KiA AnnuAl RepoRt 2014 n Joo C A n F ACtoR y be RhAd · pleasure in presenting the Annual Report and the Audited Financial Statements of Kian Joo group of companies (“Kian Joo Group”

AC

KIAN JOO CAN FACTORY BERHAD (003186-P)Lot No.10, Jalan Perusahaan Satu

68100 Batu Caves

Selangor Darul Ehsan, Malaysia

Tel +603 6189 6322

Fax +603 6189 8185

www.KJCF.net (003186-P)(INCORPORATED IN MALAYSIA)

A n n u A l R e p o R t 2 0 1 4

KiAn Jo

o CAn

FACtoRy beRh

Ad (003186-P)An

nu

Al RepoRt 2014

FIVE-YEARFInancIal HIgHlIgHts

992,671

1,086,037

1,162,845

1,290,567

1,334,784

2010 2011 2012 2013 20142010 2011 2012 2013 2014

Profit before taxation(RM’000)

132,906

139,487144,035

147,392

144,029

101,967

104,044

120,876118,319 120,910

1,196,228

1,322,982

1,359,122

1,528,171

1,710,338

2014 2013 2012 2011 2010

Revenue (RM’000) 1,334,784 1,290,567 1,162,845 1,086,037 992,671 Profit Before Taxation (RM’000) 144,029 147,392 144,035 139,487 132,906 Profit After Taxation and Minority Interest (RM’000) 120,910 118,319 120,876 104,044 101,967 Paid-up Capital (RM’000) 111,042 111,042 111,042 111,042 111,042 Shareholders’ Equity (RM’000) 1,138,900 1,037,452 970,895 910,147 872,166 Total Assets (RM’000) 1,710,338 1,528,171 1,359,122 1,322,982 1,196,228 Total Borrowings (RM’000) 294,829 228,237 182,306 194,216 114,432 Earnings Per Share (sen) 27.22 26.64 27.21 23.42 22.96Net Assets Backing Per Share (RM) 2.56 2.34 2.19 2.05 1.96Borrowings/Shareholders’ Equity (%) 26 22 19 21 13

reVenUe(RM’000)

2010 2011 2012 2013 20142010 2011 2012 2013 2014

Profit before taxation(RM’000)

Profit after taxation and Minority interest(RM’000)

CONTENTSCorporate Information

Corporate Structure

Chairman’s Statement

Profile of Directors

Corporate Social Responsibility Statement

Statement on Corporate Governance

Audit Committee Report

Other Information

Statement on Risk Management and Internal Control

Responsibility Statement by the Board of Directors

Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Form of Proxy

2

3

4

6

10

11

18

21

23

26

27

107

109

113

KIAN JOO CAN FACTORY BERHAD (003186-P)

2 Corporate INForMatIoN

AUDIT COMMITTEE

Dato’ Tan Guan Cheong (Chairman)Dato’ Mah Siew KwokY.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

REMUNERATION COMMITTEE

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar (Chairman)Dato’ Tan Guan Cheong Yeoh Jin Hoe

NOMINATION COMMITTEE

Dato’ Mah Siew Kwok (Chairman)Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afarY.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

COMPANY SECRETARIES

Tan Bee Keng (MAICSA 0856474)Chia Kwok Why (MAICSA 7005833)

AUDITORS

Ernst & YoungChartered AccountantsLevel 23A, Menara MileniumJalan Damanlela, Pusat Bandar Damansara50490 Kuala LumpurWilayah Persekutuan, MalaysiaTel No. : 603-7495 8000Fax No. : 603-2095 5332

REGISTERED AND CORPORATE OFFICE

Lot No. 10, Jalan Perusahaan Satu68100 Batu CavesSelangor Darul Ehsan, MalaysiaTel No. : 603-6189 6322Fax No. : 603-6189 8185

SOLICITORS

James KhongJeff Leong, Poon & WongJublin Tan & TeyLee Choon Wan & Co.Ranjit Ooi & Robert LowShook Lin & Bok

BANKERS/FINANCIAL COMPANIES/FINANCIAL INSTITUTIONS

AmBank (M) BerhadAmIslamic Bank BerhadCIMB Bank BerhadHSBC Bank Malaysia BerhadAffin Hwang Asset Management BerhadMalaysia Building Society BerhadOCBC Bank (Malaysia) BerhadPublic Bank Berhad Standard Chartered Bank Malaysia Berhad

SHARE REGISTRAR

Boardroom Corporate Services (KL) Sdn. Bhd.Lot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul Ehsan, Malaysia Tel No. : 603-7720 1188Fax No. : 603-7720 1111

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities BerhadStock Name : KIANJOOStock code : 3522Sector : Industrial Products

WEBSITE

www.KJCF.net

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar(Chairman/Independent Non-Executive Director)

Yeoh Jin Hoe(Group Managing Director)

Chee Khay Leong(Chief Operating Officer cum Executive Director)

Dato’ Anthony See Teow Guan(Executive Director)

Dato’ Tan Guan Cheong (Independent Non-Executive Director)

Dato’ Mah Siew Kwok(Independent Non-Executive Director)

Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz(Independent Non-Executive Director)

board of direCtors

Annual Report 2014

3Corporate StrUCtUre

* Listed on the Main Market of Bursa Malaysia Securities Berhad

Kian Joo Can (Vietnam) Co., Ltd.100%

KJ Can (Singapore) Pte. Ltd.100%

Indastri Kian Joo Sdn. Bhd.100%

Kian Joo Cans Distribution Sdn. Bhd.(Formerly known as Multi-Pet Sdn. Bhd.)100%

Kian Joo Canpack (Shah Alam) Sdn. Bhd.100%

Kian Joo Canpack Sdn. Bhd.100%

KJ Can (Johore) Sdn. Bhd.100%

KJ Can (Selangor) Sdn. Bhd.100%

Metal-Pak (Malaysia) Sdn. Bhd.100%

Federal Metal Printing Factory, Sdn. Berhad100%

KJM Aluminium Can Sdn. Bhd.100%

Kian Joo Packaging Sdn. Bhd.100%

100% Great Asia Tin Cans Factory Company, Sdn. Berhad

*(003186-P)(INCORPORATED IN MALAYSIA)

100% Bintang Seribu Sdn. Bhd.

Kian Joo-Visypak Sdn. Bhd.50%

100% PT. KJ Canco1%

99%

KJO International Sdn. Bhd.

Box-Pak (Malaysia) Bhd.*

100%

54.83%

100%

100%

100%

PT. KJ Box-Pak

AMBM Packaging Distribution Sdn. Bhd.

PT. KJ Canmax

100% Box-Pak (Johore) Sdn. Bhd.

1%

1%

99%

99%

100%

100%

Box-Pak (Vietnam) Co., Ltd.

Box-Pak (Hanoi) Co., Ltd.

19%

81%


4 CHaIrMaN’S StateMeNt

On behalf of the Board of Directors (“Board”) of Kian Joo Can Factory Berhad (“Kian Joo” or “the Company”), I have pleasure in presenting the Annual Report and the Audited Financial Statements of Kian Joo group of companies (“Kian Joo Group” or “the Group”) for the financial year ended 31 December 2014.

finanCiaL resULts

The Group achieved a record revenue of RM1.33 billion in financial year ended 31 December 2014, representing a 3.1% improvement against revenue of RM1.29 billion in the previous financial year. The improvement in revenue is attributable mainly to improvement in the aluminium cans and cartons divisions.

Pre-tax profit however, has declined slightly by 2.3% at RM144.03 million as compared to RM147.39 million in the previous financial year. Profit after taxation was slightly higher at RM124.43 million as compared to RM123.74 million due to lower tax charge for the financial year.

During the year, the joint venture company of the Group has disposed its landed property at a gain. As a result, the share of result from the joint venture company has improved from a loss of RM102,000 in the previous financial year to a profit of RM11.73 million in the financial year under review.

reVieW on oPeration

Generally for financial year ended 31 December 2014, the main operating divisions of the Group have been facing margin compression as a result of market competition, higher material cost caused mainly by the weakening of Malaysian Ringgit against the US Dollar and rising operating cost.

General Cans Division

The General Cans Division generated a revenue of RM496.17 million as compared to RM503.00 million in the previous financial year. The decline in revenue was contributed by the drop in revenue from the Vietnam operation and drop in export sales.

The segment profit declined from RM77.40 million in the previous financial year to RM65.99 million for financial year ended 31 December 2014. This was mainly contributed by the drop in revenue, margin compression due to market competition, higher material and operating cost.

Aluminium Cans Division

The Aluminium Cans Division generated a revenue of RM475.15 million for the current year under review as compared to RM464.85 million in the previous financial year. The improvement in revenue was contributed by the commissioning of new production line in this division.

The segment profit declined slightly from RM53.23 million in the previous financial year to RM52.46 million for financial year ended 31 December 2014. The drop is mainly contributed by higher operating cost on commissioning of the new line.

Cartons Division

Revenue from Cartons Division improved to RM343.04 million for the financial year ended 31 December 2014 from RM300.14 million in the previous financial year. Apart from improvement in revenue from existing plant in Ho Chi Minh, the new plants in Hanoi and Johor also contributed to the revenue growth.

Profit before taxation however, has declined from RM14.25 million in the previous financial year to RM10.47 million. The decline in profit was due mainly to losses recorded in its Hanoi and Johor plants. The decline in profit was also contributed by foreign currency exchange loss and loss arising from derivative financial instrument as a result of weakening of the Malaysian Ringgit against the US Dollar.

Contract Packing Division

Revenue from contract packing division declined to RM50.71 million for the financial year under review as compared to RM56.29 million in financial year ended 31 December 2013. Despite the lower revenue, profit before taxation improved to RM3.40 million as compared to RM2.92 million in the previous financial year.

The decrease in revenue was due mainly to the decrease in demand from customers in the year while the improvement in profit was attributable mainly to was improvement in operating efficiency.

CorPorate deVeLoPMent

Incorporation of New Subsidiaries

During the year, the Group has incorporated 3 new subsidiaries namely, PT. KJ Canmax, PT. KJ Canco and PT. KJ Box-Pak in the Republic of Indonesia.

PT. KJ Canmax and PT. KJ Canco are wholly-owned by the Group whereas PT. KJ Box-Pak is held via Box-Pak (Malaysia) Bhd., a subsidiary in which the Company has a 54.83% equity interest.

Whilst these new subsidiaries are not expected to contribute positively to the results of the Group in the immediate future, they are part of the plan for the Group to achieve its ambition as a regional player in the long term future.

Annual Report 2014

5CHaIrMaN’S StateMeNt

Offer by Aspire Insight Sdn Bhd

On 26 November 2013, the Company received a letter of offer from Aspire Insight Sdn Bhd (“Aspire”) to acquire the entire business and undertakings, including all assets and liabilities of the Company for a cash consideration of RM1,466 million (“Offer”).

On 24 March 2014, the Company signed a conditional business sale agreement, properties sale agreements and asset sale agreement with Aspire. The Company has until 23 March 2015 to fulfil all the conditions precedent to the conditional business sale agreement.

The Company is in the process of preparing the necessary circular to the shareholders to seek their approval in respect of the Offer.

indUstry trend and deVeLoPMent

The weakening of the Malaysian Ringgit against the US Dollar towards the end of 2014 has added cost pressure on the industry as a significant portion of the raw materials consumed in this industry is priced in US Dollars.

The weakening in sentiment in the consumer market has a spill over effect on the industry. Demand from the main food and beverage player is expected to be more competitive than usual and profit margin is expected to be further compressed.

ProsPeCts

The Group continues to face challenges to maintain its competitive edge in all its operating divisions in Malaysia and Vietnam.

In Malaysia, the weakened Malaysian Ringgit against the US Dollar, the advent of Goods and Services Tax (“GST”) and the rising interest rates are key challenges faced by the Group in 2015.

Whilst the weakening of local currency results in more expensive material cost and capital expenditure, the implementation of the GST will have a significant cash flow impact on the Group. The rise in interest rate has caused the financing cost of new capital expenditure to increase.

In Vietnam, the Group is facing increased competition from local and international players. The minimum wage which has been raised by 15% by the Vietnamese government has a cost impact on the Group. Volatility of the Vietnamese Dong has also posed a risk to the profitability of the Group’s operation in Vietnam.

However, the Group will continue to take measures to manage these challenges, to reorganise to improve efficiency and to open up new market opportunities.

The Group will also continue to invest in new equipment in order to upgrade its capacity and improve operating efficiency. Towards this, the Group has invested close to RM400 million in the past 3 years and has further committed to capital expenditure amounting to RM55 million at 31 December 2014.

diVidends

In respect of financial year ended 31 December 2014, the Company declared and paid a final tax exempt (single-tier) dividend of 10% (2.50 sen per share) and a special tax exempt (single-tier) dividend of 15% (3.75 sen per share) totalling RM27.8 million on 6 May 2014.

The Board does not recommend any dividend payment for the financial year ended 31 December 2014.

aPPreCiation

On behalf of the Board, I wish to express my sincere appreciation to all valued and loyal shareholders, customers, suppliers, bankers and business associates for their continuous and invaluable support to the Group.

I would like to take this opportunity to thank the management and staff of the Group for their dedication and commitment to continuously improve the results of the Group. Last but not least, I would like to thank the members of the Board for their wise counsel.

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afarChairman

4 March 2015


6

Y.A.M. TUNKU NAQUIYUDDIN IBNI ALMARHUM TUANKU JA’AFARIndependent Non-Executive Chairman, Malaysian, Aged 68

YEOH JIN HOEGroup Managing Director, Malaysian, Aged 68

proFIle oF DIreCtorS

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar, was appointed to the Board on 30 November 1999. He is also the Chairman of Remuneration Committee and a member of the Nomination Committee.

Y.A.M. Tunku Naquiyuddin read International Politics at the University of Wales in Aberystwyth and graduated with a Bachelor of Science Degree with Honours in Economics from the same university. Tunku served in the Ministry of Foreign Affairs and was posted as the Second Secretary with the Malaysian Embassy in Paris. Tunku later headed Antah Holdings Berhad as its Chairman, a position held till 2007, which was vacated for a 5-year period during his tenure as the Regent of Negeri Sembilan from 1994 to 1999. Tunku was also a Council Member of the Business Council for Sustainable Development, a Geneva-based

organisation, Founder and Head of the Federation of Public Listed Companies and Committee Member of the Kuala Lumpur Stock Exchange.

Y.A.M. Tunku Naquiyuddin is presently Chairman of Sino Hua-An International Berhad, Olympia Industries Berhad and a Director in Ann Joo Resources Berhad which are all listed on Bursa Malaysia Securities Berhad (“Bursa Securities”). He is also the Chairman of Orix Leasing Malaysia Berhad.

Y.A.M. Tunku Naquiyuddin does not have family relationship with any Director and/or major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

Yeoh Jin Hoe was appointed to the Board on 18 June 2012 as Executive Director and assumed the position of Group Managing Director on 10 July 2012. He is responsible for the development of the corporate goals and objectives of the Group and the setting of strategies to achieve them. He is also a member of the Remuneration Committee.

He has extensive experience in the manufacturing and trading industries. He was the former Managing Director of Can-One Berhad (“Can-One”), a major shareholder of Kian Joo, and which is listed on the Main Market of Bursa Securities. He currently remains as a Non-Independent Non-Executive Director of Can-One.

He is also the founder of several companies which are involved in the manufacturing sector. These companies

manufacture and sell branded mattresses and other sleep related products; food products such as instant noodles and food seasonings; and distribution of sanitary wares, ironmongery and builders’ hardware.

Currently, he is also an Executive Director of subsidiary company, Box-Pak (Malaysia) Bhd. (“Box-Pak”), which is listed on the Main Market of Bursa Securities.

He is a major shareholder of Kian Joo. He does not have family relationship with any Director of the Company. He does not have personal interest in any business arrangement involving the Company.

Annual Report 2014

7

CHEE KHAY LEONGChief Operating Officer cum Executive Director, Malaysian, Aged 54

DATO’ ANTHONY SEE TEOW GUANExecutive Director, Singaporean, Aged 69

Dato’ Anthony See Teow Guan was appointed to the Board on 1 January 1972.

He has over 51 years experience in the packaging industry. He completed his Senior Cambridge education in Singapore and moved immediately to Malaysia to work with Kian Joo. In 1974, he initiated the set up of Box-Pak, a subsidiary of Kian Joo, and served as the Managing Director until 15 April 2014.

In 1993, he was awarded the “Manager of the Year 1992” by Harvard Business School Alumni Club of Malaysia and was the President of the Malaysian Tin Can Manufacturers Association (MTCMA) until June 2004.

He does not have family relationship with any Drector and/or major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

Chee Khay Leong was appointed to the Board on 18 June 2012 as Executive Director of the Company and assumed the position of Chief Operating Officer cum Executive Director on 10 July 2012. He oversees the implementation of the Group’s broad operational strategies and policies, operations, management and performance of the Group.

Currently, he is also an Executive Director of listed subsidiary, Box-Pak. He has extensive experience in the management of manufacturing facilities, marketing and business development having been with Can-One group

of companies since 1977. Prior to joining Kian Joo, he was the Chief Operating Officer cum Executive Director of Can-One.

He does not have family relationship with any Director and/or major shareholder of the Company. He has an interest in the offer received on 26 November 2013 by the Company from Aspire Insight Sdn Bhd (“Aspire”) to acquire the entire business and undertaking including all of the assets and liabilities of the Company by virtue of his directorship and indirect controlling interest in Aspire.



8

DATO’ TAN GUAN CHEONGIndependent Non-Executive Director, Malaysian, Aged 70

DATO’ MAH SIEW KWOKIndependent Non-Executive Director, Malaysian, Aged 66

Dato’ Tan Guan Cheong was appointed to the Board on 5 July 2013. He is also the Chairman of the Audit Committee and a member of the Remuneration Committee.

He holds a Bachelor of Commerce Degree from Otago University, New Zealand, majoring in economics, marketing management and accountancy. He is a Chartered Accountant and a member of the Malaysian Institute of Accountants since 1983.

Dato’ Tan Guan Cheong has worked in international audit firm, Messrs Coopers & Lybrand (now known as

PricewaterhouseCoopers) in New Zealand and Malaysia. He has more than 20 years experience in the field of financial services.

He holds directorships in YTL Cement Berhad and Hartalega Holdings Berhad, a company listed on Bursa Securities.

He does not have family relationship with any director and/or major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

Dato’ Mah Siew Kwok was appointed to the Board on 18 July 2013. He is also the Chairman of the Nomination Committee and a member of the Audit Committee.

Dato’ Mah founded Messrs Mah & Partners in 1975 and was Senior Partner of the firm specialising in Corporate Law, Banking Law as well as Land Law. Dato’ Mah remained in practice for 10 years before venturing into the commercial sector where he was the Managing Director of South Malaysia Industries Berhad from 1983 to 1994.

Since 1994, Dato’ Mah has been involved in the Information Technology business where his last executive role was as Executive Vice Chairman and Chief Executive Officer of Formis Resources Berhad (now known as Omesti Berhad).

Dato’ Mah is currently the Non-Executive Vice Chairman of Omesti Berhad, the Chairman of Diversified Gateway Solutions Berhad and Deputy Chairman of Ho Hup Construction Company Berhad, all of which are listed on Bursa Securities. He is also the Deputy Chairman of Chong Hwa Independent High School.

He does not have family relationship with any director and/or major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.


Annual Report 2014

9

Y.A.M. TUNKU ZAIN AL-’ABIDIN IBNI TUANKU MUHRIZ Independent Non-Executive Director, Malaysian, Aged 32

Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz was appointed to the Board on 5 July 2013. Tunku is also a member of the Audit Committee and the Nomination Committee.

Y.A.M. Tunku Zain holds a Bachelor of Science Degree in Sociology and a Master of Science in Comparative Politics from the London School of Economics and Political Science, United Kingdom.

Y.A.M. Tunku Zain is a Trustee of Yayasan Munarah, Yayasan Chow Kit and the Jeffrey Cheah Foundation.

Y.A.M. Tunku Zain is Founding President of the Institute for Democracy and Economic Affairs (IDEAS), Kuala Lumpur and Research Fellow of CIMB ASEAN Research Institute (CARI), Kuala Lumpur. He is also a columnist and writes for the Malay Mail, Borneo Post and Oriental Daily.

Y.A.M. Tunku Zain served as a research fellow in the Lee Kuan Yew School of Public Policy, National University of Singapore. Prior to that, he was a political researcher at KRA Group, Kuala Lumpur, Malaysia and was a consultant at the World Bank, Washington DC, United States of America.

Y.A.M. Tunku Zain is also a director or advisor of several educational organisations, patron of several cultural initiatives, an honorary major in the Malaysian Territorial Army and a committee member of several associations.

Y.A.M. Tunku Zain holds directorship in Allianz Malaysia Berhad, a company listed on Bursa Securities.

Y.A.M. Tunku Zain does not have family relationship with any Director and/or major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

Notes:

None of the Directors has conviction for any offences within the past 10 years.



10

Kian Joo Group has always operated as a responsible corporate citizen that believes in caring for its various stakeholders.

Whilst the Group continues to produce high quality products, the Group is fully committed to ensure that its operations remain environmental friendly. This is done by complying strictly with the applicable industry standard and regulations on environmental affairs as well as applying 3R (Reduce, Reuse and Recycle) principles within its operations.

