CONTENTSkjcf.net/docs/investor/annualRpt/report2013.pdf · 81% Great Asia Tin Cans Factory Company,...

2013 2012(restated)

2011 2010 2009

Revenue (RM’000) 1,290,567 1,162,845 1,086,037 992,671 875,601

Profit Before Taxation (RM’000) 147,392 144,035 139,487 132,906 68,491

Profit After Taxation and Minority Interest (RM’000) 118,319 120,876 104,044 101,967 48,776

Dividend Rate (%) 50 50 55 35 20

Dividend Net (RM’000) 55,520 55,520 61,073 36,088 22,208

Paid-up Capital (RM’000) 111,042 111,042 111,042 111,042 111,042

Shareholders’ Equity (RM’000) 1,037,452 970,895 910,147 872,166 818,512

Total Assets (RM’000) 1,528,171 1,359,122 1,322,982 1,196,228 1,173,930

Total Borrowings (RM’000) 228,237 182,306 194,216 114,432 140,759

Earnings Per Share (sen) 26.64 27.21 23.42 22.96 10.98

Net Assets Backing Per share (RM) 2.34 2.19 2.05 1.96 1.84

Borrowings / Shareholders’ Equity (%) 22 19 21 13 17

FIVE-YEARFInAncIAl HIgHlIgHts

REVENUE(RM’000)

2009

2010

2011

2012

2013

875,601

992,671

1,086,037

1,162,845

1,290,567

PRofit AftER tAxAtioN ANd MiNoRity iNtEREst(RM’000)

2009

2010

2011

2012

2013

48,776

101,967

104,044

120,876

118,319

PRofit bEfoRE tAxAtioN(RM’000)

2009

2010

2011

2012

2013

68,491

132,906

139,487

144,035

147,392

totAL AssEts(RM’000)

2009

2010

2011

2012

2013

1,173,930

1,196,228

1,322,982

1,359,122

1,528,171

CONTENTS

Corporate Information

Corporate Structure

Chairman’s Statement

Profile of Directors

Corporate Social Responsibility

Statement on Corporate Governance

Responsibility Statement by the Board of Directors

Audit Committee Report

Other Information

Statement on Risk Management and Internal Control

Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Form of Proxy

2

3

4

7

11

12

19

20

23

25

28

116

118

122

KIAN JOO CAN FACTORY BERHAD (3186-P)

KIAN JOO CAN FACTORY BERHAD (3186-P)2

COrpOraTE INFOrMaTION

BOARD OF DIRECTORS

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)

See Teow Koon(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)

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

Shook Lin & Bok20th Floor, AmBank Group Building55, Jalan Raja Chulan50200 Kuala LumpurWilayah Persekutuan, Malaysia

Jublin Tan & Tey18-1, 1st FloorJalan Kampung Attap50460 Kuala LumpurWilayah Persekutuan, Malaysia

BANKERS / FINANCIAL COMPANIES / FINANCIAL INSTITUTIONS

AmBank (M) BerhadAmIslamic Bank BerhadCIMB Bank BerhadHSBC Bank Malaysia BerhadHwangDBS Investment Bank BerhadMalaysia Building Society BerhadOCBC Bank (Malaysia) BerhadPublic Bank Berhad Standard Chartered Bank Malaysia Berhad

SHARE REGISTRARS

Boardroom Corporate Services (KL) Sdn BhdLot 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


COrpOraTE STrUCTUrE

Kian Joo Packaging Sdn. Bhd.

KJM Aluminium Can Sdn. Bhd.

Federal Metal Printing Factory, Sdn. Berhad

Metal-Pak (Malaysia) Sdn. Bhd.

KJ Can (Selangor) Sdn. Bhd.

KJ Can (Johore) Sdn. Bhd.

Kian Joo Canpack Sdn. Bhd.

Kian Joo Canpack (Shah Alam) Sdn. Bhd.

Multi-Pet Sdn. Bhd.

Indastri Kian Joo Sdn. Bhd.

KJO International Sdn. Bhd. (Formerly known as KJO Systems Sdn. Bhd.)

KJ Can (Singapore) Pte. Ltd.

Kian Joo Can (Vietnam) Co., Ltd.

Box-Pak (Malaysia) Bhd.*

Kian Joo-Visypak Sdn. Bhd.

Bintang Seribu Sdn. Bhd.19%

81% Great Asia Tin Cans Factory Company, Sdn. Berhad

Box-Pak (Johore) Sdn. Bhd.

AMBM Packaging Distribution Sdn. Bhd.

Box-Pak (Vietnam) Co., Ltd.

Box-Pak (Hanoi) Co., Ltd.

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

54.83%

50%

100%

100%

100%

100%

100%

100%

*

* Listed on the Main Market of Bursa Malaysia Securities Berhad


CHaIrMaN’S STaTEMENT

For the fourth consecutive year, Kian Joo Can Factory Berhad (“Kian Joo” or “the Company”) group of companies (“the Group”) has broken its own record on revenue and pre-tax profit.

On behalf of the Board of Directors (“Board”) of the Company, I have pleasure in presenting the Annual Report and the Audited Financial Statements of the Group for the financial year ended 31 December 2013.

FINANCIAL RESULTS

The Group’s revenue improved by 11% from RM1,162.8 million in financial year 2012 to RM1,290.6 million in the financial year 2013. The increase in revenue was contributed mainly by the incremental sales in its Cans division and Cartons division.

Pre-tax profit was higher at RM147.4 million in financial year 2013 as compared to RM144.0 million the preceding financial year whereas profit after taxation was slightly lower at RM123.7 million as compared to RM128.4 million previously.

During the financial year 2013, an actuarial valuation was carried out to update the amount of retirement benefit obligations following the extension of retirement age and implementation of the minimum wage scheme in Malaysia. Unrecognised actuarial loss relating to financial periods before 31 December 2012 amounted to RM4.59 million and its related tax impact had been accounted for as prior period adjustments. As a result, comparative figures have been restated.

The Group has also revised the estimated useful lives for its plant and machinery from 10 years to 15 years in 2013 to better reflect the commercial reality of the usage of its plant and machinery. The change in accounting estimate did not have any significant impact on the results for the year.

REVIEW ON OPERATION

Generally for financial year ended 31 December 2013, profitability of all operating divisions of the Group was affected by the extension of retirement age, implementation of the minimum wage scheme in Malaysia and the annual revision of minimum wage rate in Vietnam.

Cans Division

The Cans division generated a total revenue of RM967.8 million as compared to RM862.1 million in the preceding financial year. Profit before taxation for this division was higher at RM130.6 million compared to RM124.7 million in 2012.

Improvement in revenue was mainly due to the increase in production capacity for aluminium cans following its expansion program in recent years and increase in demand for tin cans in Vietnam.

The Group was able to maintain its profitability in this division despite rising cost due to improvement in operating efficiency.

Cartons Division

Revenue from Cartons division improved to RM300.1 million in 2013 from RM264.3 million in the previous financial year. Profit before taxation, however, declined to RM14.2 million from RM22.4 million in the preceding year.

Increase in revenue was contributed by increase in demand from its customers in Vietnam.

The profitability of this division was affected by the initial operating loss of its new plant in Hanoi and recognition of loss on derivative financial instrument.

Contract Packing Services Division

Revenue from Contract packing services division declined to RM56.3 million for the financial year 2013 as compared to RM75.5 million in financial year 2012. Despite the lower revenue, profit before taxation improved to RM2.9 million as compared to loss before taxation of RM1.1 million in the preceding financial year.

The decrease in sales and improvement in profit was mainly attributable to the disposal of the division’s operation in Vietnam in July 2012. Its operation in Vietnam contributed revenue and loss before taxation of RM0.9 million and RM2.6 million respectively in financial year 2012.


