the initial raw material stage until the final stage before the products are delivered – such is our commitment to providing only the best to our customers.

WITH OUR GLOBAL ENVIRONMENT

It is our aim to seek to maintain harmony with nature. We constantly monitor the environmental impact of every facet in our operations and apply cost-efficient means of reducing the use of natural resources.

In 1998, Press Metal was awarded with the ISO 14001 certification for our environmental management system, now similarly awarded to our smelting plant in Hubei, China. In 2010, our operations in Foshan, China have also achieved the said certification. On top of the above, Press Metal was also the first company in Malaysia to acquire the Swedish technology to use aluminium sludge (S204), a scheduled waste from anodizing and wastewater treatment plants, for the manufacturing of Polyaluminium Chloride (PAC), a water treatment chemical. We also operate a Common Waste Water Treatment Plant that provides treatment for a wide range of electroplating waste at a lower cost.

Today, our campaign continues. While the path to eco-preservation may be long and arduous, we will remain steadfast to our commitment to Mother Nature – simply because we believe in investing in a greener future.

Corporate Social Responsibilities Statement cont’d

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Corporate Governance Statement

The Board of Directors (“the Board”) of Press Metal Berhad (“the Company”) is committed to exercise good corporate governance by supporting and applying the prescriptions of the principles and best practices set out in Parts 1 and 2 respectively of the Malaysian Code on Corporate Governance (the “Code”). In addition, the Board follows global developments of internationally recognised best governance practices, and though complying in many respects already, continually reviews the Company and its subsidiaries’ (“the Group”) corporate governance processes and makes adjustments as may be appropriate. The key intent is to adopt the substance behind good governance and not merely the form, with the aim of ensuring Board’s effectiveness in enhancing shareholders’ value. The Board is pleased to provide the following statement on how the Group has applied the principles and best practices set out in Parts 1 and 2 of the Code.

DIRECTORS

The Board

The Group recognises the important role played by the Board in the stewardship of its direction and operations, and ultimately, the enhancement of long-term shareholders’ value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

The Role and Functions

The Board has a formal schedule of matters reserved for decision, which includes the overall Group’s strategy and direction, acquisition and divestment policy, approval of major capital expenditure projects and significant financial matters.

BOARD MEETINGS

The Board meets at least four (4) times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year ended 31 December 2011, the Board met on four (4) occasions, where it deliberated upon and considered a variety of matters including the financial results, major investments, strategic decisions, the business plan and direction of the Group.

The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. The Board papers are comprehensive and encompass both quantitative and qualitative factors so that informed decisions are made. All proceedings from the Board meetings are minuted.

Details of Directors’ attendance at Board Meetings held during the financial year ended 31 December 2011 are as follows:

Number of Meetings

Name of Directors Held Attended

Dato’ (Dr.) Megat Abdul Rahman Bin Megat AhmadIndependent Non-Executive Chairman

4 4

Koon Poh MingExecutive Vice Chairman

4 4

Dato’ Koon Poh KeongGroup Chief Executive Officer

4 4

Koon Poh WengExecutive Director

4 4

Koon Poh KongExecutive Director

4 4

Koon Poh TatExecutive Director

4 4

24

Corporate Governance Statement cont’d

BOARD MEETINGS cont’d

Number of Meetings

Name of Directors Held Attended

Tuan Haji Mohamad Faiz Bin Abdul HamidSenior Independent Non-Executive Director

4 4

Loo Lean HockIndependent Non-Executive Director

4 4

Tan Heng KuiIndependent Non-Executive Director

4 4

Board Committees

The Board delegates certain responsibilities to the Board Committees, as follows:

Board Committee Key Functions

Audit Committee Explained on pages 31 to 35 of this Annual Report

Executive Committee Oversees all pertinent operational issues.

Remuneration Committee Explained on page 27 of this Annual Report

Nomination Committee Explained on pages 25 and 26 of this Annual Report.

All committees have written terms of reference and operating procedures and the Board receives reports of their proceedings and deliberations. The Chairman of the various committees will report to the Board on the outcome of the Committee meetings and such reports are incorporated in the Minutes of the Board meetings. These committees are formed in order to enhance business and operational efficiency as well as efficacy.

Board Balance

As at the date of this Statement, the Board consists of an Independent Non-Executive Chairman, an Executive Vice Chairman, a Group Chief Executive Officer, three (3) Executive Directors and three (3) Independent Non-Executive Directors. A brief profile of each Director is presented on pages 15 to 19 of this Annual Report.

There is also balance in the Board with the presence of Independent Non-Executive Directors possessing the calibre necessary to assist in Board decisions. Although all the Directors have equal responsibility of the Company’s operations, the role of these Independent Non-Executive Directors is particularly important in ensuring that the strategies proposed by the executive management are fully discussed and examined, and taking account of the long term interests, not only of the shareholders, but also of employees, customers, suppliers and the many communities in which the Group conducts businesses.

The Non-Executive Directors contribute significantly in areas such as policy and strategy, performance monitoring, allocation of resources as well as improving governance and controls. Together with the Executive Directors who have indepth knowledge of the business, the Board constituted of individuals who are committed to business coupled with integrity and professionalism in all its activities.

There is a clear division of responsibilities at the head of the Group to ensure a balance of authority and power. The Board is led by Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad, an Independent Non-Executive Chairman and the executive management of the Group is led by Dato’ Koon Poh Keong, the Group Chief Executive Officer.

25


BOARD MEETINGS cont’d

Board Balance cont’d

The roles of the Chairman and the Group Chief Executive Officer are clearly defined in their individual position descriptions. The Chairman is responsible for running the Board and ensures that all Directors receive sufficient relevant information on financial and non-financial matters to enable them to participate actively in the Board’s decisions. The Group Chief Executive Officer is responsible for the day-to-day management of the business as well as the implementation of Board’s policies and decisions. Tuan Haji Mohamad Faiz Bin Abdul Hamid is the Senior Independent Non-Executive Director designated to clarify matters or enquiries that may be raised by shareholders or investors.

The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders in the Company.

Supply of Information

The Board recognises that the decision making process is highly contingent on the strength of information furnished. As such, Directors have unrestricted access to any information pertaining to the Company.

The Chairman plays a key role in ensuring that all Directors have full and timely access to information with Board papers circulated at least five (5) working days in advance of Board meetings. This ensures that Directors have sufficient time to appreciate issues deliberated at the Board meetings and expedites the decision making process. A comprehensive balance of financial and non-financial information is encapsulated in the papers covering strategic, operational, regulatory, marketing and human resource issues.

Every Director has also unhindered access to the advice and services of the Company Secretary. The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board while the terms of appointment permit their removal and appointment only by the Board as a whole.

The Audit Committee and Executive Committee play a pivotal role in channeling pertinent operational and assurance related issues to the Board. Both of the Committees function as a filter to ensure that only pertinent matters are tabled at the Board level. There is also a formal procedure sanctioned by the Board, whether as the Board as a whole or in their individual capacity, for Directors to obtain independent professional advice at the Company’s expense.

Detailed periodic briefings on the industry outlook and Company performance are also conducted for the Directors to ensure that the Board is well informed on the latest market and industry trends.

APPOINTMENTS TO THE BOARD

Nomination Committee

The Nomination Committee comprised the following members during the financial year ended 31 December 2011:

Name of Director Membership Directorship

Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad Chairman Independent Non-Executive Director

Tuan Haji Mohamad Faiz Bin Abdul Hamid Member Independent Non-Executive Director

Loo Lean Hock Member Independent Non-Executive Director

The Nomination Committee consists entirely of Independent Non-Executive Directors. The Nomination Committee is empowered by the Board and its terms of reference to bring to the Board recommendations as to the appointment of new Directors. The Nomination Committee reviews the required mix of skills, experience and other qualities of the Director, including core competencies. The Nomination Committee also systematically assesses the effectiveness of the Board, and the contribution and performance of each individual Director on an annual basis.

26


APPOINTMENTS TO THE BOARD cont’d

Nomination Committee cont’d

The Nomination Committee also keeps under review the Board structure, size and composition.

The Nomination Committee held one (1) meeting during the financial year ended 31 December 2011 and all the members registered full attendance.

Appointment Process

The Board through the Nomination Committee’s annual appraisal believes that the current composition of the Board brings the required mix of skills and core competencies required for the Board to discharge its duties effectively.

The Board appoints its members through a formal and transparent selection process, which is consistent with the Articles of Association of the Company. This process has been reviewed, approved and adopted by the Board. New appointees will be considered and evaluated by the Nomination Committee. The Nomination Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretaries will ensure that all appointments are properly made, and that legal and regulatory obligations are met.

Directors’ Training

The Directors have participated in numerous training programmes, seminars, conferences and briefings to ensure that they are kept abreast with the latest market development, relevant new laws and regulations, financial reporting and other issues relevant requirements to the Company. All the Directors have completed the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Malaysia Securities Berhad.

Among the training programmes, seminars and briefings attended by the Directors during the financial year are as follows:-

Tax Efficient Remuneration Packages on Individuals, in particulars Directors; Tax Planning for Individual and Tax Treatment for Share Options; IFRS Convergence – The New Approved Accounting Framework, Malaysian Financial Reporting Standards (“MFRS’); and Amendments to Bursa Malaysia Securities Berhad Main Market Listing Requirements.

During the financial year, the Directors had visited several aluminium plants both locally and overseas to further enhance their professionalism in discharging their duties to the Group.

The Senior Management had also briefed the Directors on general economic, industry and technical developments from time to time.

The Directors will continue to attend relevant training courses to further enhance their skills and knowledge to enable them to discharge their responsibilities more effectively.

Re-Election

The Articles of Association of the Company provide that all Directors shall retire at least once in every three (3) years. The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-election. A retiring Director is eligible for re-election. This provides an opportunity for shareholders to renew their mandates. The re-election of each Director is voted on separate resolution during the Annual General Meeting (“AGM”) of the Company.

Also, Directors over seventy years of age are required to retire and offer themselves for re-appointment annually in accordance with Section 129 (6) of the Companies Act, 1965.

27


APPOINTMENTS TO THE BOARD cont’d

Remuneration Committee

The Level and Make-up of Remuneration

The Remuneration Committee comprised two (2) Independent Non-Executive Directors and one (1) Executive Director with Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad as the Chairman. The Committee is responsible for recommending the remuneration framework for Directors as well as the remuneration packages of Executive Directors to the Board. None of the Executive Directors participated in any way in determining their individual remuneration.

Non-Executive Directors’ remuneration will be a matter to be decided by the Board as a whole with the Director concerned abstaining from deliberations and voting on decisions in respect of his individual remuneration.

(i) The members of the Remuneration Committee are as follows:-

Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad (Independent Non-Executive Director) - Chairman

Tuan Haji Mohamad Faiz Bin Abdul Hamid (Independent Non-Executive Director) - Member

Koon Poh Ming (Executive Director) - Member

The Remuneration Committee held one (1) meeting during the financial year ended 31 December 2011 and all the members registered full attendance.

(ii) Remuneration Package

The aggregate Directors’ remuneration paid or payable or otherwise made available to all Directors of the Company who served during the financial year ended 31 December 2011 are as follows:

Fees Salaries

Category (RM’000) (RM’000)

Executive Directors - 2,331

Non-Executive Directors 187 -

The number of Directors of the Company who served during the financial year ended 31 December 2011 and whose income fall within the following bands:

Executive Non-Executive

RM50,000 and below - 3

RM50,001 - RM100,000 - 1

RM400,001 - RM450,000 3 -

RM450,001 - RM500,000 - -

RM500,001 - RM550,000 2 -

Total 5 4

The Company does not disclose each Director’s remuneration separately as required by the Code as the Board is of the view that the disclosure of the remuneration bands of the Company’s Directors is sufficient.

28


RELATIONSHIP WITH SHAREHOLDERS

The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving shareholders as clear and complete picture of the Company’s performance and position. The key element of the Company’s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, both private and institutional shareholders on all issues relevant to the Company at the AGM. The Notice of the AGM and related papers are sent to shareholders at least twenty-one (21) days before the meeting to help them decide how they should vote on each item of business. At the AGM, the shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations in general. Where it is not possible to provide immediate answers, the Chairman will undertake to furnish the shareholders with a written answer after the AGM. The Chairman of the Board also addresses the shareholders on the review of the Group’s operations for the financial year and outlines the prospects of the Group for the subsequent financial years. Additionally, a press conference is held immediately after the AGM where the Chairman advises the press of the resolutions passed, and answers questions on the Group. The Group Chief Executive Officer and the Executive Directors are also present at the press conference.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance and prospects at the end of the financial year, primarily through the annual financial statements and quarterly results to shareholders as well as the Chairman’s Statement and review of operations in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group’s financial reporting processes and the quality of its financial reporting.

Directors’ Responsibility Statement in Respect of the Preparation of the Audited Financial Statements

The Board is responsible for ensuring that the financial statements of the Group give a true and fair view of the state of affairs of the Group and of the Company as at the end of the accounting period and of their results and cash flows for the period then ended. In preparing the financial statements, the Directors have ensured that applicable approved Financial Reporting Standard (FRS) in Malaysia and the provisions of the Companies Act, 1965 have been applied.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgements and estimates.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.


The Statement on Internal Control furnished on pages 36 and 37 of the Annual Report provides an overview on the state of internal controls within the Group.

Relationship With the Auditors

Key features underlying the relationship of the Audit Committee with the external auditors are included in the Audit Committee’s terms of reference as detailed on pages 31 to 33 of the Annual Report.

A summary of the activities of the Audit Committee during the year, including the evaluation of the independent audit process, are set out in the Audit Committee Report on page 34 of the Annual Report.

The Company has complied throughout the financial year with all the best practices of corporate governance set out in the Code, except for Principles BIII – Disclosures on remuneration of Directors.

29

Additional Compliance Information

1. MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries involving Directors and Substantial

Shareholders during the financial year ended 31 December 2011.

2. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES

(i) Employees Share Option Scheme (“ESOS”) There were no ESOS granted during the financial year ended 31 December 2011. As at 31 December 2011, a total of

9,419,000 ESOS had been exercised.

(ii) 8-year 6% Redeemable Convertible Secured Loan Stocks (“RCSLS”) at 100% of its nominal value with free detachable warrants (“warrants”)

The Company has on 23 August 2011 issued 145,684,940 RCSLS and 145,684,940 warrants pursuant to the proposed renounceable rights issue announced on 15 April 2011. The RCSLS and warrants were subsequently listed on the Main Market of Bursa Malaysia Securities Berhad on 26 August 2011.

3. SANCTIONS AND/OR PENALTIES IMPOSED There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the

relevant regulatory bodies during the financial year.

4. NON-AUDIT FEES The non-audits fees paid to the Company’s external auditors, Messrs KPMG during the financial year ended 31 December

2011 amounted to RM135,000.

5. SHARE BUY-BACKS During the financial year, the Company did not undertake any share buy-back exercise.

6. RECURRENT RELATED PARTY TRANSACTIONS (“RRPTs”) OF REVENUE NATURE

The RRPTs of the Group have been entered into in the normal course of business. Further details of the aggregate value of transactions conducted is disclosed in Note 31 to the financial statements on pages 121 to 123 of the Annual Report.

Please refer to section 2.2 of the Circular to Shareholders dated 6 June 2012 on the name of the related parties and the Company’s relationship with the related parties.

7. PROFIT GUARANTEE There were no profit guarantees issued during the financial year ended 31 December 2011.

30

Additional Compliance Information cont’d

8. VARIATION IN RESULTS There was no variation of 10% or more between the profits announced in the audited and unaudited results of the

Group for the financial year ended 31 December 2011.

9. DEPOSITORY RECEIPT PROGRAMME

During the financial year, the Group did not sponsor any depository receipt programme.

10. UTILISATION OF PROCEEDS During the financial year, approximately RM153.6 million of the proceeds received by the Company from the issuance

of RCSLS were utilised for the Samalaju Smelting Project.

31

Audit Committee Report

MEMBER OF THE AUDIT COMMITTEE

The Audit Committee comprises three (3) members, all of whom are Independent Non-Executive Directors.

The members of the Audit Committee are as follow:-

Tuan Haji Mohamad Faiz Bin Abdul Hamid (Chairman)Independent Non-Executive Director

Loo Lean Hock (Member)Independent Non-Executive Director; Member of the Malaysian Institute of Accountants

Tan Heng Kui (Member)Independent Non-Executive Director

ATTENDANCE OF MEETINGS

The details of attendance of each member at the Audit Committee meetings held during 2011 are as follows:-

Number of Audit Committee Meetings

Name of Audit Committee Members Held Attended

Tuan Haji Mohamad Faiz Bin Abdul Hamid 4 4

Loo Lean Hock 4 4

Tan Heng Kui 4 4

TERMS AND REFERENCE

i. Composition of the Audit Committee

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

a) The Audit Committee must be composed of no fewer than 3 members;

b) All members of the Audit Committee must be Non-Executive Directors;

c) A majority of the Audit Committee must be Independent Directors;

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

i) must be a member of the Malaysian Institute of Accountants; or

ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience and:-

he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967;

he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967;

iii) fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad and/or other relevant authorities from time to time.

e) No Alternate Director of the Board shall be appointed as a member of the Audit Committee.

The members of the Audit Committee shall elect a chairman from among their member who shall be an Independent Director.

32

Audit Committee Report cont’d

TERMS AND REFERENCE cont’d

i. Composition of the Audit Committee cont’d

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

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

ii. Objectives

The objective of the Audit Committee is to assist the Board of Directors in meeting its responsibilities relating to accounting and reporting practices of the Company and its subsidiary companies.

In addition, the Audit Committee shall:-

a) Oversee and appraise the quality of the audits conducted both by the Company’s internal and external auditors;

b) Maintain open lines of communication between the Board of Directors, the internal auditors and the external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and

c) Determine the adequacy of the Group’s administrative, operating and accounting controls.

iii. Functions

The functions of the Audit Committee are as follow:-

(a) To review the following and report the same to the Board of Directors:-

i) with the external auditors, the audit plan;ii) with the external auditors, his evaluation of the system of internal controls;iii) with the external auditors, his audit report;iv) the assistance given by the Company’s employees to the external auditors; andv) 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 questions of management integrity.

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

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

(d) To review the quarterly and year-end financial statements of the company, focusing particularly on:-

Any changes in accounting policies and practices; Significant adjustments arising from the audit; The going concern assumption; and Compliance with the accounting standards and other legal requirements.

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

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

33


TERMS AND REFERENCE cont’d

iii. Functions cont’d

(g) To do the following, in relation to the internal audit function:-

Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work;

Review the internal audit programme and results of the internal audit process and where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

Review any appraisal or assessment of the performance of members of the internal audit function; Approve any appointment or termination of senior staff members of the internal audit function; and Take cognisance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.

(h) To consider the major findings of internal investigations and the management’s response;

(i) To ensure the internal audit function is independent of the activities it audits and the head of internal audit reports directly to the audit committee. The head of internal audit will be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control, and governance processes within the Company.

(j) To consider other areas as defined by the Board or as may be prescribed by Bursa Malaysia Securities Berhad or any other relevant authority from time to time.

RIGHTS OF THE AUDIT COMMITTEE

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

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

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

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

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

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

f) Be able to convene meeting with the external auditors excluding the attendance of others Directors and employee of the Company.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Finance Director, the Head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Company.

MEETINGS

The Audit Committee shall meet at least 4 times a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. However, at least twice a year the Audit Committee shall meet with the external auditors without the presence of the executive Board members and the Management.

In addition, the Chairman may call a meeting of the Audit Committee at the request of any committee member, the Company’s Chief Executive Officer, or the Internal or External Auditors.

34


MEETINGS cont’d

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

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

A quorum shall consist of a majority of Independent Directors.

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

ACTIVITIES OF THE COMMITTEE

There were four (4) Audit Committee meetings held during the financial year ended 31 December 2011.

The activities of the Audit Committee during the financial year were summarised as below:- (i) Reviewed the unaudited quarterly results/announcements of the Group and made recommendations to the Board of

Directors for approval prior to the release of the results to Bursa Malaysia Securities Berhad;

(ii) Reviewed with the External Auditors:

(a) Scope of work and annual audit plan;(b) The audited financial statements of the Group and the Company prior to submission to the Board of Directors for

consideration and approval; and(c) Problems and reservation arising from the interim and final audits.

(iii) Reviewed findings on the internal audit reports which were tabled during the year, the audit recommendations made as well as the management response’s to these recommendations and the implementation of agreed action plan;

(iv) Reviewed and approved the Internal Audit’s Annual Audit Plan for year 2011 to ensure adequate scope and comprehensive coverage over the activities of the Company and Group;

(v) Reviewed related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transactions, procedure or course of conduct that raises questions of management integrity;

(vi) Considered and recommended to the Board of Directors on the appointment and annual re-appointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit;

(vii) Met with the external auditors twice during the financial year without the presence of any executive Board members and employees of the Group; and

(viii) Reviewed the Audit Committee Report, Corporate Governance Statement and Statement of Internal Control for the financial year ended 31 December 2011 and recommended the same for adoption to the Board of Directors.