In 2014, the Group continued to fulfil its responsibilities to the welfare of the less fortunate and of the local community, through its contributions to various charity organisations throughout the year. Among the recipients of Kian Joo Group’s donations in year 2014 were Yayasan Tunku Naquiyuddin, Pertubuhan Kebajikan Amitabha Malaysia, Sekolah Jenis Kebangsaan Cina Kampung Baru Ampang and Buddhist Enlightenment Haven.

The Group continued to be involved in an annual community event, the 27th Seremban Half Marathon 2014 as a co-sponsor.

For many years, the Group has been involved in providing undergraduates from various local universities to undergo their internship training. This year is no exception, and many of the undergraduates have benefited from the experience, skills and knowledge gained during their internship with the Group.

For its staff members, the Group constantly organises training programs for them to enhance their skills and knowledge. The Group has also sponsored some of its staff members to pursue further education.

The Group is always committed in ensuring that its employees work in a balanced working environment, with the encouragement of staff participation in social and recreational activities.

Corporate SoCIal reSpoNSIbIlIty StateMeNt

Annual Report 2014

11

The Board of Kian Joo continues to uphold its commitment to good corporate governance practices in line with the recommendations set out in the Malaysian Code on Corporate Governance 2012 (“Code”) and the provisions in the Main Market Listing Requirements of Bursa Securities (“Main LR”).

a) direCtors

I. The Board’s role and composition

The Board’s main roles are to create value for shareholders and provide leadership to the Group. It is primarily responsible for the Group’s overall strategic plans and directions, establishment of policies for the Group, ensuring high standards of ethics and corporate conduct, implementation of corporate disclosure policies and procedures, overseeing the conduct of the businesses, risk management, succession planning of senior management, implementing investor relations programmes and ensuring the system of internal controls and management information system are adequate and effective.

The Board currently has 7 members, comprising 4 Independent Non-Executive Directors (“NEDs”), a Group Managing Director (“MD”), a Chief Operating Officer (“COO”) cum Executive Director (“ED”) and an ED. The number of Independent Directors makes up more than the required one-third (1/3) of the board membership to be independent.

The Chairman holds a Non-Executive position and is primarily responsible for matters pertaining to the Board and overall conduct of the Board. The Group MD is responsible for the development of the corporate goals and objectives of the Group and the setting of strategies to achieve them.

The COO cum ED is responsible for the overall performance and profitable operation of the Company and the Group. The Executive Directors work together with the other senior management of the Group, to manage the business of the Group in the manner consistent with all relevant policies, standards, guidelines, procedures and practices of the Group and in accordance with any specific plans, instructions and directions of the Board.

The Independent NEDs do not participate in the day-to-day management as well as the daily business of the Company. In staying clear of any potential conflict of interest situation, the Independent Directors remain in a position to fulfill their responsibility to provide a check and balance to the Board. They provide independent and objective views, advice and judgment which take into account the interests of the Group as well as shareholders and investors. The Board does not consider it necessary to nominate a recognised Senior Independent NED given the separation of the roles of the Chairman who is a NED and the Group MD.

A brief profile of each Director is presented on pages 6 to 9 of this Annual Report.

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company during the financial year ended 31 December 2014 (“FYE 2014”). All the Directors do not hold directorships more than that prescribed under the Main LR.

II. Board Charter

The Board Charter of the Company which was approved and adopted on 20 August 2013, provides reference for Directors in respect of the Board’s responsibilities and matters specifically reserved for the Board. Key matters specifically reserved for the Board’s collective approval include, among others, business strategy, Group operational plan, annual budget, business restructuring, remuneration structure and policy for Directors, appointment to the Board, Board Committees and key executive positions, interim and annual financial statements, corporate policies and purchase of the Company’s own shares.

The division of responsibilities between the Board, the different Board Committees, the Chairman, the COO and the ED as well as the Directors’ Code of Best Practice are also incorporated in the Board Charter. The Board is mindful of the importance of reviewing and amending the Board Charter, as and when required, to ensure an optimum structure for efficient and effective decision making in the Group.

StateMeNt oN Corporate GoVerNaNCe


12

a) direCtors (Cont’d)

III. The Board Committees

The Board is assisted by the following Board Committees:

1. Executive Committee

The Executive Committee (“Exco”) comprising the Group MD, the COO, the ED and the Group Chief Financial Officer (“CFO”) assumes some of the responsibilities and functions of the Board, oversees the running of the Group and the implementation of the Board’s decisions and policies relating to operational, sales and marketing strategies, financial, risk management, internal controls, environmental, human resource, compliance, credit control and legal issues.

2. Audit Committee

The Audit Committee was established on 30 June 1994. For details of its composition and activities, please refer to the Audit Committee Report on page 18 of this Annual Report.

3. Remuneration Committee

The Remuneration Committee was established on 19 November 2001 and currently comprises of the following members, a majority of whom are Independent NEDs:

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar (Chairman)Dato’ Tan Guan CheongYeoh Jin Hoe

The Remuneration Committee shall recommend for the Board’s approval, the ED’s remuneration package and evaluate the effectiveness of the contributions made by each member of the Board.

There was no Remuneration Committee meeting held during the FYE 2014 by reason that the remunerations of the ED and fees of Directors are not subject to annual adjustment.

Directors’ fees are determined by the Board which are based on a standard fixed fee and subject to the approval of shareholders at the Annual General Meeting (“AGM”) of the Company. Details of the number of EDs and NEDs and their remuneration for the FYE 2014 are disclosed in Note 10 to the Financial Statements.

4. Nomination Committee

The Nomination Committee was set up on 26 February 2003 to formalise procedures for appointments to the Board. All decisions on appointments are made by the Board after considering the recommendations of the Nomination Committee.

The Nomination Committee currently comprises of the following members who are all Independent NEDs:

Dato’ Mah Siew Kwok (Chairman)Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afarY.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

The Nomination Committee’s role is primarily to:

• identify, select and recommend to the Board, candidates for directorships of the Company; • recommend to the Board, Directors to fill the seats on Board committees; and • evaluate the effectiveness of the Board and the Board Committees (including its size and composition),

contributions and performance and the independence of the Independent Directors.


Annual Report 2014

13


III. The Board Committees (cont’d)

4. Nomination Committee

In FYE 2014, the Nomination Committee evaluated the Directors having regard to the size, balance, composition, mix of skills, experience, core competencies and other qualities of the existing Board, level of commitment, resources and time that each of the Directors contribute to the existing Board.

Each of the Independent Directors provided confirmation of their independence to the Nomination Committee. Upon the assessment, the Nomination Committee concluded that Independent Directors, Dato’ Tan Guan Cheong, Dato’ Mah Siew Kwok and Y.A.M. Tunku Zain Al-’Abidin Tunku Muhriz continue to be independent minded. Each demonstrated conduct and behaviour that displayed their independence.

The Nomination Committee has also determined at the annual assessment carried out in FYE 2014 that Independent Director, Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar who has served on the Board for 15 years, remains objective and independent minded in his participation during deliberation and decision making of the Board and Board Committees. Accordingly, recommendation was made to the Board to retain the designation of Y.A.M. Tunku Naquiyuddin as Independent NED of the Company.

The Board composition was reviewed to ensure effective functioning of the Board in light of the vacancies created by the following, as well as to enable progressive refreshing of Independent NEDs by bringing in new experience, knowledge and expertise on the Board to meet the current and future needs of the Company and of the Group:

i. See Tiau Kee resigned as a Director of the Company on 28 February 2014; and ii. See Teow Koon retired as Director at the close of the Fifty-Sixth AGM of the Company held on 16 April

2014.

As it is important to also balance tenure and skills so that the distribution of length of tenure across the Board members represents a reasonable mix of old and new thinking, with diverse skill sets, recommendation was made to the Board to fill up the existing vacancies on the Board by enlisting suitable candidates who are experts within the field of financial, human capital and/or technical industries.

IV. Re-election

The Articles of Association provide for all Directors including the Group MD to submit themselves for re-election at least once in every 3 years. Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar, Yeoh Jin Hoe, Chee Khay Leong and Dato’ Anthony See Teow Guan are due to retire by rotation at the close of the Fifty-Seventh AGM of the Company on 24 April 2015 but shall be eligible for re-election. Yeoh Jin Hoe, Chee Khay Leong and Dato’ Anthony See Teow Guan have offered themselves for re-election at the aforesaid AGM.

In line with best corporate governance practice, Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tunku Ja’afar has indicated that he will not seek re-election and will retire at the close of the said AGM accordingly.

The Articles also provide that Directors newly appointed by the Board shall retain office until the next AGM but shall be eligible for re-election.

In accordance with Section 129(2) of the Companies Act, 1965, Directors who are of or over the age of 70 years shall vacate office as Director at the conclusion of every AGM. Independent Director, Dato’ Tan Guan Cheong, who is over the age of 70 years, has indicated that he will not seek re-appointment at the forthcoming Fifty-Seventh AGM of the Company and will vacate office as Director at the close of the said AGM accordingly.



14


V. Board meetings and attendances

9 Board meetings were held during the FYE 2014 and the attendance of the Directors were as follows:

Number of Meetings % ofDirectors attended in FYE 2014 Attendance

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar 9 out of 9 100Yeoh Jin Hoe 9 out of 9 100Chee Khay Leong (1) 5 out of 9 56Dato’ Anthony See Teow Guan 9 out of 9 100See Tiau Kee (2) 2 out of 2 100See Teow Koon (3) 6 out of 6 100Dato’ Tan Guan Cheong 9 out of 9 100Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz 9 out of 9 100Dato’ Mah Siew Kwok 8 out of 9 89

Notes:

(1) He recused himself from 4 Board meetings which were held for the purpose of deliberating on the offer received by the Company from Aspire Insight Sdn Bhd to acquire the entire business and undertaking including all of the assets and liabilities of the Company (“Offer”) by virtue of his interest in the Offer.

(2) Resigned on 28 February 2014.(3) Retired on 16 April 2014.

VI. Supply of Information

Prior to the Board meetings, every Director is given an agenda and a comprehensive set of Board papers consisting of reports on the Group’s financial performance, status of major projects, future development, the quarterly or annual financial results, the minutes of preceding meetings of the Board and Board Committees, and relevant proposal papers (if any) to allow them sufficient time to review, consider and deliberate knowledgeably on the matters to be tabled.

Senior management staff as well as advisers and professionals appointed to act for the Company on corporate proposals to be undertaken by the Company are invited to attend the meetings to furnish the Board with their views and explanations on relevant agenda items tabled to the Board and to provide clarification on issues that may be raised by any Director.

In between Board meetings, approvals on matters requiring the sanction of the Board are sought by way of circular resolutions enclosing all the relevant information to enable the Board to make informed decisions. All circular resolutions approved by the Board are tabled for notation at the subsequent Board meeting.

The Board also perused the decisions deliberated by the Board Committees through minutes of these Committees. The Chairman of the Board Committees is responsible for informing the Board at the Directors’ Meetings of any salient matters noted by the Committees and which may require the Board’s direction.

The Exco also holds monthly management meetings with the operating heads to deliberate on risk management matters, the performance of the Group, sales, marketing development and strategies, operational, environmental, internal control, regulatory and statutory matters pertaining to the Group.

The Board have access to the advice and services of the Company Secretaries and may undertake independent professional advice, where necessary, and in appropriate circumstances, in furtherance of their duties.


Annual Report 2014

15


VII. Directors’ Training

All the Directors had completed Bursa Securities’ Mandatory Accreditation Programme. During the FYE 2014, the existing Directors have attended various training programmes and seminars to keep abreast with developments on a continuous basis in compliance with Paragraph 15.08 of the Main LR, the details of which are set below:

Directors Courses/Seminars/ Workshops/Conferences

Organiser Date

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar

National Economic Summit and Dialogue with the Prime Minister of Malaysia

Asian Strategy & Leadership Institute (“ASLI”)

7 March 2014

The Inaugural Conference of the Jeffery Cheah Institute on South East Asia

ASLI 19 March 2014

Strategic Issues Forum / Corporate Malaysia Roundtable - Roundtable Discussion with Mr. Timothy Beardson

ASLI 11 April 2014

In House Training on Personal Data Protection Act - A Brief Overview

Ann Joo Group 24 April 2014

Forum on Board Chairman Series: The Role of the Board Chairman

The ICLIF Leadership & Governance Centre

24 June 2014

Yeoh Jin Hoe

Looking Beyond Financial Statements Malaysian Investor Relations Association (“MIRA”)

7 August 2014

Regional IR Platform for Foreign Investors Outreach

MIRA 13 August 2014

Chee Khay Leong Goods and Services Tax (“GST”) Training Kian Joo Group 13 November 2014

Dato’ Anthony See Teow Guan

Interpack & Metpack 2014 Sayers Publishing 6 to 10 May 2014

GST Briefing and Q & A Session Royal Malaysian Customs

26 September 2014

Dato’ Tan Guan Cheong

Roundtable Discussion on Financial Reporting

Malaysian Accounting Standards Board

24 April 2014

Integrating Corporate Governance with Business Acumen and Corporate Disclosure

Smart Focus Business Consulting

27 May 2014

Personal Data Protection Act 2010 and The Competition Act 2010: Implications on Capital Market

CHK Consultancy Sdn Bhd

18 June 2014

Looking Beyond Financial Statements MIRA 7 August 2014

2015 Budget Update Deloitte Malaysia 18 November 2014

Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

21st Century Malaysia: Public Leadership, Education and Entrepreneurship

Sunway University 12 January 2014

Managing the International and Domestic Fault Lines in East and Southeast Asia

Jeffrey Cheah Institute on Southeast Asia

19 March 2014

Keynote address: The ongoing journey World Malay-Polynesian Organisation

28 March 2014



16


VII. Directors’ Training (cont’d)

Directors Courses/Seminars/ Workshops/Conferences

Organiser Date

Tunku Zain Al-’Abidin Ibni Tuanku Muhriz(cont’d)

The Role of Civil Society in Realising the ASEAN Community

Institute for Diplomacy and Foreign Relations

8 April 2014

Towards a People Centred ASEAN - The Viewpoints of Women and Emerging Young Leaders in achieving the ASEAN Social and Cultural Community at 11th ASEAN Leadership Forum

Asian Strategy and Leadership Institute

12 May 2014

Penghayatan Sejarah dalam Pembinaan Diri Bangsa

Jabatan Kebudayaan dan Kesenian Negara

21 May 2014

Education Beyond Borders Sunway University 6 August 2014

The Role of ASEAN Civil Society: Towards ASEAN Community 2015

Universiti Kebangsaan Malaysia

13 August 2014

On authentic leadership Sunway University 22 August 2014

Inspirations from Raja Aziz Addruse: Morality and the Rule of Law

Malaysian Bar Council 24 September 2014

ASEAN Economic Community: Opportunities and Challenges

Economic Freedom Network

7 November 2014

Dato’ Mah Siew Kwok

Executive Briefing on GST for Property & Construction

BDO 15 May 2014

National Seminar on Anti-Money Laundering and Anti-Terrorism Financing 2014

Malaysian Institute of Corporate Governance

24 November 2014

b) inVestors reLations and sHareHoLders CoMMUniCation

The Company recognises the importance of effective and timely communication with shareholders and investors to keep them informed of the Group’s latest financial performance and material corporate matters affecting the Company. Such information is available to shareholders and investors through the Annual Reports, the various disclosures and announcements made to the Bursa Securities and the Company’s corporate website.

The AGM provides the principal platform for dialogue and interactions with the shareholders. At every meeting, the Chairman sets out the performance of the Group for the financial year then ended. Question and Answer session will then be convened wherein the Directors, Group CFO, Company Secretaries and the external auditors will be available to answer to the queries raised by the shareholders.

The Chairman of the Board will announce before the start of all general meetings the right of the shareholders to demand a poll in accordance with the Company’s Articles of Association.

A full explanation for each resolution proposed at the AGM will usually be provided by the Chairman before the resolution is put to the vote. A press briefing, attended by the key management, is also held after each AGM.

Shareholders and the public can also access information on the Group’s background, products and financial performance through the Company website at www.KJCF.net.


Annual Report 2014

17

C) aCCoUntabiLity and aUdit

I. Financial Reporting

The Board takes responsibility for presenting a balanced and understandable assessment of the Group’s operations and prospects each time it releases its quarterly and annual financial statements to shareholders. The Audit Committee reviews the information to be disclosed to ensure its accuracy and adequacy.

A statement by Directors of their responsibilities in preparing the financial statements is set out on page 26 of this Annual Report.

II. Risk Management and Internal Controls

The Board recognises the importance of a sound risk management framework and internal control system in order to safeguard the Group’s assets and therefore, shareholders’ investments in the Group.

The Board affirms its overall responsibility for the Group’s system of internal controls. This includes reviewing the adequacy and integrity of financial, operational, environmental and compliance controls and risk management procedures within an acceptable risk profile. Since certain risks and threats are externally driven, unforeseen and beyond the Group’s control, the system can only provide reasonable assurance against misstatement or loss.

The Board had put in place an ongoing process for identifying, evaluating and managing significant risks faced by the Group.

III. Relationship with Auditors

Ernst & Young, the external auditors report to the Audit Committee in respect of their audit on each year’s statutory financial statements on matters that require their attention. Their role and participation during the FYE 2014 are set out in the Audit Committee Report on page 18 of this Annual Report.

At least twice a year, the Audit Committee will have a separate session with the external auditors without the presence of the Group MD, the COO, EDs and the management.

d) CoMPLianCe WitH tHe Code

The Group has substantially complied with the Principles and Recommendations of the Code except as disclosed below:

Board Gender Diversity Policy

Corporate Governance Blueprint 2011 states that the Board should ensure women participation on Board to reach 30% by year 2016.

The Company does not have a policy on boardroom diversity, including gender diversity. In its selection for Board representation, the Company believes in, and provides equal opportunity to candidates with merit.

This Statement is made in accordance with a resolution of the Board dated 4 March 2015.



18

MeMbersHiPs and MeetinGs

The Audit Committee (“Committee”) comprises of 3 members, all of whom are Independent Non-Executive Directors. The Committee held 6 meetings during the FYE 2014 and the attendance of the members were as follows:-

Members

Dato’ Tan Guan Cheong (Chairman / Independent Non-Executive Director)Dato’ Mah Siew Kwok (Member / Independent Non-Executive Director)Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz (Member / Independent Non-Executive Director)

fUnCtions, roLes and resPonsibiLities

The primary objectives of the Committee are to:

a) provide assistance to the Board in fulfilling its statutory and fiduciary responsibilities for examinations of the Group and in monitoring the Group’s management of business/financial risk processes and accounting and financial reporting practices;

b) determine that the Group has adequate administrative, operational and internal accounting controls and that the Group is operating in accordance with its prescribed procedures, codes of conduct and applicable legal and regulatory requirements;

c) serve as an independent and objective party in the review of the financial information presented by management for distribution to shareholders and the general public;

d) ensure that the Company’s financial statements comply with applicable financial reporting standards; and

e) provide direction and oversight over the internal audit function and the external auditors to enhance their independence from management.

The duties and responsibilities of the Committee shall include the following:

a) To recommend appointment of the external auditors and their fees and consider any questions of resignation or dismissal including whether there is reason (supported by grounds) to believe that the external auditors are not suitable for re-appointment, including making an assessment of their independence where the external auditors also provide non-audit services.

b) To review the external auditors’ proposed plan scope and approach of audit before the audit commences and ensure co-ordination where more than 1 audit firm is involved.

c) To review the quarterly financial announcements and annual financial statements of the Group, prior to the approval by the Board, focusing particularly on:

- changes in major accounting policy and practices and their implementation;- major judgmental areas;- significant and unusual events;- significant adjustments arising from the audit;- going concern assumption; and- compliance with financial reporting standards and the stock exchange and other legal requirements.

d) To discuss problems and reservations arising from the audits and any matter the auditor may wish to discuss (in the absence of management where necessary) including assistance given by employees of the Group to the auditor.

e) To review with the external auditors, their evaluation of the system of internal controls, including any significant suggestions for improvements and management’s response.

f) To review with the external auditors, their audit report.

aUDIt CoMMIttee report

Annual Report 2014

19

fUnCtions, roLes and resPonsibiLities (Cont’d)

g) To review the Group’s business risk management process, including adequacy of the Group’s overall control environment and controls in selected areas representing significant financial and business risk.

h) On internal audit function:

- review the adequacy of the scope, function, 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, process and results of the internal audit programme, processes or investigation undertaken and, where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function;

- the internal audit function should be independent of the activities it audits; the internal audit activities should be free from interference in determining the scope of internal audit, performing work and communicating results; and

- the internal audit function reports directly to the Committee.

i) To review any related party transactions 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’s integrity.

j) To review the major findings of internal investigations and management’s response.

k) To review with the Group’s counsels, any legal matters that could have a significant impact on the Group’s financial statements.

l) To review the findings of any examinations by regulatory authorities.

m) Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main LR, the Committee must promptly report such matter to Bursa Securities.

n) Perform other oversight functions as requested by the Board.

sUMMary of aCtiVities of tHe internaL aUdit fUnCtion and tHe CoMMittee dUrinG tHe fye 2014

Internal Audit Function

The Group has an Internal Audit Department with the principal responsibility to undertake regular and systematic reviews of the systems of internal controls to provide reasonable assurance that such systems continue to operate effectively and efficiently.