Chairman’s statement

CORPORATE DEVELOPMENT

Expansion in Vietnam

The Group’s new carton box plant in Hanoi commenced operations in the Third Quarter of 2013. The plant which recorded an operating loss of RM4.5 million for the financial year under review is expected to breakeven by the Second Quarter of the financial year ending 31 December 2014.

Acquisition of New Subsidiary

On 27 November 2013, the Group, via Box-Pak (Malaysia) Bhd completed the acquisition of the entire equity interest in AMBM Packaging Distribution Sdn Bhd (“AMBM”) at a total cash consideration of RM4.5 million. Consequently, AMBM which operates a carton box plant in Johor, became an indirect subsidiary of the Group. The Group expects positive contribution from AMBM for the financial year ending 31 December 2014.

Proposed Bonus Issue and Rights Issue

In 2011, the Company announced its proposal to implement a bonus issue of 222,083,893 new ordinary shares of RM0.25 each to be credited as fully paid-up, on the basis of 1 bonus share for every 2 existing shares held and a renounceable rights issue of 166,562,919 5-year warrant 2011/2016 on the basis of 1 warrant for every 4 shares held in the Company, after the proposed bonus issue, at an issue price of RM0.01 per warrant (“the Proposals”).

During the year, the Board decided to abort the Proposals after due deliberation as the Proposals were not in the best interest of the Company.

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 the assets and liabilities of the Company at a cash consideration of RM1.466 billion (“Offer”).

The Offer had been conditionally accepted by the Board, pending the signing of definitive agreement and procurement of approval from shareholders and the relevant authorities.

INDUSTRY TREND AND DEVELOPMENT

In 2013, the implementation of the minimum wage scheme and extension of retirement age posed fresh challenges to the industry players in Malaysia.

The annual upward revision of minimum wage rate in Vietnam has also affected the profitability of the Vietnam operation.

The finalisation of anti-dumping investigation by the Ministry of International Trade and Industry had resulted in anti-dumping duties being imposed on the importation of tin plates from certain overseas suppliers. This had a negative impact on the tin can industry in general.

PROSPECTS

The global economic climate will likely remain uncertain and challenging in year 2014. In Malaysia, costs in general are rising, whilst businesses are pressured to maintain their selling prices in order to avoid losing out to competitors, local and abroad.

Rising material cost, electricity cost and other operating costs and the weakening of Malaysian Ringgit against US Dollar remain the key challenges which will affect the profitability of the Group.

However, barring unforeseen circumstances, the Group will continue to be resilient and should remain profitable.


Chairman’s statement

DIVIDENDS

For the financial year ended 31 December 2013, the Board is recommending a final tax exempt (single-tier) dividend of 10% (2.5 sen per share) and a special tax exempt (single-tier) dividend of 15% (3.75 sen per share) on 444,167,786 ordinary shares, totalling RM27.8 million, subject to approval by shareholders at the forthcoming Annual General Meeting of the Company.

During the year, the Company declared and paid an interim tax exempt (single-tier) dividend of 10% (2.5 sen per share) and a special tax exempt (single-tier) dividend of 15% (3.75 sen per share) on 444,167,786 ordinary shares, totalling RM27.8 million, both of which were paid on 25 September 2013.

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


Y.A.M. TUNKU NAQUIYUDDIN IBNI ALMARHUM TUANKU JA’AFAR Independent Non-Executive Chairman, Malaysian, Aged 67

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 also sits on the board 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 HOEGroup Managing Director, Malaysian, Aged 67

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. Under his leadership and guidance, Can-One group of companies have expanded its core business to several other businesses. He was instrumental for the acquisition by Can-One of its significant interest in Kian Joo. He is currently 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, locks 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.

PROFILE OF DIRECTORS


CHEE KHAY LEONGChief Operating Officer cum Executive Director, Malaysian, Aged 53

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.

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 resigned from Can-One on 22 November 2013.

He is an Executive Director of the listed subsidiary, Box-Pak.

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.

DATO’ ANTHONY SEE TEOW GUANExecutive Director, Singaporean, Aged 68

Dato’ Anthony See Teow Guan was appointed to the Board on 1 January 1972. He is also responsible for implementation of the Group’s broad operational strategies and policies, and also oversees the day-to-day operations, management and performance of the Group.

He has over 50 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 serves as the Managing Director. Box-Pak was listed on the Main Board of Bursa Securities in 1996.

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.

Dato’ Anthony See Teow Guan and See Teow Koon are brothers. Dato’ Anthony See Teow Guan does not have family relationship with any major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

SEE TEOW KOONExecutive Director, Malaysian, Aged 64

See Teow Koon was appointed to the Board on 8 October 1974.

He completed his technical studies in Singapore Institute of Technology and in 1967, he furthered his studies in Japan specialising in metal printing and can manufacturing. Subsequently in 1970, he was appointed as Factory Manager of the Company.

He has over 46 years experience in the packaging industry in particular metal printing and can manufacturing of 3-piece and 2-piece aluminium cans.

See Teow Koon and Dato’ Anthony See Teow Guan are brothers. See Teow Koon does not have family relationship with any major shareholder of the Company. He does not have personal interest in any business arrangement involving the Company.

PrOFiLe OF DireCtOrs


DATO’ TAN GUAN CHEONG Independent Non-Executive Director, Malaysian, Aged 69

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 Independent Non-Executive Director, Malaysian, Aged 65

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.

Dato’ Mah is currently the Vice Chairman of Formis Resources Berhad, the Chairman of Diversified Gateway Solutions Berhad and a Director of Ho Hup Construction Company Berhad. 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.



Y.A.M. TUNKU ZAIN AL-’ABIDIN IBNI TUANKU MUHRIZ Independent Non-Executive Director, Malaysian, Aged 31

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 Al-’Abidin 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.

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

Y.A.M. Tunku Zain Al-’Abidin 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.

Tunku 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 and was a consultant at the World Bank, Washington DC.

Y.A.M. Tunku Zain Al-’Abidin is also an Honorary Major of Regiment 508 Askar Wataniah (Territorial Army), Malaysia.

Y.A.M. Tunku Zain Al-’Abidin 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.



COrpOraTE SOCIal rESpONSIbIlITy

The 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 3Rs (Reduce, Reuse and Recycle) principles within its operations.

In 2013, the Group continued to fulfill 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 the Group’s donations in year 2013 were Yayasan Tunku Naquiyuddin, Persatuan Dialisis Touch Petaling Jaya, The Kumbakonam Doicese Society, Rotary Club of Bukit Bintang and Buddhist Enlightenment Haven.

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

For many years, the Group has been involved in providing undergraduates from various local universities to undergo their internship training. The year 2013 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.


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 Malaysia (“Main LR”).

A) DIRECTORS

I. The Board

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 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 2013 (“FYE 2013”). All the Directors do not hold directorships more than that prescribed under the Main LR. 7 Board meetings were held during the FYE 2013 and the attendance of the Directors were as follows:

Directors Number of Meetings attended in FYE 2013

% of Attendance

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

7 out of 7 100

Yeoh Jin Hoe 7 out of 7 100

Chee Khay Leong (1) 5 out of 7 71

Dato’ Anthony See Teow Guan 7 out of 7 100

See Teow Koon 7 out of 7 100

See Tiau Kee (2) 7 out of 7 100

Y.A.M. Tunku Dato’ Seri Nadzaruddin Ibni Almarhum Tuanku Ja’afar (3)

3 out of 3 100

Loh Lap Sang (3) 3 out of 3 100

Oon Kien Hoe (3) 3 out of 3 100

Dato’ Tan Guan Cheong (4) 3 out of 3 100

Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz (4) 3 out of 3 100

Dato’ Mah Siew Kwok (5) 3 out of 3 100

Notes :

(1) Was not present at the 2 Board meetings convened to deliberate on the offer received on 26 November 2013 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 18 June 2013.(4) Appointed on 5 July 2013.(5) Appointed on 18 July 2013.