INTERNAL AUDIT FUNCTION The primary role of the internal audit function is to undertake regular and systematic review of the systems of internal control so as to provide sufficient assurance that the Group has sound system of internal control and that established policies and procedures are adhered to.

35


INTERNAL AUDIT FUNCTION cont’d

The Company has been engaging an independent external audit firm (“outsourced Internal Auditors”) to carry out the internal audit function for the Group and the Company. An in-house internal audit team (“in-house Internal Auditors”) has been set up to further enhance the effectiveness and efficiency of the internal audit function. A summary of the activities of the internal audit function is as follow:

Performed operational audits on business units of the Group to ascertain the adequacy of the internal control systems and to make recommendations for improvement where weaknesses exist;

Prepared the annual audit plan for deliberation by the Audit Committee;

Issued audit reports which identified recommendations for improvements on quarterly basis; and

Performed follow-up reviews to ensure that prompt actions on the audit recommendations were taken by Management.

The in-house Internal Auditors were present at three out of four Audit Committee meetings to present their Internal Audit reports to the Audit Committee while the outsourced Internal Auditors were present at all Audit Committee meetings to present their Internal Audit reports to the Audit Committee.

The total cost incurred for the outsourced and in-house internal audit function of the Group for the financial year ended 31 December 2011 was RM45,000.

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

The Audit Committee has verified that the options granted were made in accordance with the By-Laws of the ESOS.

There is one (1) ESOS scheme i.e. ESOS 2007-2012 currently in existence during the financial year ended (“FYE”) 31 December 2011. The details of the ESOS scheme are as follows:-

Since Commencement

of the ESOS Scheme (2007)

From FYE 2008-2010

During the FYE 31 December

2011

As at 31 December

2011

‘000 ‘000 ‘000 ‘000

Total number of options granted 17,892 - - 17,892

Total number of options exercised (28) (2,085) (9,419) (11,532)

Total number of options lapsed - (1,025) (84) (1,109)

Total number of options outstanding 17,864 - - 5,251

Granted to the Directors and Chief Executive

Since Commencement

of the ESOS Scheme (2007)

From FYE 2008-2010

During the FYE 31 December

2011

As at 31 December

2011

‘000 ‘000 ‘000 ‘000

Total number of options granted 7,750 - - 7,750

Total number of options exercised - (80) (6,080) (6,160)

Total number of options outstanding 7,750 - - 1,590

Pursuant to the Company’s ESOS By-Laws, not more than 50% of the options available under the scheme would be allocated, in aggregate, to Directors and senior management. Since the commencement of the scheme, 43.31% of the options granted under the scheme have been granted to Directors.

36


INTRODUCTION

In accordance with Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the Board of Directors of public listed companies are required to include in their annual report a statement about the state of internal control of the listed issuer as a group. The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders’ investments and the group’s assets. Set out below is the Board’s Internal Control Statement, which has been prepared in accordance with the “Statement on Internal Control: Guidance to Directors of Public Listed Companies”.

BOARD RESPONSIBILITY

The Board is committed to maintaining both a sound system of internal control and the proper management of risks throughout the operations of the Group in order to safeguard shareholders’ investment and assets of the Group. The Board acknowledges that it is ultimately responsible for the Group’s system of internal control which includes the establishment of an appropriate control environment and framework, including financial, operational and compliance controls and risk management, as well as reviewing its adequacy and integrity on an ongoing basis. It should be noted, however, that due to the inherent limitations in any system, such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. In addition, it should be noted that any system can provide only reasonable, and not absolute assurance against material misstatement or loss.

INTERNAL AUDIT FUNCTION AND RISK MANAGEMENT FRAMEWORK

The Audit Committee has established both an in-house internal audit department and engaged the services of external consultants to assess the adequacy and effectiveness of the internal control system. The same external consultants have also been appointed to assist in the development of a risk management framework and the risk management framework was completed back in 2005. The Audit Committee is kept informed of the internal audit process, from the annual audit plan up to the audit findings and reporting. The details on the Internal Audit function are further explained on pages 34 and 35 of this Annual Report. Management is responsible for ensuring that corrective actions on reported weaknesses are taken within the required time frame.

During the financial year, the in-house internal auditors and external consultants have performed operational audits on the following Group entities:-

(i) External consultants

1) Ace Extrusion Sdn. Bhd. (“AESB”)2) PMS Marketing Sdn. Bhd. (“PMSM”)3) Press Metal Sarawak Sdn. Bhd. (“PMS”)

The above audit covered the Revenue Cycle, Purchasing Cycle and Inventory Management and Control of AESB and PMS and Revenue Cycle of PMSM.

(ii) In-house Internal Auditors

1) Hubei Press Metal Huasheng Aluminium Electric Co., Ltd.2) Press Metal International (Hubei) Ltd. (formerly known as PMH Aluminium Extrusion Co., Ltd.)

The above audit covered the production, inventory management, maintenance and human resource management function of these subsidiaries.

37

OTHER KEY ELEMENTS OF INTERNAL CONTROL

Apart from risk management and internal audit, the other key elements of the Group’s internal control systems are described below:

A management structure with job descriptions and defined lines of responsibilities is in place for all business operating units;

The Company and five of its subsidiaries, including three subsidiaries operating in the People’s Republic of China have the following accreditation for their operational processes:-

Press Metal Berhad ISO 14001:2004 on Environmental Management System

ISO 9001:2008 on Quality Management System

OHSAS 18001:2007 on Occupational Health & Safety Management System

ACE Extrusion Sdn. Bhd. ISO 9001:2008 on Quality Management System

Press Metal International Ltd. ISO 9001:2008 on Quality Management System

Hubei Press Metal Huasheng Aluminium-Electric Co., Ltd.

ISO 14001:2004 on Environmental Management System


OHSAS 18001:2007 on Occupational Health & Safety Management System

Press Metal International (Hubei) Ltd. (formerly known as PMH Aluminium Extrusion Co., Ltd.)


Press Metal Sarawak Sdn. Bhd. ISO 9001:2008 on Quality Management System

Review of all proposals for material capital and investment acquisitions by management prior to the review and approval by the Board of Directors;

Monthly information provided to management, covering financial performance as well as key performance indicators, such as cash flows, product sales analysis and operating costs analysis. These performance reports are benchmarked against budget;

Quarterly monitoring of results and financial position by the Board; Monthly visits to business operating units by key members of the Board and the management team; Quarterly review of the Group’s related party transactions by the Audit Committee.

WEAKNESSES

A few minor internal control weaknesses were identified during the period, all of which have been, or are being addressed. None of these weaknesses resulted in any material errors and losses, contingencies or uncertainties that would require mention in the Group’s annual report.

Statement on Internal Control cont’d

Directors’ Report

Statements of Financial Position

Statements of Comprehensive Income

Consolidated Statement of Changes in Equity

Statement of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

40

48

49

50

52

53

56

126

126

127

40

Directors’ Reportfor the year ended 31 December 2011

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the manufacturing and marketing of aluminium products, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

RESULTS

Group Company

RM’000 RM’000

Profit for the year attributable to:

Owners of the Company 90,291 15,018

Non-controlling interests 10,815 -

101,106 15,018

RESERVES AND PROVISIONS

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

DIVIDENDS

Since the end of the previous financial year, the Company paid:

i) a final tax exempt ordinary dividend of 1 sen per ordinary share totalling RM4,392,000 in respect of the year ended 31 December 2010 on 28 July 2011.

ii) an interim tax exempt ordinary dividend of 1 sen per ordinary share totalling RM4,393,000 in respect of the year ended 31 December 2011 on 28 October 2011.

The final tax exempt ordinary dividend recommended by the Directors in respect of the year ended 31 December 2011 is 1 sen per ordinary share totalling RM4,395,000.

DIRECTORS OF THE COMPANY

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

Dato’ Megat Abdul Rahman bin Megat Ahmad Dato’ Koon Poh Keong Koon Poh Ming Koon Poh Tat Koon Poh Kong Koon Poh Weng Tuan Haji Mohamad Faiz bin Abdul Hamid Loo Lean Hock Tan Heng Kui Kuan Shin @ Kuan Nyong Hin (resigned on 30.05.11)

41


cont’d

DIRECTORS’ INTERESTS IN SHARES

The interests and deemed interests in the ordinary shares, redeemable convertible secured loan stocks (“RCSLS”) together with free warrants and options over shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses or child of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM0.50 each

At 1.1.2011 Bought Sold

At31.12.2011

Interests in the Company:

Dato’ Megat Abdul Rahman bin Megat Ahmad

- own 14,936,692 120,000 (200,000) 14,856,692

- spouse 280,000 - - 280,000

Dato’ Koon Poh Keong

- own 66,248,406 28,523,500 - 94,771,906

- spouse 10,229,700 - - 10,229,700

Koon Poh Ming

- own 28,572,439 1,900,000 (3,139,000) 27,333,439

- spouse 1,000,000 10,000,000 - 11,000,000

Koon Poh Tat

- own 9,806,000 3,521,400 - 13,327,400

- spouse 399,522 - - 399,522

Koon Poh Kong

- own 10,711,194 1,070,000 (500,000) 11,281,194

- spouse 5,000 - (2,000) 3,000

Koon Poh Weng

- own 11,880,048 1,040,000 - 12,920,048

- spouse 572,400 - (1,800) 570,600

- child 6,000 - - 6,000

Tuan Haji Mohamad Faiz bin Abdul Hamid 142,398 - - 142,398

Loo Lean Hock 40,000 - (40,000) -

Tan Heng Kui 69,000 40,000 - 109,000

Deemed interests in the Company:

Dato’ Megat Abdul Rahman bin Megat Ahmad # 542,000 - - 542,000 # Deemed interested by virtue of the Directors’ interests in JOEM Sdn. Bhd..

42

DIRECTORS’ INTERESTS IN SHARES cont’d

By virtue of their interests in the ordinary shares of the Company, Dato’ Koon Poh Keong, Koon Poh Ming, Koon Poh Tat, Koon Poh Kong and Koon Poh Weng are also deemed interested in the shares of the subsidiaries during the financial year to the extent that Press Metal Berhad has an interest.

Number of RCSLS together with one free warrant per one RCSLS of RM2.20 each

At date of issuance Bought Sold

At 31.12.2011


Koon Poh Tat

- spouse 133,174 - - 133,174

Koon Poh Kong

- spouse 151,000 - - 151,000

Koon Poh Weng

- spouse 190,000 - - 190,000

- child 2,000 - - 2,000

Koon Poh Ming

- spouse 1,000,000 - - 1,000,000

Tuan Haji Mohamad Faiz bin Abdul Hamid 47,466 - - 47,466

Tan Heng Kui 37,000 - - 37,000

Deemed interests in the Company:

Dato’ Koon Poh Keong * 105,319,860 - - 105,319,860

Koon Poh Ming * 105,319,860 - - 105,319,860

* Deemed interested by virtue of the Directors’ interests in Alpha Milestone Sdn. Bhd..

Directors’ Reportfor the year ended 31 December 2011 cont’d

43

DIRECTORS’ INTERESTS IN SHARES cont’d

Number of options over ordinary shares of RM0.50 each

At 1.1.2011 Exercised

At 31.12.2011


Dato’ Koon Poh Keong 1,750,000 (1,400,000) 350,000

Koon Poh Ming 1,750,000 (1,400,000) 350,000

Koon Poh Kong 1,300,000 (1,040,000) 260,000

Koon Poh Tat 1,300,000 (1,040,000) 260,000

Koon Poh Weng 1,300,000 (1,040,000) 260,000

Dato’ Megat Abdul Rahman bin Megat Ahmad 150,000 (120,000) 30,000

Tuan Haji Mohamad Faiz bin Abdul Hamid 50,000 - 50,000

Loo Lean Hock 10,000 - 10,000

Tan Heng Kui 10,000 - 10,000

REMUNERATION COMMITTEE MEMBERSHIP

The members of the Remuneration Committee are as follows:

Dato’ Megat Abdul Rahman bin Megat Ahmad Tuan Haji Mohamad Faiz bin Abdul Hamid Koon Poh Ming

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract made by the Company or 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, other than a Director who has significant financial interests in a company which received rental income from certain companies in the Group in the ordinary course of business.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate apart from the issue of RCSLS together with free warrants and the Employees’ Share Option Scheme (“ESOS”).

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company issued 9,419,000 new ordinary shares of RM0.50 each for cash arising from the exercise of employees’ share options at a weighted average exercise price of RM1.50 per ordinary share.

The new ordinary shares issued during the financial year rank pari-passu in all respects with the existing ordinary shares of the Company.


cont’d

44

ISSUE OF SHARES AND DEBENTURES cont’d

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

During the financial year, the Company issued 145,684,940 RCSLS together with 145,684,940 free detachable warrants for cash of RM320,506,868. The RCSLS are convertible into 145,684,940 ordinary shares of RM0.50 each from the first anniversary of the issue date of the RCSLS up to 22 August 2019 at the option of the holder, which is at a rate of one ordinary share of RM0.50 each for every one RCSLS held; unconverted RCSLS will be entitled to receive a coupon of 6% per annum based on the nominal value of RCSLS held.

The warrants are in registered form and constituted by a deed poll. The registered holders are entitled to subscribe for one new ordinary share of RM0.50 in the Company at a price of RM2.20 per ordinary share for every warrant held. The conversion ratio is subject to the aforesaid deed poll and can be exercised at any time during the eight-year subscription period up to 22 August 2019.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the year apart from issue of RCSLS together with free warrants.

RCSLS together with free warrants At an extraordinary general meeting held on 29 June 2011, the Company’s owners approved a proposed renounceable rights issue of up to RM323,735,042 nominal value of 8 year 6% RCSLS at 100% of its nominal value together with up to 147,152,292 free warrants on the basis of one RM2.20 nominal value of RCSLS together with one warrant for every three existing ordinary shares of RM0.50 each held in the Company.

On 26 August 2011, the Company issued 145,684,940 RCSLS together with 145,684,940 free detachable warrants for cash of RM320,506,868. The RCSLS are convertible into 145,684,940 ordinary shares of RM0.50 each from the first anniversary of the issue date of the RCSLS up to 22 August 2019 at the option of the holder, which is at a rate of one ordinary share of RM0.50 each for every one RCSLS held; unconverted RCSLS will be entitled to receive a coupon of 6% per annum based on the nominal value of RCSLS held.


As at 31 December 2011, no warrants have been exercised by the registered holders while the RCSLS are only exercisable from the first anniversary of the issue date of the RCSLS onwards.

ESOS

At an extraordinary general meeting held on 26 June 2007, the Company’s owners approved the establishment of a New ESOS of not more than 10% of the issued share capital of the Company to eligible Directors and Employees of the Group, subsequent to the expiry of the Former ESOS on 5 June 2007.

The salient features of the New ESOS are, inter alia, as follows:

(i) any eligible person of the Group shall be eligible to participate in the New ESOS, if at the date of offer, the employee:-

(a) has attained the age of eighteen (18) years; and (b) is a Malaysian and employed by any company within the Group (other than a company which is dormant).


45

OPTIONS GRANTED OVER UNISSUED SHARES cont’d ESOS cont’d

(ii) the option price shall be based on the weighted average market price of the Company’s ordinary shares for the five (5) market days preceding the date of offer, with a discount of not more than ten per cent (10%), if deemed appropriate (subject to such adjustments in accordance with rules, terms and conditions of the New ESOS), or the par value of the Company’s ordinary shares, whichever is higher.

(iii) the New ESOS shall be in force for a period of five (5) years from the date of offer and may be extended to a duration of ten (10) years or such longer duration as permitted by the relevant authorities.

(iv) the options granted may be exercised according to the following scale based on the discretion of the ESOS committee:

Percentage of options exercisable

Number of options granted Year 1 Year 2 Year 3 Year 4 Year 5

17,891,754 20% 20% 20% 20% 20%

Options exercisable in a particular year but not exercised could be carried forward to the subsequent years subject to the time limit of the New ESOS.

The options offered to take up unissued ordinary shares of RM0.50 each and the exercise price are as follows:

Date of offerExercise

priceAt

1.1.2011 GrantedLapsed/

Forfeited ExercisedAt

31.12.2011

Exercisable as at

31.12.2011

RM ’000 ’000 ’000 ’000 ’000 ’000

26.6.2007 1.50 14,754 - (84) (9,419) 5,251 5,251

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report the names of persons to whom options have been granted during the financial year and details of their holdings as required by Section 169(11) of the Companies Act, 1965. This information has been separately filed with the Companies Commission of Malaysia.

SIGNIFICANT EVENTS DURING THE YEAR

i) On 7 March 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, Press Metal International Technology Ltd., with an issued and paid-up capital of RMB20,000,000.

ii) On 8 June 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, Press Metal International Trading Ltd., with an issued and paid-up capital of RMB2,000,000.

iii) On 13 June 2011 and 10 August 2011, the Company subscribed an additional 1,049,998 and 48,950,000 new ordinary shares of RM1.00 each at par respectively, for a total cash consideration of RM49,999,998 in Press Metal Bintulu Sdn. Bhd., a wholly-owned subsidiary of the Company.

iv) On 30 June 2011, the Company subscribed an additional 50,000 new ordinary shares of RM1.00 each at par for a total cash consideration of RM50,000 in PMB Marketing Sdn. Bhd., a wholly-owned subsidiary of the Company.


cont’d

46

SIGNIFICANT EVENTS DURING THE YEAR cont’d

v) On 29 July 2011, Press Metal Bintulu Sdn. Bhd., a wholly-owned subsidiary of the Company, obtained a RM400 million syndicated term loan facility for the construction of a new aluminium smelting plant in Samalaju, Sarawak. As at the end of the financial year, Press Metal Bintulu Sdn. Bhd. has drawn down RM176,397,000 of the term loan.

vi) On 26 August 2011, the Company issued 145,684,940 RCSLS together with 145,684,940 free detachable warrants for cash of RM320,506,868. The RCSLS are convertible into 145,684,940 ordinary shares of RM0.50 each from the first anniversary of the issue date of the RCSLS up to 22 August 2019 at the option of the holder, which is at a rate of one ordinary share of RM0.50 each for every one RCSLS held; unconverted RCSLS will be entitled to receive a coupon of 6% per annum based on the nominal value of RCSLS held.


The proceeds from the RCSLS were subsequently advanced to Press Metal Bintulu Sdn. Bhd. as part of the financing for the construction of the new aluminium smelting plant in Samalaju, Sarawak.

OTHER STATUTORY INFORMATION

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

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

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

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

i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value 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, or

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

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

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


47

OTHER STATUTORY INFORMATION cont’d

In the opinion of the Directors, except for the impairment loss on investment in a subsidiary and trade receivables, waiver of amount due from a subsidiary and property, plant and equipment written off as disclosed in Note 20 to the financial statements, the financial performance of the Group and of the Company for the financial year ended 31 December 2011 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

AUDITORS

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

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

DATO’ KOON POH KEONG KOON POH TAT

Petaling Jaya, Selangor

26 April 2012


cont’d

48

Statements of Financial Positionas at 31 December 2011

Group Company

Note 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Assets

Property, plant and equipment 3 2,020,204 1,476,086 112,914 114,902

Intangible assets 4 13,549 13,187 - -

Investment properties 5 5,634 5,797 - -

Investments in subsidiaries 6 - - 531,601 485,751

Investment in an associate 7 32,298 28,003 11,812 11,812

Other investments 8 6,837 6,477 750 750

Deferred tax assets 9 1,598 1,042 - -

Trade and other receivables 10 - - 62,841 -

Total non-current assets 2,080,120 1,530,592 719,918 613,215

Trade and other receivables 10 812,203 704,052 678,780 543,205

Inventories 11 375,225 327,165 29,285 21,225

Current tax assets 7,259 2,520 - -

Cash and cash equivalents 12 369,977 201,211 188,382 67,694

Total current assets 1,564,664 1,234,948 896,447 632,124

Total assets 3,644,784 2,765,540 1,616,365 1,245,339

Equity

Share capital 219,740 215,031 219,740 215,031

Share premium 17,110 3,982 17,110 3,982

Reserves 134,907 (1,935) 92,952 5,166

Retained earnings 665,825 584,286 206,121 199,855

Total equity attributable to owners of the Company 1,037,582 801,364 535,923 424,034

Non-controlling interests 137,025 126,210 - -

Total equity 13 1,174,607 927,574 535,923 424,034

Liabilities

Trade and other payables, including derivatives 14 120,228 106,049 - 103,423

Loans and borrowings 15 642,944 396,125 232,362 69,820

Deferred tax liabilities 9 148,528 104,710 43,246 16,996

Total non-current liabilities 911,700 606,884 275,608 190,239

Trade and other payables, including derivatives 14 303,544 262,394 293,061 112,392

Loans and borrowings 15 1,248,332 964,938 508,208 516,834

Current tax liabilities 6,601 3,750 3,565 1,840

Total current liabilities 1,558,477 1,231,082 804,834 631,066

Total liabilities 2,470,177 1,837,966 1,080,442 821,305

Total equity and liabilities 3,644,784 2,765,540 1,616,365 1,245,339

The notes on pages 56 to 125 are an integral part of these financial statements.