In attaining such objectives, the following activities were carried out by Internal Audit Department in 2014:

• Conducted periodic checks to determine the extent of compliance with established policies, procedures and statutory requirements.

• Carried out ad-hoc investigations and special reviews requested by management.

• Recommended improvements to the existing systems of controls by way of issuing audit reports to the appropriate level of management for corrective actions and improvement to be taken.

• Co-ordinating and conducting cross-auditing among the subsidiaries and being part of the Internal Quality Audit Team.

The total cost incurred by the Internal Audit Department for the FYE 2014 amounted to RM253,363.

All internal audit activities were conducted by the in-house audit team.



20

sUMMary of aCtiVities of tHe internaL aUdit fUnCtion and tHe CoMMittee dUrinG tHe fye 2014 (Cont’d)

Summary of Activities of the Committee

During the FYE 2014, the Committee performed its duties as set out above.

The main activities undertaken by the Committee were as follows:

• Reviewed with the external auditors their scope of work and audit plan for the year.

• Reviewed the results of the external audit, the audit report and the management letter, including management’s response.

• Reviewed the internal audit department’s resources requirements, program and plan for the year.

• Reviewed the internal audit reports and actions taken by management to improve on the internal controls system based on internal audit findings.

• Reviewed the annual report and audited financial statements of the Group and of the Company before submission to the Board for their consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965.

• Reviewed the quarterly unaudited financial result announcements before recommending them for the Board’s approval. The review and discussions were conducted with the Group CFO.

• Reviewed the Group’s compliance with the Main LR, financial reporting standards and other relevant legal and regulatory requirements.

• Reviewed the recurrent related party transactions entered into by the Group.



Annual Report 2014

21

sHare bUy-baCK

During the FYE 2014, the Company did not enter into any share buy-back transaction.

iMPosition of sanCtions and PenaLties

There were no sanctions or penalties imposed on the Company and/or its subsidiaries, Directors or management by the relevant regulatory bodies during the FYE 2014.

non-aUdit fees

The amount of non-audit fees paid to the external auditors by the Company for the FYE 2014 amounted to RM168,000 (2013: RM19,000).

MateriaL ContraCts

Save as disclosed below, there were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Company and/or its subsidiaries involving Directors’ or major shareholders’ interests that were still subsisting at the end of the financial year or since then:

I. Offer from Aspire Insight Sdn Bhd (“Aspire”) to acquire the entire business and undertaking, including all of the assets and liabilities of the Company

On 26 November 2013, the Company received a letter of offer from Aspire to acquire the entire business and undertaking, including all of the assets and liabilities of Kian Joo at a cash consideration of RM1,465,753,693 (“Offer”). The Offer was opened until 10 December 2013. The shareholders of Aspire are Ekuiti Merdu Sdn Bhd (“Ekuiti”) and Alleyways Sdn Bhd (“Alleyways”). Ekuiti is wholly-owned by Employees Provident Fund Board, a substantial shareholder of Kian Joo, while Alleyways is majority-owned by Chee Khay Leong, the COO cum ED of Kian Joo.

On 5 December 2013, the Company requested from Aspire for an extension of time from 10 December 2013 until 29 January 2014 to consider the Offer. Aspire, vide a letter dated 10 December 2013, agreed to the extension of the Offer until 20 January 2014.

On 10 January 2014, the Board deliberated and agreed to accept the Offer.

On 29 January 2014, the Company received a letter from Aspire requesting for an extension of time for the completion of the ongoing due diligence exercise and the signing of the definitive agreement in relation to the Offer. The Company agreed on the extension from 31 January 2014 to 14 March 2014.

Both the Company and Aspire agreed on 13 March 2014 to further extend the timeline to enter into the definitive agreement and transaction documents from 14 March 2014 to 31 March 2014.

On 24 March 2014, the Company entered into a conditional Business Sale Agreement (“BSA”), Properties Sale Agreements and Assets Sale Agreement with Aspire in respect of the proposed disposal of the entire business and undertaking, including all of the assets and liabilities of Kian Joo to Aspire for a total consideration RM1,465,753,693 which translates to approximately RM3.30 per ordinary share of RM0.25 each in Kian Joo (“Proposed Disposal”). Upon completion of the Proposed Disposal, the Company will undertake a capital reduction and repayment exercise to return the proceeds arising from the Proposed Disposal to all entitled shareholders via a proposed distribution of the proceeds in cash at not less than RM3.30 per ordinary share of RM0.25 each in the Company (“Proposed Proceeds Distribution”).

On 29 May 2014, the Company, via its adviser, announced that Bursa Securities had vide its letter dated 27 May 2014 approved the extension of time for the Company to submit the draft Circular to shareholders in relation to the Proposed Disposal and Proposed Proceeds Distribution (collectively, “Proposals”) from 24 May 2014 until 23 August 2014. Vide a letter dated 22 August 2014, Bursa Securities granted the Company a further extension of time to submit the draft Circular to shareholders in relation to the Proposals from 23 August 2014 until 23 November 2014.

Pursuant to a letter dated 28 August 2014, the Company and Aspire agreed to extend the date on which all conditions precedent to the BSA should be fulfilled from 23 September 2014 to 23 March 2015.

Bursa Securities vide its letter dated 26 November 2014 approved a further extension of time for the Company to submit the draft Circular to shareholders from 24 November 2014 until 31 March 2015.

otHer INForMatIoN


22

MateriaL ContraCts (Cont’d)

II. Recurrent Related Party Transactions

For information on recurrent related party transactions of a revenue or trading nature, please refer to Note 33 to the Financial Statements.

oPtions or ConVertibLe seCUrities

The Company has not issued any options or convertible securities during the FYE 2014.

VarianCe froM UnaUdited resULts annoUnCed

During the FYE 2014, there were no significant variances noted between the reported results and the unaudited results announced.

Profit estiMate, foreCast or ProJeCtion

During the FYE 2014, the Company has not made any profit estimate, forecast or projection.

Profit GUarantee

During the FYE 2014, there were no profit guarantees given by the Company.

dePository reCeiPt ProGraMMe

The Company did not sponsor any depository receipt programme during the FYE 2014.

otHer INForMatIoN

Annual Report 2014

23

introdUCtion

The Board of Kian Joo is responsible for maintaining a sound system of internal control in the Company and its subsidiaries (“Group”) and is pleased to provide the following Statement on Risk Management and Internal Control (“the Statement”), which outlines the nature and scope of risk management and internal control systems of the Group during the FYE 2014. This Statement is issued pursuant to Paragraph 15.26(b) of the Main LR and in accordance with the Statement on Risk Management & Internal Control: Guidelines for Directors of Listed Issuers.

board’s resPonsibiLity

The Board is responsible for the Group’s internal control and risk management systems to safeguard shareholders’ investment and the Group’s assets as well as reviewing the adequacy and effectiveness of the said systems. This responsibility is delegated to the Audit Committee, which is empowered by its terms of reference to seek assurance on the adequacy and integrity of the internal control system through independent reviews carried out by the internal audit function and through engagement with management.

The Board has received assurance from the Group Managing Director (“MD”) and Group Chief Financial Officer (“CFO”) that the Group’s risk management and internal control systems have operated adequately and effectively for FYE 2014, in all material aspects.

The assurance has been given based on the internal controls established and maintained by the Group, work performed and reports provided by the internal audit function, management letters provided by external auditors, reviews performed by management and various Board Committees as well as reliance on confirmations by management.

The system of internal control is designed to manage rather than to eliminate all risks that may impede the achievement of the Group’s business objectives. Therefore, the internal control system can only provide reasonable assurance and not absolute assurance against material misstatement or loss.

The Board is of the opinion that the internal controls and risk management systems were adequate for FYE 2014 to address the risks which the Group considers relevant and material to its operations.

risK ManaGeMent

The Group has a formalised risk management process for identifying, evaluating, monitoring and managing significant risks. This process has been in place for the financial year under review.

Key aspects of the risk management process are:

(i) The Exco was established by the Board for ensuring an effective risk management process. The Exco comprises the Group MD, Chief Operating Officer (“COO”), the Executive Director (“ED”) and the Group CFO, who bring a mix of relevant business and management knowledge and experience;

(ii) Structured risk management framework, which includes a process for identifying significant risks and mitigating action plans;

(iii) The Exco meets the management team of each operating division on a monthly basis to review the risk profile, control procedures, annual budget and status of mitigating action plans;

(iv) Any significant risks that require the Board’s attention will be highlighted; and

(v) Key risks are highlighted to the internal audit function for the development of internal audit plan. Risk management framework and activities are reviewed by the internal audit function annually.

StateMeNt oN rISK MaNaGeMeNt aND INterNal CoNtrol


24

internaL aUdit fUnCtion

The Group’s independent internal audit function is performed by the Group’s Internal Audit Department to assist the Board and the Audit Committee in providing independent assessment of the adequacy, efficiency and effectiveness of the Group’s internal control system. The internal auditor reports directly to the Audit Committee.

For FYE 2014, internal audit reviews were carried out in accordance with internal audit plan approved by the Audit Committee. Observations from these internal audit reviews were presented, together with proposed action plans and management’s response, to the Audit Committee for its review. The internal audit function also follows up and reports to the Audit Committee on whether the corrective action plans to address the control weaknesses have been satisfactorily implemented by management. Further details of the activities of the internal audit function are provided in the Audit Committee Report.

Based on the internal audit reviews carried out, none of the weaknesses noted have resulted in any material losses, contingencies or uncertainties that would require separate disclosure in this Annual Report.

The cost incurred in maintaining the internal audit function for FYE 2014 amounted to RM253,363.

internaL ControL

The key elements of the Group’s internal control system are described below:

(a) Organisation Structure & Authorisation ProceduresThe Group maintains a formal organisation structure. Delegation of authority including authorisation limits at various level of management and those requiring the Board’s approval are documented and designed to ensure accountability and responsibility.

(b) Documented Policies & ProceduresClearly defined policies and procedures are in place, where applicable, and are regularly updated to reflect changing risks or to address operational deficiencies.

(c) Planning, Monitoring and Reporting• The Group has an annual planning and budgeting process where financial budget and capital expenditure

proposal are approved by the Board;• Actual performances against budget are monitored closely by the management; and updates on the Group’s

performances are provided to the Board periodically.

(d) Human Resource PolicyDocumented policies and guidelines within the Group covering hiring and termination of employee, training program and performance appraisal to enhance the level of employees’ competency in carrying out their duties and responsibilities.

For FYE 2014, the Group has an investment in a joint venture company. The Group’s risk management process, internal audit review and internal control system do not apply to the joint venture company, where the Group does not have full management control.

The Group’s interest in the joint venture company is served through representation in its respective joint management committee or board. This representation provided the Board with access to review and monitor the performance of this investment. The Board is provided with periodic reports and information on its performances.

rePortinG and reVieW

There is a monthly management reporting mechanism to monitor and review the financial results for the Group.

The COD cum ED meets with the senior management monthly to discuss and resolve operational and key management issues. Meetings are conducted in the presence of the COO cum ED/senior management to address issues identified during Standard and Industrial Research Institute of Malaysia (“SIRIM”), LLOYD’S, SGS’s surveillance audits and the Internal Quality Audits.

Management Review Meetings are conducted at least once every year to review action plans to ensure its continual suitability, adequacy and effectiveness including opportunities and changes, if any, to be made to its Quality Management System including Quality Policy and Objectives.


Annual Report 2014

25

otHer aCtiVities

The Company together with its 7 subsidiaries and 1 joint venture company were accredited by SIRIM or other certification bodies, such as LLOYD’S of United Kingdom, while 2 other subsidiaries were accredited by the accreditation bodies in Vietnam. The accreditations are in respect of having implemented a Quality Management System conforming to ISO 9001: 2008.

In addition, 4 subsidiaries above had also obtained FSSC 22000 certifications for conforming with the requirements of Food Safety Management System Standard pertaining to Food Safety while additional 2 subsidiaries had been awarded the HACCP certifications and ISO 22000: 2005.

The Quality Management System lays down procedures in performing key processes with the aim of achieving and maintaining, consistently high quality products. Internal Quality Audits are conducted regularly on the Quality Management System and certification audits are carried out by SIRIM, LLOYD’S and SGS every year to ensure that the procedures laid down in the Quality Management System have been complied. Issues identified during the audits are documented and corrective actions taken accordingly.

reVieW of tHe stateMent by externaL aUditors

Pursuant to Paragraph 15.23 of the Main LR, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for FYE 2014 and reported to the Board that nothing has come to their attention that caused them to believe that the Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the systems of risk management and internal control.

ConCLUsion

The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s Annual Report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group’s risk management and internal control systems in meeting the Group’s strategic objectives.




26

Directors are legally responsible to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year.

In preparing those financial statements, the Directors have:

- ensured applicable accounting standards have been followed- used appropriate accounting policies and applied them consistently- made judgements and estimates that are reasonable and prudent

The Directors are responsible to ensure that proper accounting records are kept and disclosed with reasonable accuracy the financial position of the Group and of the Company and to ensure that the financial statements comply with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965.

The Directors have a general responsibility for taking such steps as are reasonably opened to them to manage risks associated to the business of the Group, safeguard the Group’s assets, to prevent and detect fraud and other irregularities. In this aspect, the Directors have received reasonable assurance from the Group Managing Director and Group Chief Financial Officer that proper internal controls are in place throughout the financial year for these purposes.

reSpoNSIbIlIty StateMeNt by tHe boarD oF DIreCtorS

Annual Report 2014

27

Financial Statements

Directors’ Report

Statement by Directors

Statutory declaration

Independent auditors’ report

Statements of comprehensive income

Statements of financial position

Consolidated statement of changes in equity

Company statement of changes in equity

Statements of cash flows

Notes to the financial statements

Supplementary explanatory note on disclosure of realised and unrealised profits

28

32

32

33

35

37

39

40

41

43

106


28

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

PrinCiPaL aCtiVities

The principal activities of the Company are manufacture and distribution of tin cans and investment holding.

The principal activities of the subsidiaries include the manufacture and distribution of tin cans, 2-piece aluminium beverage cans and corrugated fibreboard cartons, letting of property and provision of contract packing services.

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

resULts

Group Company RM’000 RM’000

Profit after tax 124,428 64,336

Profit attributable to:Owners of the parent 120,910 64,336Non-controlling interests 3,518 -

124,428 64,336

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

diVidends

The amounts of dividends paid by the Company since 31 December 2013 were as follows:

RM’000

In respect of the financial year ended 31 December 2013 as reported in the directors’ report of that financial year :

Final tax exempt (single-tier) dividend of 10% on 444,167,786 ordinary shares, declared on 24 March 2014 and paid on 6 May 2014 11,104

Special tax exempt (single-tier) dividend of 15% on 444,167,786 ordinary shares, declared on 24 March 2014 and paid on 6 May 2014 16,656

27,760

No final dividend will be recommended in respect of the financial year ended 31 December 2014.

DIreCtorS’ report

Annual Report 2014

29

direCtors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afarYeoh Jin HoeChee Khay LeongDato’ Anthony See Teow GuanY.A.M. Tunku Zain Al-’Abidin Ibni Tuanku MuhrizDato’ Tan Guan CheongDato’ Mah Siew KwokSee Teow Koon (retired on 16 April 2014)

Pursuant to Articles 104 and 104A of the Company’s Articles of Association, Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar, Dato’ Anthony See Teow Guan and Chee Khay Leong will retire by rotation at the forthcoming Annual General Meeting and being eligible, the aforesaid directors, with the exception of Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar, offer themselves for re-election.

Pursuant to Article 104A of the Company’s Articles of Association, Yeoh Jin Hoe will retire at the forthcoming Annual General Meeting and being eligible, offers himself for re-election.

In accordance with Section 129(2) of the Companies Act, 1965, Dato’ Tan Guan Chong will retire at the forthcoming Annual General Meeting. He is not seeking re-appointment.

direCtors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 10 to the financial statements) by reason of a contract made by the Company or a related corporation with any 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, except as disclosed in Note 33 to the financial statements.

DIreCtorS’ report


30

direCtors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in ordinary shares in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares of RM0.25 each At At 01.01.2014 Acquired Sold 31.12.2014

The Company

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar 323,100 - - 323,100

Yeoh Jin Hoe * 146,131,500 - - 146,131,500

Dato’ Anthony See Teow Guan 5,463,292 1,460,558 - 6,923,850 # 112,250 213,757 - 326,007 * 7,737,117 - 7,737,117 -

Number of ordinary shares of RM1.00 each At At 01.01.2014 Acquired Sold 31.12.2014

Box-Pak (Malaysia) Bhd. - a fellow subsidiary

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar 2,222,300 - - 2,222,300

Dato’ Anthony See Teow Guan 85,500 70,000 - 155,500 # 37,500 - - 37,500

Yeoh Jin Hoe * 32,910,000 - - 32,910,000

* Denotes deemed interest# Interest in shares held by spouse and children

Yeoh Jin Hoe by virtue of his interests in shares in Can-One Berhad, a substantial corporate shareholder of the Company, is also deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest.

None of the other directors in office at the end of the financial year had any interest in ordinary shares in the Company or its related corporations during the financial year.

DIreCtorS’ report

Annual Report 2014

31

otHer statUtory inforMation

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

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

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

(b) At the date of this report, the directors are not aware of any circumstances which would render:

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

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

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

(e) At the date of this report, there does not exist any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

aUditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors dated 4 March 2015.

Yeoh Jin Hoe Chee Khay Leong

DIreCtorS’ report


32 StateMeNt by DIreCtorSpUrSUaNt to SeCtIoN 169(15) oF tHe CoMpaNIeS aCt, 1965

We, Yeoh Jin Hoe and Chee Khay Leong, being two of the directors of Kian Joo Can Factory Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 35 to 105 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 at 31 December 2014 and of their financial performance and cash flows for the financial year then ended.

Further to the Statement by directors pursuant to Section 169(15) of the Companies Act, 1965, the information set out in Note 42 on page 106 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 4 March 2015.

Yeoh Jin Hoe Chee Khay Leong

StatUtory DeClaratIoNpUrSUaNt to SeCtIoN 169(16) oF tHe CoMpaNIeS aCt, 1965

I, Ooi Teik Huat, being the officer primarily responsible for the financial management of Kian Joo Can Factory Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 35 to 106 are in my opinion 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 declaredby the abovenamed Ooi Teik Huatat Kuala Lumpur in the Federal Territoryon 4 March 2015 Ooi Teik Huat

Before me,

Muralitheran Art Pillai(No. W633)Commissioner for OathsKuala Lumpur

Annual Report 2014

33INDepeNDeNt aUDItorS’ report to tHe MeMberS oF KIaN Joo CaN FaCtory berHaD

(INCorporateD IN MalaySIa)rePort on tHe finanCiaL stateMents

We have audited the financial statements of Kian Joo Can Factory Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 105.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is 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 about 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 judgement, 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 the 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 give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

rePort on otHer LeGaL and reGULatory reqUireMents

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

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.

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

d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.


34

otHer Matters

The supplementary information set out in Note 42 on page 106 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

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.