STaTEMENT ON COrpOraTE GOVErNaNCE


A) DIRECTORS (CONT’D)

I. The Board (cont’d)

The Board is assisted by the following Board Committees:

1. Executive Committee

The Executive Committee (“Exco”) comprising the Group Managing Director (“MD”), the Chief Operating Officer (“COO”), the Executive Directors (“EDs”) and the Group Chief Financial Officer 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 20 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 Non-Executive Directors (“NEDs”):

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar (Chairman)Dato’ Tan Guan Cheong Yeoh 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 2013.

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 2013 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 met once during the FYE 2013 which was attended by all its members.

statement On COrPOrate GOVernanCe



II. Board Composition and Independence

The Board currently has 8 members, comprising 4 NEDs, a Group MD, a COO cum ED and 2 EDs. Out of the 8 Directors, 4 of them are Independent Directors which is in compliance with Paragraph 15.02 of the Main LR.

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 and EDs are responsible for the overall performance and profitable operation of the Company and the Group. They 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 7 to 10 of this Annual Report.

Shareholders’ approval for retaining designation of Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar as Independent NED

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar, the Independent Non-Executive Chairman, was appointed to the Board on 30 November 1999.

The Board is satisfied with the skills, contribution and independent judgment that Y.A.M. Tunku Naquiyuddin brings to the Board. In view thereof, the Board recommends retaining his designation as Independent NED of the Company for shareholders’ approval at the forthcoming Fifty-Sixth (“56th”) AGM of the Company.

III. Board Charter

The Board recognised the importance of formalising a Board Charter so as to provide reference for Directors in relation to the Board’s role, powers, duties and functions.

The Board has approved and adopted the Board Charter on 20 August 2013.

IV. 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.




IV. Supply of Information (cont’d)

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 Committee also holds monthly management meetings with the operating heads to deliberate on 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.

V. Re-election

The Articles of Association provide for all Directors including the MD to submit themselves for re-election at least once in every 3 years.

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. As such, Dato’ Tan Guan Cheong, Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz and Dato’ Mah Siew Kwok will retire at the close of the 56th AGM of the Company on 16 April 2014. They have offered themselves 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. The aforesaid provision is not applicable to any Director at the coming 56th AGM of the Company.

VI. Directors’ Training

All the Directors had completed Bursa Securities’ Mandatory Accreditation Programme. During the FYE 2013, 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:


DirectorsCourses/Seminars/ Workshops/Conferences Organisers Dates

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

Meeting of Minds - Euro-Asian Perspectives of Philanthropy

Lombard Odier Darier Hentsche & Cie (Singapore) Ltd., Singapore

31 May 2013

Special Presentation on ASEAN Corporate Governance Scorecard 2013

Minority Shareholder Watchdog Group

20 June 2013

Breakfast at the Kuala Lumpur Golf & Country Club with Board Chairman - Keynote by Alex Malley

Bursa Securities 11 September 2013

Rothschild Dialogues Retreat - Philanthropy & Impact Investing

Rothschild Trust Group, Singapore

31 October 2013 and1 November 2013



VI. Directors’ Training (cont’d)


DirectorsCourses/Seminars/ Workshops/Conferences Organisers Dates

Yeoh Jin Hoe

Governance and Enterprise Risk Management – Managing the Challenges Ahead

Malaysian Investor Relations Association (“MIRA”) and Boardroom Corporate Services (KL) Sdn Bhd (“Boardroom”)

19 September 2013

Investigation, Prosecution and Domestic Inquiry

XcelLearn Resources Bhd

9 and 10 October 2013

Chee Khay Leong

Governance and Enterprise Risk Management – Managing the Challenges Ahead

MIRA and Boardroom

19 September 2013

Investigation, Prosecution and Domestic Inquiry

XcelLearn Resources Bhd

9 and 10 October 2013

Dato’ Anthony See Teow Guan

Drinktec 2013, Germany Drinktec AG, Munich 16 to 19 September 2013

Asia Cantech 2013 in Surabaya, Indonesia

CanTech International

11 to 13 November 2013

See Teow Koon

Food Safety -Publicly Available Specification (PAS) 223 Training

SGS Malaysia Sdn Bhd

21 February 2013

• Receivable Finance• Forfaiting• UPAS

HSBC Bank Malaysia Berhad

28 June 2013

Dato’ Tan Guan Cheong

Sustainability Training for Directors and Practitioners

Bursa Securities 7 March 2013

Advocacy Session on Corporate Disclosure for Directors of Listed Issuers

Bursa Securities 5 September 2013

Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

Mandatory Accreditation Programme for Directors of Public Listed Companies

Bursatra Sdn Bhd 14 and 15 August 2013

Dato’ Mah Siew Kwok

BDO Goods and Services Tax Seminar

BDO 25 November 2013


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 Chief Financial Officer, 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.

During the FYE 2013, key management personnel also held discussion with the press and analysts to provide information on the Group’s strategy, performance and major developments.

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.

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 19 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 2013 are set out in the Audit Committee Report on page 20 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 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 2014.



rESpONSIbIlITy STaTEMENT byTHE bOard OF dIrECTOrS

Directors are legally responsible to prepare financial statements for each financial year which give a full 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 Standard 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.


MEMBERSHIPS AND MEETINGS

The Audit Committee (“Committee”) comprises of 3 members, all of whom are Independent Non-Executive Directors. The Committee held 5 meetings during the FYE 2013 which were attended by all its members.

Members

Y.A.M. Tunku Dato’ Seri Nadzaruddin Ibni Almarhum Tuanku Ja’afar (Chairman) (1)

Rick Loh Lap Sang (2)

Onn Kien Hoe (2)

Dato’ Tan Guan Cheong (Chairman) (3)

Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz (4)

Dato’ Mah Siew Kwok (5)

Notes:(1) Ceased as chairman and member on 18 June 2013(2) Ceased as member on 18 June 2013(3) Appointed as chairman and member on 5 July 2013(4) Appointed as member on 5 July 2013(5) Appointed as member on 18 July 2013

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 year-end 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 accounting standards and the stock exchange and other legal requirements.

aUdIT COMMITTEE rEpOrT


FUNCTIONS, ROLES AND RESPONSIBILITIES (CONT’D)

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.

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) To do the following where an internal audit function exists:

- 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; and

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

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION AND THE COMMITTEE DURING THE FYE 2013

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 2013:

• 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.

aUDit COmmittee rePOrt


SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION AND THE COMMITTEE DURING THE FYE 2013 (CONT’D)

• Taking corrective actions to continuously improve on the controls, processes and operations of the Group based on feedback from the management and recommendations from external auditors.

• 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 2013 amounted to RM263,237.

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

Summary of Activities of the Committee

During the FYE 2013, 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 provisions of the Companies Act, 1965 and the applicable accounting standards approved by the Malaysian Accounting Standards Board (“MASB”).

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

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

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

• Reviewed the extent of the Group’s compliance with the recommendations made by the Code for the purpose of the Statement on Corporate Governance pursuant to the Main LR.


aUDit COmmittee rePOrt


SHARE BUY-BACKS

During the FYE 2013, the Company did not enter into any share buy-back transactions.

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 2013.

NON-AUDIT FEES

The amount of non-audit fees paid to the external auditors by the Company for the FYE 2013 amounted to RM19,000 (2012: RM25,130).

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 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 Equiti Merdu Sdn Bhd (“Equiti”) and Alleyways Sdn Bhd (“Alleyways”). Equiti 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.