49

Statements of Comprehensive Incomefor the year ended 31 December 2011

Group Company

Note 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Revenue 17 2,268,751 1,698,839 788,599 677,001

Cost of sales (1,895,015) (1,454,964) (696,617) (619,782)

Gross profit 373,736 243,875 91,982 57,219

Other income 13,807 52,482 3,844 26,109

Distribution expenses (79,399) (53,598) (4,217) (3,399)

Administrative expenses (77,381) (71,040) (10,288) (12,324)

Other expenses (33,359) (19,171) (24,887) (9,320)

Results from operating activities 197,404 152,548 56,434 58,285

Finance income 18 4,246 560 8,907 28

Finance costs 19 (82,868) (51,789) (43,156) (22,733)

Operating profit 20 118,782 101,319 22,185 35,580

Share of profits of equity accounted investee, net of tax 4,295 1,996 - -

Profit before tax 123,077 103,315 22,185 35,580

Income tax expense 22 (21,971) (13,705) (7,167) (1,592)

Profit for the year 101,106 89,610 15,018 33,988

Foreign currency translation differences for foreign operations 49,056 (44,714) - -

Total comprehensive income for the year 150,162 44,896 15,018 33,988

Profit attributable to:

Owners of the Company 90,291 83,493 15,018 33,988


Profit for the year 101,106 89,610 15,018 33,988

Total comprehensive income attributable to:

Owners of the Company 139,347 38,779 15,018 33,988


Total comprehensive income for the year 150,162 44,896 15,018 33,988

Basic earnings per ordinary share (sen) 23 20.72 21.87

Diluted earnings per ordinary share (sen) 23 20.47 21.23


50

Consolidated Statement of Changes in Equity for the year ended 31 December 2011

Attributable to owners of the Company

Non-distributable Distributable

Group NoteShare

capitalShare

premiumTranslation

reserve

Share option

reserveRCSLS

reserveWarrants

reserveRetainedearnings Total

Non-controlling

interestsTotal

equity

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2010 182,694 1,224 37,613 5,451 - - 508,394 735,376 87,761 823,137

Profit for the year - - - - - - 83,493 83,493 6,117 89,610

Foreign currency translation differences for foreign operations - - (44,714) - - - - (44,714) - (44,714)

Total comprehensive income for the year - - (44,714) - - - 83,493 38,779 6,117 44,896

Conversion of warrants 13 31,315 - - - - - - 31,315 - 31,315

Share options exercised 13 1,022 2,044 - - - - - 3,066 - 3,066

Transfer to share premium for share options exercised - 714 - (714) - - - - - -

Transfer to retained earnings for share options lapsed - - - (358) - - 358 - - -

Share-based payment transactions 16 - - - 787 - - - 787 - 787

Dividends to owners of the Company 24 - - - - - - (7,959) (7,959) - (7,959)

Acquisition of non-controlling interests 32 - - - - - - - - (28,068) (28,068)

Subscription of additional shares in a subsidiary by non-controlling shareholders 32 - - - - - - - - 60,400 60,400

At 31 December 2010 215,031 3,982 (7,101) 5,166 - - 584,286 801,364 126,210 927,574

51

Consolidated Statement of Changes in Equity for the year ended 31 December 2011

cont’d

Attributable to owners of the Company


Group NoteShare

capitalShare

premiumTranslation

reserve

Share option

reserveRCSLS

reserveWarrants

reserveRetainedearnings Total

Non-controlling

interestsTotal

equity

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2011 215,031 3,982 (7,101) 5,166 - - 584,286 801,364 126,210 927,574

Profit for the year - - - - - - 90,291 90,291 10,815 101,106

Foreign currency translation differences for foreign operations - - 49,056 - - - - 49,056 - 49,056

Total comprehensive income for the year - - 49,056 - - - 90,291 139,347 10,815 150,162

Share options exercised 13 4,709 9,419 - - - - - 14,128 - 14,128

Issue of RCSLS, net of tax 15 - - - - 14,408 - - 14,408 - 14,408

Issue of warrants 15 - - - - - 76,475 - 76,475 - 76,475

Transfer to share premium for share options exercised - 3,709 - (3,709) - - - - - -

Transfer to retained earnings for share options lapsed - - - (33) - - 33 - - -

Share-based payment transactions 16 - - - 645 - - - 645 - 645

Dividends to owners of the Company 24 - - - - - - (8,785) (8,785) - (8,785)

At 31 December 2011 219,740 17,110 41,955 2,069 14,408 76,475 665,825 1,037,582 137,025 1,174,607


52


NoteShare

capitalShare

premium

Share option

reserveRCSLS

reserveWarrants

reserveRetained earnings

Totalequity

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2010 182,694 1,224 5,451 - - 173,468 362,837

Profit for the year - - - - - 33,988 33,988

Total comprehensive income for the year - - - - - 33,988 33,988

Conversion of warrants 13 31,315 - - - - - 31,315

Share options exercised 13 1,022 2,044 - - - - 3,066

Transfer to share premium for share options exercised - 714 (714) - - - -

Transfer to retained earnings for share options lapsed - - (358) - - 358 -

Share-based payment transactions 16 - - 787 - - - 787

Dividends to owners of the Company 24 - - - - - (7,959) (7,959)

At 31 December 2010/ 1 January 2011 215,031 3,982 5,166 - - 199,855 424,034

Profit for the year - - - - - 15,018 15,018

Total comprehensive income for the year - - - - - 15,018 15,018

Share options exercised 13 4,709 9,419 - - - - 14,128

Issue of RCSLS, net of tax 15 - - - 14,408 - - 14,408

Issue of warrants 15 - - - - 76,475 - 76,475

Transfer to share premium for share options exercised - 3,709 (3,709) - - - -

Transfer to retained earnings for share options lapsed - - (33) - - 33 -

Share-based payment transactions 16 - - 645 - - - 645

Dividends to owners of the Company 24 - - - - - (8,785) (8,785)

At 31 December 2011 219,740 17,110 2,069 14,408 76,475 206,121 535,923


Statement of Changes in Equity for the year ended 31 December 2011

53

Statements of Cash Flows for the year ended 31 December 2011

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities


Adjustments for:

Depreciation of investment properties 112 112 - -

Depreciation of property, plant and equipment 118,962 83,373 15,608 14,718

Derivative loss 2,994 2,123 2,994 2,123

Dividend income - - (322) (282)

Equity settled share-based payment transactions 645 787 645 787

Finance costs 82,868 51,789 43,156 22,733

Finance income (3,535) (560) (8,196) (28)

Impairment loss on investment in a subsidiary - - 4,200 -

Impairment loss on investment properties 51 200 - -

Impairment loss on property, plant and equipment 257 - - -

Loss/(Gain) on disposal of property, plant and equipment 250 (352) 126 (20)

Negative goodwill - (18,030) - -

Property, plant & equipment written off 3,704 - - -

Share of profit of equity accounted investee, net of tax (4,295) (1,996) - -

Unrealised foreign exchange loss/(gain) 2,847 (20,543) 2,937 (20,533)

Waiver of amount due from a subsidiary - - 3,503 -

Waiver of debts by a creditor - (5,000) - (5,000)

Operating profit before changes in working capital 327,937 195,218 86,836 50,078

Changes in working capital:

Inventories (48,060) (64,589) (8,060) 7,871

Trade and other payables 3,907 116,182 33,689 (4,480)

Trade and other receivables (431,393) (125,294) (43,468) (24,996)

Cash (used in)/generated from operations (147,609) 121,517 68,997 28,473

Income tax paid (12,951) (13,947) (6,911) (5,721)

Net cash (used in)/from operating activities (160,560) 107,570 62,086 22,752

54

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Cash flows from investing activities

Acquisition of investment properties - (272) - -

Acquisition of non-controlling interests - (9,767) - -

Acquisition of other investments - (2,164) - -

Acquisition of patents (193) - - -

Acquisition of property, plant and equipment (236,999) (104,649) (12,660) (7,909)

Dividends received from an associate 322 282 322 282

Increase in investments in subsidiaries - - - (27,095)

Interest received from fixed deposits 3,535 560 1,294 28

Proceeds from disposal of investment in a subsidiary - 60,400 - 60,400

Proceeds from disposal of property, plant and equipment 1,682 3,522 150 220

Proceeds from government grant obtained 4,480 - - -

Net cash (used in)/from investing activities (227,173) (52,088) (10,894) 25,926

Cash flows from financing activities

Drawdown/(Repayment) of revolving credits 93,304 (1,610) - -

Drawdown of bankers’ acceptances 171,443 87,270 28,843 73,476

Dividends paid to owners of the Company (8,785) (7,959) (8,785) (7,959)

Increase/(Decrease) in amount due to an associate 3,306 (2,466) 1,948 -

Increase in amounts due from subsidiaries - - (173,130) (102,990)

Interest paid on loans and borrowings (78,434) (51,789) (38,722) (22,733)

Interest received from loan to a subsidiary - - 6,902 -

Net proceeds from RCSLS together with free warrants 313,688 - 313,688 -

Placement of deposits pledged with licensed banks (4,373) (3,514) - -

Proceeds from/(Repayment of) term loans 44,353 26,949 (82,321) 35,517

Proceeds from issue of share capital via the new ESOS 14,128 3,066 14,128 3,066

Proceeds from issue of share capital via warrants conversion - 31,315 - 31,315

Repayment of finance lease liabilities (7,534) (4,656) (991) (566)

Net cash from financing activities 541,096 76,606 61,560 9,126

Net increase in cash and cash equivalents 153,363 132,088 112,752 57,804

Effect of exchange rate fluctuations on cash held 2,970 1,321 - -

Cash and cash equivalents at 1 January 197,640 64,231 67,694 9,890

Cash and cash equivalents at 31 December 353,973 197,640 180,446 67,694

Statements of Cash Flows for the year ended 31 December 2011cont’d

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Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statement of financial position amounts:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Deposits (excluding deposits pledged) 68,410 2,391 391 391

Cash and bank balances 293,670 195,296 187,991 67,303

Bank overdrafts (8,107) (47) (7,936) -

353,973 197,640 180,446 67,694

Acquisition of property, plant and equipment

During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM623,583,000 (2010: RM257,421,000) and RM13,896,000 (2010: RM8,625,000) respectively, as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Satisfied by cash 236,999 104,649 12,660 7,909

By means of finance leases 21,363 7,390 1,236 716

Reclassified from deposits 322,024 145,382 - -

Payable to Sarawak government in future years 43,197 - - -

623,583 257,421 13,896 8,625


Statements of Cash Flows for the year ended 31 December 2011

cont’d

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Notes to the Financial Statements

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

PRINCIPAL PLACE OF BUSINESS

Lot 6464 Batu 5 ¾Jalan Kapar, Sementa42100 KlangSelangor Darul Ehsan

REGISTERED OFFICE

Lot 6.05, Level 6KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul Ehsan

The consolidated financial statements of the Company as at and for the year ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in an associate. The financial statements of the Company as at and for the year ended 31 December 2011 do not include other entities.

The Company is principally engaged in the manufacturing and marketing of aluminium products, whilst the principal activities of the subsidiaries are as stated in Note 6 to the financial statements.

These financial statements were authorised for issue by the Board of Directors on 26 April 2012.

1. BASIS OF PREPARATION

(a) Statement of compliance

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

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

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

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012 FRS 124, Related Party Disclosures (revised) Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Severe Hyperinflation and

Removal of Fixed Dates for First-time Adopters Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets

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Notes to the Financial Statementscont’d

1. BASIS OF PREPARATION cont’d

(a) Statement of compliance cont’d

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

Income

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

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

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

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

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) Functional and presentation currency

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

(d) Use of estimates and judgements The preparation of financial statements in conformity with FRSs requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised or disclosed in the financial statements other than those disclosed in the following notes:

Note 4 - measurement of the recoverable amounts of cash-generating units Note 5 - valuation of investment properties Note 10 - impairment of receivables Note 29 - contingencies

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2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

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

Investments in subsidiaries are stated in the Company’s statement of financial position at cost less any impairment losses, unless the investment is held for sale or distribution. The cost of investments includes transaction costs.

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

(ii) Accounting for business combination

Business combinations are accounted for using the acquisition method from the acquisition date, which is

the date on which control is transferred to the Group.

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

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

Acquisitions on or after 1 January 2011

For acquisitions on or after 1 January 2011, the Group measures goodwill at the acquisition date as:

the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed.

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

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

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

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


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2. SIGNIFICANT ACCOUNTING POLICIES cont’d

(a) Basis of consolidation cont’d

(ii) Accounting for business combination cont’d

Acquisitions between 1 January 2006 and 1 January 2011

For acquisitions between 1 January 2006 and 1 January 2011, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

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

Acquisitions prior to 1 January 2006

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

(iii) Accounting for acquisition of non-controlling interests

From 1 January 2011, the Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. For acquisition of non-controlling interests prior to 1 January 2011, any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against profit or loss.

(iv) Loss of control

The Group applied FRS 127, Consolidated and Separate Financial Statements (revised) since the beginning of the reporting period in accordance with the transitional provisions provided by the standard and does not have impact on earnings per share. Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of the equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

In the previous years, if the Group retained any interest in the previous subsidiary, such interest was measured at the carrying amount at the date that control was lost and this carrying amount would be regarded as cost on initial measurement of the investment.

(v) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted associates, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.


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(a) Basis of consolidation cont’d

(v) Associates cont’d

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Investment in an associate is measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of the investment includes transaction costs.

(vi) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, is presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Since the beginning of the reporting period, the Group has applied FRS 127, Consolidated and Separate

Financial Statements (revised) where losses applicable to non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. This change in accounting policy is applied prospectively in accordance with the transitional provisions of the standard and does not have impact on earnings per share.

In the previous years, where losses applicable to the non-controlling interests exceed their interest in the equity of a subsidiary, the excess, and any further losses applicable to the non-controlling interests, were charged against the Group’s interest except to the extent that the non-controlling interests had a binding obligation to, and was able to, make additional investment to cover the losses. If the subsidiary subsequently reported profits, the Group’s interest was allocated with all such profits until the non-controlling interests’ share of losses previously absorbed by the Group had been recovered.

(vii) Transactions eliminated on consolidation

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

Unrealised gains arising from transactions with equity accounted associates are eliminated against the

investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

(i) Foreign currency transactions

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

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


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(b) Foreign currency cont’d

(i) Foreign currency transactions cont’d

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

Foreign currency differences arising on retranslation are recognised in profit or loss.

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

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

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign

currency translation reserve (FCTR) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

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

(c) Financial instruments

(i) Initial recognition and measurement

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

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

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


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(c) Financial instruments cont’d

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise and measure financial instruments as follows:

Financial assets

(a) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market, trade and other receivables and cash and cash equivalents.

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

(b) Available-for-sale financial assets

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

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost.

All financial assets are subject to review for impairment (see Note 2(j)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

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

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) 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 in accordance with the original or modified terms of a debt instrument.

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


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(c) Financial instruments cont’d

(iv) Derecognition

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

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

(d) Property, plant and equipment

(i) Recognition and measurement

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

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

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the part will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.


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(d) Property, plant and equipment cont’d

(iii) Depreciation cont’d

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The estimated useful lives for the current and comparative periods are as follows:

Leasehold land 24 - 99 years Buildings 50 years Renovation 10 years Plant and machinery 5 - 25 years Office equipment 10 years Motor vehicles 5 - 10 years Furniture and fittings 10 years Moulds and dies 3 - 6 years

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

(e) Leased assets

(i) Finance lease

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

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

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

(ii) Operating lease

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised in the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

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


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(f) Intangible assets

(i) Goodwill

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

(ii) Patents

Patents that are acquired by the Group, which have indefinite useful lives, are measured at cost less any accumulated impairment losses.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is recognised in profit or loss as incurred.

(iv) Amortisation

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

(g) Investment property

(i) Investment property carried at cost

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

Investment properties are measured at cost less any accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the investment property and any other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalised borrowing costs.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

(ii) Determination of fair value

For the purpose of disclosure, the Directors estimate the fair values of the Group’s investment properties without involvement of independent valuers.

The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.

The Directors adopted the comparison method in arriving at the market value. The comparison method entails critical analyses of recent evidences of values of comparable properties in the neighbourhood and making adjustment for differences such as differences in location, size and shape of land, age and condition of building, tenure, title restrictions if any and other relevant characteristics.


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(g) Investment property cont’d

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of investment properties. Freehold land is not depreciated. The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 years Leasehold land 90 years

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

(h) Inventories

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

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

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

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, balances and deposits with banks. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(j) Impairment

(i) Financial assets

All financial assets (except for investments in subsidiaries and investment in an associate) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial 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.

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit or loss.


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(j) Impairment cont’d

(ii) Other assets

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

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that

generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value

less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

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

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

(k) Equity instruments

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

Issue expenses

Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.

(l) Compound financial instrument

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

Compound financial instruments issued by the Group comprise redeemable convertible secured loan stocks 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.


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(l) Compound financial instrument cont’d

The liability component of a compound financial instrument is recognised initially at 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 financial instrument is not remeasured subsequent to initial recognition.

(m) Employee benefits

(i) Short-term employee benefits

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

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

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(iii) Share-based payment transactions

The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

The fair value of employee share options is measured using a Black Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

(n) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.


69


(n) Provisions cont’d

Contingent liabilities

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

(o) Government grants

Government grants are recognised initially as a deduction from the carrying amount of the asset of which the grant is related to when there is reasonable assurance that they will be received and the Group will comply with the conditions associated. The grant is recognised as income over the life of a depreciable asset by way of reduced depreciation charge.

(p) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.

(iii) Rental income

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

(iv) Dividend income

Dividend income is recognised in profit or loss on the date the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(v) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.


70


(q) Borrowing costs

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

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

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

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

(r) Income tax

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

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

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

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

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

(s) Earnings per ordinary share

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

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise RCSLS, warrants and share options granted to employees.


71


(t) Operating segments

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

3. PROPERTY, PLANT AND EQUIPMENT

Group Land

Buildings and

renovation

Plantand

machineryOffice

equipmentMotor

vehicles

Furnitureand

fittingsMoulds

and diesUnder

construction Total

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cost

At 1 January 2010 106,175 335,250 767,514 26,158 25,506 5,795 134,294 287,090 1,687,782

Additions 4,117 2,309 177,563 9,071 6,929 202 8,255 48,975 257,421

Disposals - (180) (636) (294) (612) - - (2,438) (4,160)

Write off - - - (4) - - - - (4)

Transfers - 306,583 (3,832) 4 - - - (302,755) -

Effect of movements in exchange rates (1,679) (21,151) (32,079) (815) (439) (36) (3,275) (4,111) (63,585)

At 31 December 2010/ 1 January 2011 108,613 622,811 908,530 34,120 31,384 5,961 139,274 26,761 1,877,454

Additions 65,883 39,295 318,808 3,561 27,354 367 34,178 134,137 623,583

Government grant obtained - - (4,480) - - - - - (4,480)

Disposals - - (1,352) (12) (1,706) - - - (3,070)

Write off - - (8,360) (217) (13) - - - (8,590)

Transfers - 23,933 3,393 - - - - (27,326) -

Effect of movements in exchange rates 1,941 21,225 34,254 1,192 513 14 5,038 5,375 69,552

At 31 December 2011 176,437 707,264 1,250,793 38,644 57,532 6,342 178,490 138,947 2,554,449


72

3. PROPERTY, PLANT AND EQUIPMENT cont’d

Group Land

Buildings and

renovation

Plantand

machineryOffice

equipmentMotor

vehicles

Furnitureand

fittingsMoulds

and diesUnder

construction Total


Depreciation and impairment loss

At 1 January 2010 2,010 32,925 179,968 13,268 8,326 1,770 92,166 - 330,433

Depreciation for the year 794 12,827 54,951 2,468 2,903 241 9,189 - 83,373

Disposals - (39) (290) (264) (397) - - - (990)

Write off - - - (4) - - - - (4)

Effect of movements in exchange rates (86) (1,915) (6,973) (170) (109) (20) (2,171) - (11,444)

At 31 December 2010/1 January 2011 2,718 43,798 227,656 15,298 10,723 1,991 99,184 - 401,368

Depreciation for the year 1,273 18,966 56,910 2,692 4,689 348 34,084 - 118,962

Impairment loss for the year - 257 - - - - - - 257

Disposals - - (123) (3) (1,012) - - - (1,138)

Write off - - (4,698) (175) (13) - - - (4,886)

Effect of movements in exchange rates 190 3,585 11,412 362 230 4 3,899 - 19,682

At 31 December 2011 4,181 66,606 291,157 18,174 14,617 2,343 137,167 - 534,245

Carrying amounts

At 1 January 2010 104,165 302,325 587,546 12,890 17,180 4,025 42,128 287,090 1,357,349

At 31 December 2010/1 January 2011 105,895 579,013 680,874 18,822 20,661 3,970 40,090 26,761 1,476,086

At 31 December 2011 172,256 640,658 959,636 20,470 42,915 3,999 41,323 138,947 2,020,204


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Company Land Buildings RenovationPlant and

machineryOffice

equipmentMotor

vehicles

Furnitureand

fittingsMoulds

and dies Total


Cost

At 1 January 2010 5,910 31,472 2,408 129,152 10,047 4,650 849 75,104 259,592

Additions - - 94 2,214 102 775 24 5,416 8,625

Disposals - (180) - (58) - (80) - - (318)

At 31 December 2010/ 1 January 2011 5,910 31,292 2,502 131,308 10,149 5,345 873 80,520 267,899

Additions - - 1,443 4,531 817 1,362 - 5,743 13,896

Disposals - - - (40) - (345) - - (385)

At 31 December 2011 5,910 31,292 3,945 135,799 10,966 6,362 873 86,263 281,410

Depreciation

At 1 January 2010 - 5,032 453 69,121 7,840 2,622 479 52,850 138,397

Depreciation for the year - 551 250 6,764 520 398 15 6,220 14,718

Disposals - (39) - (8) - (71) - - (118)

At 31 December 2010/ 1 January 2011 - 5,544 703 75,877 8,360 2,949 494 59,070 152,997

Depreciation for the year - 626 329 7,047 534 449 15 6,608 15,608

Disposals - - - (17) - (92) - - (109)

At 31 December 2011 - 6,170 1,032 82,907 8,894 3,306 509 65,678 168,496

Carrying amounts

At 1 January 2010 5,910 26,440 1,955 60,031 2,207 2,028 370 22,254 121,195

At 31 December 2010/ 1 January 2011 5,910 25,748 1,799 55,431 1,789 2,396 379 21,450 114,902

At 31 December 2011 5,910 25,122 2,913 52,892 2,072 3,056 364 20,585 112,914

3.1 Impairment loss During the year, the Group assessed certain assets for impairment and recognised an impairment loss on RM257,000

as these assets no longer generate future economic benefits to the Group. 3.2 Security Property, plant and equipment of the Group with a carrying amount of RM1,148,181,000 (2010: RM626,431,000)

have been pledged as security and floating charges for term loans granted to certain subsidiaries (see Note 15).