Ernst & Young Yap Seng ChongAF: 0039 No. 2190/12/15(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

INDepeNDeNt aUDItorS’ report to tHe MeMberS oF KIaN Joo CaN FaCtory berHaD (INCorporateD IN MalaySIa)

Annual Report 2014

35

Group Company Note 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Revenue 4 1,334,784 1,290,567 213,176 162,758Cost of sales (1,119,814) (1,070,533) (137,317) (133,298)

Gross profit 214,970 220,034 75,859 29,460Other items of income: Interest income 5 1,603 2,414 2,014 4,040 Other income 6 6,163 4,740 9,152 2,800Other items of expense: Marketing and distribution (8,017) (5,796) (587) (560) Administrative expenses (72,401) (68,254) (18,802) (16,217) Finance costs 7 (10,016) (5,644) (1,219) (1,077)Share of results of a joint venture 11,727 (102) - -

Profit before tax 8 144,029 147,392 66,417 18,446Income tax expense 11 (19,601) (23,653) (2,081) (2,694)

Profit after tax 124,428 123,739 64,336 15,752

Profit attributable to:Owners of the parent 120,910 118,319 64,336 15,752Non-controlling interests 3,518 5,420 - -

124,428 123,739 64,336 15,752

Earnings per ordinary share attributable to owners of the parent (sen):

Basic 12 27.22 26.64

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

StateMeNtS oF CoMpreHeNSIVe INCoMeFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014


36 StateMeNtS oF CoMpreHeNSIVe INCoMeFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014

Group Company 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Profit for the year 124,428 123,739 64,336 15,752

Other comprehensive income:

Other comprehensive income to be reclassified to profit or loss in subsequent periods:

Foreign currency translation, representing net other comprehensive income to be reclassified to profit or loss in subsequent periods, net of income tax of nil 10,441 8,372 - -

Other comprehensive income not to be reclassified to profit or loss in subsequent periods:

Re-measurement losses on defined benefit plans - (3,709) - (912)- Income tax effect - 928 - 228Share of other comprehensive income of a joint venture - (4) - -Net other comprehensive income not to be reclassified to profit or loss in subsequent periods - (2,785) - (684)

Other comprehensive income for the financial year, net of tax 10,441 5,587 - (684)

Total comprehensive income for the financial year 134,869 129,326 64,336 15,068

Total comprehensive income attributable to:Owners of the parent 129,208 122,077 64,336 15,068Non-controlling interests 5,661 7,249 - -

134,869 129,326 64,336 15,068


Annual Report 2014

37StateMeNtS oF FINaNCIal poSItIoNaS at 31 DeCeMber 2014


Assets

Non-current assetsProperty, plant and equipment 13 830,106 692,698 131,246 138,355Land use rights 14 20,718 14,195 - 1Investment properties 15 23,833 24,282 17,656 17,947Intangible assets 16 2,555 2,500 7 7Investment in subsidiaries 17 - - 107,565 107,439Investment in a joint venture 18 22,196 20,469 10,000 10,000Other assets 21 61,613 39,433 - -Deferred tax assets 19 735 3,366 509 250Other receivables 20 - - 12,950 27,700

961,756 796,943 279,933 301,699

Current assetsInventories 22 307,715 284,282 35,826 46,619Trade and other receivables 20 293,834 279,315 119,660 73,540Other assets 21 15,420 18,064 271 192Tax recoverable 8,204 3,184 - -Cash and bank balances and short term funds 23 123,409 146,383 15,594 49,293

748,582 731,228 171,351 169,644

Total assets 1,710,338 1,528,171 451,284 471,343



38 StateMeNtS oF FINaNCIal poSItIoNaS at 31 DeCeMber 2014


Equity and liabilities

Current liabilitiesProvisions 24 43 58 - -Retirement benefit obligations 25 3,108 10,985 1,426 3,957Income tax payable 1,409 2,698 185 22Loans and borrowings 26 183,029 132,621 - 14,615Trade and other payables 27 140,638 130,200 22,195 63,834Derivatives 28 1,557 - - -

329,784 276,562 23,806 82,428

Net current asset 418,798 454,666 147,545 87,216

Non-current liabilitiesRetirement benefit obligations 25 35,068 31,458 12,728 10,741Deferred tax liabilities 19 21,155 18,297 - -Loans and borrowings 26 111,800 95,616 - -Derivatives 28 5,968 4,750 - -

173,991 150,121 12,728 10,741

Total liabilities 503,775 426,683 36,534 93,169

Net assets 1,206,563 1,101,488 414,750 378,174

Equity attributable to owners of the parentShare capital 30 111,042 111,042 111,042 111,042Share premium 30 744 744 744 744Other reserves 31 13,114 4,816 - -Retained earnings 32 1,014,000 920,850 302,964 266,388

1,138,900 1,037,452 414,750 378,174Non-controlling interests 67,663 64,036 - -

Total equity 1,206,563 1,101,488 414,750 378,174

Total equity and liabilities 1,710,338 1,528,171 451,284 471,343


Annual Report 2014

39CoNSolIDateD StateMeNt oF CHaNGeS IN eqUItyFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014

Attributable to owners of the parent Non-distributable Distributable Non-distributable Equity attributable to owners Foreign of the Other currency Non- Equity, parent, Share Share Retained reserves, Capital translation controlling Note total total capital premium earnings total reserve reserve interests RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2014 1,101,488 1,037,452 111,042 744 920,850 4,816 4,480 336 64,036Total comprehensive income for the financial year 134,869 129,208 - - 120,910 8,298 - 8,298 5,661

Transactions with ownersDividends on ordinary shares 41 (27,760) (27,760) - - (27,760) - - - -Dividends paid to non-controlling interests (2,034) - - - - - - - (2,034)

Total transactions with owners (29,794) (27,760) - - (27,760) - - - (2,034)

At 31 December 2014 1,206,563 1,138,900 111,042 744 1,014,000 13,114 4,480 8,634 67,663

At 1 January 2013 (as previously stated) 1,033,207 974,204 111,042 744 864,009 (1,591) 4,480 (6,071) 59,003Effects of adopting the amendments to MFRS 119 (3,491) (3,309) - - (3,309) - - - (182)

At 1 January 2013 (restated) 1,029,716 970,895 111,042 744 860,700 (1,591) 4,480 (6,071) 58,821

Total comprehensive income for the financial year 129,326 122,077 - - 115,670 6,407 - 6,407 7,249

Transactions with ownersDividends on ordinary shares 41 (55,520) (55,520) - - (55,520) - - - -Dividends paid to non-controlling interests (2,034) - - - - - - - (2,034)

Total transactions with owners (57,554) (55,520) - - (55,520) - - - (2,034)

At 31 December 2013 1,101,488 1,037,452 111,042 744 920,850 4,816 4,480 336 64,036



40 CoMpaNy StateMeNt oF CHaNGeS IN eqUItyFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014

Non-distributable Distributable Share Share Retained Total Note capital premium earnings equity RM’000 RM’000 RM’000 RM’000

At 1 January 2014 111,042 744 266,388 378,174Total comprehensive income for the financial year - - 64,336 64,336Dividends on ordinary shares 41 - - (27,760) (27,760)

At 31 December 2014 111,042 744 302,964 414,750

At 1 January 2013 (as previously stated) 111,042 744 307,755 419,541Effects of adopting the amendments to MFRS 119 - - (915) (915)

At 1 January 2013 (restated) 111,042 744 306,840 418,626Total comprehensive income for the financial year - - 15,068 15,068Dividends on ordinary shares 41 - - (55,520) (55,520)

At 31 December 2013 111,042 744 266,388 378,174


Annual Report 2014

41StateMeNtS oF CaSH FlowSFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014


Cash flows from operating activitiesReceipts from customers 1,323,543 1,274,220 159,887 155,690Payments to suppliers (1,165,087) (1,097,856) (169,341) (144,566)

Cash generated from operations 158,456 176,364 (9,454) 11,124Interest paid (10,046) (6,153) (1,219) (1,077)Income tax paid (20,241) (22,748) (2,177) (2,307)

Net cash generated from/(used in) operating activities 127,989 147,463 (12,850) 7,740

Cash flows from investing activitiesDividend received from subsidiary companies - - 50,347 4,218Dividend received from a joint venture 10,000 1,750 10,000 1,750Acquisition of: Property, plant and equipment (Note a) (195,466) (121,655) (3,508) (4,768) Land use rights (Note 14) (5,647) (1,634) - - Investment properties (Note 15) (20) (383) (20) (383) Intangible asset (Note 16) (231) (163) (8) (10)Proceeds from disposal of property, plant and equipment 1,644 301 3,204 93Additional investment in a subsidiary (Note 17) - (4,184) - (4,500)Net change in short term funds 16,587 (44,552) 23,266 (25,051)Interest received 1,603 2,414 2,014 4,040

Net cash (used in)/generated from investing activities (171,530) (168,106) 85,295 (24,611)

Cash flows from financing activitiesTerm loans, bankers’ acceptances and revolving credit: Drawdown 81,592 70,931 63,456 7,900 Repayment (15,000) (25,000) (78,071) (40,000)Dividends paid to: Equity holders of the Company (27,760) (55,520) (27,760) (55,520) Non-controlling interests (2,034) (2,034) - -Advances (to)/from a joint venture - (13) 17 36Inter-company (payments)/receipts - - (40,520) 61,448

Net cash used in financing activities 36,798 (11,636) (82,878) (26,136)

Net decrease in cash and cash equivalents (6,743) (32,279) (10,433) (43,007)Effects of exchange rate changes 356 427 - -Cash and cash equivalents at beginning of the year 101,831 133,683 24,242 67,249

Cash and cash equivalents at end of the year (Note b) 95,444 101,831 13,809 24,242

Note a

Purchase of property, plant and equipment, paid for in cash (195,466) (121,655) (3,508) (4,768)Interest capitalised (30) (509) - -

Additions of property, plant and equipment (Note 13) (195,496) (122,164) (3,508) (4,768)



42 StateMeNtS oF CaSH FlowSFor tHe FINaNCIal year eNDeD 31 DeCeMber 2014


Note b

Analysis of cash and cash equivalents:

Cash at banks and on hand 48,963 47,692 3,635 12,921Deposits with: Licensed banks 46,481 42,664 10,174 3,306 Other financial institution - 11,475 - 8,015Short term funds 27,965 44,552 1,785 25,051

Cash and bank balances and short term funds 123,409 146,383 15,594 49,293Less: Short term funds (27,965) (44,552) (1,785) (25,051)

Cash and cash equivalents at end of the year 95,444 101,831 13,809 24,242

Annual Report 2014

43

Annual Report 2014

43Notes to the fiNaNcial statemeNtsfor the fiNaNcial year eNded 31 december 2014

1. CorPorate inforMation

Kian Joo Can Factory 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 registered office of the Company is located at Lot No. 10, Jalan Perusahaan Satu, 68100 Batu Caves, Selangor Darul Ehsan.

The principal activities of the Company are manufacture and distribution of tin cans and investment holding.

The principal activities of the subsidiaries include the manufacture and distribution of tin cans, 2-piece aluminium beverage cans and corrugated fibreboard cartons, letting of property and provision of contract packing services.

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 4 March 2015.

2. sUMMary of siGnifiCant aCCoUntinG PoLiCies

2.1 Basis of preparation

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

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (RM’000), except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2014, the Group and the Company adopted the following new and amended MFRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2014.

Effective for annual periodsDescription beginning on or after

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities 1 January 2014Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014IC Interpretation 21: Levies 1 January 2014

The adoption of the above standards and interpretation did not have any material effect on the financial performance or position of the Group and the Company.


44


44 Notes to the fiNaNcial statemeNtsfor the fiNaNcial year eNded 31 december 2014

2. sUMMary of siGnifiCant aCCoUntinG PoLiCies (Cont’d)

2.3 Standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Effective for annual periodsDescription beginning on or after

Amendments to MFRS 119: Defined Benefits Plans: Employee Contributions 1 July 2014Annual Improvements to MFRSs 2010 - 2012 Cycle 1 July 2014Annual Improvements to MFRSs 2011 - 2013 Cycle 1 July 2014Annual Improvements to MFRSs 2012 - 2014 Cycle 1 January 2016Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January 2016Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016Amendments to MFRS 101: Disclosure Initiatives 1 January 2016Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities Applying the Consolidation Exception 1 January 2016MFRS 15 Revenue from Contracts with Customers 1 January 2017MFRS 9 Financial Instruments 1 January 2018

Amendments to MFRS 119: Defined Benefits Plans: Employee Contributions

The amendments to MFRS 119 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. For contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service.

The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s and the Company’s financial statements.

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets.

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets.

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2.3 Standards issued but not yet effective (cont’d)

Amendments to MFRS 127: Equity Method in Separate Financial Statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s and the Company’s financial statements.

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFR 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.

MFRS 9 Financial Instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The Company controls an investee if and only if the Company has all the following:

- Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

- Exposure, or rights, to variable returns from its investment with the investee; and

- The ability to use its power over the investee to affect its returns.


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2.4 Basis of consolidation (cont’d)

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

- The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

- Potential voting rights held by the Company, other vote holders or other parties;

- Rights arising from other contractual arrangements; and

- Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses of subsidiaries are attributed to the non-controlling interests even if that results in a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

2.5 Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, if any, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

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2.6 Business combinations (cont’d)

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. The accounting policy for goodwill is set out in Note 2.10(a).

2.7 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in RM, which is also the Company’s functional currency.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to other comprehensive income of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.


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2.7 Foreign currency (cont’d)

(c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.8 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment except for freehold land are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets as follows:

%

Leasehold land 1 1/2Buildings 2 - 2 1/2Plant, machinery and equipment 6 2/3 - 33 1/3Furniture, fittings and office equipment 10 - 50Motor vehicles 20

Spare parts which are held for use in the production or supply of goods are expected to be used during more than one period, and thus are classified under property, plant and equipment. The cost will be charged out to statements of comprehensive income when utilised, as further disclosed in Note 13(a).

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

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2.9 Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are initially measured as cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment losses. These investment properties are depreciated to write off the value over the unexpired lease terms ranging from 23 to 77 years.

Investment properties are derecognised when either they have been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year in which they arise.

2.10 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

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

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.7.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.

(b) Computer software

Computer software is measured initially at cost. Following initial acquisition, computer software is measured at cost less any accumulated amortisation and accumulated impairment losses.

The useful life of computer software is assessed to be finite. Computer software is amortised on a straight-line basis over the estimated economic useful lives at an annual rate of 50% and assessed for impairment whenever there is an indication that it may be impaired. The amortisation period and the amortisation method for computer software with finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on computer software with finite lives is recognised in profit or loss.


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2.10 Intangible assets (cont’d)

(b) Computer software (cont’d)

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

2.11 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over their lease terms.

2.12 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.13 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

- Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

- Exposure, or rights, to variable returns from its investment with the investee; and

- The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

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2.14 Investments in associates and joint ventures

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.

An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate or a joint venture.

Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate or joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the associates and joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in associates and joint ventures are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.


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2.15 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

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

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.

The Group and the Company have not designated any financial assets as financial assets at fair value through profit or loss.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

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

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

The Group and the Company have not designated any financial assets as held-to-maturity investments.

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2.15 Financial assets (cont’d)

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

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

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

The Group and the Company have not designated any financial assets as available-for-sale financial assets.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.

2.16 Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(a) Trade and other receivables and other financial assets carried at amortised costs

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

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


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2.16 Impairment of financial assets (cont’d)

(a) Trade and other receivables and other financial assets carried at amortised costs (cont’d)

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

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

2.17 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand and demand deposits that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

2.18 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:

- Raw materials: purchase costs on a first-in first-out basis.

- Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a first-in first-out basis.

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

2.19 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

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2.20 Financial liabilities

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

(b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade and other payables and loans and borrowings.

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

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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

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

2.21 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.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.


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2.22 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

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

2.23 Employee benefits

(a) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave, maternity and paternity leave are recognised when the absences occur.

(b) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Foreign subsidiaries also make contributions to its country’s statutory pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(c) Defined benefit plans

The Group’s obligation under defined benefit plans is determined based on actuarial computations by independent actuaries using the Projected Unit Credit Method, through which the amount of benefit that employees have earned in return for their services in the current and prior years is estimated. That benefit is discounted in order to determine its present value. Past service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service costs are recognised immediately.

2.24 Leases

(a) As lessee

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.25(b).

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2.25 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Sale of goods

Revenue from sale of goods is recognised net of taxes and upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(b) Rental income

Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(c) Interest income

Interest income is recognised using the effective interest method.

(d) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.26 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investment in subsidiaries, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.


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2.26 Income taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(d) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

- where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

2.27 Segment reporting

For management purposes, the Group is organised into geographical segments based on the location of the Group’s assets. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 40, including the factors used to identify the reportable segments and the measurement basis of segment information.

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2.28 Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.29 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group.

3. siGnifiCant aCCoUntinG JUdGeMents and estiMates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

(a) Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on MFRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of good or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portion separately. If the portion could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or for supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

The investment properties which principally comprise leasehold land and building held by the Group for their investment potential and are not occupied by the Group. Those properties occupied by the Group are classified as property, plant and equipment.


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3. siGnifiCant aCCoUntinG JUdGeMents and estiMates (Cont’d)

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Useful lives of plant, machinery and equipment

MFRS 116: Property, plant and equipment requires that residual value and useful life of an asset to be reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) shall be accounted for prospectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(b) Defined benefit plan

The cost of defined benefit pension plan is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the long term nature of this plan, such estimates are subject to significant uncertainty. The net retirement benefit obligations of the Group and of the Company at 31 December 2014 are RM38,176,000 (2013: RM42,443,000) and RM14,154,000 (2013: RM14,698,000) respectively.

In determining the appropriate discount rate management has derived the applicable interest rates from high quality corporate bonds in Malaysia with an AA rating. The bonds have been selected based on the expected duration of the defined benefit obligation and taking into consideration the yield curve respectively.

The mortality rate is based on publicly available mortality tables. Future salary increased and pension increases are based on expected future inflation rates in Malaysia.

Further details are provided in Note 25.

(c) Provision for solid waste disposal

The Group is required to dispose solid waste in accordance with the environmental requirements. The Group recognises the provision for liabilities associated with solid waste disposal in accordance with the accounting policy stated in Note 2.19. The estimation of solid waste is based on service provider’s price quotation. The best estimate of the provision at 31 December 2014 is RM43,000 (2013: RM58,000). Further details are provided in Note 24.

(d) Income tax

Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(e) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and unutilised reinvestment allowances to the extent that it is probable that taxable profit will be available against which the losses, capital allowances and reinvestment allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The unabsorbed tax losses, unutilised capital and reinvestment allowances of the Group at the reporting date was RM63,941,000 (2013: RM63,032,000).

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3. siGnifiCant aCCoUntinG JUdGeMents and estiMates (Cont’d)

3.2 Key sources of estimation uncertainty (cont’d)

(e) Deferred tax assets (cont’d)

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. This depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses, unabsorbed and reinvestment allowances.

(f) Impairment of property, plant and equipment

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable.

During the previous financial year, the Group has recognised impairment losses in respect of a subsidiary’s plant, machinery and equipment. The Group carried out the impairment test based on a variety of estimation including the value in use of the cash-generating units (“CGU”) to which plant, machinery and equipment are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. No additional impairment losses of property, plant and equidment was recorded in the current financial year.

(g) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the CGU to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the espected future cash flows from the asset or CGU and choose a suitable discount rate in order to calculate the present value of those cash flows. Futher details of the carrying value, the key assumptions applied in the impairment assessment of goodwill are given in Note 16.

4. reVenUe


Revenue from: Sale of goods 1,334,660 1,290,453 152,829 157,134 Dividend income from: Unquoted subsidiaries - - 47,879 2,333 Quoted subsidiary - - 2,468 3,291 Joint venture - - 10,000 - Others 124 114 - -

1,334,784 1,290,567 213,176 162,758


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5. interest inCoMe


Interest income from: Loans to subsidiaries - - 1,919 2,929 Fixed deposits 1,482 2,229 95 1,047 Others 121 185 - 64

1,603 2,414 2,014 4,040

6. otHer inCoMe


Other income from: Insurance claims 141 367 - 19 Rental income 2,003 2,695 7,460 2,781 Net gain on disposal of property, plant and equipment 1,536 244 1,305 - Miscellaneous 2,483 1,434 387 -

6,163 4,740 9,152 2,800

7. finanCe Costs


Interest expense on: Term loans 7,101 4,269 - - Trade facilities 1,833 982 107 175 Revolving credit 1,112 902 1,112 902

10,046 6,153 1,219 1,077Less: Interest capitalised in property, plant and equipment (Note 13b) (30) (509) - -

10,016 5,644 1,219 1,077

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8. Profit before tax

The following items have been included in arriving at profit before tax:


Auditors’ remuneration: - Statutory audits 515 468 92 87 - Other services 168 19 154 12Employee benefits expense (Note 9) 158,781 136,955 39,728 37,087Non-executive directors’ remuneration (Note 10) 643 602 349 323Depreciation of: - Property, plant and equipment (Note 13) 49,054 44,118 7,962 5,887 - Investment properties (Note 15) 469 538 311 312Direct operating expenses arising from rental of investment properties 501 773 479 761Amortisation of: - Intangible assets (Note 16) 388 178 8 60 - Land use rights (Note 14) 397 245 1 -Allowance for doubtful debts (Note 20) 48 328 23 -Reversal of allowance for doubtful debts (Note 20) (154) (252) (18) -Bad debts written off - 18 - -Impairment loss on property, plant and equipment (Note 13) - 8,000 - -(Write back)/write down of inventories (632) 15,643 82 838Inventories written off 2,977 - 869 -Rental of office equipment and motor vehicles 557 - - -Rental of land and buildings 1,290 338 62 42Rental of plants and machinery 574 245 2 -Provision for solid waste disposal (Note 24) 1,017 808 - -Write off of property, plant and equipment (Note 13) 311 148 295 41Fair value loss on derivatives (Note 28) 2,775 4,352 - -Net foreign exchange loss/(gain): - Realised 2,546 321 (22) 33 - Unrealised (4,163) (4,670) (2,578) (1,384)

9. eMPLoyee benefits exPense


Wages and salaries 125,885 115,246 30,797 31,387Social security contributions 1,178 1,020 239 241Short term accumulating compensated absences 225 136 49 45Contributions to defined contribution plan 20,823 9,186 5,818 2,531Increase in liability for defined benefit plan (Note 25) 3,052 4,745 1,919 2,086Other benefits 7,618 6,622 906 797

158,781 136,955 39,728 37,087

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting to RM4,954,000 (2013: RM10,458,000) and RM2,621,000 (2013: RM4,616,000) respectively (Note 10).