II. Recurrent Related Party Transactions

For information on recurrent related party transactions of a revenue or trading nature, please refer to Note 34 to the Financial Statements.

OPTIONS OR CONVERTIBLE SECURITIES

The Company has not issued any options or convertible securities during the FYE 2013.

OTHEr INFOrMaTION


VARIANCE FROM UNAUDITED RESULTS ANNOUNCED

During the FYE 2013, there were no significant variances noted between the reported results and the unaudited results announced.

PROFIT ESTIMATE, FORECAST OR PROJECTION

During the FYE 2013, the Company has not made any profit estimate, forecast or projection.

PROFIT GUARANTEE

During the FYE 2013, there were no profit guarantees given by the Company.

DEPOSITORY RECEIPT PROGRAMME

The Company did not sponsor any depository receipt programme during the FYE 2013.

Other inFOrmatiOn


STaTEMENT ON rISK MaNaGEMENTaNd INTErNal CONTrOl

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 2013. 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 MD and Group Chief Financial Officer that the Group’s risk management and internal control systems have operated adequately and effectively for FYE 2013, in all material aspects, based on the risk management and internal control systems of the Group.

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 2013 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 FYE 2013 under review.

Key aspects of the risk management process are:

(i) The Risk Management Committee was established by the Board for ensuring an effective risk management process. The Risk Management Committee comprises the Group MD, COO, the EDs and the Group Chief Financial Officer, 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 Risk Management Committee meets on a quarterly basis to review the risk profile, control procedures and status of mitigating action plans;

(iv) Any significant risks that require the Board’s attention will be escalated; 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 manaGementanD internaL COntrOL

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 2013, 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 2013 amounted to RM263,367.

INTERNAL CONTROL

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

(a) Organisation Structure & Authorisation Procedures The 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 & Procedures Clearly 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 Policy Documented 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 2013, the Group has an investment in 1 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.


statement On risK manaGementanD internaL COntrOL

REPORTING AND REVIEW

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

The EDs meet with the senior management monthly to discuss and resolve operational and key management issues. Meetings are conducted in the presence of an 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.

OTHER ACTIVITIES

The Company together with its 2 subsidiaries and 1 joint venture company were accredited by SIRIM. 2 other subsidiaries were accredited by 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, 6 companies within the Group have been awarded the HACCP certifications - ISO 22000:2005 for conforming with the requirements of Food Safety Management System Standard pertaining to Food Safety.

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 surveillance audits are carried out by SIRIM, LLOYD’S and SGS once a 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 Market LR, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for FYE 2013 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.


Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Comprehensive Income

Consolidated Statement of Financial Position

Company Statement 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

29

33

33

34

36

38

40

41

42

43

44

115

FinancialStatementSKIAN JOO CAN FACTORY BERHAD (3186-P)


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 2013.

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 fibre board cartons, letting of property, provision of contract packing and engineering 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 123,739 15,752

Profit attributable to:Owners of the parent 118,319 15,752 Non-controlling interests 5,420 -

123,739 15,752

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 2012 were as follows:

RM’000

In respect of the financial year ended 31 December 2012 as reported in the directors’ report of that year:

Final tax exempt (single-tier) dividend of 10% on 444,167,786 ordinary shares, declared on 22 May 2013 and paid on 10 July 2013

Special tax exempt (single-tier) dividend of 15% on 444,167,786 ordinary shares, declared on 22 May 2013 and paid on 10 July 2013

In respect of the financial year ended 31 December 2013:

Interim tax exempt (single-tier) dividend of 10%, on 444,167,786 ordinary shares, declared on 20 August 2013 and paid on 25 September 2013

Special tax exempt (single-tier) dividend of 15%, on 444,167,786 ordinary shares, declared on 20 August 2013 and paid on 25 September 2013

11,104

16,656

11,104

16,656

55,520

Directors’ report


DIvIDENDs (CONT’D)

At the forthcoming Annual General Meeting, a final tax exempt (single-tier) dividend of 10% (2.50 sen) and a special tax exempt (single-tier) dividend of 15% (3.75 sen) on 444,167,786 ordinary shares in respect of current financial year ended 31 December 2013, amounting to a dividend payable of RM27,760,487 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2014.

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 GuanSee Teow KoonY.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz (appointed on 5 July 2013)Dato’ Tan Guan Cheong (appointed on 5 July 2013)Dato’ Mah Siew Kwok (appointed on 18 July 2013)Y.A.M. Tunku Dato’ Seri Nadzaruddin Ibni Almarhum Tuanku Ja’afar (retired on 18 June 2013)Rick Loh Lap Sang (retired on 18 June 2013)Onn Kien Hoe (retired on 18 June 2013)See Tiau Kee (resigned on 28 February 2014)

Pursuant to Article 104 of the Company’s Articles of Association, See Teow Koon will retire by rotation at the forthcoming annual general meeting and being eligible, offer himself for re-election.

Pursuant to Article 108 of the Company’s Articles of Association, Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz, Dato’ Tan Guan Cheong and Dato’ Mah Siew Kwok will retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election.

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, except as disclosed in Note 42 to the financial statements.

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 or the fixed salary of a full-time employee of the Company) 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 34 to the financial statements.

Directors’ report


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 1.1.2013/ date of Acquired Sold At appointment during the financial year 31.12.2013 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 5,263,292 200,000 - 5,463,292 # 232,250 - 120,000 112,250 * 7,737,117 - - 7,737,117 See Teow Koon 1,496,678 - - 1,496,678 # 415,692 - - 415,692 * 7,737,117 - - 7,737,117

See Tiau Kee 1,992,000 - 160,000 1,832,000 # 129,000 - - 129,000 * 7,737,117 - - 7,737,117

Box-Pak (Malaysia) Berhad - 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 - - 85,500 # 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


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.

sIGNIFICANT EvENTs DuRING THE FINANCIAl YEAR

Significant events during the financial year are disclosed in Note 41 to the financial statements.

sIGNIFICANT EvENT suBsEquENT TO THE FINANCIAl YEAR END

A significant event subsequent to the financial year end is disclosed in Note 42 to the financial statements.

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 2014.

Yeoh Jin Hoe Dato’ Anthony See Teow Guan

Directors’ report


We, Yeoh Jin Hoe and Dato’ Anthony See Teow Guan, 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 36 to 114 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 2013 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 44 on page 115 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 2014.

Yeoh Jin Hoe Dato’ Anthony See Teow Guan

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 36 to 115 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 declared by the by the abovenamed Ooi Teik Huat at Kuala Lumpur in the Federal Territory on 4 March 2014 Ooi Teik Huat

Before me,

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

statement by Directorspursuant to section 169(15) of the companies act,

1965

statutory Declarationpursuant to section 169(16) of the companies act,

1965


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 2013 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 ended 31 December 2013, and a summary of significant accounting policies and other explanatory notes, as set out on pages 36 to 114.