74


3.3 Borrowing costs

Included in property, plant and equipment under construction of the Group is interest capitalised for the year at a rate of 1.75% (2010: 1.75%) above the Financiers’ Islamic Cost of Funds per annum amounting to RM16,779,000 (2010: RM12,389,000).

3.4 Leased plant and machinery and motor vehicles

At 31 December, the net carrying amounts of leased plant and machinery and motor vehicles of the Group and the Company were RM36,027,000 (2010: RM18,944,000) and RM3,230,000 (2010: RM2,554,000), respectively.

3.5 Land

Included in the carrying amounts of land are:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Freehold land 5,910 5,910 5,910 5,910

Leasehold land with unexpired period of more than 50 years 166,346 99,985 - -

172,256 105,895 5,910 5,910

3.6 Leasehold land premium

During the year, included in additions of leasehold land of the Group are leasehold land premiums paid/payable to the state government of Sarawak amounting to RM62,384,000.

3.7 Government grant

During the year, a subsidiary obtained a government grant of RM4,480,000, which had an effect of reducing the depreciation expense of the Group for the year by RM403,000. The subsidiary has complied with all conditions attached to the government assistance recognised.

4. INTANGIBLE ASSETS

Group Goodwill Patents Total

RM’000 RM’000 RM’000

Cost

At 1 January 2010 13,665 - 13,665

Effect of movements in exchange rates 72 - 72

At 31 December 2010/1 January 2011 13,737 - 13,737

Additions - 193 193

Effect of movements in exchange rates 169 - 169

At 31 December 2011 13,906 193 14,099


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4. INTANGIBLE ASSETS cont’d

Group Goodwill Patents Total

RM’000 RM’000 RM’000

Impairment loss

At 1 January 2010/31 December 2010/1 January 2011/ 31 December 2011 550 - 550

Carrying amounts

At 1 January 2010 13,115 - 13,115

At 31 December 2010/1 January 2011 13,187 - 13,187

At 31 December 2011 13,356 193 13,549

4.1 Patents

The patents have indefinite useful lives and are assessed for impairment annually.

4.2 Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s business units acquired, at which the goodwill is monitored for internal management purposes.

The goodwill is allocated to subsidiaries in the manufacturing and trading segments.

The recoverable amounts of the business units were based on value in use and were determined by management.

Value in use was determined by assessing the budgets of the business units and was based on the following key

assumptions:

The 5 year budgets were arrived at based on actual operating results. The principal activities of the business units will not change significantly. The business environment or industry in which the business units operate in will not change significantly. Discount rate is based on weighted average cost of capital of 8%.

The values assigned to the assumptions represent management’s assessment of future trends in the business units’ principal activities and are based on internal sources (historical data).

The above estimates are not sensitive in relation to the carrying amount of goodwill.


76

5. INVESTMENT PROPERTIES

Group

RM’000

Cost

At 1 January 2010 6,640

Additions 272

At 31 December 2010/1 January 2011/31 December 2011 6,912

Depreciation and impairment loss

At 1 January 2010 803

Depreciation for the year 112

Impairment loss for the year 200

At 31 December 2010/1 January 2011 1,115

Depreciation for the year 112

Impairment loss for the year 51

At 31 December 2011 1,278

Carrying amounts

At 1 January 2010 5,837


At 31 December 2011 5,634

Fair values

At 1 January 2010 6,773


At 31 December 2011 11,306

Group

2011 2010

RM’000 RM’000

Included in the above are:

Freehold land 812 812

Buildings on freehold land 568 581

Leasehold land 575 583

Buildings on leasehold land 3,679 3,821

5,634 5,797


77

5. INVESTMENT PROPERTIES cont’d

Investment properties comprise of freehold land, leasehold land, industrial properties and a number of commercial properties.

The fair values of all investment properties are determined based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.

Impairment loss

The Group assessed the investment properties for impairment and recognised an impairment loss of RM51,000 (2010: RM200,000) as a result of a significant decline in market value of a building on a leasehold land of a subsidiary.

The following are recognised in profit or loss in respect of investment properties:

Group

2011 2010

RM’000 RM’000

Rental income 340 313

Direct operating expenses

- income generating investment properties (166) (165)

- non-income generating investment properties (13) (17)

6. INVESTMENTS IN SUBSIDIARIES

Company

2011 2010

RM’000 RM’000

Unquoted shares, at cost 538,241 488,191

Less: Accumulated impairment losses (6,640) (2,440)

531,601 485,751

The movements of investments in subsidiaries are as follows:

At 1 January 485,751 217,484

Subscription of additional shares 50,050 328,667

Disposal of shares - (60,400)

Impairment losses provided during the year (4,200) -

At 31 December 531,601 485,751

Satisfied by cash - 27,095

Net settled against balance due to a subsidiary 50,050 301,572

Total consideration paid for subscription of additional shares 50,050 328,667


78

6. INVESTMENTS IN SUBSIDIARIES cont’d Details of the subsidiaries are as follows:

Name of subsidiaryCountry of

incorporation Principal activitiesEffective

ownership interest

2011 2010

Angkasa Jasa Sdn. Bhd. Malaysia Contracting and fabrication of aluminium and stainless steel products

100% 100%

PMB Development Sdn. Bhd. Malaysia Investment holding 100% 100%

and its subsidiary,

PMB Spectrum Sdn. Bhd. Malaysia Dormant 60% 60%

PMB Recycling Management Sdn. Bhd. Malaysia Dormant 100% 100%

Wesama Sdn. Bhd. Malaysia Investment holding 100% 100%

and its subsidiary,

ACE Extrusion Sdn. Bhd. Malaysia Manufacturing and trading of aluminium products

100% 100%

PMB Marketing Sdn. Bhd. # Malaysia Trading of garments and accessories 100% 100%

and its subsidiary,

PMB Marketing (H.K.) Limited * Hong Kong Trading of garments and accessories 100% 100%

BI-PMB Waste Management Sdn. Bhd. Malaysia Provision of a common waste water treatment plant to treat toxic waste

100% 100%

PMS Marketing Sdn. Bhd. Malaysia Trading of aluminium products 100% 100%

Press Metal Sarawak Sdn. Bhd. Malaysia Manufacturing and trading of aluminium products

80% 80%

Press Metal Bintulu Sdn. Bhd. + Malaysia Dormant. In the process of constructing an aluminium smelting plant

100% 100%

Press Metal Aluminium (Australia) Pty. Ltd. *

Australia Marketing of aluminium products 70% 70%

Press Metal UK Limited * United Kingdom

Marketing of aluminium products 100% 100%

Press Metal Hong Kong Limited * Hong Kong Investment holding 100% 100%

and its subsidiary,

Press Metal International Ltd. ~ China Manufacturing and trading of aluminium products

100% 100%

and its subsidiaries,

Press Metal International Technology Ltd. **, ^

China Dormant 100% -

Press Metal International Trading Ltd. **, %

China Purchasing agent of Press Metal Bintulu Sdn. Bhd.

100% -

Hubei Press Metal Huasheng Aluminium-Electric Co,. Ltd.

China Manufacturing and trading of aluminium products

90% 90%

and its subsidiaries,

Press Metal International (Hubei) Ltd. (formerly known as PMH Aluminium Extrusion Co,. Ltd.) ~

China Manufacturing and trading of aluminium products

90% 90%

PMH Electric Engineering Co,. Ltd.** China Dormant 90% 90%


79

6. INVESTMENTS IN SUBSIDIARIES cont’d

~ Audited by member firms of KPMG International* Not audited by member firms of KPMG International** Consolidated based on management accounts ^ On 7 March 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned

subsidiary in the People’s Republic of China, Press Metal International Technology Ltd., with an issued and paid-up capital of RMB20,000,000.

% On 8 June 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, Press Metal International Trading Ltd., with an issued and paid-up capital of RMB2,000,000.

# On 30 June 2011, the Company subscribed an additional 50,000 new ordinary shares of RM1.00 each at par for a total cash consideration of RM50,000 in PMB Marketing Sdn. Bhd., a wholly-owned subsidiary of the Company.

+ On 13 June 2011 and 10 August 2011, the Company subscribed an additional 1,049,998 and 48,950,000 new ordinary shares of RM1.00 each at par respectively, for a total cash consideration of RM49,999,998 in Press Metal Bintulu Sdn. Bhd., a wholly-owned subsidiary of the Company.

7. INVESTMENT IN AN ASSOCIATE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Quoted shares in Malaysia, at cost 11,812 11,812 11,812 11,812

Share of post-acquisition reserves 20,486 16,191 - -

32,298 28,003 11,812 11,812

Market value:

Quoted shares in Malaysia 10,094 16,751 10,094 16,751

Summary financial information of the associate incorporated in Malaysia, which is primarily involved in design, fabrication,

installation of aluminium curtain wall, cladding system and manufacturing and trading of aluminium related products, not adjusted for the percentage ownership held by the Group:

Effectiveownership

interestRevenue

(100%)Profit

(100%)

Totalassets

(100%)

Totalliabilities

(100%)

RM’000 RM’000 RM’000 RM’000

2011

PMB Technology Berhad 28% 311,848 15,496 291,054 178,583

2010

PMB Technology Berhad 28% 219,436 7,194 244,064 146,821


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8. OTHER INVESTMENTS

Group Company

RM’000 RM’000

2011

Non-current

Available-for-sale financial assets

At cost:

Unquoted shares in Malaysia 1,803 750

Unquoted shares outside Malaysia 5,034 -

6,837 750

2010

Non-current

Available-for-sale financial assets

At cost:

Unquoted shares in Malaysia 1,803 750

Unquoted shares outside Malaysia 4,674 -

6,477 750

9. DEFERRED TAX ASSETS/(LIABILITIES)

Recognised deferred tax assets/(liabilities)

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

2011 2010 2011 2010 2011 2010

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - - (154,782) (122,917) (154,782) (122,917)

Provisions 3,356 591 - - 3,356 591

Tax loss carry-forwards 6,817 236 - - 6,817 236

Capital allowance carry-forwards 23,895 18,702 - - 23,895 18,702

Other deductible temporary differences 987 380 (593) (660) 394 (280)

RCSLS - - (26,610) - (26,610) -

Tax assets/(liabilities) 35,055 19,909 (181,985) (123,577) (146,930) (103,668)

Set off (33,457) (18,867) 33,457 18,867 - -

Net tax assets/(liabilities) 1,598 1,042 (148,528) (104,710) (146,930) (103,668)


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9. DEFERRED TAX ASSETS/(LIABILITIES) cont’d

Assets Liabilities Net

2011 2010 2011 2010 2011 2010

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - - (16,636) (16,336) (16,636) (16,336)

Other deductible temporary differences - - - (660) - (660)

RCSLS - - (26,610) - (26,610) -

Net tax liabilities - - (43,246) (16,996) (43,246) (16,996)

Movement in temporary differences during the year

At1.1.2010

Recognisedin profit

or loss(Note 22)

Effect of movement

inexchange

ratesAt

31.12.2010

Recognisedin profit

or loss (Note 22)

Recogniseddirectly in

equity

Effect ofmovement

in exchange

ratesAt

31.12.2011

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Property, plant and equipment (112,034) (16,646) 5,763 (122,917) (27,230) - (4,635) (154,782)

Provisions 565 26 - 591 2,765 - - 3,356

Tax loss carry-forwards 3,984 (3,748) - 236 6,581 - - 6,817

Capital allowance carry-forwards 5,811 12,891 - 18,702 5,193 - - 23,895

Other deductible temporary differences (4,712) 4,432 - (280) 674 - - 394

RCSLS - - - - 1,109 (27,719) - (26,610)

(106,386) (3,045) 5,763 (103,668) (10,908) (27,719) (4,635) (146,930)

During the year, the deferred tax portion of the RCSLS amounting to RM27,719,000 was charged to the equity component of the RCSLS and recognised in equity. Following the accretion of RCSLS, there was a reduction in deferred tax liabilities amounting to RM1,109,000 recognised in profit or loss.


82

9. DEFERRED TAX ASSETS/(LIABILITIES) cont’d

Movement in temporary differences during the year cont’d

At1.1.2010

Recognisedin profit

or loss(Note 22)

At31.12.2010

Recognised in profit

or loss(Note 22)

Recogniseddirectly in

equityAt

31.12.2011

Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment (17,069) 733 (16,336) (300) - (16,636)

Other deductible temporary differences (4,711) 4,051 (660) 660 - -

RCSLS - - - 1,109 (27,719) (26,610)

(21,780) 4,784 (16,996) 1,469 (27,719) (43,246)

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items (stated at gross):

Group

2011 2010

RM’000 RM’000

Other temporary differences (3,151) (3,972)

Tax loss carry-forwards 15,031 11,694

Capital allowance carry-forwards 8,453 8,036

20,333 15,758

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group entities can utilise the benefits there from.


83

10. TRADE AND OTHER RECEIVABLES

Group Company

2011 2010 2011 2010

Note RM’000 RM’000 RM’000 RM’000

Non-current

Non-trade

Amounts due from subsidiaries 10.1 - - 62,841 -

Current

Trade

Trade receivables 356,449 295,080 45,679 46,861

Less: Individual impairment (7,699) (4,711) (325) (411)

348,750 290,369 45,354 46,450

Amounts due from subsidiaries 10.1 - - 213,354 173,738

Amount due from an associate 10.1 22,718 11,345 18,169 10,995

371,468 301,714 276,877 231,183

Non-trade

Amounts due from subsidiaries 10.1 - - 393,907 298,278

Amount due from an associate 10.1 45 1,244 - -

Other receivables 77,884 13,168 2,026 1,589

Deposits 10.2 345,933 337,830 3,251 10,046

Prepayments 16,873 50,096 2,719 2,109

440,735 402,338 401,903 312,022

812,203 704,052 678,780 543,205

10.4 812,203 704,052 741,621 543,205

10.1 Related party balances

The trade balances due from subsidiaries and an associate are subject to normal trade terms.

The non-trade balances due from subsidiaries and an associate are unsecured, interest free and are repayable on demand, except for amounts due from subsidiaries amounting to RM62,841,000 during the year which are repayable in more than a year, of which RM53,341,000 is subject to interest at 6% per annum.


84

10. TRADE AND OTHER RECEIVABLES cont’d 10.2 Deposits

Included in deposits of the Group are deposits paid to contractors in relation to the construction of aluminium smelting plants as follows:

Group

2011 2010

RM’000 RM’000

Samalaju 335,387 -

Mukah - 322,023

335,387 322,023

10.3 Estimation uncertainty and critical judgements

The Group and the Company make impairment of receivables based on assessment of recoverability. Whilst management’s judgement is guided by past experiences, judgement is made about the future recovery of debts.

10.4 Analysis of foreign currency exposure for significant receivables

Significant receivables outstanding at year end that are not in the functional currencies of the Group entities or the Company are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Functional currency Foreign currency

RM AUD - - 39,490 47,962

RM GBP - - 91,039 115,760

RM HKD - - 122,139 136,510

RM RMB 281,795 - - 10,600

RM SGD 5,196 7,082 4,916 6,096

RM USD 46,038 31,280 21,585 16,363

RM EUR 2,919 - 2,656 -

RMB USD 173,121 187,084 - -

RMB SGD 2 5 - -

RMB EUR 1,210 552 - -


85

11. INVENTORIES

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

At cost:

Raw materials 160,501 129,541 17,668 11,800

Work-in-progress 77,191 49,468 5,002 3,518

Finished goods 136,314 147,838 6,485 5,613

Consumable parts 1,219 318 130 294

375,225 327,165 29,285 21,225

Carrying amount of inventories pledged as security of bank borrowings 136,951 94,650 - -

12. CASH AND CASH EQUIVALENTS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Deposits placed with licensed banks 76,307 5,915 391 391

Cash and bank balances 293,670 195,296 187,991 67,303

369,977 201,211 188,382 67,694

Included in the Group’s deposits placed with licensed banks is RM7,897,000 (2010: RM3,524,000) pledged as security for term loans granted to certain subsidiaries (see Note 15).

Analysis of foreign currency exposure for significant cash and cash equivalents

Significant cash and cash equivalents as at year end that are not in the functional currencies of the Group entities or the Company are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000


RM AUD 35 34 35 34

RM EUR 14 1 7 1

RM GBP 287 2,469 237 2,469

RM SGD 1,090 1,378 410 673

RM USD 26,334 57,217 10,941 57,174

RMB HKD - 23 - -

RMB USD 9,710 - - -

RMB EUR 9 - - -

HKD USD 42 - - -


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13. CAPITAL AND RESERVES

Share capital Group and Company

Amount2011

Number ofshares

2011Amount

2010

Number ofshares

2010

RM’000 ’000 RM’000 ’000

Ordinary shares of RM0.50 each:

Authorised 500,000 1,000,000 500,000 1,000,000

Issued and fully paid:

At 1 January 215,031 430,060 182,694 365,387

Issue of shares via conversion of warrants - - 31,315 62,629

Issue of shares under the employees share option scheme 4,709 9,419 1,022 2,044

At 31 December 219,740 439,479 215,031 430,060

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company and rank equally with regard to the Company’s residual assets.

Capital reserve

The capital reserve comprises the equity portion of financial instruments issued.

Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the financial statements

of Group entities with functional currencies other than RM.

Share option reserve

The share option reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the amount from the share option reserve is transferred to share premium. When the share options expire, the amount from the share option reserve is transferred to retained earnings. Share option is disclosed in Note 16.

Tax exempt income

Subject to agreement by the Inland Revenue Board, the Company has tax exempt income to distribute approximately RM165,521,000 (2010: RM174,306,000) of its distributable reserves at 31 December 2011 if paid out as dividends.