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10. direCtors’ reMUneration

The details of remuneration receivable by directors of the Group and of the Company during the year are as follows:


Executive: Salaries and other emoluments 2,434 7,311 1,687 3,753 Fees 381 548 228 309 Bonus 375 559 257 289 Defined contribution plan 683 507 449 265

3,873 8,925 2,621 4,616

Non-executive: Fees 426 434 349 323

4,299 9,359 2,970 4,939

Other directors of the Group:Executive: Salaries and other emoluments 816 1,296 - - Fees 59 60 - - Bonus 96 96 - - Defined contribution plan 110 81 - -

1,081 1,533 - -

Non-executive: Fees 217 168 - -

1,298 1,701 - -

Total directors’ remuneration 5,597 11,060 2,970 4,939

Analysis:Total executive directors’ remuneration (Note 9) 4,954 10,458 2,621 4,616Total non-executive directors’ remuneration (Note 8) 643 602 349 323

Total directors’ remuneration 5,597 11,060 2,970 4,939

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

Number of directors 2014 2013

Executive directors: Below RM50,000 1 - RM350,001 - RM400,000 1 - RM1,000,001 - RM1,050,000 1 - RM1,100,001 - RM1,150,000 1 - RM1,350,001 - RM1,400,000 1 - RM1,550,001 - RM1,600,000 - 2 RM1,700,000 - RM1,750,000 - 1 RM1,950,001 - RM2,000,000 - 1 RM2,000,001 - RM2,050,000 - 1

Non-executive directors: Below RM50,000 - 4 RM50,001 - RM100,000 5 2 RM100,001 - RM150,000 - 1

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11. inCoMe tax exPense

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2014 and 2013 are:


Statement of comprehensive income:Current income tax:Malaysian income tax 9,975 19,737 1,742 2,420Foreign tax 4,515 5,530 - -(Over)/underprovision in prior years (378) (55) 598 287

14,112 25,212 2,340 2,707

Deferred income tax (Note 19):Relating to origination and reversal of temporary differences 5,347 3,792 399 2,500Effect of reduction in Malaysian tax rate - (1,842) - (308)Under/(over) provision in prior years 142 (3,509) (658) (2,205)

5,489 (1,559) (259) (13)

19,601 23,653 2,081 2,694

Reconciliation between expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2014 and 2013 are as follows:


Profit before tax 144,029 147,392 66,417 18,446

Taxation at Malaysian statutory tax rate of 25% (2013: 25%) 36,007 36,848 16,604 4,612Effect of different tax rates in foreign jurisdiction (7,329) (8,054) - -Effect of reduction in Malaysian tax rate - (1,842) - (308)Effect of expenses not deductible for tax purposes 1,087 4,940 741 374Effect of income not subject to tax (338) (1,164) (15,204) (66)Effect of deferred tax assets not recognised during the financial year 364 454 - -Effect of under/(over)provision of: - Deferred tax in prior years 142 (3,509) (658) (2,205) - Income tax in prior years (378) (55) 598 287Effect of utilisation of current year’s reinvestment allowances (10,530) (2,961) - -Effect of utilisation of previously unrecognised deferred tax assets (137) - - -Effect of partial tax exemption - (1,338) - -Effect of share of results of a joint venture 713 334 - -

19,601 23,653 2,081 2,694


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11. inCoMe tax exPense (Cont’d)

Reconciliation between expense and accounting profit

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated assessable profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The Group’s Vietnam subsidiaries are subjected to 7.5% (2013: 7.5%)

The Malaysian corporate income tax rate is expected to reduce from 25% to 24% with effect from year of assessment 2016.

12. earninGs Per ordinary sHare

Basic and diluted

Basic and diluted earnings per share amounts are calculated by dividing profit for the financial year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year.

The following table reflects the profit and share data used in the computation of basic earnings per share for the years ended 31 December:

Group 2014 2013 RM’000 RM’000

Profit net of tax attributable to owners of the parent 120,910 118,319Weighted average number of ordinary shares in issue 444,168 444,168

Basic earnings per ordinary share (sen) 27.22 26.64

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13. ProPerty, PLant and eqUiPMent

Plant, Furniture, machinery fittings Capital Land and and and office Motor Spare work-in- buildings* equipment equipment vehicles parts progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2014

At costAt 1 January 2014 408,736 893,246 45,739 14,237 17,013 57,224 1,436,195Additions 2,598 21,639 4,987 1,183 20,945 144,144 195,496Transfer from intangible asset (Note 16) - - 60 - - - 60Reclassification 645 100,185 - 291 - (101,121) -Disposals - (5,108) (34) (2,017) - - (7,159)Net usage for the year (Note a) - - - - (13,971) - (13,971)Write off (364) - (128) - - - (492)Exchange differences 1,981 5,258 1,053 32 - 9 8,333

At 31 December 2014 413,596 1,015,220 51,677 13,726 23,987 100,256 1,618,462

Accumulated depreciationAt 1 January 2014 80,928 614,583 37,785 10,201 - - 743,497Depreciation charge for the financial year (Note 8) 9,285 34,664 3,682 1,423 - - 49,054Transfer from intangible asset (Note 16) - - 60 - - - 60Disposals - (5,040) (34) (1,977) - - (7,051)Write off (73) (5) (103) - - - (181)Exchange differences 247 1,928 790 12 - - 2,977

At 31 December 2014 90,387 646,130 42,180 9,659 - - 788,356

Net carrying amountAt 31 December 2014 323,209 369,090 9,497 4,067 23,987 100,256 830,106


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13. ProPerty, PLant and eqUiPMent (Cont’d)


Group

At 31 December 2013

At costAt 1 January 2013 (as previously stated) 385,453 810,134 42,552 12,942 - 47,919 1,299,000Effect of adopting the amendments to MFRS 116 - - - - 13,098 - 13,098

At 1 January 2013 (restated) 385,453 810,134 42,552 12,942 13,098 47,919 1,312,098Additions 14,063 50,570 4,154 2,061 12,720 38,596 122,164Acquisition of a subsidiary - 2,665 57 - - - 2,722Transfer to investment properties (Note 15) - - - - - (627) (627)Transfer to intangible asset (Note 16) - - (1) - - - (1)Reclassification 4,553 24,928 (763) (54) - (28,664) -Disposals - (243) (226) (735) - - (1,204)Net usage for the year (Note a) - - - - (8,805) - (8,805)Write off - (1,372) (284) - - - (1,656)Exchange differences 4,667 6,564 250 23 - - 11,504

At 31 December 2013 408,736 893,246 45,739 14,237 17,013 57,224 1,436,195

Accumulated depreciation At 1 January 2013 74,295 572,226 35,048 9,270 - - 690,839Depreciation charge for the financial year (Note 8) 6,444 33,252 2,790 1,632 - - 44,118Impairment loss recognised for the financial year (Note 8) - 8,000 - - - - 8,000Disposals - (211) (226) (710) - - (1,147)Write off - (1,280) (228) - - - (1,508)Exchange differences 189 2,596 401 9 - - 3,195

At 31 December 2013 80,928 614,583 37,785 10,201 - - 743,497

Net carrying amountAt 31 December 2013 327,808 278,663 7,954 4,036 17,013 57,224 692,698

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Company

At 31 December 2014

At costAt 1 January 2014 116,964 143,529 13,789 4,614 898 2,246 282,040Additions 443 1,364 371 608 494 228 3,508Reclassifications - 420 - - - (420) -Disposals - (5,003) - (1,081) - (1,873) (7,957)Net usage for the year (Note a) - - - - (461) - (461)Write off (364) - (34) - - - (398)

At 31 December 2014 117,043 140,310 14,126 4,141 931 181 276,732

Accumulated depreciationAt 1 January 2014 16,864 110,382 12,644 3,795 - - 143,685Depreciation charge for the financial year (Note 8) 3,464 3,780 420 298 - - 7,962Disposals - (5,003) - (1,055) - - (6,058)Write off (73) - (30) - - - (103)

At 31 December 2014 20,255 109,159 13,034 3,038 - - 145,486

Net carrying amountAt 31 December 2014 96,788 31,151 1,092 1,103 931 181 131,246


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Company

At 31 December 2013

At costAt 1 January 2013 (as previously stated) 116,928 141,967 13,630 4,203 - 1,099 277,827Effect of adopting the amendments to MFRS 116 - - - - 647 - 647

At 1 January 2013 (restated) 116,928 141,967 13,630 4,203 647 1,099 278,474Additions 36 1,332 324 411 527 2,138 4,768Transfer to investment properties (Note 16) - - - - - (627) (627)Reclassifications - 230 - - - (230) -Disposals - - - - - (93) (93)Net usage for the year (Note a) - - - - (276) - (276)Write off - - (165) - - (41) (206)

At 31 December 2013 116,964 143,529 13,789 4,614 898 2,246 282,040

Accumulated depreciationAt 1 January 2013 15,630 106,623 12,418 3,292 - - 137,963Depreciation charge for the financial year (Note 8) 1,234 3,759 391 503 - - 5,887Write off - - (165) - - - (165)

At 31 December 2013 16,864 110,382 12,644 3,795 - - 143,685

Net carrying amountAt 31 December 2013 100,100 33,147 1,145 819 898 2,246 138,355

(a) Spare parts consumed

Included in the Group’s and the Company’s property, plant and equipment are spare parts consumed amounting to RM13,971,000 (2013: RM8,805,000) and RM461,000 (2013: RM276,000), respectively. These are classified as upkeep of machinery under Cost of Sales in the statements of comprehensive income.

(b) Capitalisation of borrowing costs

The Group’s capital work in progress include borrowing costs arising from term loans borrowed specifically for the purpose of the construction of a plant and the acquisition of plant and machineries amounting to RM30,000 (2013: RM509,000).

(c) Impairment of plant, machinery and equipment

In the financial year ended 31 December 2013, a subsidiary of the Group, carried out a review of the recoverable amount of its plant, machinery and equipment because of its deteriorating financial performance. An impairment loss of RM8 million, representing the write-down of the plant, machinery and equipment to the recoverable amount was recognised in “Administrative expenses” line item of the statements of comprehensive income for the financial year ended 31 December 2013. The recoverable amount of the plant, machinery and equipment was based on its value in use and the pre-tax discount rate used was 11%. In the current financial year, the management has performed an updated review of the recoverable of the property plant and equipment of the said subsidiary and has concluded that no material change is required to be made to the recoverable amount of the property, plant and equipment.

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* Land and buildings of the Group:

Long term Freehold leasehold land land Buildings Total RM’000 RM’000 RM’000 RM’000

Group

At 31 December 2014

At costAt 1 January 2014 88,390 80,733 239,613 408,736Additions/reclassifications - - 3,243 3,243Write off - - (364) (364)Exchange differences - - 1,981 1,981

At 31 December 2014 88,390 80,733 244,473 413,596

Accumulated depreciationAt 1 January 2014 4,882 10,834 65,212 80,928Depreciation charge for the financial year - 1,140 8,145 9,285Write off - - (73) (73)Exchange differences - - 247 247

At 31 December 2014 4,882 11,974 73,531 90,387

Net carrying amountAt 31 December 2014 83,508 68,759 170,942 323,209

At 31 December 2013

At costAt 1 January 2013 88,390 80,733 216,330 385,453Additions/reclassifications - - 18,616 18,616Exchange differences - - 4,667 4,667

At 31 December 2013 88,390 80,733 239,613 408,736

Accumulated depreciationAt 1 January 2013 4,882 9,683 59,730 74,295Depreciation charge for the financial year - 1,151 5,293 6,444Exchange differences - - 189 189

At 31 December 2013 4,882 10,834 65,212 80,928



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* Land and buildings of the Company:

Long term Freehold leasehold land land Buildings Total RM’000 RM’000 RM’000 RM’000

Company

At 31 December 2014

At costAt 1 January 2014 42,213 39,790 34,961 116,964Additions - - 443 443Write off - - (364) (364)

At 31 December 2014 42,213 39,790 35,040 117,043

Accumulated depreciationAt 1 January 2014 2,133 5,029 9,702 16,864Depreciation charge for the financial year - 561 2,903 3,464Write off - - (73) (73)

At 31 December 2014 2,133 5,590 12,532 20,255


At 31 December 2013

At costAt 1 January 2013 42,213 39,790 34,925 116,928Additions - - 36 36

At 31 December 2013 42,213 39,790 34,961 116,964

Accumulated depreciationAt 1 January 2013 2,133 4,457 9,040 15,630Depreciation charge for the financial year - 572 662 1,234

At 31 December 2013 2,133 5,029 9,702 16,864


The long term leasehold land of the Group has remaining tenure of 56 to 66 (2013: 57 to 67) years.

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14. Land Use riGHts


CostAt 1 January 16,460 13,933 229 229Additions 5,647 1,634 - -Disposal (229) - (229) -Exchange differences 1,367 893 - -

At 31 December 23,245 16,460 - 229

Accumulated amortisationAt 1 January 2,265 1,776 228 228Amortisation charge during the financial year (Note 8) 397 245 1 -Disposal (229) - (229) -Exchange differences 94 244 - -

At 31 December 2,527 2,265 - 228

Net carrying amountAt 31 December 20,718 14,195 - 1

Analysed as:Long term leasehold land 20,718 14,194 - -Short term leasehold land - 1 - 1

20,718 14,195 - 1

The land use rights of the Group have remaining tenure of 32 to 43 (2013: 33 to 44) years.

15. inVestMent ProPerties


CostAt 1 January 31,071 30,061 20,399 19,389Additions 20 383 20 383Transfer from property, plant and equipment (Note 13) - 627 - 627

At 31 December 31,091 31,071 20,419 20,399

Accumulated depreciationAt 1 January 6,789 6,251 2,452 2,140Depreciation charge for the financial year (Note 8) 469 538 311 312

At 31 December 7,258 6,789 2,763 2,452

Net carrying amountAt 31 December 23,833 24,282 17,656 17,947


74



15. inVestMent ProPerties (Cont’d)

Representing investment properties held under lease terms:

2014 2013 RM’000 RM’000

GroupLeasehold land 13,696 13,890Buildings 10,137 10,392

23,833 24,282

CompanyLeasehold land 10,044 10,178Buildings 7,612 7,769

17,656 17,947

The investment properties consist of leasehold land and buildings which are held under lease terms and are leased to third parties. The leasehold land of the Group has remaining tenure of 22 to 76 (2013: 23 to 77) years.

The estimated fair value of the investment properties of the Group and of the Company as at 31 December 2014 are approximately RM103,300,000 and RM75,000,000 (2013: RM102,300,000 and RM73,000,000), respectively. The fair value for the financial year was obtained from open-market values estimated by independent professionally qualified valuers. In the previous year, the fair value was obtained from observable market information, determined by reference to similar industrial lands which have been sold or are being offered for sale.

16. intanGibLe assets

Intangible assets represent computer software cost and goodwill arising from acquisition of a subsidiary.

Computer Goodwill software Total RM’000 RM’000 RM’000

Group

At 31 December 2014

At costAt 1 January 2014 2,375 4,863 7,238Additions - 171 171Transfer to property, plant and equipment (Note 13) - (60) (60)Exchange difference - 8 8

At 31 December 2014 2,375 4,982 7,357

Accumulated amortisationAt 1 January 2014 - 4,738 4,738Amortisation charge during the financial year (Note 8) - 388 388Transfer to property, plant and equipment (Note 13) - (60) (60)Exchange difference - (264) (264)

At 31 December 2014 - 4,802 4,802

Net carrying amountAt 31 December 2014 2,375 180 2,555

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16. intanGibLe assets (Cont’d)

Computer Goodwill software Total RM’000 RM’000 RM’000

Group

At 31 December 2013

At costAt 1 January 2013 - 4,727 4,727Additions - 163 2,538Acquisition of a subsidiary (Note 17a) 2,375 1 1Transfer from property, plant and equipment (Note 13) - 1 1Write off - (35) (35)Exchange difference - 6 6

At 31 December 2013 2,375 4,863 7,238

Accumulated amortisationAt 1 January 2013 - 4,590 4,590Amortisation charge during the financial year (Note 8) - 178 178Write off - (35) (35)Exchange difference - 5 5

At 31 December 2013 - 4,738 4,738

Net carrying amountAt 31 December 2013 2,375 125 2,500

Computer software 2014 2013 RM’000 RM’000

Company

CostAt 1 January 1,666 1,656Additions 8 10

At 31 December 1,674 1,666

Accumulated amortisationAt 1 January 1,659 1,599Amortisation charge during the financial year (Note 8) 8 60

At 31 December 1,667 1,659

Net carrying amountAt 31 December 7 7


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16. intanGibLe assets (Cont’d)

Impairment tests for cash-generating units (“CGU”) containing goodwill

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections from financial budgets approved by management covering a five-year period with annual growth rate of 5% (2013: 5%). The cash flow projections are discounted using the current market assessment of the risks specific to the CGU at 10% (2013: 10%).

(a) Key assumptions used in value-in-use calculations

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year increased for expected efficiency improvements.

(ii) Growth rate

The weighted average growth rates used are consistent with the long term average growth rate for the industry.

(iii) Discount rate

The discount rate used is pre-tax and reflects specific risks relating to the industry.

(b) Sensitivity to changes in assumptions

The management believes that changes in any of the above key assumptions would not cause the carrying value of the unit to materially differ from its recoverable amount.

17. inVestMent in sUbsidiaries

Company 2014 2013 RM’000 RM’000

Quoted shares in Malaysia, at cost 19,155 19,155Unquoted shares, at cost 89,410 89,284

108,565 108,439Impairment losses (1,000) (1,000)

107,565 107,439

Market value of quoted shares in Malaysia 69,111 74,048

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17. inVestMent in sUbsidiaries (Cont’d)

Percentage Percentage Country of (%) of equity (%) of equity incorporation held by the held by non- and principal Group (1) controlling place of Principal interest (1)

Name business activities 2014/2013 2014/2013

Box-Pak (Malaysia) Bhd. (“BP”) Malaysia Corrugated fibre board 55 45 carton manufacturer

Federal Metal Printing Factory, Sdn. Berhad Malaysia Can manufacturer 100 -

Indastri Kian Joo Sdn. Bhd. Malaysia Letting out of 100 - factory building

Kian Joo Can (Vietnam) Co., Ltd. (2) Vietnam Can manufacturer 100 -

Kian Joo Packaging Sdn. Bhd. Malaysia 2-piece aluminium beverage 100 - cans manufacturer

Kian Joo Canpack Sdn. Bhd. Malaysia Provision of contract 100 - packing services

Kian Joo Canpack (Shah Alam) Sdn. Bhd. Malaysia Provision of contract 100 - packing services

KJ Can (Johore) Sdn. Bhd. Malaysia Can manufacturer 100 -

KJ Can (Selangor) Sdn. Bhd. Malaysia Can manufacturer 100 -

KJM Aluminium Can Sdn. Bhd. Malaysia 2-piece aluminium 100 - retortable can manufacturer

Metal-Pak (Malaysia) Sdn. Bhd. (“MP”) Malaysia Can manufacturer 100 -

Kian Joo Cans Distribution Sdn. Bhd. Malaysia Dormant 100 - (Formerly known as Multi-Pet Sdn. Bhd.; name was changed on 24 February 2015)

KJO International Sdn. Bhd. Malaysia Investment holding 100 -

KJ Can (Singapore) Pte. Ltd. (3) Singapore Dormant 100 -

PT. KJ Canmax (4) # Indonesia Can manufacturer 100 -

PT. KJ Canco (4) # Indonesia Dormant 100 -

PT. KJ Box-Pak (4) # Indonesia Dormant 55 45

Box-Pak (Johore) Sdn. Bhd. Malaysia Dormant 55 45

AMBM Packaging Distribution Malaysia Corrugated fibre board 55 45 Sdn. Bhd. (“AMBM”) carton manufacturer


78




Percentage Percentage Country of (%) of equity (%) of equity incorporation held by the held by non- and principal Group (1) controlling place of Principal interest (1)

Name business activities 2014/2013 2014/2013

Box-Pak (Vietnam) Co., Ltd. (“BPV”) (2) Vietnam Corrugated fibre board 55 45 carton manufacturer

Box-Pak (Hanoi) Co., Ltd. (“BPH”) (2) Vietnam Corrugated fibre board 55 45 carton manufacturer

Bintang Seribu Sdn. Bhd. Malaysia Letting out factory building 100 -

Great Asia Tin Cans Malaysia Letting out factory building 100 - Factory, Company Sdn. Berhad

(1) Equals to the proportion of voting rights held(2) Audited by a member firm of Ernst & Young Global(3) Audited by a firm other than Ernst & Young(4) Not audited by Ernst & Young or a member firm of Ernst & Young Global# Incorporated during the financial year

(a) Acquisition of subsidiary

In the previous financial year, a subsidiary of the Company, Box-Pak (Malaysia) Bhd. entered into an agreement to acquire 100% equity interest in another corrugated fibre board carton manufacturer, AMBM, for a total cash consideration of RM4,500,000. The acquisition was completed on 27 November 2013. Following the said acquisition, AMBM became a subsidiary of the Group.

The fair values of the identifiable assets and liabilities of AMBM as at the date of acquisition were as follows:

Carrying Fair value amount RM RM

Property, plant and equipment (Note 13) 2,722,356 469,248 Intangible asset 873 873 Trade and other receivables 3,496,955 3,580,454 Inventories 2,138,886 2,033,486 Cash and bank balances 315,726 315,726

8,674,796 6,399,787

Trade and other payables 3,959,975 3,851,930 Borrowings 1,999,255 1,999,255 Deferred tax liabilities (Note 19) 590,279 -

6,549,509 5,851,185

Net identifiable asset 2,125,287 548,602

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(a) Acquisition of subsidiary (cont’d)

The total cost of this business combination is RM4,500,000 which paid by cash.

‘The effect of the acquisition on cash flows is as follows:

RM

Total cost of the business combination 4,500,000 Less: Cash and cash equivalents of subsidiary acquired (315,726)

Net cash outflow on acquisition 4,184,274

Goodwill arising on acquisition RM

Fair value of net identifiable asset 2,125,287 Goodwill on acquisition (Note 16) 2,374,713

Cost of business combination 4,500,000

Goodwill on acquisition is attributable to the fair value of improved resilience to sector specific volatilities and significant synergies expected to arise after the acquisition.