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 2013 and of their financial performance and cash flows for the year ended 31 December 2013 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’ report of the subsidiary of which we have not acted as auditors, which is 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.

inDepenDent auDitors’ reportto the members of Kian Joo can factory berhaD(incorporateD in malaysia)


OTHER MATTERs

The supplementary information set out in Note 44 on page 115 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, Malaysia4 March 2014

inDepenDent auDitors’ reportto the members of Kian Joo can factory berhaD

(incorporateD in malaysia)


Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 (restated) (restated)

Revenue 4 1,290,567 1,162,845 162,758 207,029Cost of sales (1,070,533) (963,513) (133,298) (168,663)

Gross profit 220,034 199,332 29,460 38,366Other items of income: Interest income 5 2,414 1,438 4,040 5,373 Other income 6 4,740 3,753 2,800 2,340 Gain/(loss) on disposal of a subsidiary 17 - 7,949 - (4,263)Other items of expense: Marketing and distribution (5,796) (5,443) (560) (1,024) Administrative expenses (68,254) (57,258) (16,217) (16,407) Finance costs 7 (5,644) (4,113) (1,077) (2,295)Share of results of a joint venture (102) (1,623) - -

Profit before tax 8 147,392 144,035 18,446 22,090Income tax expense 11 (23,653) (15,629) (2,694) (1,955)

Profit after tax 123,739 128,406 15,752 20,135

Profit attributable to:Owners of the parent 118,319 120,876 15,752 20,135Non-controlling interests 5,420 7,530 - -

123,739 128,406 15,752 20,135

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

Basic 12 26.64 27.21

statements of comprehensive incomefor the financial year enDeD 31 December 2013


statements of comprehensive incomefor the financial year enDeD 31 December 2013

Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 (restated) (restated)

Profit for the year 123,739 128,406 15,752 20,135

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 8,372 (3,276) - -

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

Reversal of amortisation on past service costs - (319) - (14) - Income tax effect - 80 - 5Re-measurement losses on defined benefit plans (3,709) (4,587) (912) (1,220) - Income tax effect 928 1,147 228 305Share of other comprehensive income of a joint venture (4) (51) - -Net other comprehensive income not to be reclassified to profit or loss in subsequent periods (2,785) (3,730) (684) (924)

Other comprehensive income for the financial year, net of tax 5,587 (7,006) (684) (924)

Total comprehensive income for the financial year 129,326 121,400 15,068 19,211

Total comprehensive income attributable to:Owners of the parent 122,077 114,857 15,068 19,211Non-controlling interests 7,249 6,543 - -

129,326 121,400 15,068 19,211

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


Note 31.12.2013 31.12.2012 1.1.2012 RM’000 RM’000 RM’000 (restated) (restated)

AssETs

Non-current assetsProperty, plant and equipment 13 692,698 621,259 641,791 Land use rights 14 14,195 12,157 12,289 Investment properties 15 24,282 23,810 23,010 Intangible assets 16 2,500 137 246 Investment in a joint venture 18 20,469 22,659 24,362 Other investment 19 - - 90 Other assets 22 39,433 - -Deferred tax assets 20 3,366 454 32

796,943 680,476 701,820

Current assetsInventories 23 284,282 273,557 269,219 Trade and other receivables 21 279,315 267,492 254,344Other assets 22 18,064 963 2,194Tax recoverable 3,184 2,951 2,488 Cash and bank balances 24 146,383 133,683 92,917

731,228 678,646 621,162

Total assets 1,528,171 1,359,122 1,322,982


consoliDateD statement of financial positionas at 31 December 2013



EquITY AND lIABIlITIEs

Current liabilitiesProvisions 25 58 48 103 Retirement benefit obligations 26 10,985 3,297 1,891 Income tax payable 2,698 - 3,006 Loans and borrowings 27 132,621 122,354 131,064 Trade and other payables 28 130,200 94,071 101,152 Derivatives 29 4,750 333 4,107

281,312 220,103 241,323

Net current assets 449,916 458,543 379,839

Non-current liabilitiesRetirement benefit obligations 26 31,458 32,069 22,827Deferred tax liabilities 20 18,297 17,282 20,988Loans and borrowings 27 95,616 59,952 63,152

145,371 109,303 106,967

Total liabilities 426,683 329,406 348,290

Net assets 1,101,488 1,029,716 974,692

Equity attributable to owners of the parentShare capital 31 111,042 111,042 111,042 Share premium 31 744 744 744 Other reserves 32 4,816 (1,591) (510)Retained earnings 33 920,850 860,700 798,871

1,037,452 970,895 910,147 Non-controlling interests 64,036 58,821 64,545

Total equity 1,101,488 1,029,716 974,692

Total equity and liabilities 1,528,171 1,359,122 1,322,982


consoliDateD statement of financial positionas at 31 December 2013



Non-current assetsProperty, plant and equipment 13 138,355 140,511 148,581 Land use rights 14 1 1 1 Investment properties 15 17,947 17,249 16,205 Intangible assets 16 7 57 90 Investment in subsidiaries 17 107,439 107,439 137,560 Investment in a joint venture 18 10,000 10,000 10,000 Deferred tax assets 20 250 9 32Other receivables 21 27,700 63,500 80,000

301,699 338,766 392,469 Current assetsInventories 23 46,619 37,764 41,146 Trade and other receivables 21 73,540 64,002 64,466 Other assets 22 192 59 160 Tax recoverable - 378 - Cash and bank balances 24 49,293 67,249 52,221

169,644 169,452 157,993

Total assets 471,343 508,218 550,462

Equity and liabilities

Current liabilitiesRetirement benefit obligations 26 3,957 1,542 893 Income tax payable 22 - 252 Loans and borrowings 27 14,615 46,715 58,426 Trade and other payables 28 63,834 30,545 26,474

82,428 78,802 86,045

Net current assets 87,216 90,650 71,948

Non-current liabilitiesRetirement benefit obligations 26 10,741 10,790 9,482

Total liabilities 93,169 89,592 95,527

Net assets 378,174 418,626 454,935

Equity attributable to owners of the parentShare capital 31 111,042 111,042 111,042 Share premium 31 744 744 744 Retained earnings 33 266,388 306,840 343,149

Total equity 378,174 418,626 454,935

Total equity and liabilities 471,343 508,218 550,462


company statement of financial positionas at 31 December 2013


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 2013 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) 58,821Total comprehensive income 129,326 122,077 - - 115,670 6,407 - 6,407 7,249

Transactions with ownersDividends on ordinary shares 40 (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

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 2012 974,692 910,147 111,042 744 798,871 (510) 4,480 (4,990) 64,545Effects of adopting the amendments to MFRS 119 2.2(a) - - - - - - - - -

At 1 January 2012 (restated) 974,692 910,147 111,042 744 798,871 (510) 4,480 (4,990) 64,545Total comprehensive income for the financial year 121,400 114,857 - - 117,349 (2,492) - (2,492) 6,543

Transactions with ownersDividends on ordinary shares 40 (55,520) (55,520) - - (55,520) - - - -Dividends paid to non-controlling interests (1,423) - - - - - - - (1,423)Equity movement arising from disposal of investment in a subsidiary 17 (10,035) 1,411 - - - 1,411 - 1,411 (11,446)Subscription of shares by non-controlling interest in a subsidiary 602 - - - - - - - 602

Total transactions with owners (66,376) (54,109) - - (55,520) 1,411 - 1,411 (12,267)

At 31 December 2012 1,029,716 970,895 111,042 744 860,700 (1,591) 4,480 (6,071) 58,821


consoliDateD statement of changes in equityfor the financial year enDeD 31 December 2013


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

At 1 January 2013 111,042 744 307,755 419,541Effects of adopting the amendments to MFRS 119 2.2(a) - - (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 40 - - (55,520) (55,520)

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

At 1 January 2012 111,042 744 343,149 454,935Effects of adopting the amendments to MFRS 119 2.2(a) - - - -

At 1 January 2012 (restated) 111,042 744 343,149 454,935Total comprehensive income for the financial year - - 19,211 19,211Dividends on ordinary shares 40 - - (55,520) (55,520)

At 31 December 2012 111,042 744 306,840 418,626


company statement of changes in equityfor the financial year enDeD 31 December 2013


statements of cash flowsfor the financial year enDeD 31 December 2013


Cash flows from operating activities

Receipts from customers 1,274,220 1,161,596 155,690 185,515Payments to suppliers (1,097,856) (981,347) (144,566) (166,670)

Cash generated from operations 176,364 180,249 11,124 18,845Interest paid (6,153) (5,586) (1,077) (2,295)Income tax paid (22,748) (21,999) (2,307) (2,252)