87

14. TRADE AND OTHER PAYABLES, INCLUDING DERIVATIVES

Group Company

2011 2010 2011 2010

Note RM’000 RM’000 RM’000 RM’000

Non-current

Trade

Trade payables - 9,487 - -

Amount due to an associate 14.1 - 6,890 - 2,955

- 16,377 - 2,955

Non-trade

Amount due to a subsidiary 14.1 - - - 100,468

Other payables 14.2 120,228 89,672 - -

120,228 89,672 - 100,468

120,228 106,049 - 103,423

Current

Trade

Trade payables 134,859 134,101 2,290 4,680

Amounts due to subsidiaries 14.1 - - 131,815 92,356

Amount due to an associate 14.1 12,216 4,248 3,639 -

147,075 138,349 137,744 97,036

Non-trade

Amounts due to subsidiaries 14.1 - - 135,858 -

Amount due to an associate 14.1 2,130 23 1,948 -

Amount due to a Director 14.1 125 - - -

Other payables 14.2 56,742 96,080 3,494 8,513

Accruals 14.3 94,478 25,819 11,023 4,720

Financial liabilities at fair value through profit or loss:

- Derivatives 2,994 2,123 2,994 2,123

156,469 124,045 155,317 15,356

303,544 262,394 293,061 112,392

14.4 423,772 368,443 293,061 215,815


88

14. TRADE AND OTHER PAYABLES, INCLUDING DERIVATIVES cont’d

14.1 Related party balances

The trade balances due to subsidiaries and an associate are subject to normal trade terms, except for amount due to an associate of RM6,890,000 and RM2,955,000 of the Group and of the Company, respectively, in 2010, which are repayable in more than a year.

The non-trade balances due to subsidiaries, an associate and a Director are unsecured, interest free and repayable on demand, except for an amount due to a subsidiary amounting to RM100,468,000 in 2010, which is repayable in more than a year.

14.2 Other payables Included in other payables of the Group are:-

(i) the remaining 30% of the purchase consideration for the acquisition of a subsidiary, Hubei Press Metal Huasheng Aluminium-Electric Co,. Ltd. amounting to RM67,657,000 (2010: RM62,819,000).

(ii) amounts payable to contractors in relation to the construction of aluminium smelting plants as follows:

Group

2011 2010

RM’000 RM’000

Samalaju 13,797 -

Mukah - 17,378

13,797 17,378

(iii) amount payable to a Director related company amounting to RM15,721,000 (2010: Nil) which is unsecured, interest free and is repayable in more than a year.

(iv) leasehold land premium payable to the state government of Sarawak amounting to RM43,197,000 (2010: Nil).

14.3 Accruals

During the year, included in accruals of the Group are electricity charges payable amounting to RM34,773,000 (2010: RM845,000).


89

14. TRADE AND OTHER PAYABLES, INCLUDING DERIVATIVES cont’d

14.4 Analysis of foreign currency exposure for significant payables

Significant payables that are not in the functional currencies of the Group entities or the Company are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000


RM RMB 617 - 194,832 148,256

RM HKD - - 1,946 1,946

RM SGD - 6,096 - 6,096

RM USD 334 16,363 1,045 16,363

RM EUR 461 - - -

RMB USD 2,155 1,773 - -

RMB JPY 6 - - -

15. LOANS AND BORROWINGS

Group Company

2011 2010 2011 2010

Note RM’000 RM’000 RM’000 RM’000

Non-current

Bank loans (unsecured) 15.2 41,561 87,748 31,728 68,929

Bank loans (secured) 15.2 386,675 301,331 - -

Finance lease liabilities 15.3 15,188 7,046 1,114 891

RCSLS 15.4 199,520 - 199,520 -

642,944 396,125 232,362 69,820

Current

Bank loans (unsecured) 15.2 224,391 209,271 37,304 82,731

Bank loans (secured) 15.2 94,372 104,592 - -

Bankers’ acceptances (unsecured) 683,881 512,438 417,363 388,520

Revolving credits (unsecured) 15.1 178,243 131,265 45,000 45,000

Revolving credits (secured) 15.1 49,404 3,078 - -

Bank overdrafts (unsecured) 8,107 47 7,936 -

Finance lease liabilities 15.3 9,934 4,247 605 583

1,248,332 964,938 508,208 516,834

1,891,276 1,361,063 740,570 586,654


90

15. LOANS AND BORROWINGS cont’d

15.1 Revolving credits

The revolving credits of the Group amounting to RM49,404,000 (2010: RM3,078,000) are secured by way of irrevocable Standby Letter of Credit issued by a bank while RM98,875,000 (2010: Nil) are guaranteed by the Company.

15.2 Bank loans

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Loans of the Company:

Loan 1 (unsecured) 12,674 30,855 12,674 30,855

Loan 2 (unsecured) 21,783 34,600 21,783 34,600

Loan 3 (unsecured) 9,227 16,193 9,227 16,193

Loan 4 (unsecured) 25,348 30,855 25,348 30,855

Loan 5 (unsecured) - 39,157 - 39,157

Loans of subsidiaries:

Loan 6 (secured) 344 351 - -

Loan 7 (secured) 301,000 387,000 - -

Loan 8 (unsecured) 6,344 12,340 - -

Loan 9 (unsecured) 6,977 9,703 - -

Loan 10 (unsecured) 126,211 69,567 - -

Loan 11 (unsecured) - 14,020 - -

Loan 12 (secured) 8,349 18,572 - -

Loan 13 (unsecured) 15,102 14,022 - -

Loan 14 (unsecured) 27,687 25,707 - -

Loan 15 (secured) 171,354 - - -

Loan 16 (unsecured) 10,068 - - -

Loan 17 (unsecured) 4,531 - - -

746,999 702,942 69,032 151,660

Securities and guarantees

Loans 1, 2 and 17 Negative pledge by the Company

Loan 3 Negative pledge and guaranteed by a subsidiary, Press Metal International Ltd.

Loans 4 and 5 No securities

Loan 6 Secured over a building of a subsidiary with a carrying amount of RM937,000 (2010: RM964,000) and guaranteed by the Company


91


15.2 Bank loans cont’d

Securities and guarantees cont’d

Loan 7 Secured over a leasehold land of a subsidiary with a carrying amount of RM34,040,000 (2010: RM22,202,000), floating charges on other property, plant and equipment and inventories, deposits pledged with a licensed bank of RM5,100,000 (2010: RM3,524,000) and guaranteed by the Company

Loans 8 to 11 Guaranteed by the Company

Loan 12 Secured over the inventories of a subsidiary

Loans 13 and 14 Guaranteed by a subsidiary, Hubei Press Metal Huasheng Aluminium-Electric Co,. Ltd.

Loan 15 Secured over a leasehold land of a subsidiary with a carrying amount of RM49,806,000 (2010: Nil), floating charges on other property, plant and equipment and inventories, deposits pledged with a licensed bank of RM2,797,000 (2010: Nil) and guaranteed by the Company

Loan 16 Guaranteed by subsidiaries, Hubei Press Metal Huasheng Aluminium-Electric Co,. Ltd. and Press Metal International Ltd.

15.3 Finance lease liabilities

Finance lease liabilities are payable as follows:

Futureminimum

leasepayments Interest

Presentvalue of

minimumlease

payments

Futureminimum

leasepayments Interest

Presentvalue of

minimumlease

payments

2011 2011 2011 2010 2010 2010

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 11,117 (1,183) 9,934 4,821 (574) 4,247

Between one and five years 17,333 (2,259) 15,074 8,037 (1,028) 7,009

More than five years 139 (25) 114 48 (11) 37

28,589 (3,467) 25,122 12,906 (1,613) 11,293

Company

Less than one year 698 (93) 605 668 (85) 583

Between one and five years 1,257 (191) 1,066 1,019 (128) 891

More than five years 60 (12) 48 - - -

2,015 (296) 1,719 1,687 (213) 1,474


92


15.4 RCSLS

Group and Company

2011 2010

RM’000 RM’000

Proceeds from issue of 145,684,940 RCSLS and free warrants 320,507 -

Transaction costs (6,819) -

Net proceeds 313,688 -

Amount classified as equity:

- RCSLS reserve (14,408) -

- Warrants reserve (76,475) -

Amount classified as deferred tax liabilities (27,719) -

Accreted interest 4,216 -

Amortisation of transaction costs 218 -

Carrying amount at 31 December 199,520 -

The amount of RCSLS classified as equity and the warrants amounting to RM14,408,000 and RM76,475,000 respectively, is net of attributable transaction costs of RM1,956,000.

On 26 August 2011, the Company issued 145,684,940 RCSLS together with 145,684,940 free detachable warrants for cash of RM320,506,868. The RCSLS are convertible into 145,684,940 ordinary shares of RM0.50 each from the first anniversary of the issue date of the RCSLS up to 22 August 2019 at the option of the holder, which is at a rate of one ordinary share of RM0.50 each for every one RCSLS held; unconverted RCSLS will be entitled to receive a coupon of 6% per annum based on the nominal value of RCSLS held.

RCSLS will be redeemed by the Company in accordance to the following redemption schedule:

End of year% of issue size

redeemed

1 -

2 -

3 10

4 15

5 15

6 20

7 20

8 20

100


93


15.5 Significant covenants

In connection with the significant term loan facilities of certain subsidiaries, Press Metal Sarawak Sdn. Bhd., and Press Metal Bintulu Sdn. Bhd., the subsidiaries and the Group have agreed on the following significant covenants with the lenders:

Press Metal Sarawak Sdn. Bhd.

i) project Debt-to-Equity ratio of the subsidiary to be maintained below the ratio of 70:30 upon commencement of operations; equity is defined to include all subordinated debts and shareholders advances;

ii) minimum Finance Service Cover Ratio (“FSCR”) of 1.25 times, where FSCR equal to the subsidiary’s net operating cash flows for the year plus opening cash balance divided by total facility payment due for the current year;

iii) no material change in the business plan of the subsidiary and Press Metal Berhad Group; and

iv) the Company shall maintain its shareholdings in the subsidiary more than or equivalent to 80% throughout the tenure of the facility.

Press Metal Bintulu Sdn. Bhd.

i) project Debt-to-Equity ratio of the subsidiary to be maintained below the ratio of 70:30 upon commencement of operations; equity is defined to include all subordinated debts and shareholders advances;

ii) minimum Debt Service Cover Ratio (“DSCR”) of 1.25 times, where DSCR equal to the subsidiary’s net operating cash flows for the year plus opening cash balance divided by total facility payment due for the current year;

iii) to provide further security when required by the security agent.

15.6 Analysis of foreign currency exposure for significant loans and borrowings

Significant loans and borrowings outstanding at year end that are not in the functional currencies of the Group entities or the Company are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000


RM USD 77,381 170,232 69,032 151,660

RM GBP 33,790 24,593 33,790 24,593

RMB USD 99,210 79,135 - -

HKD USD 9,511 12,340 - -

16. EMPLOYEE BENEFITS

Share-based payments arrangement

New Employees’ Share Option Scheme (“New ESOS”)

At an extraordinary general meeting held on 26 June 2007, the Company’s owners approved the establishment of a New ESOS of not more than 10% of the issued share capital of the Company to eligible Directors and Employees of the Group, subsequent to the expiry of the Former ESOS on 5 June 2007.


94

16. EMPLOYEE BENEFITS cont’d

New Employees’ Share Option Scheme (“New ESOS”) cont’d

The number and weighted average exercise price of share options are as follows:

Weightedaverageexercise

price2011

Numberof

options2011

Weightedaverageexercise

price2010

Numberof

options2010

RM ’000 RM ’000

Outstanding at 1 January 1.50 14,754 1.50 17,823

Exercised during the year 1.50 (9,419) 1.50 (2,044)

Lapsed/Forfeited during the year 1.50 (84) 1.50 (1,025)

Outstanding at 31 December 1.50 5,251 1.50 14,754

Exercisable at 31 December 1.50 5,251 1.50 11,396

The options outstanding at 31 December 2011 have an exercise price of RM1.50 and a weighted average contractual life of 0.5 years (2010: 1.5 years).

During the year, 9,419,000 share options were exercised. The weighted average share price at the date of exercise for the year was RM2.29 (2010 - RM1.52).

The fair value of services received in return of share options granted is based on the fair value of share options granted, measured using the Black Scholes model, with the following inputs:

Fair value of share options and assumptions

2011 2010

Fair value at grant date RM0.18 RM0.25

Weighted average share price RM2.11 RM1.23

Exercise price RM1.50 RM1.50

Expected volatility (weighted average volatility) 37.82% 46.12%

Option life (expected weighted average life) 0.5 years 1.5 years

Expected dividends 2% 1.93%

Risk-free interest rate (based on Malaysian government bonds) 3.28% 2.64%

Value of employee services received for issue of share options

2011 2010

RM’000 RM’000

Expense recognised as share-based payments 645 787


95

17. REVENUE

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Sale of goods 2,174,994 1,635,790 788,599 677,001

Contracting and fabrication 92,834 62,125 - -

Rendering of services 923 924 - -

2,268,751 1,698,839 788,599 677,001

18. FINANCE INCOME

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Interest income of financial assets that are not at fair value through profit or loss:

- Loan to a subsidiary - - 6,902 -

- Fixed deposits 3,535 560 1,294 28

- Amortisation of savings on finance costs of a term loan 711 - 711 -

4,246 560 8,907 28

19. FINANCE COSTS

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Interest expense of financial liabilities that are not at fair value through profit or loss:

- Bank overdrafts 403 432 335 385

- Bank loans 39,968 40,442 10,589 4,995

- Bankers’ acceptances 24,347 16,203 15,389 12,883

- Discounting of non-current amount due from a subsidiary - - 500 -

- Finance lease liabilities 891 586 86 63

- RCSLS:

- Accretion of RCSLS 4,216 - 4,216 -

- Amortisation of transaction costs 218 - 218 -

- Coupon payment 6,902 - 6,902 -

- Revolving credits 16,726 3,269 2,209 1,592

- Others 5,976 3,246 2,712 2,815

99,647 64,178 43,156 22,733


96

19. FINANCE COSTS cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Recognised in profit or loss 82,868 51,789 43,156 22,733

Capitalised on qualifying assets:

- Property, plant and equipment 16,779 12,389 - -

99,647 64,178 43,156 22,733

20. OPERATING PROFIT

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Operating profit is arrived at after charging:

Auditors’ remuneration:

- Statutory audit

KPMG 339 278 150 140

Other auditors 277 329 - -

- Other services

KPMG 135 35 135 15

Affiliates of KPMG 285 187 - -

Other auditors 66 60 - -

Bad debts written off 312 4,264 - -

Depreciation of investment properties 112 112 - -

Depreciation of property, plant and equipment 118,962 83,373 15,608 14,718

Derivative loss 2,994 2,123 2,994 2,123

Impairment loss:

- Investment in a subsidiary - - 4,200 -

- Investment properties 51 200 - -

- Property, plant and equipment 257 - - -

- Trade receivables 3,917 62 - -

Loss on disposal of property, plant and equipment 250 - 126 -


97

20. OPERATING PROFIT cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Operating profit is arrived at after charging: cont’d

Personnel expenses (including key management personnel):

- Contributions to Employees’ Provident Fund 3,219 4,715 1,357 1,248

- Share-based payments 645 787 645 787

- Wages, salaries and others 126,335 132,165 18,996 18,112

Property, plant and equipment written off 3,704 - - -

Realised foreign exchange loss - 2,087 3,588 1,241

Rental expense on equipment and machinery 3,602 5,833 298 234

Rental expense on property leases 7,638 4,039 416 -

Unrealised foreign exchange loss 2,847 - 2,937 -

Waiver of amount due from a subsidiary - - 3,503 -

and after crediting:

Dividend income from an associate - - 322 282

Gain on disposal of property, plant and equipment - 352 - 20

Negative goodwill - 18,030 - -

Realised foreign exchange gain 4,855 - - -

Rental income from properties 489 313 - -

Reversal of impairment loss of trade receivables 242 36 86 -

Unrealised foreign exchange gain - 20,543 - 20,533

Waiver of debts by a creditor - 5,000 - 5,000


98

21. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel compensations are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Directors:

- Fees 187 499 187 200

- Remuneration 3,131 2,655 2,331 1,552

Total short-term employee benefits 3,318 3,154 2,518 1,752

Post employment benefits - 283 - -

Share-based payments 645 787 645 787

3,963 4,224 3,163 2,539

22. INCOME TAX EXPENSE

Recognised in profit or loss

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Income tax expense 21,971 13,705 7,167 1,592

Share of tax of equity accounted associate 403 553 - -

Total income tax expense 22,374 14,258 7,167 1,592

Major components of income tax expense include:

Current tax expense

Malaysian - current year 9,514 7,047 9,102 6,376

- prior year (610) 81 (466) -

Overseas - current year 4,299 3,532 - -

- prior year (2,140) - - -

Total current tax recognised in profit or loss 11,063 10,660 8,636 6,376


99

22. INCOME TAX EXPENSE cont’d

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Deferred tax expense

Origination and reversal of temporary differences 14,955 9,185 (2,499) (577)

(Over)/Under provision in prior year (4,047) (6,140) 1,030 (4,207)

Total deferred tax recognised in profit or loss 10,908 3,045 (1,469) (4,784)

Share of tax of equity accounted associate 403 553 - -

Total income tax expense 22,374 14,258 7,167 1,592

Reconciliation of tax expense


Income tax calculated using Malaysian tax rate of 25% 30,669 25,691 5,546 8,895

Effect of tax rates in foreign jurisdictions 133 4 - -

Non-deductible expenses 3,168 5,622 2,166 3,978

Non-taxable income (4,834) (10,302) - (5,794)

Tax incentives - (1,280) - (1,280)

Effect of deferred tax assets not recognised 1,144 582 - -

Effect of accretion of RCSLS (1,109) - (1,109) -

(Over)/Under provided in prior years (6,797) (6,059) 564 (4,207)

22,374 14,258 7,167 1,592

23. EARNINGS PER ORDINARY SHARE

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2011 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding, calculated as follows:

Group

2011 2010

RM’000 RM’000

Profit attributable to ordinary shareholders 90,291 83,493


100

23. EARNINGS PER ORDINARY SHARE cont’d

Basic earnings per ordinary share cont’d

Weighted average number of ordinary shares:

Group

2011 2010

’000 ’000

Issued ordinary shares at 1 January 430,060 365,387

Effect of ordinary shares issued during the period 5,806 16,404

Weighted average number of ordinary shares at 31 December 435,866 381,791

Group

2011 2010

sen sen

Basic earnings per ordinary share 20.72 21.87

Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary share at 31 December 2011 was based on profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding after adjustments for the effects of all dilutive potential ordinary shares, calculated as follows:

Group

2011 2010

RM’000 RM’000

Profit attributable to ordinary shareholders 90,291 83,493

Weighted average number of ordinary shares (diluted):

Group

2011 2010

’000 ’000

Weighted average number of ordinary shares (basic) 435,866 381,791

Effect of share options on issue 5,251 11,396

Weighted average number of ordinary shares (diluted) at 31 December 441,117 393,187

The average market value of the Company’s shares for purpose of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.


101

23. EARNINGS PER ORDINARY SHARE cont’d

The effects of the warrants and RCSLS are anti-dilutive.

Group

2011 2010

sen sen

Diluted earnings per ordinary share 20.47 21.23

24. DIVIDENDS

Dividends recognised in the current year by the Company are:

Sen per share

(net of tax)

Total amount RM’000

Date of payment

2011

Final 2010 ordinary 1.00 4,392 28 July 2011

Interim 2011 ordinary 1.00 4,393 28 October 2011

Total amount 8,785

2010

Final 2009 ordinary 1.00 3,679 23 July 2010

Interim 2010 ordinary 1.00 4,280 7 October 2010

Total amount 7,959

After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial period upon approval by the owners of the Company.

Sen per share

(net of tax)

Total amount RM’000

Final ordinary 1.00 4,395

25. OPERATING SEGMENTS

The Group has two reportable segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s Chief Executive Officer (the chief operating decision maker) reviews internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments:

Manufacturing and trading. Includes manufacturing and marketing of aluminium products and garments and accessories.

Contracting and fabrication. Includes contracting and fabrication of aluminium and stainless steel products.


102

25. OPERATING SEGMENTS cont’d

Other non-reportable segments comprise operations related to property development and recycling and waste management.

There are varying levels of integration between reportable segments, the Manufacturing and trading and Contracting

and fabrication reportable segments. This integration includes transfers of raw materials and shared distribution services, respectively. The accounting policies of reportable segments are the same as described in Note 2(t).

Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the internal management reports that are reviewed by the Group’s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Segment assets The total of segment asset is measured based on all assets (including goodwill) of a segment, as included in the internal

management reports that are reviewed by the Group’s Chief Executive Officer. Segment total asset is used to measure the return on assets of each segment.

Segment liabilities Segment liabilities information is neither included in the internal management reports nor provided regularly to the

Group’s Chief Executive Officer. Hence no disclosure is made on segment liabilities.

Segment capital expenditure Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment,

investment properties, and intangible assets other than goodwill.