(b) Non-controlling interests in subsidiary

The Group’s subsidiary that has material non-controlling interests (“NCI”) is as follows:

Box-Pak (Malaysia) Bhd. 2014 2013 RM’000 RM’000

NCI percentage of ownership interest and voting interest 45.17% 45.17%Carrying amount of NCI 67,663 64,036

Profit allocated to NCI 3,518 5,420

Summarised financial information before intra-group eliminationAs at 31 DecemberNon-current assets 176,493 167,204Current assets 135,092 128,145Non-current liabilities (53,348) (58,827)Current liabilities (108,448) (94,756)

Net assets 149,789 141,767


80




(b) Non-controlling interests in subsidiary (cont’d)

The Group’s subsidiary that has material non-controlling interests (“NCI”) is as follows: (cont’d)

Box-Pak (Malaysia) Bhd. 2014 2013 RM’000 RM’000

Year ended 31 DecemberRevenue 352,808 300,137Profit for the year 7,788 12,000Total comprehensive income 12,597 15,993

Cash outflows from operating activities 9,075 18,037Cash outflows from investing activities (18,724) (61,020)Cash outflows from financing activities 9,081 42,523

Net decrease in cash and cash equivalents (568) (460)

Dividends paid to NCI (2,034) (2,034)

(c) Incorporation of subsidiaries

Incorporations during the financial year ended 31 December 2014

During the year, the Group:

(i) incorporated two new wholly-owned subsidiaries in the Republic of Indonesia, known as PT. KJ Canmax and PT. KJ Canco. The subsidiaries are 99%-owned by KJO International Sdn Bhd, a wholly-owned subsidiary of the Company, and the remaining 1% is owned by the Company.

(ii) a 54.83%-owned subsidiary of the Company, Box-Pak (Malaysia) Bhd., had incorporated a 99%-owned subsidiary in the Republic of Indonesia, known as PT. KJ Box-Pak and the remaining 1% is owned by the Company.

The newly incorporated subsidiaries did not contribute materially to the financial statements of the Group of the current financial year.

18. inVestMent in a Joint VentUre


Unquoted shares at cost 10,000 10,000 10,000 10,000Share of post-acquisition reserves 22,196 12,219 - -Less: Distribution of profits (10,000) (1,750) - -

22,196 20,469 10,000 10,000

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18. inVestMent in a Joint VentUre (Cont’d)

Proportion (%) of Country of ownership interestName incorporation Principal activities 2014 2013

Kian Joo-Visypak Sdn. Bhd. Malaysia Polyethylene terephthalate 50 50 products manufacturer

During the year 2014, Kian Joo-Visypak has disposed of its non-current assets and has since ceased operations.

The summarised financial statements of the joint venture is as follows:

(a) Summarised statements of financial position

2014 2013 RM’000 RM’000

AssetsNon-current assetsProperty, plant and equipment - 32,107Intangible assets - 4

Total non-current assets - 32,111

Current assets Inventories - 3,409Trade and other receivables 2,440 6,706Cash and bank balances 43,077 2,230

Total current assets 45,517 12,345

Total assets 45,517 44,456

LiabilitiesCurrent liabilitiesRetirement benefit obligations - 1Trade and other payables 239 2,030Tax payable 886 -

Total current liabilities 1,125 2,031

Non-current liabilitiesRetirement benefit obligations - 901Deferred tax liabilities - 586

Total non-current liabilities - 1,487

Total liabilities 1,125 3,518

Net Assets 44,392 40,938


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18. inVestMent in a Joint VentUre (Cont’d)

The summarised financial statements of the joint venture is as follows: (cont’d)

(b) Summarised statements of comprehensive income

2014 2013 RM’000 RM’000

Revenue 12,350 26,660Cost of goods sold (17,677) (25,679)

Gross (loss)/profit (5,327) 981Other income 31,038 441Administrative expenses (1,928) (1,576)Finance costs (15) (50)

Profit/(loss) before taxation 23,768 (204)Taxation (314) (669)

Profit/(loss) for the financial year 23,454 (873)

Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in joint venture is as follows:

2014 2013 RM’000 RM’000

Net assets as 1 January 40,938 45,317Distribution of profits (20,000) (3,500)Other comprehensive income - (6)Profit/(loss) for the financial year 23,454 (873)

Net assets as 31 December 44,392 40,938Interest in joint venture (%) 50 50

Carrying value of Group’s interest in joint venture 22,196 20,469

19. deferred taxation


At 1 January (as previously stated) 14,931 17,975 (250) 296Effect of adopting the amendments to MFRS 119 - (1,147) - (305)

At 1 January (restated) 14,931 16,828 (250) (9)Recognised in the profit or loss 11 5,489 (1,559) (259) (13)Recognised in the other comprehensive income - (928) - (228)Acquisition of a subsidiary 17 - 590 - -

At 31 December 20,420 14,931 (509) (250)

Presented after appropriate offsetting as follows:Deferred tax assets (735) (3,366)Deferred tax liabilities 21,155 18,297

20,420 14,931

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19. deferred taxation (Cont’d)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities/(assets) of the Group:

Capital allowance and Leasehold Unutilised Unutilised depreciation land and capital Unabsorbed reinvestment differences buildings Provisions allowances tax losses allowances Others Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2013 (as previously stated) 31,350 27,790 (6,841) (8,401) (501) (23,957) (1,465) 17,975Effect of adopting the amendments to MFRS 119 - - (1,147) - - - - (1,147)

At 1 January 2013 (restated) 31,350 27,790 (7,988) (8,401) (501) (23,957) (1,465) 16,828Recognised in profit or loss (892) 1,586 (4,292) (1,296) (439) 4,087 (313) (1,559)Recognised in other comprehensive income - - (928) - - - - (928)Acquisition of a subsidiary (Note 17) 590 - - - - - - 590

At 31 December 2013 31,048 29,376 (13,208) (9,697) (940) (19,870) (1,778) 14,931

At 1 January 2014 31,048 29,376 (13,208) (9,697) (940) (19,870) (1,778) 14,931Recognised in profit or loss 5,801 85 3,353 1,953 489 (6,560) 368 5,489

At 31 December 2014 36,849 29,461 (9,855) (7,744) (451) (26,430) (1,410) 20,420

Deferred tax liabilities/(assets) of the Company:

Capital allowance and Leasehold Unutilised Unutilised depreciation land and capital reinvestment differences buildings Provisions allowances allowances Others Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2013 (as previously stated) 7,915 14,486 (2,928) (5,083) (14,035) (59) 296Effect of adopting the amendments to MFRS 119 - - (305) - - - (305)

At 1 January 2013 (restated) 7,915 14,486 (3,233) (5,083) (14,035) (59) (9)Recognised in profit or loss (1,630) (268) (377) 1,856 - 406 (13)Recognised in other comprehensive income - - (228) - - - (228)

At 31 December 2013 6,285 14,218 (3,838) (3,227) (14,035) 347 (250)

At 1 January 2014 6,285 14,218 (3,838) (3,227) (14,035) 347 (250)Recognised in profit or loss (702) (430) 115 1,011 - (253) (259)

At 31 December 2014 5,583 13,788 (3,723) (2,216) (14,035) 94 (509)

Deferred tax assets for the Group have not been recognised in respect of the following items:

2014 2013 RM’000 RM’000

Unabsorbed tax losses 11,676 13,112Unutilised capital allowances 22,262 21,434Unutilised reinvestment allowances 30,003 28,486

63,941 63,032


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19. deferred taxation (Cont’d)

At the reporting date, the Group has unabsorbed tax losses, unutilised capital and reinvestment allowances of approximately RM63,941,000 (2013: RM63,032,000) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The availability of unused tax losses for offsetting against future taxable profits of the respective subsidiaries in Malaysia are subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority. The use of tax losses of subsidiaries in other countries is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the subsidiaries operate.

There are no income tax consequences (2013: nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements (Note 41).

20. trade and otHer reCeiVabLes


CurrentTrade receivablesThird parties 277,936 263,214 26,334 32,003Amounts due from subsidiaries - - 9,530 8,713Amount due from a related party - 819 - -

277,936 264,033 35,864 40,716Less: Allowance for impairment - third parties (2,015) (3,115) - -

Trade receivables, net (a) 275,921 260,918 35,864 40,716

Other receivablesOther receivables 10,037 16,421 703 1,784Refundable deposits 7,876 1,870 294 602Amounts due from a joint venture (b) - 106 - 17Amounts due from subsidiaries (c) - - 99,971 47,588

Other receivables, net 17,913 18,397 100,968 49,991Less: Allowance for impairment - - (17,172) (17,167)

Other receivables, net 17,913 18,397 83,796 32,824

Non-current Other receivablesLoans to subsidiaries (d) - - 12,950 27,700

Total trade and other receivables - current 293,834 279,315 119,660 73,540 - non-current - - 12,950 27,700

293,834 279,315 132,610 101,240Add: Cash and bank balances and short term funds 23 123,409 146,383 15,594 49,293

Total loans and receivables 417,243 425,698 148,204 150,533

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20. trade and otHer reCeiVabLes (Cont’d)

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2013: 30 to 90) days terms. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.

Ageing analysis of trade receivables

The ageing analysis of the Group’s and the Company’s trade receivables are as follows:


Neither past due nor impaired 194,859 161,495 26,854 30,207

1 to 30 days past due not impaired 49,061 66,886 5,419 8,60731 to 60 days past due not impaired 21,508 25,837 2,375 1,69861 to 90 days past due not impaired 6,478 4,003 1,150 18490 to 120 days past due not impaired 2,215 1,188 55 15More than 121 days past due not impaired 1,800 1,509 11 5

81,062 99,423 9,010 10,509Impaired 2,015 3,115 - -

277,936 264,033 35,864 40,716

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.

None of the Group’s and the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and the Company have trade receivables amounting to RM81,062,000 (2013: RM99,423,000) and RM9,010,000 (2013: RM10,509,000) respectively that are past due at the reporting date but not impaired.

Receivables that are impaired

The Group’s and the Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:


Trade receivables - nominal amounts 2,015 3,115 - -Less: Allowance for impairment (2,015) (3,115) - -

- - - -


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20. trade and otHer reCeiVabLes (Cont’d)

(a) Trade receivables (cont’d) Group Company Note 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Movement in allowance accounts:At 1 January 3,115 3,606 - -Charge for the financial year 8 48 328 23 -Reversal of impairment losses 8 (154) (252) (18) -Written off (823) (580) - -Exchange differences (171) 13 - -

At 31 December 2,015 3,115 5 -

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

(b) Amount due from a joint venture

Amount due from a joint venture is unsecured, non-interest bearing and is repayable on demand.

(c) Amounts due from subsidiaries

Amounts due from subsidiaries are unsecured, non-interest bearing and repayable on demand.

(d) Loans to subsidiaries

Loans to subsidiaries are unsecured, bear interest at cost of fund plus 0.4% (2013: 0.4%) per annum, and have an average maturity of 2 (2013: 2) years.

21. otHer assets


CurrentPrepayments (a) 15,420 18,064 271 192

Non-currentNon-refundable deposits for acquisition of property, plant and equipment (b) 61,613 39,433 - -

77,033 57,497 271 192

(a) Prepayments

Included in the prepayments are advance payments to suppliers for purchase of raw materials, land and building and installation of machinery.

(b) Non-refundable deposits for acquisition of property, plant and equipment

These represent deposits placed for acquisition of land and building, plant and machinery.

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Annual Report 2014


21. inVentories


Raw materials 181,484 167,277 14,663 24,227Work-in-progress 63,523 64,174 18,769 19,707Finished goods 56,626 48,577 1,904 1,884Consumables 6,082 4,254 490 801

307,715 284,282 35,826 46,619

During the financial year, the amounts of inventories recognised as expense in cost of sales of the Group and of the Company were RM805,089,870 (2013: RM826,336,000) and RM110,498,106 (2013: RM125,373,000), respectively.

The Group has recorded a charge to income statement pertaining to inventories written down to net realisable value of RM15,643,000 in previous financial year while for the Company a charge of RM82,000 (2013: RM838,000) during the year.

During the year, a reversal of write-down of inventories of the Group amounting to RM632,000 (2013: nil) was made due to increase in net realisable value.

23. CasH and banK baLanCes and sHort terM fUnds


Cash at banks and on hand 48,963 47,692 3,635 12,921Deposits with: Licensed banks 46,481 42,664 10,174 3,306 Other financial institution - 11,475 - 8,015Short term funds 27,965 44,552 1,785 25,051

Cash and bank balances and short term funds 123,409 146,383 15,594 49,293Less: Short term funds (27,965) (44,552) (1,785) (25,051)

Cash and cash equivalents 95,444 101,831 13,809 24,242

Other financial institution represents a building society in Malaysia.

Short term funds are investments in income trust funds in Malaysia. The trust funds invest in highly liquid assets which are readily convertible to cash.

The weighted average effective interest rates of deposits of the Group and of the Company at the reporting date were as follows:

Group Company 2014 2013 2014 2013

Weighted average effective interest rates (%) - Fixed rates 3.66% 2.97% 3.28% 3.04%

The average maturity days of deposits at the reporting date were as follows:

Group Company 2014 2013 2014 2013 Days Days Days Days

Licensed banks 44 30 8 14Other financial institution - 24 - 17


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24. ProVisions

Group 2014 2013 RM’000 RM’000

Provision for solid waste disposalAt 1 January 58 48Additional provision during the financial year (Note 8) 1,017 808Utilisation of provision during the financial year (1,032) (798)

At 31 December 43 58

The Group is required to dispose solid waste in accordance with environmental requirements. A provision has been made for estimated cost for the disposal of solid waste based on service provider’s price quotation.

25. retireMent benefit obLiGations

The Group operates an unfunded, defined Retirement Benefit Scheme (“the Scheme”) for their eligible employees. The Group’s obligation under the Scheme is determined based on actuarial valuation by an independent actuary dated 23 January 2014. Under the Scheme, eligible employees are entitled to retirement benefits varying between 18 days and 52 days per year of final salary upon attainment of the retirement age of 60.


Net defined benefit obligations, representing net liability 38,176 42,443 14,154 14,698

Analysed as:Not later than 1 year 3,108 10,985 1,426 3,957Later than 1 year but not later than 2 years 108 102 30 25Later than 2 years but not later than 5 years 3,216 322 1,341 98Later than 5 years 31,744 31,034 11,357 10,618

38,176 42,443 14,154 14,698

Analysed as:Current 3,108 10,985 1,426 3,957Non-current 35,068 31,458 12,728 10,741

38,176 42,443 14,154 14,698

Movements in the net liability were as follows:


At 1 January (as previously stated) 42,443 30,779 14,698 11,112Effect of adopting the amendments to MFRS 119 - 4,587 - 1,220

At 1 January (restated) 42,443 35,366 14,698 12,332Current service cost 2,075 4,353 2,066 1,900Past service cost (728) (1,042) (728) (338)Interest cost 1,705 1,434 580 524Remeasurement effects recognised in other comprehensive income - 3,709 - 912Benefits paid by the plan (7,319) (1,377) (2,462) (632)

At 31 December 38,176 42,443 14,154 14,698

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25. retireMent benefit obLiGations

The amounts recognised in the profit or loss are as follows:


Current service cost 2,075 4,353 2,066 1,900Past service cost (728) (1,042) (728) (338)Interest cost 1,705 1,434 581 524

Total, included in staff cost (Note 9) 3,052 4,745 1,919 2,086

Principal actuarial assumptions used:

2014 2013 % %

Discount rate 5.4 5.4Price inflation 3.5 3.5Expected rate of salary increases 6.0 6.0

The discount rate is determined based on the values of AA rated corporate bond yields with 10 to 15 years of maturity.

Significant actuarial assumption for determination of the defined benefits obligation is the discount rate. The sensitivity analysis below has been determined based on changes to significant assumption, with all other assumptions held constant.

Group Company RM’000 RM’000

A 1% increase/decrease in discount rate will decrease/increase the defined benefit obligation by 3,771 1,222

The sensitivity analysis presented above may not be representative of the actual change in defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some assumptions may be correlated.


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26. Loans and borroWinGs

Group Company 2014 2013 2014 2013

Maturity RM’000 RM’000 RM’000 RM’000

CurrentUnsecured:Trade facilities On demand 114,832 94,822 - 14,615Revolving credit On demand 34,192 15,000 - -Term loans 2015 34,005 22,799 - -

183,029 132,621 - 14,615

Non-currentUnsecured:Term loans 2021 111,800 95,616 - -

TotalTrade facilities 114,832 94,822 - 14,615Revolving credit 34,192 15,000 - -Term loans 145,805 118,415 - -

294,829 228,237 - 14,615

The remaining maturities of the loans and borrowings as at 31 December 2014 are as follows:


On demand or within one year 183,029 132,621 - 14,615More than 1 year and less than 2 years 34,005 26,147 - -More than 2 years and less than 5 years 55,293 65,684 - -More than 5 years 22,502 3,785 - -

294,829 228,237 - 14,615

Details of the term loans are as follows:

Loan Interest rate Drawdown date Repayment Term

Type 1 Cost of fund + 0.9% Nov-09 16 quarterly instalments after 15 months of drawdownType 2 Cost of fund + 0.75% Jan-11 19 quarterly instalments after 15 months of drawdownType 3 Fixed 3.5% Oct-12 61 monthly instalments after 24 months of drawdownType 4 Cost of fund + 0.75% Apr-13 59 monthly instalments after 1 month of drawdownType 5 Cost of fund +0.65% May-13 20 monthly instalments after 1 month of drawdownType 6 Cost of fund + 0.8% Oct-13 20 quarterly instalments after 3 months of drawdownType 7 Cost of fund + 0.75% Feb-14 84 monthly instalments after 6 months of drawdownType 8 VND 3-month base Aug-14 16 quarterly instalments after 6 months of drawdown lending rate + 0.5%

Annual Report 2014

91

Annual Report 2014


26. Loans and borroWinGs (Cont’d)

As at reporting date, the weighted average effective interest rates for the loans and borrowings, were as follows:

Group Company 2014 2013 2014 2013

Term loans: - Fixed rates 3.50% 3.50% - - - Floating rates 4.58% 3.97% - -Trade facilities 2.57% 3.28% - 3.29%Revolving credit 6.48% 5.62% - -

Term loans

The term loans are secured by a corporate guarantee given by the Company to banks for credit facilities granted to certain subsidiaries as further disclosed in Note 35(b).

27. trade and otHer PayabLes

Group Company Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

CurrentTrade payablesThird parties (a) 64,654 70,176 6,105 5,683

Other payablesAccrued operating expenses 42,006 35,317 9,586 8,665Other payables (b) 33,875 23,979 3,050 3,326Value added tax payable 103 720 - -Amounts due to subsidiaries (c) - - 3,454 46,160Amounts due to a joint venture (c) - 8 - -

75,984 60,024 16,090 58,151

Total trade and other payables 140,638 130,200 22,195 63,834Add: Loans and borrowings (Note 26) 294,829 228,237 - 14,615

Total financial liabilities carried at amortised cost 435,467 358,437 22,195 78,449

(a) Trade payables

Trade payables are non-interest bearing and are normally settled on 60 days (2013: 60 days) terms.

(b) Other payables

These amounts are non-interest bearing. Other payables are normally settled on an average term of six months (2013: average term of six months).

(c) Amounts due to subsidiaries and a joint venture

The amounts due to subsidiaries and a joint venture are unsecured, non-interest bearing and are repayable on demand.


92



28. deriVatiVes

Contract/Notional amount Liabilities 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Group

Non-hedging derivatives: Cross currency swap contract 43,471 43,525 7,525 4,750

2014 2013 RM RM

Current 1,557 -Non-current 5,968 4,750

Total 7,525 4,750

In the financial year ended 2012, a subsidiary of the Company, Box-Pak (Malaysia) Bhd., obtained a term loan denominated in RM from a financial institution, with whom the subsidiary entered into a USD/RM cross currency swap contract. The term loan was subsequently converted into USD and extended to its subsidiary in Vietnam. The subsidiary shall repay the loan in USD.

During the financial year, the Group recognised a loss of RM2,775,000 (2013: RM4,352,000) arising from fair value loss of derivative liabilities (Note 8). The fair value changes are attributable to changes in market prices of interest rates, as well as foreign exchange spot and forward rate.

29. fair VaLUe MeasUreMent

The following table provides the fair value measurement hierarchy of the Group’s and the Company’s assets and liabilities

Fair value measurement using

Quoted prices Significant Significant in active observable unobservable markets inputs inputs Total (Level 1) (Level 2) (Level 3) RM’000 RM’000 RM’000 RM’000

Group

Assets for which fair values are disclosed:

Investment properties (Note 15) 103,300 - 103,300 -Investment in subsidiaries - market value of quoted shares in Malaysia (Note 17) 69,111 69,111 - -

Liability measured at fair value:

Derivative financial liabilities: - Currency swap contracts (Note 28) (7,525) - (7,525) -

Company

Assets for which fair values are disclosed:Investment properties (Note 15) 75,000 - 75,000 -Investment in subsidiaries - market value of quoted shares in Malaysia (Note 17) 69,111 69,111 - -

Annual Report 2014

93

Annual Report 2014


29. fair VaLUe MeasUreMent (Cont’d)

The management assessed that short term funds approximate their carrying amounts largely due to the short-term maturities of these instruments.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

Level 1 fair value

Level 1 fair value is derived from market value of quoted shares in Malaysia which represent the closing share price on 31 December 2014, as quoted by Bursa Malaysia Securities Berhad.