Net cash generated from operating activities 147,463 152,664 7,740 14,298

Cash flows from investing activities

Dividend received from subsidiary companies - - 4,218 22,815Dividend received from a joint venture 1,750 - 1,750 -Acquisition of: Property, plant and equipment (Note a) (121,655) (65,965) (4,768) (5,409) Land use rights (Note 14) (1,634) (1,445) - - Investment properties (Note 15) (383) (1,335) (383) (1,335) Intangible asset (Note 16) (163) (230) (10) (114)Proceeds from disposal of property, plant and equipment 301 928 93 678Additional investment in a subsidiary (Note 17) (4,184) (903) (4,500) -Proceeds from disposal of investment in subsidiary - 24,910 - 27,001Interest received 2,414 1,438 4,040 5,178

Net cash (used in)/generated from investing activities (123,554) (42,602) 440 48,814

Cash flows from financing activities

Term loans, bankers’ acceptances and revolving credit: Drawdown 70,931 183,123 7,900 23,635 Repayment (25,000) (195,033) (40,000) (35,346)Dividends paid to: Equity holders of the Company (55,520) (55,520) (55,520) (55,520) Non-controlling interests (2,034) (1,423) - -Advances (to)/from an joint venture (13) (293) 36 (291)Inter-company receipts - - 61,448 19,438

Net cash used in financing activities (11,636) (69,146) (26,136) (48,084)

Net increase/(decrease) in cash and cash equivalents 12,273 40,916 (17,956) 15,028Effects of exchange rate changes 427 (150) - -Cash and cash equivalents at beginning of the year 133,683 92,917 67,249 52,221

Cash and cash equivalents at end of the year (Note 24) 146,383 133,683 49,293 67,249

Note a

Purchase of property, plant and equipment, paid for in cash (121,655) (65,965) (4,768) (5,409)Interest capitalised (509) (1,473) - -

Additions of property, plant and equipment (Note 13) (122,164) (67,438) (4,768) (5,409)

The accompany accounting policies and explanatory notes from an integal part of the financial statements.


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, provision of contract packing and engineering 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 2014.

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.

At the beginning of the current financial year, the Group and the Company adopted new and revised MFRS which are mandatory for the financial periods beginning on or after 1 January 2013 as described fully in Note 2.2.

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.

notes to the financial statementsfor the financial year enDeD 31 December 2013


Notes to the fiNaNcial statemeNtsfor the fiNaNcial year eNded 31 december 2013

45

2. SuMMARY OF SIGNIFICANT ACCOuNTING POlICIES (CONT’D)

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 2013, 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 2013.

Effective for annual periodsDescription beginning on or after

Amendments to MFRS 101: Presentation of items of Other Comprehensive Income 1 July 2012MFRS 3: Business Combination (IFRS 3 Business Combinations issued by IASB in March 2004) 1 January 2013MFRS 127: Consolidated and Separate Financial Statements (IAS 27 revised by IASB in December 2003) 1 January 2013MFRS 10: Consolidated Financial Statements 1 January 2013MFRS 11: Joint Arrangements 1 January 2013MFRS 12: Disclosure of Interests in Other Entities 1 January 2013MFRS 13: Fair Value Measurement 1 January 2013MFRS 119: Employee Benefits (IAS 19 as amended by IASB in June 2011) 1 January 2013MFRS 127: Separate Financial Statements (IAS 27 as amended by IASB in May 2011) 1 January 2013MFRS 128: Investment in Associate and Joint Ventures (IAS 28 as amended by IASB in May 2011) 1 January 2013IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2013Amendments to MFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013Annual Improvements 2009-2011 Cycle 1 January 2013Amendments to MFRS 1: Government Loans 1 January 2013Amendments to MFRS 10, MFRS 11 and MFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance 1 January 2013

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and of the Company except for those discussed below:

MFRS 10: Consolidated Financial Statements

MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.

Under MFRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its investment with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activites.

MFRS 10 includes detailed guidance to explain when an investor that owns less than 50 per cent of the voting shares in an investee has control over investee. MFRS 10 requires the investor to take into account all relevant facts and circumstances, particularly the size of the investor’s holding of voting right relative to the size and dispersion of holdings of the other vote holders.

The adoption of the above MFRS 10 did not have any impact on the financial position or performance of the Group and of the Company.



46


2.2 Changes in accounting policies (Cont’d)

MFRS 11: Joint Arrangements

MFRS 11 replaces MFRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly Controlled Entities - Non-monetary Contributions by Venturers.

The classification of joint arrrangements under MFRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. 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 arrangement.

MFRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.

The Group has re-assessed its investment in associate and determined that its interest in Kian Joo-Visypak Sdn. Bhd. to be classified as joint venture. The classification was applied retrospectively and the comparative information for the immediately preceeding period is restated.

The application of this classification will not have significant impact to the financial position of the Group as the Group has adopted equity accounting. The effect of the reclassification on the Group’s financial statements is provided in Note 2.2(a) below.

MFRS 12: Disclosures of Interests in Other Entities

MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and have no impact on the Group’s and the Company’s financial position or performance.

MFRS 13: Fair Value Measurement

MFRS 13 establishes a single source of guidance under MFRS for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS. MFRS 13 defines fair value as an exit price. As a result of the guidance in MFRS 13, the Group reassessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. MFRS 13 also requires additional disclosures.

Application of MFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Fair value hierarchy is provided in Note 30.

Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income

The amendments to MFRS 101 introduce a grouping of items presented in other comprehensive income. Items that will be reclassified (“recycled”) to profit or loss at a future point in time (eg. net loss or gain on available-for-sale financial assets) have to be presented separately from items that will not be reclassified (eg. revaluation of land and buildings). The amendments affect presentation only and have no impact on the Group’s and the Company’s financial position or performance.



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MFRS 119: Employee Benefits (IAS 19 as amended by IASB in June 2011)

The Group applied MFRS 119 (revised) retrospectively in the current period in accordance with the transitional provisions set out in the revised standard. The opening statement of financial position of the earliest comparative period presented (1 January 2012) and the comparative figures have been accordingly restated.

MFRS 119 (revised) changes, amongst other things, the accounting for defined benefit plans. Some of the key changes that impacted the Group include the following:

- All past service costs are recognised at the earlier of when the amendment/curtailment occurs or when the related restructuring or termination costs are recognised. As a result, unvested past service costs can no longer be deferred and recognised over the future vesting period. Previously, the Group had a balance of unrecognised service cost of RM203,000 (RM152,000 net of tax) as at 1 January 2012. Upon transition to MFRS 119 (revised), this balance was taken to equity (retained earnings) as at 1 January 2012 along with the consequential tax impact. Amortisation on past service costs of RM319,000 (RM239,000 net of tax) for the year ended 31 December 2012 was reversed.

- The interest cost and expected return on plan assets used in the previous version of MFRS 119 were replaced with a net-interest amount under MFRS 119 (revised), which is calculated by applying the discount rate to the net defined benefit liability or asset at the start of each annual reporting period. In view of this change, RM4,587,000 was charged to the Group’s profit and loss for year ended 31 December 2012 with a consequential OCI gain. There was no impact on the overall equity of the Group.

MFRS 119 (revised) also requires more extensive disclosures. These have been provided in Note 26.

MFRS 119 (revised) has been applied retrospectively, with following permitted exceptions:

- The carrying amounts of other assets have not been adjusted for changes in employee benefit costs that were included before 1 January 2012.

- Sensitivity disclosures for the defined benefit obligation for comparative period (year ended 31 December 2012) have not been provided.

The effect of applying MFRS 119 on the Group’s financial statements is provided in Note 2.2(a) below.

MFRS 127: Separate Financial Statements

As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements

MFRS 128: Investments in Associates and Joint Ventures

As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.