Manufacturingand trading

Contracting and fabrication Total

2011 2010 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Segment profit 197,103 136,996 1,986 2,080 199,089 139,076

Included in the measure of segment profit are:

Revenue from external customers 2,175,463 1,635,790 92,365 62,125 2,267,828 1,697,915

Inter-segment revenue 1,929,979 1,602,758 469 - 1,930,448 1,602,758

Impairment of property, plant and equipment 257 - - - 257 -

Impairment of investment properties - - 51 200 51 200

Depreciation 116,957 81,412 1,475 1,281 118,432 82,693


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Manufacturingand trading

Contracting and fabrication Total

2011 2010 2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Segment assets 5,239,109 4,064,499 77,479 53,033 5,316,588 4,117,532

Included in the measure of segment assets are:

Investment in an associate 32,298 28,003 - - 32,298 28,003

Additions to non-current assets other than financial instruments and deferred tax assets 618,311 256,573 1,820 429 620,131 257,002

Reconciliation of reportable segment revenues, profit or loss, assets and other material items

2011 2010

RM’000 RM’000

Revenue

Total external revenue for reportable segments 2,267,828 1,697,915

Other non-reportable segments 923 924

Consolidated revenue for the year 2,268,751 1,698,839

Profit or loss

Total profit for reportable segments 199,089 139,076

Other non-reportable segments (3,375) (117)

Elimination of inter-segment losses/(profits) 1,690 (4,441)

Negative goodwill - 18,030

Share of profit of an associate not included in reportable segments 4,295 1,996

Finance income 4,246 560

Finance costs (82,868) (51,789)

Income tax expense (21,971) (13,705)

Consolidated profit for the year 101,106 89,610


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Reconciliation of reportable segment revenues, profit or loss, assets and other material items cont’d

2011 2010

RM’000 RM’000

Total assets

Total assets for reportable segments 5,316,588 4,117,532

Other non-reportable segments 588,139 161,374

Elimination of inter-segment balances (2,259,943) (1,513,366)

Consolidated assets for the year 3,644,784 2,765,540

Depreciation

Total depreciation for reportable segments 118,432 82,693

Other non-reportable segments 642 792

Consolidated depreciation for the year 119,074 83,485

Additions to non-current assets

Total additions to non-current assets for reportable segments 620,131 257,002

Other non-reportable segments 3,645 419

Consolidated additions to non-current assets for the year 623,776 257,421

Geographical segments

The Manufacturing and trading and Contracting and fabrication segments are managed on a worldwide basis, but operate in four principal geographical areas apart from Malaysia, which include Singapore, Hong Kong and China for Asia region, Australia for the Oceania region, United Kingdom for the Europe region and United States of America for the North America region.

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


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Geographical segments cont’d

RevenueNon-current

assets

Geographical information RM’000 RM’000

2011

Malaysia 1,024,179 1,319,355

Asia region 913,546 745,457

Oceania region 78,118 5,773

Europe region 243,780 9,535

North America region 9,128 -

2,268,751 2,080,120

2010

Malaysia 436,620 799,443

Asia region 939,529 715,924

Oceania region 77,478 6,179

Europe region 245,212 9,046

1,698,839 1,530,592

Major customers

The Group does not have any customers contributing to equal or more than 10 percent of the Group’s total revenue.


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26. FINANCIAL INSTRUMENTS

26.1 Categories of financial instruments

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

(a) Loans and receivables (L&R);(b) Fair value through profit or loss (FVTPL): - Held for trading (HFT); (c) Available-for-sale financial assets (AFS);(d) Other financial liabilities measured at amortised cost (OL).

Carrying amount L&R/(OL) FVTPL-HFT AFS

RM’000 RM’000 RM’000 RM’000

2011

Financial assets

Group

Other investments 6,837 - - 6,837

Trade and other receivables 812,203 812,203 - -

Cash and cash equivalents 369,977 369,977 - -

1,189,017 1,182,180 - 6,837

Company

Other investments 750 - - 750



930,753 930,003 - 750

2011


Group

Loans and borrowings 1,891,276 1,891,276 - -

Trade and other payables, including derivatives 423,772 420,778 2,994 -

2,315,048 2,312,054 2,994 -

Company

Loans and borrowings 740,570 740,570 - -


1,033,631 1,030,637 2,994 -

107


26. FINANCIAL INSTRUMENTS cont’d

26.1 Categories of financial instruments cont’d

Carrying amount L&R/(OL) FVTPL-HFT AFS

RM’000 RM’000 RM’000 RM’000

2010

Financial assets

Group

Other investments 6,477 - - 6,477



911,740 905,263 - 6,477

Company

Other investments 750 - - 750



611,649 610,899 - 750

2010


Group

Loans and borrowings 1,361,063 1,361,063 - -


1,729,506 1,727,383 2,123 -

Company

Loans and borrowings 586,654 586,654 - -


802,469 800,346 2,123 -

108


26.2 Net gains and losses arising from financial instruments

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Net gains/(losses) arising on:

Fair value through profit or loss:

- Derivatives (2,994) (2,123) (2,994) (2,123)

Loans and receivables 272 (1,442) 4,737 2,416

Financial liabilities measured at amortised cost (80,873) (30,621) (51,922) (829)

(83,595) (34,186) (50,179) (536)

26.3 Financial risk management

The Group and the Company have exposure to the following risks from their use of financial instruments:

Credit risk Liquidity risk Market risk

26.4 Credit risk

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

Receivables

Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis through

review of trade receivables ageing. Credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented

by the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group and the Company. The Group and the Company use ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 150 days, which are deemed to have higher credit risk, are monitored individually.


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26.4 Credit risk cont’d

Receivables cont’d

Exposure to credit risk, credit quality and collateral cont’d

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

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Domestic 125,059 105,625 26,638 36,337

Asia 142,323 106,370 5,379 8,453

Oceania 11,023 19,435 - -

Europe 57,008 57,279 - -

North America 13,337 1,660 13,337 1,660

348,750 290,369 45,354 46,450

Impairment losses

The ageing of trade receivables (excluding inter company balances) as at the end of the reporting period was:

GrossIndividual

impairment Net

Group RM’000 RM’000 RM’000

2011

Not past due 209,362 - 209,362

Past due 0 - 150 days 110,937 (296) 110,641

Past due more than 150 days 36,150 (7,403) 28,747

356,449 (7,699) 348,750

2010

Not past due 194,662 - 194,662

Past due 0 - 150 days 63,402 (1,283) 62,119

Past due more than 150 days 37,016 (3,428) 33,588

295,080 (4,711) 290,369


110



Receivables cont’d

Impairment losses cont’d

GrossIndividual

impairment Net

Company RM’000 RM’000 RM’000

2011

Not past due 31,267 - 31,267

Past due 0 - 150 days 13,773 - 13,773

Past due more than 150 days 639 (325) 314

45,679 (325) 45,354

2010

Not past due 32,651 - 32,651

Past due 0 - 150 days 12,510 - 12,510

Past due more than 150 days 1,700 (411) 1,289

46,861 (411) 46,450

No allowance for impairment losses of trade receivables has been made for the remaining past due receivables as the Group and the Company monitor the results and repayments of these customers regularly and are confident of the ability of the customers to repay the balances owing.

The movements in the allowance for impairment losses of receivables during the year were:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

At 1 January 4,711 14,936 411 10,218

Impairment loss recognised 3,917 62 - -

Impairment loss reversed (242) (36) (86) -

Impairment loss written off (792) (9,807) - (9,807)

Effect of movements in exchange rates 105 (444) - -

7,699 4,711 325 411

The allowance account in respect of receivables is used to record impairment losses. Unless the Group and the Company are satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.


111



Financial guarantees

Risk management objectives, policies and processes for managing the risk

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 repayments made by the subsidiaries.

Exposure to credit risk, credit quality and collateral

The maximum exposure to credit risk amounts to RM711,105,000 (2010: RM492,981,000) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

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

The financial guarantees have not been recognised since the fair value on initial recognition was not material.

Inter company balances


The Group and the Company provide unsecured loans and advances to an associate and subsidiaries. The Group and the Company monitor the results of the associate and subsidiaries regularly.

Exposure to credit risk, credit quality and collateral

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

Impairment losses

As at the end of the reporting period, there was no indication that the loans and advances to the associate and subsidiaries are not recoverable. The Group and the Company do not specifically monitor the ageing of advances to the associate and subsidiaries.

26.5 Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from their various payables, loans and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by management to ensure, as far as possible, that they will have sufficient liquidity to meet their liabilities when they fall due.


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26.5 Liquidity risk cont’d

Maturity analysis

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

Carrying amount

Contractual interest rate

Contractual cash flows

Under 1 year

1 - 2 years

2 - 5 years

More than 5 years

Group RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2011

Non-derivative financial liabilities

Trade and other payables, excluding derivatives 420,778 - 420,778 300,550 90,110 30,118 -

Secured bank loans 746,999 * 830,284 351,914 133,234 328,405 16,731

Revolving credits 227,647 2.25-7.81 236,255 236,255 - - -

Bankers’ acceptances 683,881 1.95-5.40 691,274 691,274 - - -

Bank overdrafts 8,107 7.10-7.60 8,107 8,107 - - -

Finance lease liabilities 25,122 2.28-11.03 28,588 11,117 8,214 9,118 139

RCSLS with warrants (initial proceeds) 320,507 6.00 435,407 19,337 19,337 180,158 216,575

2,433,041 2,650,693 1,618,554 250,895 547,799 233,445

Derivative financial liabilities

Derivatives 2,994 - 2,994 2,994 - - -

2,436,035 2,653,687 1,621,548 250,895 547,799 233,445

* Loans 1, 2, 3, 6, 7, 8, 9, 10, 12, 13, 14, 16 and 17- Represents lenders’ cost of funds rate plus a fixed rate ranging from 1.00% - 1.84%.

Loans 4 and 5 - Interest is chargeable at a rate pegged against London Metal Exchange commodity prices. Contractual cash flows as at 31 December 2011 are estimated based on coupon rate stipulated in the respective agreements.

Loans 11 and 15 - Fixed rate ranging from 5.56% to 6.16%.


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Maturity analysis cont’d

Carrying amount



Under 1 year

1 - 2 years

2 - 5 years

More than 5 years

Company RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2011


Trade and other payables, excluding derivatives 290,067 - 290,067 290,067 - - -

Secured bank loans 69,032 * 72,404 39,006 19,964 13,434 -



Bank overdrafts 7,936 7.10-7.60 7,936 7,936 - - -

Finance lease liabilities 1,719 2.29-4.81 2,015 698 460 797 60

RCSLS with warrants (initial proceeds) 320,507 6.00 435,407 19,337 19,337 180,158 216,575

1,151,624 1,271,693 820,908 39,761 194,389 216,635


Derivatives 2,994 - 2,994 2,994 - - -

1,154,618 1,274,687 823,902 39,761 194,389 216,635

* Loans 1, 2 and 3 - Represents base lending rate plus 1.50%. Loans 4 and 5 - Interest is chargeable at a rate pegged against London Metal Exchange commodity prices. Contractual

cash flows as at 31 December 2011 are estimated based on coupon rate stipulated in the respective agreements.


114




Carrying amount



Under 1 year

1 - 2 years

2 - 5 years

More than5 years

Group RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2010


Trade and other payables, excluding derivatives 366,320 - 366,320 260,271 106,049 - -

Secured bank loans 702,942 * 763,640 344,306 154,516 264,519 299



Bank overdraft 47 - 47 47 - - -

Finance lease liabilities 11,293 2.28-9.67 12,906 4,821 4,014 4,023 48

1,727,383 1,801,448 1,267,980 264,579 268,542 347


Forward exchange contracts 2,123 - 2,123 2,123 - - -

1,729,506 1,803,571 1,270,103 264,579 268,542 347

* Loans 1, 2, 3, 6, 7, 8, 9,12, 13 and 14 - Represents lenders’ cost of funds rate plus a fixed rate ranging from 0.5% - 1.75%. Loans 4 and 5 - Interest is chargeable at a rate pegged against London Metal Exchange commodity prices. Contractual

cash flows as at 31 December 2010 are estimated based on coupon rate stipulated in the respective agreements. Loans 10 and 11 - Fixed rate ranging from 2.54% to 6.10%.


115




Carrying amount



Under 1 year

1 - 2 years

2 - 5 years

More than5 years

Company RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

2010


Trade and other payables, excluding derivatives 213,692 - 213,692 110,269 103,423 - -

Secured bank loans 151,660 * 162,173 89,916 39,092 33,165 -



Finance lease liabilities 1,474 2.29-4.81 1,687 668 423 596 -

800,346 812,836 636,137 142,938 33,761 -


Forward exchange contracts 2,123 - 2,123 2,123 - - -

802,469 814,959 638,260 142,938 33,761 -

* Loans 1, 2 and 3 - Represents base lending rate plus 1.50%. Loans 4 and 5 - Interest is chargeable at a rate pegged against London Metal Exchange commodity prices. Contractual

cash flows as at 31 December 2010 are estimated based on coupon rate stipulated in the respective agreements.

26.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices that will affect the Group’s and the Company’s financial position or cash flows.

26.6.1 Currency risk

The Group and the Company are exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities and the functional currency of the Company. The currencies giving rise to this risk are primarily U.S. Dollar (USD), Great Britain Pound (GBP), Australian Dollar (AUD), Singapore Dollar (SGD) and Renminbi (RMB).


The Group and the Company actively monitor their exposure to foreign currency risk and purchases forward exchange contracts to mitigate the risk when the need arises. Most of the forward exchange contracts have maturities of less than one year after the end of the reporting period. Where necessary, the forward exchange contracts are rolled over at maturity.


116


26.6 Market risk cont’d

26.6.1 Currency risk cont’d

Exposure to foreign currency risk

The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period is as disclosed in Note 10, Note 12, Note 14 and Note 15.

Currency risk sensitivity analysis

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

A 10% (2010: 10%) strengthening of RMB against the RM at the end of the reporting period would have increased post-tax profit or loss by RM758,000 (2010: RM442,000). This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

A 10% (2010: 10%) weakening of RMB against RM at the end of the reporting period would have had equal but opposite effect on the above currency to the amount shown above, on the basis that all other variables remained constant.

Meanwhile, foreign currency risk of the Company mainly arises from USD. The exposure to currency risk of the Company to other foreign currencies other than USD is not material and hence, sensitivity analysis is not presented.

A 10% (2010: 10%) strengthening of USD against RM at the end of the reporting period would have increased post-tax profit or loss of the Company by RM698,000 (2010: RM1,562,000). This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

A 10% (2010: 10%) weakening of USD against RM at the end of the reporting period would have had equal but opposite effect on the above currency to the amounts shown above, on the basis that all other variables remained constant.

26.6.2 Interest Rate Risk

The Group’s and the Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.


Interest rate exposure arising from the Group’s and the Company’s borrowings is managed through the use of fixed and floating rate debts. The Group and the Company will consider entering into interest rate swaps where necessary to achieve an appropriate mix of fixed and floating rate exposure.


117



26.6.2 Interest Rate Risk cont’d

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period were:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Fixed rate instruments

Financial asset 76,307 5,915 391 391

Financial liabilities (1,307,524) (741,661) (663,602) (434,994)

(1,231,217) (735,746) (663,211) (434,603)

Floating rate instruments

Financial liabilities (583,752) (619,355) (76,968) (151,660)

Interest rate risk sensitivity analysis

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedged accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

A change of 30 basis points (bp) in interest rates at the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Profit or loss Profit or loss

30 bp increase

30 bp decrease

30 bp increase

30 bp decrease

2011 2011 2010 2010

Group RM’000 RM’000 RM’000 RM’000

Floating rate instruments (1,313) 1,313 (1,761) 1,761

Company

Floating rate instruments (173) 173 (309) 309


118



26.6.3 Other price risk

Other price risk arises from price fluctuation risk mainly on aluminium related products. The Group and the Company mitigate their risk to the price volatility through establishing the fixed price level that the Group and the Company consider acceptable and where deemed prudent, entering into commodity fixed price contracts. The Group and the Company incurred a derivative loss of RM2,994,000 (2010: RM2,123,000) on their commodity fixed price contracts.

26.7 Fair value of financial instruments

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

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

The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

2011 2010

Carrying amount

Fair value

Carrying amount

Fair value

RM’000 RM’000 RM’000 RM’000

Group

Trade and other payables

- non-current (120,228) (118,907) (99,159) (94,748)

Amount due to an associate

- non-current - - (6,890) (6,584)

Forward exchange contracts:

Liabilities (2,994) (2,994) (2,123) (2,123)

Bank loans (746,999) (747,532) (702,942) (705,261)

Finance lease liabilities (25,122) (25,122) (11,293) (11,293)

RCSLS - liability component (199,520) (204,165) - -

Company

Amounts due from subsidiaries

- non-current 62,841 62,841 - -

Amount due to an associate

- non-current - - (2,955) (2,824)

Amounts due to subsidiaries

- non-current - - (100,468) (96,000)

Forward exchange contracts:

Liabilities (2,994) (2,994) (2,123) (2,123)

Bank loans (69,032) (67,907) (151,660) (154,565)

Finance lease liabilities (1,719) (1,719) (1,474) (1,474)

RCSLS - liability component (199,520) (204,165) - -


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26.7 Fair value of financial instruments cont’d

The following summarises the methods used in determining the fair value of financial instruments reflected in the above table.

Derivatives

The fair value of forward exchange contract is based on its quoted price. Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is 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 RCSLS, the market rate of interest is determined by reference to similar liabilities that do not have a conversion option. For finance leases, the market rate of interest is determined by reference to similar lease agreements.

Interest rates used to determine fair value

The interest rates used to discount estimated cash flows, when applicable, are as follows:

Group Company

2011 2010 2011 2010

Related party balances - 4% 4% 4%

Trade and other payables (non-current) 6.65% 4% - -

Bank loans 5.87% 4.60% 3.34% 3.44%

Finance leases 3.50% 3.78% 3.36% 3.31%

RCSLS 6% - 6% -

26.7.1 Fair value hierarchy

Comparative figures have not been presented for 31 December 2010 by virtue of paragraph 44G of FRS 7.

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Level 1 Level 2 Level 3

Group and Company RM’000 RM’000 RM’000

2011


Derivatives - 2,994 -


120


26.7 Fair value of financial instruments cont’d

26.7.1 Fair value hierarchy cont’d

Although the Group and the Company believe that their estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value.

27. CAPITAL MANAGEMENT

The Group’s and the Company’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and determine to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

The debt-to-equity ratios at 31 December 2011 and at 31 December 2010 were as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Total borrowings (Note 15) 1,891,276 1,361,063 740,570 586,654

Less: Cash and cash equivalents (Note 12) (369,977) (201,211) (188,382) (67,694)

Net debt 1,521,299 1,159,852 552,188 518,960

Total equity 1,174,607 927,574 535,923 424,034

Debt-to-equity ratio 1.3 1.3 1.0 1.2

There were no changes in the Group’s and the Company’s approach to capital management during the financial year. The high debt-to-equity ratio is due to significant investments in property, plant and equipment as the Group and the Company continue to expand their business.

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

The significant loan covenants of the Group and the Company are disclosed in Note 15 and the Group and the Company have complied with the covenants, of failing which, the bank may call an event of default.

28. CAPITAL COMMITMENT

Group

2011 2010

RM’000 RM’000

Capital expenditure commitment

Property, plant and equipment

Contracted but not provided for 548,998 343,185

The capital commitment mainly relates to the construction of the aluminium smelting plants of subsidiaries.


121

29. CONTINGENCIES The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a

future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

Company

2011 2010

RM’000 RM’000

Guarantees given to financial institutions for facilities granted to subsidiaries 711,105 492,981

30. OPERATING LEASES

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Group

2011 2010

RM’000 RM’000

Less than one year 2,055 3,193

Between one and five years 653 2,568

2,708 5,761

The Group leases properties under operating leases. The leases typically run for a period of less than 5 years, with an option to renew the lease after that date. None of the leases includes contingent rentals.

31. RELATED PARTIES

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to the Group or the Company 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. The key management personnel include all the Directors of the Group.


122

31. RELATED PARTIES cont’d

Identity of related parties cont’d

The significant related party transactions of the Group and of the Company, other than key management personnel compensation (see Note 21), are as follows:

Amount transacted for

the year ended 31 December

Gross balance outstanding at

31 December

Net balance outstanding at

31 December

Allowance for impairment

loss at 31 December

Impairment loss recognised for

the year ended 31 December

Group RM’000 RM’000 RM’000 RM’000 RM’000

2011

Trade

Sales

Associate 139,177 22,718 22,718 - -

Purchases

Associate (48,347) (12,216) (12,216) - -

Non-trade

Director

- rental expense on properties (690) - - - -

2010

Trade

Sales

Associate 92,310 11,345 11,345 - -

Purchases

Associate (14,494) (4,248) (4,248) - -

Non-trade

Director

- rental expense on properties (360) - - - -


123

31. RELATED PARTIES cont’d

Identity of related parties cont’d

Amount transacted for the year ended 31 December

2011 2010

RM’000 RM’000

Company

Subsidiaries

Sales 295,462 321,974

Purchases (469,612) (47,200)

Associate

Dividend income 322 282

Sales 106,509 21,154

Purchases (47,949) (6,249)

The Directors of the Company are of the opinion that the above transactions have been entered into in the normal course of business and have been established under terms that are not more favourable to the related parties than those arranged with independent third parties.

There was no impairment loss on receivables being recognised in the current and previous financial years in respect of the abovementioned related party transactions. All of the above outstanding balances are expected to be settled in cash by/to the related parties.