Level 2 fair value

Level 2 fair value for investment properties is derived from open-market values estimated by independent professionally qualified valuers.

There have been no transfers between Level 1 and Level 2 during the year.

30. sHare CaPitaL

Share capital (Issued and fully paid) Share premium 2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Group/Company

At 1 January/31 December 111,042 111,042 744 744

Group/Company Number of ordinary shares of RM0.25 each Amount 2014 2013 2014 2013 ‘000 ‘000 ‘000 ‘000

Authorised share capitalAt 1 January/31 December 2,000,000 2,000,000 500,000 500,000

Issued and fully paidAt 1 January/31 December 444,168 444,168 111,042 111,042

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.


94



31. otHer reserVes

Foreign currency Capital translation reserve reserve Total RM’000 RM’000 RM’000

Group

At 1 January 2013 4,480 (6,071) (1,591)Other comprehensive income:Foreign currency translation - 6,407 6,407At 31 December 2013 4,480 336 4,816

At 1 January 2013 4,480 336 4,816

At 1 January 2014 4,480 336 4,816Other comprehensive income:Foreign currency translation - 8,298 8,298

At 31 December 2014 4,480 8,634 13,114

(a) Capital reserve

The capital reserve arose as a result of capitalisation of retained earnings and revaluation reserve for bonus issue by a subsidiary company, Box-Pak (Malaysia) Bhd., in 1996.

(b) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from the translation of monetary items which form part of the Group’s net investment in foreign operations.

32. retained earninGs

The Company may distribute dividends out of its entire retained earnings as at 31 December 2014 under the single-tier system.

33. reLated Party disCLosUres

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and the Company with related parties took place at terms agreed between the parties during the financial year:

2014 2013 2014 2013 RM’000 RM’000 RM’000 RM’000

Sale of finished goods to: A joint venture (40) (388) - - Subsidiaries of a substantial corporate shareholder (9,854) (3,003) (400) (5) Subsidiaries - - (36,902) (37,914)Purchases from: A joint venture 4 27 - - Subsidiaries of a substantial corporate shareholder 757 229 715 226 Subsidiaries - - 7,124 4,818Dividend income received from subsidiaries - - (50,347) (5,624)Interest income receivable from subsidiaries - - (1,919) (2,929)Rental receivable from subsidiaries - - (6,183) (819)Rental of warehouse from a joint venture 31 111 - -

Annual Report 2014

95

Annual Report 2014


33. reLated Party disCLosUres (Cont’d)

(a) Sale and purchase of goods and services (cont’d)

The related companies and their relationship with the Company are as follows:

Related companies/parties Relationship

Box-Pak (Malaysia) Bhd. SubsidiaryFederal Metal Printing Factory Sdn. Berhad SubsidiaryKian Joo Canpack (Shah Alam) Sdn. Bhd. SubsidiaryKian Joo Canpack Sdn. Bhd. SubsidiaryMetal-Pak (Malaysia) Sdn. Bhd. SubsidiaryKJM Aluminium Can Sdn. Bhd. SubsidiaryKian Joo Packaging Sdn. Bhd. SubsidiaryKJ Can (Selangor) Sdn. Bhd. SubsidiaryKJ Can (Johore) Sdn. Bhd. SubsidiaryKian Joo Can (Vietnam) Co., Ltd. SubsidiaryKian Joo-Visypak Sdn. Bhd. Joint venture companyF & B Nutrition Sdn. Bhd. A subsidiary of a significant corporate shareholderAik Joo Can Factory Sdn. Berhad A subsidiary of a significant corporate shareholder

(b) Compensation of key management personnel

The Group and the Company do not have any key management personnel who have authority and responsibility for planning, directing and controlling the activities of the Group and the Company directly or indirectly, except for the directors. The directors’ remunerations are as disclosed in Note 10.

34. CoMMitMents

(a) Capital commitments

Capital expenditure as at 31 December 2014 is as follows:


Capital expenditureApproved and contracted for property, plant and equipment 55,172 129,015 225 40,940

(b) Operating lease commitments – as lessee

The Group has entered into non-cancellable operating lease agreements for the rental of hostel. These leases have an average tenure of two years with options to renew. There are no restrictions placed upon the Group by entering into the leases.

Future minimum rentals payable under non-cancellable operating leases at the reporting date are as follows:


Not later than 1 year 469 272 102 94Later than 1 year but not later than 5 years 63 46 1 -

532 318 103 94


96



35. ContinGenCies

(a) Contingent liabilities

Claim by a former Director, See Teow Koon (“STK”) for reinstatement as Executive Director

The Company had on 14 August 2014, received a sealed Writ of Summons and Statement of Claim (“STK Claim”) from the solicitors acting for STK. The Writ of Summons and Statement of Claim were subsequently amended to include Kian Joo Packaging Sdn. Bhd. and KJ Can (Selangor) Sdn. Bhd.

Details of the STK Claim, amongst others are as follows:

(i) A declaration that STK is entitled to work as the Executive Director of the Company until he attains the age of 70 years as ordered by the Court of Appeal Order dated 4 October 2006;

(ii) A declaration that the removal of STK as the Executive Director of the Company is unlawful, null and void;

(iii) An order that the Company forthwith restore STK to his position as an Executive Director of the Company without any loss of salaries, perks and benefits;

(iv) Further or alternatively, the Company be ordered to pay to STK all salaries, perks and benefits including retirement benefits under the Kian Joo Group of Companies Terms and Conditions of Employment for Executive Director, that is due to STK upon STK attaining 70 years of age on 14 June 2019 in the sum of approximately RM12.6 million plus interest thereon and other general damages.

The Court has fixed this matter for trial in April 2015. The directors are of the view that the Company has a good defence to the claim by STK.

(b) Financial guarantee

Company 2014 2013 RM’000 RM’000

Unsecured:Guarantees given to financial institutions for credit facilities granted to subsidiaries 79,622 72,812

No value has been placed on the corporate guarantee provided by the Company as the directors have assessed the guarantee contracts and concluded that the financial impact of the guarantee is not material as the subsidiaries concerned are in positive financial standing to meet their obligations as and when they fall due.

36. statUs of CorPorate ProPosaL

On 26 November 2013, the Company received a letter of offer from Aspire Insight Sdn Bhd (“Aspire Insight”) to acquire the entire business and undertaking including all assets and liabilities of the Company (“Offer”) for a cash consideration of approximately RM1.466 billion. On 10 January 2014, the Board of Directors of the Company, via its Adviser announced that it has deliberated and agreed to accept Aspire’s Offer.

On 24 March 2014, the Company, via its Adviser, announced that it has entered into a conditional Business Sale Agreement (“BSA”), Properties Sale Agreements and Assets Sale Agreement with Aspire Insight (“Proposed Disposal”). Upon completion of the Proposed Disposal, the Company will undertake a capital reduction and repayment exercise to return the cash proceeds arising from the said Proposed Disposal to all entitled shareholders via a proposed distribution of proceeds in cash at not less than RM3.30 per ordinary share of RM0.25 each in the Company (“Proposed Proceeds Distribution”).

Bursa Malaysia Securities Berhad (“Bursa Securities”) had vide its letter dated 27 May 2014 approved the extension of time for the Company to submit the draft Circular to shareholders in relation to the Proposed Disposal and Proposed Proceeds Distribution (collectively, “Proposals”) from 24 May 2014 until 23 August 2014.

Annual Report 2014

97

Annual Report 2014


36. statUs of CorPorate ProPosaL (Cont’d)

Vide letters dated 22 August 2014 and 26 November 2014, Bursa Securities granted the Company further extensions of time to submit the draft Circular to shareholders in relation to the Proposals to 23 November 2014, and subsequently to 31 March 2015.

The Proposals are subject to the approval by relevant authorities and shareholders of the Company and written confirmation from Aspire on whether the due diligence is satisfactory.

37. MateriaL LitiGation

Claim by an Executive Director, Dato’ See Teow Guan in relation to the Offer

On 7 May 2014, the executive director of the Company, Dato’ See Teow Guan (“Plaintiff”), acting in a personal capacity and in a representative capacity on behalf and for the benefit of the Company, served a Writ of Summons and Statement of Claim on the following defendants:

1. Yeoh Jin Hoe (“YJH”)2. Chee Khay Leong (“CKL”)3. Aspire Insight Sdn Bhd (“Aspire”)4. Can-One Berhad (“Can-One”)5. Can-One International Sdn Bhd (“Can-One International”)6. Kian Joo Can Factory Berhad (“The Company”)7. Box-Pak (Malaysia) Bhd. (“Box Pak”)

(collectively referred to as “the Defendants”)

In summary, the Plaintiff claimed the following:

A declaration that the letter of offer dated 26 November 2013 from Aspire to the Company to acquire the entire business and undertaking including all of the assets and liabilities of the Company (“Aspire Bid”) is deemed a related party transaction by virtue of the interest in the proposed disposal of the entire assets and liabilities of the Company to Aspire (“Proposed Disposal”) of the following:

(a) Can-One International, as a major shareholder of the Company with an interest direct or indirect in Aspire;

(b) YJH, as a Director of the Company with an interest direct or indirect in Aspire;

(c) Aspire, as a person connected to Can-One and/or Can-One International within the meaning under the Main Market Listing Requirements (“Listing Requirements”);

(d) Aspire, as a person connected with YJH within the meaning under the Listing Requirements;

On 17 June 2014, the Plaintiff filed an application for an injunctive relief, among others, that the Company be restrained until the trial of the action from calling any shareholders meeting in respect of the offer made by Aspire.

On 14 November 2014, the Company and all the other defendants have successfully applied to the KL High Court to strike out the Plaintiff’s claims.

On 1 December 2014, the Company received a Notice of Appeal from the Plaintiff’s solicitors to the Court of Appeal. The appeal pertains to the decision of the KL High Court delivered on 14 November 2014 which allowed the striking out application by the Company.

The Court of Appeal has subsequently fixed the above matter for hearing on 15 April 2015.

The Company, upon consultation with the solicitors, is of the view that the Company has a good defence to the claim by the Plaintiff and the Directors of the Company are of the view that the claim is unlikely to result in any material impact to the financial statements of the Company.


98



38. finanCiaL risK ManaGeMent obJeCtiVes and PoLiCies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Group Financial Controller. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

It is, and has been throughout the current and previous financial years, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances and short term funds), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:

- The carrying amount of each class of financial assets recognised in the statements of financial position.

- A nominal amount of RM79,622,000 (2013: RM72,816,000) relating to a corporate guarantees provided by the Company to financial institutions for credit facilities granted to subsidiaries.

Credit risk concentration profile

The Group determines concentrations of credit risk by performing ongoing credit evaluation of its customers and by monitoring industry sector profile of its trade receivables on an ongoing basis.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 20. Deposits with banks and other financial institutions that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 20.

Annual Report 2014

99

Annual Report 2014


38. finanCiaL risK ManaGeMent obJeCtiVes and PoLiCies (Cont’d)

(b) Liquidity risk (cont’d)

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

On demand or within One to Over five one year five years years Total

RM’000 RM’000 RM’000 RM’000

Group

As at 31 December 2014

Financial liabilities:Trade and other payables 140,638 - - 140,638Loans and borrowings 189,277 99,037 22,607 310,921 Derivatives 1,557 5,968 - 7,525

Total undiscounted financial liabilities 331,472 105,005 22,607 459,084


Financial liabilities:Trade and other payables 130,200 - - 130,200Loans and borrowings 132,621 99,707 4,486 236,814Derivatives - 4,750 - 4,750

Total undiscounted financial liabilities 262,821 104,457 4,486 371,764

On demand or within one year RM’000

Company


Financial liabilities:Trade and other payables 22,195Loans and borrowings -Financial guarantee contracts (1) 129,736

Total undiscounted financial liabilities 151,931


100




(b) Liquidity risk (cont’d)

On demand or within one year RM’000

Company


Financial liabilities:Trade and other payables 63,834Loans and borrowings 14,615Financial guarantee contracts (1) 91,000

Total undiscounted financial liabilities 169,449

(1) Based on the maximum amount that can be called for under the financial guarantee contract.

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s primary interest rate risk relates to their interest-bearing debt. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

The investments in other financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits which yield better returns than cash at bank.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit net of tax would have been RM1,256,000 and nil (2013: RM586,000 and RM308,000) higher/lower respectively, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings and interest income on fixed deposit placements. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

(d) Foreign currency risk

The Group is not significantly exposed to foreign currency risk as the majority of the Group’s transactions, assets and liabilities are denominated in Ringgit Malaysia except for foreign exchange risks arising from imports and exports and from a country in which foreign subsidiary companies operate. The currencies giving rise to this risk are primarily United States Dollar (“USD”), Vietnam Dong (“VND”), Singapore Dollar (“SGD”), Euro (“EURO”), Swiss Franc (“CHF”), Japanese Yen and Sterling Pound (“Others”).

The Group is not engaged in any hedging transactions.

Annual Report 2014

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Annual Report 2014



(d) Foreign currency risk (cont’d)

The net unhedged financial assets and financial liabilities of the Group as at 31 December 2014 and 2013 that are not denominated in its functional currency are as follows:

Functional currency USD VND SGD EUR CHF Others Total of the Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2014

Cash and bank balances 9,706 45,070 188 - - - 54,964Trade receivables 27,855 69,708 7,353 11 - 1,507 106,434Trade payables (16,617) (25,977) (946) (2,817) - (162) (46,519)Other receivables 6,589 1,861 - - - - 8,450Other payables (1,993) (5,209) (548) (1,623) (3) (93) (9,469)Loans and borrowings (55,619) (26,397) - (12,853) - - (94,869)

Net exposure (30,079) 59,056 6,047 (17,282) (3) 1,252 18,991

31 December 2013

Cash and bank balances 31,308 5,894 686 - - - 37,888Trade receivables 42,927 61,052 12,091 83 - - 116,153Trade payables (12,656) (34,347) (873) (269) - (312) (48,457)Other receivables 7,205 348 - 49 - 334 7,936Other payables (1,686) (1,352) (97) - (14) (53) (3,202)Loans and borrowings (89,912) (7,457) - - - - (97,369)

Net exposure (22,814) 24,138 11,807 (137) (14) (31) 12,949

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD, VND and SGD exchange rates against the respective functional currencies of the Group’s entities, with all other variables held constant. The exposure to the other currencies are not significant, hence the effect of the changes in the exchange rates are not explained below.

Profit net of tax Increase/(decrease)

2014 2013 RM’000 RM’000

Group

USD/RM - strengthened 3% (902) (684) - weakened 3% 902 684

VND/RM - strengthened 3% 1,772 724 - weakened 3% (1,772) (724)

SGD/RM - strengthened 3% 181 354 - weakened 3% (181) (354)


102




(e) Fair values

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximate of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables (current) 20Loans and borrowings (current) 26Loans and borrowings (non-current) - with floating rate 26Trade and other payables (current) 27

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

Derivatives

Forward currency contracts, commodity derivative contracts and currency swap contracts (collectively known as “derivative contracts”) are valued using a valuation technique with market observable inputs. The fair value of the derivative contracts is the amount that would be payable or receivable on completion/termination of the outstanding position, and is determined by reference to the difference between the contracted rate and the market rate as at the reporting date.

39. CaPitaL ManaGeMent

The primary objective of the Group’s and the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group and the Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new ordinary shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2014 and 2013.

The Group and the Company monitor capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group and the Company include within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Capital includes only equity attributable to the equity holders of the Company.

Group Company Note 2014 2013 2014 2013

RM’000 RM’000 RM’000 RM’000

Loans and borrowings 26 294,829 228,237 - 14,615Trade and other payables 27 140,638 130,200 22,195 63,834Less: Cash and bank balances and short term funds 23 (123,409) (146,383) (15,594) (49,293)

Net debt 312,058 212,054 6,601 29,156

Equity attributable to the owners of the parent, representing total capital 1,138,900 1,037,452 414,750 378,174

Capital and net debt 1,450,958 1,249,506 421,351 407,330

Gearing ratio 22% 17% 2% 7%

Annual Report 2014

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Annual Report 2014


40. seGMent inforMation

For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows:

(i) Cans division - manufacture and distribution of tin and aluminium beverage cans.(ii) Cartons division - manufacture and distribution of corrugated fibreboard cartons.(iii) Contract packing division - carbonated beverage contract packing service and packing of milk powder on OEM

basis.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments.


104



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3,044

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0,137

50

,712

56,28

9 12

4 11

4 (3

0,413

) (3

3,815

) 1,3

34,78

4 1,2

90,56

7

resu

lts:

Inte

rest

inco

me

982

2,173

12

7 51

48

7 17

4 6

16

1 -

- -

1,603

2,4

14Di

viden

d inc

ome

61,35

3 5,6

24

314

- 20

-

- -

- -

(60,3

47)

(5,62

4)

1,340

-

Depr

eciat

ion an

d am

ortis

ation

19

,406

17,60

2 15

,843

16,90

5 12

,204

8,363

2,6

49

2,080

20

6 12

9 -

- 50

,308

45,07

9Sh

are o

f res

ults o

f a jo

int ve

ntur

e -

- -

- -

- -

- 11

,727

(102

) -

- 11

,727

(102

)Se

gmen

t pro

fit/(l

oss)

65,99

2 77

,399

52,46

1 53

,232

10,47

4 14

,246

3,401

2,9

23

11,70

1 (4

08)

- -

144,0

29

147,3

92

asse

ts:

Inve

stm

ent i

n a jo

int ve

ntur

e 22

,196

20,46

9 -

- -

- -

- -

- -

- 22

,196

20,46

9* A

dditi

ons t

o non

-cur

rent

asse

ts

95,58

9 25

,870

84,92

0 43

,785

19,79

9 55

,797

1,026

1,2

67

- -

- -

201,3

34

126,7

19Se

gmen

t ass

ets

739,8

28

708,8

44

558,3

64

471,1

88

316,4

83

294,7

02

43,53

1 40

,666

52,13

2 12

,771

- -

1,710

,338

1,528

,171

Segm

ent l

iabilit

ies

126,4

57

109,2

74

206,9

55

161,0

22

160,3

67

148,1

27

7,911

6,1

45

641

671

1,444

1,4

44

503,7

75

426,6

83

* Add

ition

s to n

on-c

urre

nt as

sets

cons

ist of

:

20

14

2013

rM

‘000

rM

‘000

Prop

erty,

plan

t and

equip

men

t 19

5,496

12

2,164

Land

use r

ights

5,6

47

1,634

Inve

stm

ent p

rope

rties

20

38

3In

tang

ible a

sset

s 17

1 2,5

38

20

1,334

12

6,719

Annual Report 2014

105

Annual Report 2014


40. seGMent inforMation (Cont’d)

Geographical information

The Group’s geographical information is based on the location of the Group’s assets. Sales to external customers disclosed in the geographical information is based on the geographical location of the customers.

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:


Malaysia 730,993 731,331 726,134 651,335Vietnam 403,464 364,886 194,917 145,608Singapore 77,407 67,766 - -Others 122,920 126,584 40,705 -

1,334,784 1,290,567 961,756 796,943

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:

2014 2013 RM’000 RM’000

Property, plant and equipment 830,106 692,698Land use rights 20,718 14,195Investment properties 23,833 24,282Intangible assets 2,555 2,500Investment in a joint venture 22,196 20,469Other assets 61,613 39,433Deferred tax assets 735 3,366

961,756 796,943

41. diVidends

Group/Company 2014 2013 RM’000 RM’000

Recognised during the financial year:

Dividends on ordinary shares: Interim tax exempt (single-tier) dividend of 10% for 2013: 2.50 sen (2012: 2.50 sen) per share - 11,104 Special tax exempt (single-tier) dividend of 15% for 2013: 3.75 sen (2012: 3.75 sen) per share - 16,656 Final tax exempt (single-tier) dividend of 10% for 2013: 2.50 sen (2012: 2.50 sen) per share 11,104 11,104 Special tax exempt (single-tier) dividend of 15% for 2013: 3.75 sen (2012: 3.75 sen) per share 16,656 16,656

27,760 55,520

No final dividend will be recommended in respect of the financial year ended 31 December 2014.


106



42. sUPPLeMentary exPLanatory note on disCLosUre of reaLised and UnreaLised Profits

The breakdown of the retained profits of the Group and of the Company as at 31 December 2014 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.


Total retained profits of the Company and its subsidiaries: - Realised 867,663 779,090 249,696 211,480 - Unrealised 86,505 83,134 53,268 54,908

Share of retained profits of a joint venture - Realised 11,727 11,241 - - - Unrealised - (646) - -

965,895 872,819 302,964 266,388

Add: Consolidation adjustments 48,105 48,031 - -

Total retained profits as per financial statements 1,014,000 920,850 302,964 266,388

The determination of realised and unrealised profits above is solely for complying with the disclosure requirements as stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.