Amendment to MFRS 116 (Annual Improvements 2009-2011 Cycle)

The amendment to MFRS 116 introduce items such as spare parts, stand-by equipment and servicing equipment which are recognised in accordance with this MFRS when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory.

The Group applied the amendments retrospectively in the current period in accordance with the revised standard. The effect of the reclassification on the Group’s financial statements is provided in Note 2.2(a) below



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(a) Effects arising from the adoption of MFRS 11: Joint Arrangement, MFRS 119: Employee Benefits (revised) and Amendment to MFRS 116 (Annual Improvements 2009-2011 Cycle)

The effects arising from the adoption of these Standards have been accounted for retrospectively by adjusting the opening balance of retained earnings as follows:

Consolidated statement of financial position as at 1 January 2012

As previously Adjustments As reported MFRS 11 MFRS 119 MFRS 116 restated RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000

Non-current assetsProperty, plant and equipment (632,077) - - (9,714) (641,791)Investment in associate (24,362) 24,362 - - -Investment in a joint venture - (24,362) - - (24,362)

Current assetInventories (278,933) - - 9,714 (269,219)

EquityRetained earnings 798,871 - - - 798,871Non-current liabilitiesRetirement benefit obligations 22,827 - - - 22,827Deferred tax liabilities 20,988 - - - 20,988

Consolidated statement of financial position as at 31 December 2012


Non-current assetsProperty, plant and equipment (608,161) - - (13,098) (621,259)Investment in associate (22,710) 22,710 - - -Investment in a joint venture - (22,710) 51 - (22,659)

Current assetInventories (286,655) - - 13,098 (273,557)

EquityRetained earnings 864,009 - (3,309) - 860,700Non-controlling interest 59,003 - (182) - 58,821

Non-current liabilitiesRetirement benefit obligations 27,482 - 4,587 - 32,069Deferred tax liabilities 18,429 - (1,147) - 17,282



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(a) Effects arising from the adoption of MFRS 11: Joint Arrangement, MFRS 119: Employee Benefits (revised) and Amendment to MFRS 116 (Annual Improvements 2009-2011 Cycle) (Cont’d)

Statement of financial position as at 1 January 2012


Non-current assetsProperty, plant and equipment (148,066) - - (515) (148,581)Investment in associate (10,000) 10,000 - - -Investment in a joint venture - (10,000) - - (10,000)Deferred tax assets (32) - - - (32)

Current assetInventories (41,661) - - 515 (41,146)

EquityRetained earnings 343,149 - - - 343,149

Non-current liabilitiesRetirement benefit obligations 9,482 - - - 9,482

Statement of financial position as at 31 December 2012


Non-current assetsProperty, plant and equipment (139,864) - - (647) (140,511)Investment in associate (10,000) 10,000 - - -Investment in a joint venture - (10,000) - - (10,000)

Current assetInventories (38,411) - - 647 (37,764)

EquityRetained earnings 307,755 - (915) - 306,840

Non-current liabilitiesRetirement benefit obligations 9,570 - 1,220 - 10,790Deferred tax liabilities/ (assets) 296 - (305) - (9)



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(a) Effects arising from the adoption of MFRS 11: Joint Arrangement, MFRS 119: Employee Benefits (revised) and Amendment to MFRS 116 (Annual Improvements 2009-2011 Cycle) (Cont’d)

Statement of financial position as at 31 December 2012 (Cont’d)


Group

Profit net of tax 128,167 - 239 - 128,406

Other comprehensive income: Foreign currency translation (3,276) - - - (3,276) Reversal of amortisation on past service cost - - (319) - (319) - Income tax effect - - 80 - 80 Re-measurement loss on defined benefit plans - - (4,587) - (4,587) - Income tax effect - - 1,147 - 1,147 Share of other comprehensive income of a joint venture - - (51) - (51)

Other comprehensive income for the financial year, net of tax (3,276) - (3,730) - (7,006)

Total comprehensive income 124,891 - (3,491) - 121,400

Statements of comprehensive income for the financial year ended 31 December 2012


Company

Profit net of tax 20,126 - 9 - 20,135

Other comprehensive income: Reversal of amortisation on past service cost - - (14) - (14) - Income tax effect - - 5 - 5 Re-measurement loss on defined benefit plans - - (1,220) - (1,220) - Income tax effect - - 305 - 305

Other comprehensive income for the financial year, net of tax - - (924) - (924)

Total comprehensive income 20,126 - (915) - 19,211

Adoption of the above Standards did not have impact on statement of cash flows. There is no significant impact on the Group’s basic and diluted earnings per share.



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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 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 2014Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014Annual Improvements to MFRSs 2010–2012 Cycle 1 July 2014Annual Improvements to MFRSs 2011–2013 Cycle 1 July 2014MFRS 9: Financial Instruments (IFRS 9 issued by IASB in November 2009) 1 January 2015MFRS 9: Financial Instruments (IFRS 9 issued by IASB in October 2010) 1 January 2015MFRS 9 Financial Instruments: Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139 1 January 2015

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 except as discussed below:

MFRS 9: Financial Instruments

MFRS 9 reflects the first phase of work on the replacement of MFRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to MFRS 9: Mandatory Effective Date of MFRS 9 and Transition Disclosures, issued in March 2012, moved the mandatory effective date to 1 January 2015. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s and of the Company’s financial assets, but will not have an impact on classification and measurements of the Group’s and of the Company’s financial liabilities. The Group is in the process of making assessment of the impact of the adoption of MFRS 9.

Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The Group has not novated its derivatives during the current period. However, these amendments would be considered for future novation.

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.

(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.



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2.7 Foreign currency (Cont’d)

(c) Foreign operations (Cont’d)

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.

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 85 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.



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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.

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.



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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.

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.



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2.14 Investments in associates and joint ventures (Cont’d)

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.

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.



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2.15 Financial assets (Cont’d)

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

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.

(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.



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2.15 Financial assets (Cont’d)

(d) Available-for-sale financial assets (Cont’d)

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.

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, demand deposits, and short-term highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.



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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.

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.



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2.20 Financial liabilities (Cont’d)

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.

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.



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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).

2.25 Revenue

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.



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2.26 Income taxes (Cont’d)

(b) Deferred tax (Cont’d)

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.

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.

(c) 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.



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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 39, including the factors used to identify the reportable segments and the measurement basis of segment information.

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 statement 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.

During the financial year, management reviewed the residual value and remaining useful lives of its mould and plant and machineries and has revised the useful lives of these mould and plant and machinery from 10 to 3 years and 10 to 15 years, respectively.

The revision was accounted for prospectively as a change in accounting estimates, resulting in a saving in depreciation charges of the Group for the current financial year of RM7,657,000.

(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 2013 are RM42,443,000 (2012: RM35,366,000) and RM14,698,000 (2012: RM12,332,000) 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 26.

(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 2013 is RM58,000 (2012: RM48,000). Further details are provided in Note 25.

(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.



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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

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 unrecognised tax losses, unabsorbed capital and reinvestment allowances of the Group at the reporting date was RM50,574,000 (2012: RM48,759,000).

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 nonfinancial 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 current 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. Further details of the impairment losses recognised for the property, plant and equipment are disclosed in Note 13(c).

(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.