The outstanding balances arising from the above transactions have been disclosed in Note 10 and 14 to the financial statements.

32. BUSINESS COMBINATIONS

2011

Incorporation of new subsidiaries

i) On 7 March 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, Press Metal International Technology Ltd., with an issued and paid-up capital of RMB20,000,000. In the 9 months ended 31 December 2011, the subsidiary did not contribute any profit to the Group.

ii) On 8 June 2011, Press Metal International Ltd., a wholly-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, Press Metal International Trading Ltd., with an issued and paid-up capital of RMB2,000,000. In the 7 months ended 31 December 2011, the subsidiary contributed a profit of RM507,000 to the Group.


124

32. BUSINESS COMBINATIONS cont’d

2010

Acquisition of non-controlling interests

On 28 January 2010, the Company acquired the remaining 20% equity interests in Press Metal Hong Kong (Limited) (“PMHK”), which was previously an 80% owned subsidiary of the Company, from a third party. The acquisition involved a total of 4,000,000 shares of HK$1.00 each, for a total consideration of RMB20,000,000 (approximately RM9,767,000). Subsequent to the acquisition, PMHK became a wholly-owned subsidiary of the Company. The Group recognised a decrease in non-controlling interests and translation reserve of RM28,068,000 and RM271,000 respectively. This transaction also resulted in recognition of negative goodwill of RM18,030,000.

Capitalisation and subscription of shares in a subsidiary and subsequent disposal to non-controlling interests shareholders

On 28 September 2010, the previous non-controlling interest shareholders of Press Metal Sarawak (“PMS”), an 80%-owned subsidiary of the Company, disposed of their 20% equity interests to Sumitomo Corporation Sdn. Bhd. (“Sumitomo”). On 21 December 2011, the Company completed the capitalisation and subscription of RM302 million ordinary shares of RM1.00 each in PMS, via the capitalisation of amount owing by PMS to the Company of RM301,572,000 and cash subscription of RM428,000. Subsequently, the Company disposed of 60.4 million ordinary shares of RM1.00 each in PMS to Sumitomo for a total consideration of RM60.4 million. Pursuant to these transactions, the equity interests of the Company in PMS remained at 80%.

Incorporation of new subsidiaries

On 8 July 2010, Hubei Press Metal Huasheng Aluminium-Electric Co,. Ltd., a 90%-owned subsidiary of the Company, incorporated a new wholly-owned subsidiary in the People’s Republic of China, PMH Electric Engineering Co,. Ltd. with an issued and paid-up capital of RMB5,000,000.

On 19 October 2010, nominees of the Company incorporated a company in Malaysia, Press Metal Bintulu Sdn. Bhd. (“PM Bintulu”), which has an issued and paid-up share capital of RM2. Subsequently on 17 December 2011, the Company acquired the entire shares of PM Bintulu from its nominees and PM Bintulu became a wholly-owned subsidiary of the Company. In the 2 months ended 31 December 2010, the subsidiary did not contribute any profit to the Group.


125

33. SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS

The breakdown of the retained earnings of the Group and of the Company as at 31 December into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group Company

2011 2010 2011 2010

RM’000 RM’000 RM’000 RM’000

Total retained earnings of the Company and its subsidiaries

- realised 744,240 624,149 225,694 196,318

- unrealised (123,167) (83,125) (19,573) 3,537

621,073 541,024 206,121 199,855

Total share of retained earnings from an associate

- realised 20,486 16,191 - -

641,559 557,215 206,121 199,855

Less: Consolidation adjustments 24,266 27,071 - -

Total retained earnings 665,825 584,286 206,121 199,855

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


126

I, Loo Tai Choong, the officer primarily responsible for the financial management of Press Metal Berhad, do solemnly and sincerely declare that the financial statements set out on pages 48 to 125 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Kuala Lumpur in the Federal Territory on 26 April 2012.

LOO TAI CHOONG

Before me:

Commissioner for OathsKuala Lumpur

In the opinion of the Directors, the financial statements set out on pages 48 to 124 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2011 and of their financial performance and cash flows for the year then ended.

In the opinion of the Directors, the information set out in Note 33 on page 125 to the financial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

DATO’ KOON POH KEONG KOON POH TAT

Petaling Jaya, Selangor

26 April 2012

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

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

127

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Press Metal Berhad, which comprise the statements of financial position as at 31 December 2011 of the Group and of the Company, and the statements of comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information, as set out on pages 48 to 124.

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 Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of 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 Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2011 and of their financial performance and cash flows for the financial 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 accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.

c) We are satisfied that the accounts 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 accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Independent Auditors’ Reportto the Members of Press Metal Berhad

(Company No. 153208 W)(Incorporated in Malaysia)

128

OTHER REPORTING RESPONSIBILITIES

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 33 on page 125 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG MUHAMMAD AZMAN BIN CHE ANIFirm Number: AF 0758 Approval Number: 2922/04/14(J)Chartered Accountants Chartered Accountant Petaling Jaya, Selangor

26 April 2012

Independent Auditors’ Reportto the Members of Press Metal Berhad (Company No. 153208 W)(Incorporated in Malaysia)cont’d

129

List of Propertiesheld by the Group as at 31 December 2011

Proprietor LocationDescription/

Age (Year)Existing

Use Tenure

Area (Square

feet)

Net Book Value

31/12/2011 RM’000

Press Metal Sarawak Sdn Bhd

Lot 211 & 212Block 293Mukah Land DistrictMukah, Sarawak

Leasehold land and building4 years

Factory cum office

Leasehold for 99 years

44,913,337 389,988

Press Metal Bintulu Sdn Bhd

Lot 36, Block 1Kemena Land DistrictSamalaju Industrial ParkBintulu, Sarawak.

Leasehold land

1 year

Factory cum office(under

construction)


20,946,570 148,178

Press Metal International Limited

Area C, Sanshui Industrial ParkSanshui DistrictFoshan City, Guangdong Province, China


Factory cum office


5,092,976 67,850

Press Metal Berhad

Lot 6486, Mukim Kapar Daerah KlangSelangor Darul Ehsan

Freehold land and building

18 years

Factory cum office

Freehold 417,348 19,465

Press Metal Berhad

Lot 6464, Mukim Kapar Daerah KlangSelangor Darul Ehsan

Freehold land and building

18 years

Factory cum office

Freehold 217,000 10,121

Angkasa Jasa Sdn Bhd

Pt 7649, Cheras JayaMukim CherasDaerah Ulu LangatSelangor Darul Ehsan


Factory cum office

Leasehold for 99 years expiring 14 May 2088

44,584 3,549


Pantai Plaza, APH 20Menara AtlasKuala Lumpur

Commercial office suite

12 years

Tenanted Freehold 5,339 2,620


Pantai Plaza, Tower 5Suite No. 1002Kuala Lumpur

Commercial office suite

13 years

Vacant Freehold 1,392 896

Press Metal Berhad

HS (D) 85897, PTD 48325 Mukim PlentongDaerah Johor BahruJohor Darul Takzim

Double Storey shop house

9 years

Office cum Warehouse

Freehold 6,893 792


Lot 73803, Mukim KlangSelangor Darul Ehsan

Factory land and building

6 years

Tenanted Freehold 6,628 671

130

Analysis of Shareholdingsas at 14 May 2012

Authorised Share Capital : RM500,000,000 Issued and Paid-Up Share Capital : RM220,152,438.50 Class of Shares : Ordinary Shares of RM0.50 each Voting Rights : One vote per share

Size of Holdings

No. of Shareholders/

Depositors

% of Shareholders/

DepositorsNo. of Shares

Held% of Issued

Capital

Less than 100 35 0.87 1,047 0.00

100 to 1,000 363 9.08 315,957 0.07

1,001 to 10,000 2,355 58.87 11,948,159 2.71

10,001 to 100,000 1,003 25.07 30,407,431 6.91

100,001 to less than 5% of issued shares 243 6.08 367,320,956 83.43

5% and above of issued shares 1 0.03 30,311,327 6.88

Total 4,000 100.00 440,304,877 100.00

DIRECTORS’ SHAREHOLDINGS as per Register of Directors’ Shareholdings as at 14 May 2012

Direct Indirect

NameNo. of Shares

Held% of Issued

CapitalNo. of Shares

Held% of Issued

Capital

Dato’ (Dr) Megat Abdul Rahman Bin Megat Ahmad 14,661,992 3.33 787,000 ^^ 0.18

Koon Poh Ming 27,333,439 6.21 11,000,000 * 2.50

Dato’ Koon Poh Keong 94,771,906 21.52 10,229,700 # 2.32

Tuan Haji Mohamad Faiz Bin Abdul Hamid 142,398 0.03 0 0.00

Koon Poh Weng 12,920,048 2.93 576,600 ^ 0.13

Koon Poh Kong 11,281,194 2.56 3,000 + 0.00

Koon Poh Tat 13,477,600 3.06 399,522 ** 0.09

Loo Lean Hock 0 0.00 0 0.00

Tan Heng Kui 109,000 0.02 0 0.00

^^ Deemed interested in the shares by virtue of his interest in JOEM Sdn Bhd and shares held by his spouse, Datin Johariah Binti

Abdullah Khalid * Deemed interested in the shares held by his spouse, Ong Soo Fan # Deemed interested in the shares held by his spouse, Datin Khoo Ee Pheng ^ Deemed interested in the shares held by his spouse, Chan Poh Choo and daughter, Koon Sim Ee + Deemed interested in the shares held by his spouse, Lee Sook Ching ** Deemed interested in the shares held by his spouse, Chan Hean Heoh

131

SUBSTANTIAL SHAREHOLDERS as per Register of Substantial Shareholders as at 14 May 2012

Direct Indirect

NameNo. of Shares

Held% of Issued

CapitalNo. of Shares

Held% of Issued

Capital

Dato’ Koon Poh Keong 94,771,906 21.52 10,229,700 # 2.32

Koon Poh Ming 27,333,439 6.21 11,000,000 * 2.50

Datin Khoo Ee Pheng 10,229,700 2.32 94,771,906 @ 21.52

Ong Soo Fan 11,000,000 2.50 27,333,439 + 6.21

# Deemed interested in the shares held by his spouse, Datin Khoo Ee Pheng * Deemed interested in the shares held by his spouse, Ong Soo Fan @ Deemed interested in the shares held by her spouse, Dato’ Koon Poh Keong + Deemed interested in the shares held by her spouse, Koon Poh Ming

THIRTY LARGEST SHAREHOLDERSas at 14 May 2012

Name of Shareholders No. of Shares

Held % of Issued

Capital

1 KENANGA NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Koon Poh Keong

30,311,327 6.88

2 M.I.T NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Koon Poh Keong

20,832,953 4.73

3 DATO’ (DR) MEGAT ABDUL RAHMAN BIN MEGAT AHMAD 14,661,992 3.33

4 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Loh Kwi Yong

14,412,150 3.27

5 M.I.T NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Datin Khoo Ee Pheng

10,229,700 2.32

6 KOON POH MING 10,000,000 2.27

7 AMSEC NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Koon Poh Keong

9,673,926 2.20

8 KENANGA NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Loo Seow Hwai

9,493,600 2.16

9 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Koon Poh Keong

9,000,000 2.05

10 ONG SOO FAN 9,000,000 2.04

11 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Poh Weng

8,900,040 2.02

12 KOON PUI LAN 7,924,324 1.80

13 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD Pledged Securities Account for Dato’ Koon Poh Keong

7,500,000 1.70

14 KOON POH MING 7,444,590 1.69

15 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Tan Lam Kiew

7,392,914 1.68

Analysis of Shareholdingsas at 14 May 2012

cont’d

132

Analysis of Shareholdingsas at 14 May 2012 cont’d

THIRTY LARGEST SHAREHOLDERSas at 14 May 2012 cont’d

Name of Shareholders No. of Shares

Held % of Issued

Capital

16 AMANAHRAYA TRUSTEES BERHAD Public Islamic Optimal Growth Fund

6,345,500 1.44

17 CHAN POH LENG 6,033,000 1.37

18 KENANGA NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Koon Poh Keong

6,000,000 1.36

19 M.I.T NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Yun Hong @ Koon Pow Shyang

5,645,700 1.28

20 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Poh Tat

5,511,400 1.25

21 DOITBEST HOLDINGS SDN. BHD. 5,355,610 1.22

22 HLB NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Tan Ting Wong

5,292,000 1.20

23 CHAN YAT WAI 5,220,300 1.19

24 AMANAHRAYA TRUSTEES BERHAD PB Growth Fund

5,197,100 1.18

25 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD Pledged Securities Account for Koon Poh Kong

5,170,398 1.17

26 KENANGA NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Yun Hong @ Koon Pow Shyang

4,950,000 1.12

27 TAN MEW LAN 4,717,460 1.07

28 ECML NOMINEES (ASING) SDN. BHD. United Forest Limited

4,500,000 1.02

29 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Pui Lan

4,147,300 0.94

30 OSK NOMINEES (TEMPATAN) SDN BERHAD Pledged Securities Account for Koon Poh Tat

4,130,200 0.94

TOTAL 254,993,484 57.91

133

Analysis of Redeemable Convertible Secured Loan Stocks (“RCSLS”) Holdings

as at 14 May 2012

Total number of RCSLS issued : 145,684,940 Total number of Outstanding RCSLS : 145,684,940 Issued Price of RCSLS : RM2.20

Size of RCSLS Holdings

No. of RCSLS Holders/

Depositors

% of RCSLS Holders/

DepositorsNo. of RCSLS

Held% of Issued

RCSLS

Less than 100 18 1.79 612 0.00

100 to 1,000 184 18.35 149,310 0.10

1,001 to 10,000 508 50.65 2,234,295 1.53

10,001 to 100,000 218 21.73 7,597,651 5.22

100,001 to less than 5% of issued RCSLS 72 7.18 30,383,212 20.86

5% and above of issued RCSLS 3 0.30 105,319,860 72.29

Total 1,003 100.00 145,684,940 100.00

DIRECTORS’ RCSLS HOLDINGS as per Register of Directors’ RCSLS Holdings as at 14 May 2012

Direct Indirect

NameNo. of RCSLS

Held% of Issued

RCSLSNo. of RCSLS

Held% of Issued

RCSLS

Dato’ (Dr) Megat Abdul Rahman Bin Megat Ahmad 0 0.00 0 0.00

Koon Poh Ming 0 0.00 106,319,860 * 72.98

Dato’ Koon Poh Keong 0 0.00 105,319,860 # 72.29


Koon Poh Weng 0 0.00 192,000 ^ 0.13

Koon Poh Kong 0 0.00 151,000 + 0.10

Koon Poh Tat 0 0.00 133,174 ** 0.09


Tan Heng Kui 37,000 0.03 0 0.00

* Deemed interested in the RCSLS held by his spouse, Ong Soo Fan and by virtue of his direct interest in Alpha Milestone Sdn Bhd

pursuant to Section 6A of the Companies Act, 1965 # Deemed interested in the RCSLS by virtue of his direct interest in Alpha Milestone Sdn Bhd pursuant to Section 6A of the Companies

Act, 1965 ^ Deemed interested in the RCSLS held by his spouse, Chan Poh Choo and daughter, Koon Sim Ee + Deemed interested in the RCSLS held by his spouse, Lee Sook Ching ** Deemed interested in the RCSLS held by his spouse, Chan Hean Heoh

134

THIRTY LARGEST RCSLS HOLDERSas at 14 May 2012

Name of RCSLS Holders No. of RCSLS

Held % of Issued

RCSLS

1 MAYBANK NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Alpha Milestone Sdn Bhd

52,659,929 36.15

2 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Alpha Milestone Sdn Bhd

31,114,309 21.36


21,545,622 14.79

4 TOH EAN HAI 2,389,100 1.64


2,171,000 1.49


1,335,000 0.92

7 TAN MEW LAN 1,200,000 0.82

8 ECML NOMINEES (TEMPATAN) SDN. BHD Pledged Securities Account for Dato’ Tan Ting Wong

1,067,000 0.73


1,000,000 0.69

10 ONG SOO FAN 1,000,000 0.69

11 CASATECHNIC SDN BHD 841,000 0.58

12 TAN YU WEI 770,000 0.53

13 AIBB NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Tan Mew Lan

700,000 0.48

14 CHAN YAT WAI 685,000 0.47

15 DATO’ TAN TING WONG 685,000 0.47

16 AMANAHRAYA TRUSTEES BERHAD CIMB Principal Equity Aggressive Fund 1

660,900 0.45

17 EOM SYSTEMS SDN. BHD. 633,000 0.44

18 PUBLIC NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Tan Ting Wong

552,000 0.38

19 EU MUI @ EE SOO MEI 551,000 0.38

20 ONG SOW YONG 542,200 0.37

21 CIMSEC NOMINEES (ASING) SDN BHD Pledged Securities Account for Michael Hooi Jee-Onn

540,000 0.37

22 CHUA SENG SAM 532,000 0.37

23 MAYBANK NOMINEES (TEMPATAN) SDN BHD Maybank Trustees Berhad for CIMB-Principal Equity Aggressive Fund 3

510,866 0.35

24 AMBANK (M) BERHAD Pledged Securities Account for Tee Keng Kok

485,400 0.33

25 PUBLIC INVEST NOMINEES (TEMPATAN) SDN BHD PCB Asset Management Sdn Bhd for MUI Continental Insurance Bhd

469,400 0.32

Analysis of Redeemable Convertible Secured Loan Stocks (“RCSLS”) Holdingsas at 14 May 2012 cont’d

135

THIRTY LARGEST RCSLS HOLDERSas at 14 May 2012 cont’d

Name of RCSLS Holders No. of RCSLS

Held % of Issued

RCSLS

26 LUCKY STAR PTE. LTD. 458,200 0.31

27 CITIGROUP NOMINEES (TEMPATAN) SDN BHD Exempt AN for Eastspring Investments Berhad

450,666 0.31

28 KOON FHO YIN 424,000 0.29

29 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Tan Boon Seng

416,566 0.29

30 CHAN YUE LENG 359,000 0.25

TOTAL 126,748,158 87.00

Analysis of Redeemable Convertible Secured Loan Stocks (“RCSLS”) Holdingsas at 14 May 2012

cont’d

136

Total number of Warrants C issued : 145,684,940 Total number of Outstanding Warrants C : 145,683,940 Exercise Price of Warrants C : RM2.20

Size of Warrant Holdings

No. of Warrant Holders/

Depositors

% of Warrant Holders/

Depositors

No. of Warrants

Held% of Issued

Warrants

Less than 100 26 2.87 1,131 0.00

100 to 1,000 168 18.52 137,961 0.09

1,001 to 10,000 442 48.73 1,902,932 1.31

10,001 to 100,000 202 22.27 7,587,520 5.21

100,001 to less than 5% of issued warrants 66 7.28 30,734,536 21.10

5% and above of issued warrants 3 0.33 105,319,860 72.29

Total 907 100.00 145,683,940 100.00

DIRECTORS’ WARRANT HOLDINGS as per Register of Directors’ Warrant Holdings as at 14 May 2012

Direct Indirect

Name

No. of Warrants

Held% of Issued

Warrants

No. ofWarrants

Held% of Issued

Warrants

Dato’ (Dr) Megat Abdul Rahman Bin Megat Ahmad 0 0.00 0 0.00

Koon Poh Ming 0 0.00 106,319,860 * 72.98

Dato’ Koon Poh Keong 0 0.00 105,319,860 # 72.29


Koon Poh Weng 0 0.00 192,000 ^ 0.13

Koon Poh Kong 0 0.00 151,000 + 0.10

Koon Poh Tat 0 0.00 133,174 ** 0.09


Tan Heng Kui 37,000 0.03 0 0.00

* Deemed interested in the warrants held by his spouse, Ong Soo Fan and by virtue of his direct interest in Alpha Milestone Sdn Bhd

pursuant to Section 6A of the Companies Act, 1965 # Deemed interested in the warrants by virtue of his direct interest in Alpha Milestone Sdn Bhd pursuant to Section 6A of the Companies

Act, 1965 ^ Deemed interested in the warrants held by his spouse, Chan Poh Choo and daughter, Koon Sim Ee + Deemed interested in the warrants held by his spouse, Lee Sook Ching ** Deemed interested in the warrants held by his spouse, Chan Hean Heoh

Analysis of Warrant Holdingsas at 14 May 2012

137

Analysis of Warrant Holdingsas at 14 May 2012

cont’d

THIRTY LARGEST WARRANT HOLDERSas at 14 May 2012

Name of Warrantholders

No. of Warrants

Held % of Issued

Warrants

1 MAYBANK NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Alpha Milestone Sdn Bhd

52,659,929 36.15


31,114,309 21.36


21,545,622 14.79


6,290,600 4.32

5 MAYBANK NOMINEES (TEMPATAN) SDN BHD Maybank Trustees Berhad for CIMB-Principal Strategic Bond Fund

1,579,400 1.09

6 ECML NOMINEES (TEMPATAN) SDN. BHD Pledged Securities Account for Dato’ Tan Ting Wong

1,067,000 0.73


1,044,000 0.72


1,000,000 0.69

9 ONG SOO FAN 1,000,000 0.69

10 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Tan Boon Seng

1,000,000 0.69

11 CASATECHNIC SDN BHD 841,000 0.58

12 TAN MEW LAN 830,200 0.57

13 LYE THAI SANG 732,100 0.50

14 AIBB NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Tan Mew Lan

700,000 0.48

15 DATO’ TAN TING WONG 685,000 0.47

16 TA NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Yap Tuan Tay

665,066 0.46

17 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Koon Fho Yin

639,000 0.44

18 EOM SYSTEMS SDN. BHD. 633,000 0.44

19 KHOE BOON HUAT 621,000 0.43

20 NG TEA HOO @ HWANG CHOW HERK 603,000 0.41

21 PUBLIC NOMINEES (TEMPATAN) SDN BHD Pledged Securities Account for Dato’ Tan Ting Wong

552,000 0.38

22 LAU SIE KUONG 525,000 0.36

23 CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB Bank for Ng Swee Sing @ Eng Swee Sing

520,000 0.36

24 CHAN YUE LENG 473,000 0.33

138

Analysis of Warrant Holdingsas at 14 May 2012 cont’d

THIRTY LARGEST WARRANTHOLDERSas at 14 May 2012 cont’d

Name of Warrantholders

No. of Warrants

Held % of Issued

Warrants

25 LEE TEK MOOK @ LEE TEH MOH 333,333 0.23

26 TAN YU WEI 321,400 0.22

27 TEO YONG FONG 301,000 0.21

28 BERNADETTE MARGARET LAU 300,000 0.21

29 FONG LAPH MING 300,000 0.21

30 NG HO FATT 286,000 0.20

TOTAL 129,161,959 88.66

139

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Twenty-Sixth Annual General Meeting of Press Metal Berhad will be held at Balai Tunku Abdul Rahman, Commonwealth House, No. 4, Jalan Birah, Damansara Heights, 50490 Kuala Lumpur on Thursday, 28 June 2012 at 10.30 a.m..