Annual Report 2014

107lISt oF propertIeS aS at 31 DeCeMber 2014

Location Description

Year of LastRevaluation/Acquisition

Area(Square Metres) Tenure Expiry Date

Age ofBuildings

(Years)

2014 Net Book

Value (RM’000)

Lot PT 2Jalan Perusahaan 4Batu Caves, Selangor

Land &Building

2009 12,450 Leasehold 5.9.2074 34 16,415

Lot No. 26685 (28833 - 28836)Batu Caves, Selangor

Land &Building

2009 7,299 Freehold - 20 7,300

Lot No. 28829 to 28832Batu Caves, Selangor

Land &Building

2009 16,923 Freehold - 19 26,206

Lot 6 Jalan Perusahaan 1Batu Caves, Selangor

Land &Building

2009 8,502 Leasehold 5.9.2074 26 11,811


Land &Building

2009 8,417 Leasehold 5.9.2074 38 8,829


Land &Building

2009 9,444 Leasehold 5.9.2074 38 11,401

Lot 10615, Phase 3Arab-Malaysian Industrial ParkNilai, Negeri Sembilan

Land forDevelopment

2009 12,547 Freehold - - 1,760

Lot 10666Arab-Malaysian Industrial ParkNilai, Negeri Sembilan

Land forDevelopment

2009 9,007 Freehold - - 1,260


Land forDevelopment

2009 9,007 Freehold - - 1,260


Land &Building

2009 11,798 Freehold - 10 9,360

Lot 22 & 24, Section 16Town of Shah Alam, Selangor

Land &Building

2009 3,902 Leasehold 31.10.2070 41 3,453

Lot 21, Section 15Town of Shah Alam, Selangor

Land &Building

2009 1,951 Leasehold 31.10.2070 30 1,593

Lot 19, Jalan SU 4Section 22Shah Alam, Selangor

Land &Building

2009 19,776 Freehold - 16 19,308

Lot 135 Jalan Kawat 15/18Tapak Perusahaan Shah AlamTown of Shah Alam, Selangor

Land &Building

2009 11,427 Leasehold 12.6.2073 38 7,335

Lot 3 Jalan Kawat 15/18Tapak Perusahaan Shah AlamTown of Shah Alam, Selangor

Land &Building

2009 12,140 Leasehold 16.7.2074 23 11,067

Lot 18 Jalan Pengapit 15/19Shah Alam, Selangor

Land &Building

2009 7,641 Leasehold 4.11.2080 23 5,996


Land &Building

2009 18,848 Leasehold 5.9.2074 22 25,402


108 lISt oF propertIeS aS at 31 DeCeMber 2014

Location Description

Year of LastRevaluation/Acquisition

Area(Square Metres) Tenure Expiry Date

Age ofBuildings

(Years)

2014 Net Book

Value (RM’000)


Land &Building

1993 12,840 Leasehold 5.9.2074 30 5,809

No. 6, Jalan Kilang 1Kawasan Perindustrian Jelapang, 30100 Ipoh, Perak

Land &Building

1991 5,344 Leasehold 15.7.2036 36 526

733 Jalan Tampoi81200 Johor Bahru, Johor

Land &Building

2009 16,586 Freehold - 46 12,176

23 Jalan Dewani, Lorong 1Johor Bahru, Johor

Shophouse 2009 180 Freehold - 34 461

Lot PT 31619 Arab-Malaysian Industrial ParkNilai, Negeri Sembilan(previously Lots 13983, 16640, 16641 and 16642)

Land &Building

2009 52,586 Freehold - 17 50,051

Lot 16638Mukim Setul, Daerah SerembanNegeri Sembilan

Land forDevelopment

2012 4,654 Freehold - - 1,561

HS (D) 80122 PT No. 5141Mukim DamansaraDaerah Petaling, Selangor

Land &Building

2009 31,142 Freehold - 22 23,224

17 Dai Lo Doc Lap, VSIPThuan An DistrictBinh Duong Province, Vietnam

Land &Building

2009 22,201 Leasehold 11.2.2046 12 8,754

PT 15637 (Lot C)Taman Perindustrian PuchongSection 3, Puchong, Selangor

Land &Building

2003 40,468 Leasehold 2.9.2090 13 17,655

HS (D) 187255, PTD 62907 &HS (D) 187256, PTD 62908 &Mukim TebrauDaerah Johor Bahru, Johor

Land & Building

2009 18,483 Freehold - 20 12,438

22 Dai Lo Huu NghiVietnam Singapore Industrial ParkThuan An DistrictBinh Duong Province, Vietnam

Land & Building

2009 44,230 Leasehold 11.2.2046 11 27,066

Lot 125, Dai Lo Huu NghiVietnam Singapore Industrial ParkThuan An DistrictBinh Duong Province, Vietnam

Land for Development

2014 15,000 Leasehold 12.7.2048 - 6,923

Lot F-11-CNMy Phuoc Industrial Park 2Ben Cat DistrictBinh Duong Province, Vietnam

Land forDevelopment

2008 30,000 Leasehold 14.1.2055 - 957

Plot No. 014B/015 & 016AVSlP, Bac NinhPhu Chan CommuneTu Son Town Bac Ninh ProvinceVietnam

Land & Building

2011 35,762 Leasehold 30.11.2057 2 30,403

Annual Report 2014

109aNalySIS oF SHareHolDINGS aS at 9 MarCH 2015

Authorised share capital : RM500,000,000Issued and fully paid-up share capital : RM111,041,946.50Class of shares : Ordinary shares of RM0.25 each Voting rights : One (1) vote per ordinary shareNo. of shareholders : 4,564

siZe of sHareHoLdinGs

Size of shareholdings No. of shareholders % of shareholders No. of shares held % of issued shares

Less than 100 shares 56 1.23 1,722 0.00100 to 1,000 shares 500 10.96 362,338 0.081,001 to 10,000 shares 2,717 59.53 13,072,645 2.9410,001 to 100,000 shares 1,032 22.61 32,548,383 7.33100,001 to 22,208,388 shares 257 5.63 221,441,798 49.8622,208,389 shares and above 2 0.04 176,740,900 39.79

Total 4,564 100.00 444,167,786 100.00

sUbstantiaL sHareHoLders(According to the Register of Substantial Shareholders)

Direct Indirect Total No. of % of No. of % of No. of % ofName shares held issued shares shares held issued shares shares held issued shares

Maybank Nominees 146,131,500 32.90 - - 146,131,500 32.90(Tempatan) Sdn Bhd- Kuwait Finance House (Malaysia) Berhad for Can-One International Sdn Bhd (“CISB”)

Can-One Berhad - - 146,131,500 (1) 32.90 (1) 146,131,500 32.90(“Can-One”)

Eller Axis Sdn Bhd - - 146,131,500 (2) 32.90 (2) 146,131,500 32.90(“EASB”)

Yeoh Jin Hoe - - 146,131,500 (3) 32.90 (3) 146,131,500 32.90

Employees Provident 44,536,400 10.03 - - 44,536,400 10.03Fund Board

Dato’ See Teow Chuan 35,002,133 7.88 2,179,985 (4) 0.49 (4) 37,182,118 8.37

Notes:

(1) Deemed interest through wholly-owned subsidiary, CISB.(2) Deemed interest through Can-One, a company in which EASB holds more than 15% voting shares.(3) Deemed interest through EASB, a company in which he holds more than 15% voting shares.(4) Deemed interest through See Teow Chuan Holdings Sdn Bhd, a company in which he holds more than 15% voting shares.


110

direCtors’ sHareHoLdinGs(According to the Register of Directors’ Shareholdings)

Direct Indirect Total No. of % of No. of % of No. of % ofName shares held issued shares shares held issued shares shares held issued shares

Y.A.M. Tunku 323,100 0.07 - - 323,100 0.07Naquiyuddin Ibni Almarhum Tuanku Ja’afar

Yeoh Jin Hoe - - 146,131,500 (1) 32.90 (1) 146,131,500 32.90

Chee Khay Leong - - - - - -

Dato’ Anthony See Teow Guan 6,923,850 1.56 326,007 (2) 0.07 (2) 7,249,857 1.63

Dato’ Tan Guan Cheong - - - - - -

Dato’ Mah Siew Kwok - - - - - -

Y.A.M. Tunku Zain - - - - - -Al-’Abidin Ibni Tuanku Muhriz

Notes:

(1) Deemed interest through EASB, a company in which he holds more than 15% voting shares.(2) Deemed interest through his spouse and children.

aNalySIS oF SHareHolDINGS aS at 9 MarCH 2015

Annual Report 2014

111

List of tHirty (30) LarGest sHareHoLders(According to the Record of Depositors)

No. NameNo. of

shares held% of

issued shares

1. Maybank Nominees (Tempatan) Sdn Bhd - Kuwait Finance House (Malaysia) Berhad for Can-One International Sdn Bhd

146,131,500 32.90

2. Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board

30,609,400 6.89

3. See Teow Chuan 21,687,271 4.88

4. See Teow Chuan 13,184,823 2.97

5. Amanahraya Trustees Berhad - Public Smallcap Fund

10,139,700 2.28

6. HSBC Nominees (Asing) Sdn Bhd - Exempt An for Credit Suisse (SG BR-TST-Asing)

9,600,000 2.16

7. Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board (F Templeton)

9,276,700 2.09

8. Yong Har Chye 6,150,000 1.38

9. Alliancegroup Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Teh Win Kee (8016787)

5,500,100 1.24

10. HSBC Nominees (Tempatan) Sdn Bhd - HSBC (M) Trustee Bhd for AMB Value Trust Fund (4249)

4,888,000 1.10

11. Citigroup Nominees (Asing) Sdn Bhd - CBNY for Dimensional Emerging Markets Value Fund

4,777,380 1.08

12. Sanwoi (Malaysia) Sdn Bhd 4,623,600 1.04

13. CIMB Commerce Trustee Berhad - Public Focus Select Fund

3,531,700 0.80

14. See Teow Guan 3,500,292 0.79

15. See Teow Guan 3,423,558 0.77

16. Amanahraya Trustees Berhad - Public Strategic Smallcap Fund

3,187,400 0.72

17. Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board (PHEIM)

3,150,300 0.71

18. HLIB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Exosoft Sdn Bhd (MG0171-199)

3,070,000 0.69

19. See Chin Lam 3,024,535 0.68

20. Tan Kim Seng 2,700,000 0.61



112

List of tHirty (30) LarGest sHareHoLders (Cont’d)(According to the Record of Depositors)

No. NameNo. of

shares held% of

issued shares

21. See Teow Chuan Holdings Sdn Bhd 2,179,985 0.49

22. See Sew Chew @ See Siew Choo 2,067,418 0.47

23. See Teow Koon 2,032,855 0.46

24. Citigroup Nominees (Asing) Sdn Bhd - CBNY for DFA Emerging Markets Small Cap Series

1,893,880 0.43

25. Maybank Nominees (Tempatan) Sdn Bhd - Jincan Sdn Bhd

1,800,000 0.41

26. Noraini Jane Marree Ariffin 1,795,516 0.40

27. Chen Chin Peng 1,780,000 0.40

28. Migan Sdn Bhd 1,774,400 0.40

29. Citigroup Nominees (Asing) Sdn Bhd - CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc

1,772,080 0.40

30. DB (Malaysia) Nominee (Asing) Sdn Bhd - SSBT Fund SD4N for Government of the Province of Alberta

1,766,800 0.40

Total 311,019,193 70.04


Annual Report 2014

113NotICe oF aNNUal GeNeral MeetING

NOTICE IS HEREBY GIVEN THAT the Fifty-Seventh Annual General Meeting (“AGM”) of Kian Joo Can Factory Berhad will be held at Selangor 2 and 3, Dorsett Grand Subang, Jalan SS 12/1, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia on Friday, 24 April 2015 at 10.00 a.m. for the following purposes:

aGenda

AS ORDINARY BUSINESS

1. To receive the audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2014 and the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ Fees amounting to RM576,103 in respect of the financial year ended 31 December 2014.

3. To re-elect the following Directors of the Company who retire pursuant to Articles 104 and 104A of the Company’s Articles of Association:

(i) Chee Khay Leong(ii) Dato’ Anthony See Teow Guan

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar who has served on the Board as Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, will retire in accordance with Articles 104 and 104A of the Company’s Articles of Association and will not seek re-election in line with the Recommendations in the Malaysian Code on Corporate Governance 2012. Hence, Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar will retain office until the close of the Fifty-Seventh AGM of the Company.

Dato’ Tan Guan Cheong, who is over the age of seventy (70) years will vacate office as Independent Non-Executive Director at the conclusion of the Fifty-Seventh AGM of the Company in accordance with Section 129(2) of the Companies Act, 1965. He has indicated that he does not wish to seek re-appointment.

4. To re-elect as Director, Yeoh Jin Hoe who retires pursuant to Article 104A of the Company’s Articles of Association.

5. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration.

AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

Proposed renewal of authority for the Company to purchase its own shares

“THAT subject to compliance with the Companies Act, 1965, the Companies Regulations 1966, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), provisions of the Company’s Memorandum and Articles of Association and all other applicable laws, guidelines, rules and regulations, the Company be and is hereby authorised to purchase such number of ordinary shares of RM0.25 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company, provided that:

(i) the aggregate number of shares to be purchased pursuant to this resolution shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company as at the date of the share buy-back;

(ii) an aggregate amount of the funds not exceeding the retained profits and share premium reserve of the Company as at the date of the share buy-back, be utilised by the Company for the purchase of its own shares; and

(iii) the shares of the Company to be purchased may be cancelled, retained as treasury shares, distributed as dividends or resold on Bursa Securities, or a combination of any of the above, at the absolute discretion of the Directors;

Resolution 1

Resolution 2

Resolution 3Resolution 4

Resolution 5

Resolution 6

Resolution 7


114 NotICe oF aNNUal GeNeral MeetING

AND THAT the authority conferred by this resolution will commence immediately upon the passing of this resolution and will continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it shall lapse, unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever occurs first but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the Main Market Listing Requirements of Bursa Securities or any other relevant authorities;

AND FURTHER THAT the Directors of the Company be and are hereby authorised to do all such acts and things and to take all such steps as they deem fit, necessary, expedient and/or appropriate in order to complete and give full effect to the purchase by the Company of its own shares with full powers to assent to any condition, modification, variation and/or amendment as may be required or imposed by the relevant authorities.”

7. To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

Proposed renewal of shareholders’ mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature

“THAT subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the Company and its subsidiaries to enter into the recurrent related party transactions of a revenue or trading nature as set out in Section 2.4 of the Company’s Circular to Shareholders dated 2 April 2015 provided that:

(i) such transactions are necessary for the day-to-day operations of the Company and/or its subsidiaries and are carried out in the ordinary course of business on normal commercial terms and on terms not more favourable to the parties with which such recurrent transactions are to be entered into than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and

(ii) the shareholders’ mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year;

AND THAT the mandate conferred by this resolution shall continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it will lapse, unless by ordinary resolution passed at the meeting, the authority is renewed;

(ii) the expiration of the period within which the next AGM of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting;

whichever is earlier;

AND THAT the Directors of the Company be and are hereby authorised to complete and to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this resolution.”

Resolution 8

Annual Report 2014

115NotICe oF aNNUal GeNeral MeetING

8. To transact any other business of which due notice shall have been given in accordance with the Company’s Articles of Association and/or the Companies Act, 1965.

By Order of the Board

Tan Bee Keng (MAICSA 0856474)Chia Kwok Why (MAICSA 7005833)Company Secretaries

Batu Caves, Selangor Darul Ehsan2 April 2015

Notes:

(A) GENERAL MEETING RECORD OF DEPOSITORS

Only members whose name appears in the General Meeting Record of Depositors as at 16 April 2015 shall be entitled to attend this Meeting or appoint proxy to attend and vote in his stead.

(B) PROxy

(i) A member of the Company entitled to attend and vote at this Meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) proxies to attend and vote at the same meeting, the appointment shall be invalid unless the proportion of the shareholdings to be represented by each proxy is specified in the instrument appointing the proxies.

(ii) Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company.

(iii) Where a member is an exempt authorised nominee (“EAN”) as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the EAN may appoint in respect of each omnibus account it holds.

(iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or, in the case of a corporation, under its common seal or in some other manner approved by the Directors. Any alteration to the instrument appointing a proxy must be initialled.

(v) To be valid, the completed form of proxy must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate Services (KL) Sdn Bhd at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time appointed for the holding of the Meeting or any adjournment thereof.

(C) ExPLANATORy NOTES ON SPECIAL BUSINESS

Resolution 7 - Proposed renewal of authority for the Company to purchase its own shares

The Ordinary Resolution 7 proposed, if passed, will give authority to the Company to purchase through Bursa Malaysia Securities Berhad such number of ordinary shares in the Company up to an aggregate amount not exceeding ten per centum (10%) of the total issued and paid-up share capital of the Company. The authority from the shareholders will be effective immediately upon passing of the Ordinary Resolution and shall continue to be in force until:

(i) the conclusion of the next AGM; or

(ii) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever occurs first.

For further information, please refer to the Share Buy-Back Statement dated 2 April 2015 which is despatched together with the Company’s Annual Report 2014.


116

Resolution 8 - Proposed renewal of shareholders’ mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature (“RRPTs”)

The Ordinary Resolution 8 proposed, if passed, will renew the mandate for the Company and its subsidiary companies to enter into the RRPTs with Box-Pak (Malaysia) Bhd. and/or its subsidiary companies, and Can-One Berhad and/or its subsidiary companies, as set out in Section 2.4 of the Circular to Shareholders dated 2 April 2015.

The aforesaid mandate from shareholders is on an annual basis and subject to renewal at the next AGM.

For further information, please refer to the Circular to Shareholders dated 2 April 2015 which is despatched together with the Company’s Annual Report 2014.

NotICe oF aNNUal GeNeral MeetING

Form oF Proxy

CDS Account No. No. of Shares Held

I/We......................................................................................................... (NRIC/Company No. ............................................)

of.............................................................................................................................................. Tel No. ..................................

being a member/members of Kian Joo Can Factory Berhad hereby appoint :-

(Full Name in Block Letters)

(Address)

Full Name (in Block Letters) NrIC/Passport No. No. of Shares % of Shareholdings

*and/or (*delete if not applicable)

Full Name (in Block Letters) NrIC/Passport No. No. of Shares % of Shareholdings

or failing him/her, THE CHAIRMAN OF THE MEETING as my/our proxy to vote on my/our behalf at the Fifty-Seventh Annual General Meeting of the Company to be held at Selangor 2 and 3, Dorsett Grand Subang, Jalan SS 12/1, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia on Friday, 24 April 2015 at 10.00 a.m. and at any adjournment thereof.

My/our proxy/proxies will vote on the resolutions as indicated by an ‘X’ in the spaces provided below. In the absence of specific direction as to voting, my/our proxy/proxies will vote or abstain from voting at his/their discretion.

resolution ordinary Business For Against

1 To receive the audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2014 and the Report of the Directors and Auditors thereon

2 To approve the payment of Directors’ Fees amounting to RM576,103 in respect of the financial year ended 31 December 2014

3 To re-elect as Director, Chee Khay Leong who retires pursuant to Articles 104 and 104A of the Articles of Association of the Company

4 To re-elect as Director, Dato’ Anthony See Teow Guan who retires pursuant to Articles 104 and 104A of the Articles of Association of the Company

5 To re-elect as Director, Yeoh Jin Hoe who retires pursuant to Article 104A of the Articles of Association of the Company

6 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration

Special Business

7 Proposed renewal of authority for the Company to purchase its own shares

8 Proposed renewal of shareholders’ `mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature

Signature/Seal of Shareholder Date

(003186-P)(INCORPORATED IN MALAYSIA)

Notes:

(i) Only members whose name appears in the General Meeting Record of Depositors as at 16 April 2015 shall be entitled to attend this Meeting or appoint proxy to attend and vote in his stead.

(ii) A member of the Company entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) proxies to attend and vote at the same meeting, the appointment shall be invalid unless the proportion of the shareholdings to be represented by each proxy is specified in the instrument appointing the proxies.

(iii) Where a member is an authorised nominee, as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company.

(iv) Where a member is an exempt authorised nominee (“EAN”) as defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the EAN may appoint in respect of each omnibus account it holds.

(v) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or, in the case of a corporation, under its common seal or in some other manner approved by the Directors. Any alteration to the instrument appointing a proxy must be initialled.

(vi) To be valid, the completed form of proxy must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate Services (KL) Sdn Bhd at Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time appointed for the holding of the Meeting or any adjournment thereof.

Affixstamphere

The Share RegistrarBoArDroom CorPorATE SErVICES (KL) SDN. BHD.

(3775-x)Lot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama

47800 Petaling JayaSelangor Darul Ehsan

Malaysia

1st fold here

2nd fold here

Fold this flag sealing

AC

KIAN JOO CAN FACTORY BERHAD (003186-P)Lot No.10, Jalan Perusahaan Satu

68100 Batu Caves

Selangor Darul Ehsan, Malaysia

Tel +603 6189 6322

Fax +603 6189 8185

www.KJCF.net (003186-P)(INCORPORATED IN MALAYSIA)

A n n u A l R e p o R t 2 0 1 4

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Al RepoRt 2014

Documents

KiA AnnuAl RepoRt 2014 n Joo C A n F ACtoR y be RhAd · pleasure in presenting the Annual Report and the Audited Financial Statements of Kian Joo group of companies (“Kian Joo Group”