A G E N D A

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2011 together with the Reports of the Directors and Auditors thereon.

2. To declare a final tax exempt dividend of 2% for the financial year ended 31 December 2011.

3. To approve the payment of Directors’ Fees for the financial year ended 31 December 2011.

4. To re-elect the following Directors retiring pursuant to Article 92 of the Articles of Association of the Company:

(i) Koon Poh Weng

(ii) Koon Poh Tat

5. To consider and, if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965:

“That pursuant to Section 129(6) of the Companies Act, 1965, Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad be re-appointed as Director to hold office until the conclusion of the next Annual General Meeting of the Company.”

6. To consider and, if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965 and Malaysian Code of Corporate Governance 2012:

“That pursuant to Section 129(6) of the Companies Act, 1965 and Malaysian Code of Corporate Governance 2012, Tuan Haji Mohamad Faiz Bin Abdul Hamid be re-appointed and retained as Independent Non-Executive Director to hold office until the conclusion of the next Annual General Meeting of the Company.”

7. To retain the following Directors as Independent Non-Executive Director of the Company in accordance with Malaysian Code of Corporate Governance 2012:

(i) Loo Lean Hock

(ii) Tan Heng Kui

8. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration.

As Special Business

To consider and, if thought fit, to pass the following resolutions:

9. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

Ordinary Resolution 1









140

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to allot and issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum (10%) of the issued share capital of the Company for the time being, subject always to the approval of all relevant regulatory bodies being obtained for such allotment and issue.”

10. Proposed Renewal of Shareholders’ Mandate and Proposed New Shareholders’ Mandate for Press Metal Berhad and its subsidiaries to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)

“THAT approval be and is hereby given to the Company and its subsidiaries (“PMB Group”) to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.3 of the Circular to Shareholders dated 6 June 2012 (“Circular”) which are necessary for the PMB Group’s day-to-day operations subject to the following:-

a) the transactions are in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and

b) the disclosure will be made in the Annual Report of the breakdown of the aggregate value of the recurrent related party transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year on the type of recurrent related party transactions made, the names of the related parties involved in each type of recurrent related party transactions and their relationships with the Company.

THAT the authority conferred shall continue to be in force until:-

i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the forthcoming AGM at which the Proposed Shareholders’ Mandate is approved, at which time it will lapse, unless by a resolution passed at the AGM, the mandate is again renewed;

ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“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 in general meeting,

whichever is earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate.”

11. Proposed Amendments to the Articles of Association of the Company

“THAT the deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix 1 attached with the Annual Report for the financial year ended 31 December 2011 be and are hereby approved.”



Special Resolution

Notice of Annual General Meeting cont’d

141

NOTICE OF DIVIDEND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Twenty-Sixth Annual General Meeting, a final tax exempt dividend of 2% for the financial year ended 31 December 2011 will be paid to shareholders on 27 July 2012. The entitlement date for the said dividend shall be 29 June 2012.

A Depositor shall qualify for entitlement to the dividend only in respect of:

(a) Shares transferred to the Depositor’s securities account before 4.00 p.m. on 29 June 2012 in respect of ordinary transfers.

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

TAI YIT CHAN (MAICSA 7009143)TAN AI NING (MAICSA 7015852)Company Secretaries

Selangor Darul Ehsan6 June 2012

NOTES:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

2. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

3. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or signed by an officer or attorney so authorised.

5. The instrument appointing a proxy or proxies and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or authority, must be deposited at the Share Registrar’s office of the Company at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than 48 hours before the time set for holding the meeting or at any adjournment thereof.

6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 18 June 2012 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

EXPLANATORY NOTES ON SPECIAL BUSINESS

Ordinary Resolutions 6- Re-appointment and retention of Tuan Haji Mohamad Faiz bin Abdul Hamid as Independent Non-Executive Directors of

the Company pursuant to Section 129 (6) of the Companies Act, 1965 and Malaysian Code of Corporate Governance 2012

Tuan Haji Mohamad Faiz Bin Abdul Hamid was appointed to the Board as an Independent Non-Executive Director of the Company on 7 May 1993, and has, therefore served for more than 9 years. As at the date of the notice of the AGM, he has served the Company for approximately 19 years. However, he has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements. The Board, therefore, considers him to be independent and believes that he should be re-appointed and retained as Independent Non-Executive Director, in particular of his experience and contribution to the Board.


142

EXPLANATORY NOTES ON SPECIAL BUSINESS cont’d

Ordinary Resolutions 7-8- Retention as Independent Non-Executive Directors of the Company pursuant to Malaysian Code of Corporate Governance 2012

(i) Loo Lean Hock Ordinary Resolution 7

Loo Lean Hock was appointed to the Board as an Independent Non-Executive Director of the Company on 14 September 2001, and has, therefore served for more than 9 years. As at the date of the notice of the AGM, he has served the Company for approximately 11 years. However, he has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements. The Board, therefore, considers him to be independent and believes that he should be retained as Independent Non-Executive Director, in particular of his experience and contribution to the Board.

(ii) Tan Heng Kui Ordinary Resolution 8

Tan Heng Kui was appointed to the Board as an Independent Non-Executive Director of the Company on 26 December 2001, and has, therefore served for more than 9 years. As at the date of the notice of the AGM, he has served the Company for approximately 11 years. However, he has met the independence guidelines as set out in Chapter 1 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements. The Board, therefore, considers him to be independent and believes that he should be retained as Independent Non-Executive Director, in particular of his experience and contribution to the Board.

Ordinary Resolution 10- Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares

The Company had, during its Twenty-Fifth Annual General Meeting held on 29 June 2011, obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”). The Company did not issue any shares pursuant to this mandate obtained.

The Ordinary Resolution 10 proposed under item 9 of the Agenda is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. The mandate, if passed, will provide flexibility for the Company and empower the Directors to allot and issue new shares speedily in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for purpose of funding the working capital or strategic development of the Group. This would eliminate any delay arising from and cost involved in convening a general meeting to obtain approval of the shareholders for such issuance of shares. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM.

At this juncture, there is no decision to issue new shares. If there should be a decision to issue new shares after the general mandate is sought, the Company will make an announcement in respect thereof.

Ordinary Resolution 11- Proposed Renewal of Shareholders’ Mandate and Proposed New Shareholders’ Mandate for Press Metal Berhad and its

subsidiaries to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ Mandate”)

For further information on Ordinary Resolution 11, please refer to the Circular to Shareholders dated 6 June 2012 accompanying the Annual Report of the Company for the financial year ended 31 December 2011.

Special Resolution- Proposed Amendments to the Article of Association of the Company

The special resolution, if passed, will render the Articles of Association of the Company to be consistent with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and any prevailing laws, rules, regulations, orders, guidelines or requirements of the relevant authorities.


143

Appendix 1

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The Articles of Association of the Company are proposed to be amended in the following manner:

Article No.

Existing Articles Amended Articles

To amend Article 2

WORDS MEANINGS WORDS MEANINGS

New definition Exempt Authorised Nominee

means an authorised nominee defined under the Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of the Central Depositories Act.

New definition Share Issuance Scheme means a scheme involving a new issuance of shares to the employees.

To amend Article

8(E)

Shares Shares

Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares and subject to the provisions of these presents to the Act and to the provisions of any resolution of the Company, shares in the Company shall be at the disposal of Directors who may allot, grant options over or otherwise dispose of such shares to such persons on such terms and conditions and at such times as the Directors may determine, but the Directors in making any such allotment or disposal or granting any such option or shares shall comply with the following conditions:-

Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares and subject to the provisions of these presents to the Act and to the provisions of any resolution of the Company, shares in the Company shall be at the disposal of Directors who may allot, grant options over or otherwise dispose of such shares to such persons on such terms and conditions and at such times as the Directors may determine, but the Directors in making any such allotment or disposal or granting any such option or shares shall comply with the following conditions:-

(E) No Director shall participate in an issue of shares to employees of the Company unless the members in general meeting have approved of the specific allotment to be made to such Director.

(E) No Director shall participate in a Share Issuance Scheme unless the members in general meeting have approved of the specific allotment to be made to such Director.

144

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION cont’d

The Articles of Association of the Company are proposed to be amended in the following manner: cont’d

Article No.


To amend Article 67

Votes of members Votes of members

The instrument appointing a proxy shall be in writing signed by the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or signed by an officer or attorney so authorised. A proxy may, but need not, be a member of the Company. A member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company, where a member appoints two or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the CD Act, it may appoint at least one proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

67 (i) The instrument appointing a proxy by a member who is entitled to attend and vote at a meeting, or at a meeting of any class of members of the Company, shall be in writing signed by the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or signed by an officer or attorney so authorised. A proxy may, but need not, be a member of the Company. A member may appoint any person to be his proxy without restriction on the qualification of the proxy and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

(ii) A member shall be entitled to appoint more than two (2) proxies to attend and vote at a meeting of the Company. Where a member appoints two or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy and only one (1) of those proxies is entitled to vote on a show of hands. A proxy appointed to attend and vote at a meeting shall have the same rights as the member to speak at the meeting.

(iii) Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

To amend Article 76(D)

Directors Directors

The office of a Director shall be vacated in any of the following events, namely:-

The office of a Director shall be vacated in any of the following events, namely:-

(D) if he is absent from more than 50% of the total board of Directors’ meetings held during a financial year;

(D) if he is absent from more than 50% of the total board of Directors’ meetings held during a financial year, except when an exemption or waiver is obtained from The Exchange;

Appendix 1 cont’d

145

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION cont’d

The Articles of Association of the Company are proposed to be amended in the following manner: cont’d

Article No.


To amend Article

104

A resolution in writing signed or approved by all the Directors who may at the time be present in Malaysia and who are sufficient to form a quorum shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted; PROVIDED that where a Director is not so present but has an alternate who is so present, then such resolution must also be signed by such alternate. All such resolutions shall be described as “Directors’ Circular Resolutions” and shall be forwarded or otherwise delivered to the Secretary without delay and shall be recorded by him in the Company’s Minute Book. Any such resolution may consist of several documents in like form, each signed by one or more Directors.

A resolution in writing signed or approved by majority of the Directors who may at the time be present in Malaysia and who are sufficient to form a quorum shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted; PROVIDED that where a Director is not so present but has an alternate who is so present, then such resolution must also be signed by such alternate. All such resolutions shall be described as “Directors’ Circular Resolutions” and shall be forwarded or otherwise delivered to the Secretary without delay and shall be recorded by him in the Company’s Minutes Book. Any such resolution may consist of several documents in like form, each signed by one or more Directors.

To add Article 107B

(New provision) A resolution taking the form of one or more documents in writing signed or approved by other electronic communications by all committee members who may be present in Malaysia, provided that they are sufficient to form a quorum at a meeting of committee, shall be as valid and effectual as if it had been passed at a meeting of the committee duly called and constituted; provided that the resolution is circulated to all committee members. All such resolutions shall be described as “Circular Resolution” and shall be forwarded or otherwise delivers to the Secretary upon signing without delay, and shall forthwith be recorded by the Secretary in Company’s Minutes Book. Any such resolution in writing may consist of several documents in like form, each signed by one (1) or more of the committee members.

Appendix 1 cont’d

146

This page has been intentionally left blank.

Proxy FormPRESS METAL BERHAD(Company No. 153208-W)

(Incorporated in Malaysia)

I/We (name of shareholder as per NRIC, in capital letters)

IC No./ID No./Company No. (new) (old)

of (full address)

being a member of PRESS METAL BERHAD, hereby appoint

(name of proxy as

per NRIC, in capital letters) IC No. (new) (old)

of (full address)

or failing him/her, (name of proxy as

per NRIC, in capital letters) IC No. (new) (old)

of (full address)

or failing him/her, the *Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Twenty-Sixth Annual General Meeting of the Company to be held at Balai Tunku Abdul Rahman, Commonwealth House, No. 4, Jalan Birah, Damansara Heights, 50490 Kuala Lumpur on Thursday, 28 June 2012 at 10.30 a.m. or at any adjournment thereof.

My/our proxy is to vote as indicated below.

RESOLUTIONS FOR AGAINST

1. Declaration of a final tax exempt dividend of 2% Ordinary Resolution 1

2. Approval of Directors’ Fees Ordinary Resolution 2

3. Re-election of Koon Poh Weng as Director Ordinary Resolution 3

4. Re-election of Koon Poh Tat as Director Ordinary Resolution 4

5. Re-appointment of Dato’ (Dr.) Megat Abdul Rahman Bin Megat Ahmad as Director


6. Re-appointment and Retention of Tuan Haji Mohamad Faiz Bin Abdul Hamid as Director


7. Retention of Loo Lean Hock as Independent Non-Executive Director Ordinary Resolution 7

8. Retention of Tan Heng Kui as Independent Non-Executive Director Ordinary Resolution 8

9. Re-appointment of Messrs KPMG as Auditors of the Company Ordinary Resolution 9

10. Authority under Section 132D of the Companies Act, 1965 for the Directors to allot and issue shares


11. Proposed Renewal of Shareholders’ Mandate and Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature


12. Proposed Amendments to the Articles of Association of the Company Special Resolution

(Please indicate with an “X” in the spaces provided on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his/her discretion.)

Signature/Common Seal Number of shares held: Date:

NOTES:1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy

may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

2. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

3. Where a member is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

4. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or signed by an officer or attorney so authorised.

5. The instrument appointing a proxy or proxies and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or authority, must be deposited at the Share Registrar’s office of the Company at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than 48 hours before the time set for holding the meeting or at any adjournment thereof.

6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 18 June 2012 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his behalf.

For appointment of two proxies, percentage of shareholdings to be represented by the proxies:

PercentageProxy 1 %Proxy 2 %Total 100%

CDS account number of holder

AffixStamp

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The Share RegistrarPRESS METAL BERHAD (Company No. 153208-W)

Level 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurMalaysia

Press MetalGroup Directory

PRESS METAL BERHAD(Company No. 153208-W)

Lot 6464, Batu 5 ¾, Jalan Kapar, Sementa, 42100 Klang, Selangor Darul Ehsan, MalaysiaTel: +603 3291 3188 Fax: +603 3291 3637Website: www.pressmetal.com

ACE EXTRUSION SDN BHD(Company No. 483049-P)

Lot 6463, Batu 5, Jalan Kapar, Sementa, 42100 Klang,Selangor Darul Ehsan, MalaysiaTel: +603 3290 6308Fax: +603 3290 2816Website: www.aceextrusion.com.myEmail: [email protected]

ANGKASA JASA SDN BHD(Company No. 110854-M)

27, Jalan 3A, Kawasan MIEL Balakong,Taman Cheras Jaya, 42200 Cheras,Selangor Darul Ehsan, MalaysiaTel: +603 9075 2136 Fax: +603 9075 2139Website: www.angkasajasa.comE-mail: [email protected]

PMB MARKETING SDN BHD(Company No. 185222-W)

Lot 1797, Jalan Balakong,Bukit Belimbing, 43300 Seri Kembangan,Selangor Darul Ehsan, MalaysiaTel: +603 8961 9733/8962 6102Fax: +603 8961 9830E-mail: [email protected]

PMB RECYCLING MANAGEMENT SDN BHD(Company No. 383245-H)

Lot 6464 Batu 5 ¾ , Jalan Kapar,Sementa, 42100 Klang,Selangor Darul Ehsan, MalaysiaTel: +603 3290 6796 Fax: +603 3290 6795E-mail: [email protected]

WESAMA SDN BHD(Company No. 196057 W)

Lot 1797, Jalan Balakong,Bukit Belimbing, 43300 Seri Kembangan,Selangor Darul Ehsan, MalaysiaTel: +603 8961 8355Fax: +603 8961 8357 E-mail: [email protected]

PMB DEVELOPMENT SDN BHD (Company No. 198730-T)

PMB SPECTRUM SDN BHD (Company No. 400200-U)

BI-PMB WASTE MANAGEMENT SDN BHD (Company No. 204292-D)

Lot 6464 Batu 5 ¾, Jalan Kapar, Sementa, 42100 Klang,Selangor Darul EhsanMalaysiaTel: +603 3290 6796Fax: +603 3290 6795E-mail: [email protected]

PRESS METAL SARAWAK SDN BHD(Company No. 767704-M)

PMS MARKETING SDN BHD (Company No. 204138-X)

Lot 211 & 212, Block 293,Mukah Land District, KM38, Jalan Mukah-Balingian, 96400 Mukah, Sarawak , MalaysiaTel: +6086 855 199Fax: +6086 855 050

HUBEI PRESS METAL HUASHENGALUMINIUM & ELECTRIC CO LTDNo.88, Xinglong Road,Zhangjin Town, Qianjiang CityHubei Province, 433140 China Tel: +86 728 6646 007Fax: +86 728 6646 655Website: www.pmhs.cc E-mail: [email protected]

PRESS METAL INTERNATIONAL (HUBEI) LTD(F.k.a. PMH Aluminium Extrusion Co. Ltd.)

No.1, Qili RoadZhangjin Town, Qianjiang CityHubei Province, 433140 China. Tel: +86 728 664 1055 Fax: +86 728 664 4228Website: www.pmhext.comEmail: [email protected]

PRESS METAL INTERNATIONAL LIMITEDArea C, Sanshui Industrial Park,Sanshui District,Foshan City, Guangdong Province,528137 China Tel: +86 757 8736 3333Fax: +86 757 8736 3980Website: www.pressmetal.com.cnE-mail: [email protected]

PRESS METAL ALUMINIUM(AUSTRALIA) PTY. LTD.(ACN 085 370 010)

Website: www.pmaa.net.au

1012-1016 Canley Vale Road,Wetherill Park, New South Wales, 2164AustraliaTel: +612 9756 5555Fax: + 612 9756 5499Email: [email protected]

2/22 Eastern Service Road,Stapylton, Queensland, 4207 Australia Tel: +617 3382 6640 Fax: + 617 3382 6244 Email: [email protected]

37-39, Gaine Rd, Dandenong,South Victoria, 3175 AustraliaTel: +613 9793 7911Fax: + 613 9793 9077Email : [email protected]

PRESS METAL UK LIMITED(Company No. 3653082 )

Beldray Road, Bilston, West Midlands, WV14 7NH, United KingdomTel: +44 1902 498867Fax: +44 1902 495567Email: [email protected]

PRESS METAL (HK) LIMITED (Company No. 965197)

Unit A, 18/F Chinaweal Centre, 414 - 424, Jaffe Road, Wanchai, Hong Kong. Tel: +852 2397 6008Fax: + 852 2397 6206

PMB MARKETING (HK) LIMITED(Company No. 782963)

Unit A, 18/F Chinaweal Centre,414-424, Jaffe Road,Wanchai, Hong KongTel: +852 2397 8008Fax: +852 2397 6206

press metal berhad - malaysiastock.biz 2 of our smelting project in samalaju industrial park,...

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