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4. REVENuE

Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

Revenue from: Sale of goods 1,290,453 1,162,731 157,134 183,637 Dividend income from: Unquoted subsidiaries - - 2,333 21,088 Quoted subsidiary - - 3,291 2,304 Others 114 114 - -

1,290,567 1,162,845 162,758 207,029

5. INTEREST INCOME


Interest income from: Loans to subsidiaries - - 2,929 4,248 Fixed deposits 2,229 1,189 1,047 912 Others 185 249 64 213

2,414 1,438 4,040 5,373

6. OTHER INCOME


Other income from: Insurance claims 367 355 19 27 Rental income 2,695 2,005 2,781 2,128 Net gain on disposal of property, plant and equipment 244 298 - 177 Miscellaneous 1,434 1,095 - 8

4,740 3,753 2,800 2,340



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7. FINANCE COSTS


Interest expense on: Term loans 4,269 3,113 - - Bankers’ acceptances / foreign loan import 982 234 175 56 Revolving credit 902 2,239 902 2,239

6,153 5,586 1,077 2,295

Less: Interest capitalised in property, plant and equipment (Note 13) (509) (1,473) - -

5,644 4,113 1,077 2,295

8. PROFIT BEFORE TAx

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


Auditors’ remuneration: Statutory audits 468 448 87 83 Other services 19 25 12 43Employee benefits expense (Note 9) 136,955 121,199 37,087 30,990Non-executive directors’ remuneration (Note 10) 602 566 323 362Depreciation of: Property, plant and equipment (Note 13) 44,118 51,793 5,887 12,577 Investment properties (Note 15) 538 535 312 291Loss on disposal of other investment (Note 19) - 90 - -Direct operating expenses arising from rental of investment properties 773 129 761 114Amortisation of: Intangible assets (Note 16) 178 356 60 147 Land use rights (Note 14) 245 153 - -Allowance for doubtful debts (Note 21) 328 693 - -Reversal of allowance for doubtful debts (Note 21) (252) (57) - (9)Bad debts written off 18 - - 7Impairment loss on property,plant and equipment (Note 13) 8,000 - - -Write down/(write back) of inventories 15,643 227 838 (2,504)Rental of office equipment and motor vehicles - 64 - -Rental of land and buildings 338 365 42 46Rental of plants and machineries 245 294 - -Provision for solid waste disposal (Note 25) 808 594 - -Write off of: Property, plant and equipment 8,953 8,119 317 401 Intangible asset - 2 - -Fair value loss/(gain) on derivatives (Note 29) 4,352 (2,779) - -Net foreign exchange loss/(gain): Realised 321 1,459 33 271 Unrealised (4,670) (2,019) (1,384) 239



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9. EMPlOYEE BENEFITS ExPENSE


Wages and salaries 115,246 98,732 31,387 26,119Social security contributions 1,020 977 241 233Short term accumulating compensated absences 136 38 45 -Contributions to defined contribution plan 9,186 8,349 2,531 2,320Increase in liability for defined benefit plan (Note 26) 4,745 7,544 2,086 1,614Other benefits 6,622 5,559 797 704

136,955 121,199 37,087 30,990

Included in employee benefits expense of the Group and the Company are executivedirectors’ remuneration amounting to RM10,458,000 (2012: RM8,586,000) and RM4,616,000 (2012: RM2,594,000) respectively (Note 10).

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 7,311 5,364 3,753 1,987 Fees 548 345 309 225 Bonus 559 473 289 215 Defined contribution plan 507 392 265 167

8,925 6,574 4,616 2,594

Non-executive: Fees 434 424 323 362

9,359 6,998 4,939 2,956

Other directors of the Group:

Executive: Salaries and other emoluments 1,296 1,672 - - Fees 60 30 - - Bonus 96 161 - - Defined contribution plan 81 149 - -

1,533 2,012 - -

Non-executive: Fees 168 142 - -

1,701 2,154 - -

Total directors’ remuneration 11,060 9,152 4,939 2,956



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10. DIRECTORS’ REMuNERATION (CONT’D)


Analysis:

Total executive directors’ remuneration (Note 9) 10,458 8,586 4,616 2,594Total non-executive directors’ remuneration (Note 8) 602 566 323 362

Total directors’ remuneration 11,060 9,152 4,939 2,956

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 2013 2012

Executive directors:RM450,001 - RM500,000 - 1RM500,001 - RM550,000 - 1RM650,001 - RM700,000 - 1RM1,550,001 - RM1,600,000 2 2RM1,700,000 - RM1,750,000 1 -RM1,750,001 - RM1,800,000 - 1RM1,950,001 - RM2,000,000 1 -RM2,000,001 - RM2,050,000 1 -

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

11. INCOME TAx ExPENSE

Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2013 and 2012 are:


Statement of comprehensive income: Current income tax: Malaysian income tax 19,737 17,134 2,420 1,627 Foreign tax 5,530 3,043 - - (Over)/underprovision in prior years (55) (1,567) 287 - 25,212 18,610 2,707 1,627

Deferred income tax (Note 20): Relating to origination and reversal of temporary differences 3,792 (3,045) 2,500 329 Effect of reduction in Malaysian tax rate (1,842) - (308) - (Over)/underprovision in prior years (3,509) 64 (2,205) (1) (1,559) (2,981) (13) 328

23,653 15,629 2,694 1,955



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11. INCOME TAx ExPENSE (CONT’D)

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 2013 and 2012 are as follows:


Profit before tax 147,392 144,035 18,446 22,090

Taxation at Malaysian statutory tax rate of 25% (2012: 25%) 36,848 36,009 4,612 5,523Effect of different tax rates in foreign jurisdiction (8,054) (6,956) - -Effect of reduction in Malaysian tax rate (1,842) - (308) -Effect of expenses not deductible for tax purposes 4,940 6,067 374 1,751Effect of income not subject to tax (1,164) (4,467) (66) (5,318)Effect of deferred tax assets not recognised during the financial year 454 26 - -Effect of (over)/underprovision of: Deferred tax in prior years (3,509) 64 (2,205) (1) Income tax in prior years (55) (1,567) 287 -Effect of utilisation of previously unrecognised deferred tax assets (2,961) (13,575) - -Effect of partial tax exemption (1,338) - - -Effect of share of results of a joint venture 334 28 - -

23,653 15,629 2,694 1,955

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 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% (2012: 7.5%) corporate tax rate.

The Malaysian corporate income tax rate is expected to reduce from 25% to 24% with effect from year of assessment 2016 as announced in the 2014 Budget.



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12. EARNINGS PER ORDINARY SHARE

(a) Basic

Basic 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 2013 2012 RM’000 RM’000 (restated)

Profit net of tax attributable to owners of the parent 118,319 120,876Weighted average number of ordinary shares in issue 444,168 444,168

Basic earnings per ordinary share (sen) 26.64 27.21

(b) Diluted

The Group does not have any potential dilutive ordinary shares. Accordingly, the diluted earnings per share is not presented.

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 2013

At cost At 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 33,733 (763) (54) (8,805) (28,664) -Disposals - (243) (226) (735) - - (1,204)Write off (Note a) - (10,177) (284) - - - (10,461)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



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13. PROPERTY, PlANT AND EquIPMENT (CONT’D)


Group

At 31 December 2013 (Cont’d)

Accumulated depreciation and impairmentAt 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

Group

At 31 December 2012

At costAt 1 January 2012 (as previously stated) 371,710 738,837 41,933 13,826 - 116,667 1,282,973Effect of adopting the amendments to MFRS 116 - - - - 9,714 - 9,714

At 1 January 2012 (restated) 371,710 738,837 41,933 13,826 9,714 116,667 1,292,687Additions 76 12,547 2,897 1,061 10,854 40,003 67,438Reclassification 21,293 94,387 - 253 (7,470) (108,463) -Transfer to intangible asset (Note 16) - (19) - - - - (19)Disposal of a subsidiary (Note 17) (7,082) (24,105) (551) (160) - - (31,898)Disposals - (1,176) (615) (2,026) - (157) (3,974)Write off (Note a) (2) (8,092) (929) - - (131) (9,154)Exchange differences (542) (2,245) (183) (12) - - (2,982)

At 31 December 2012 (restated) 385,453 810,134 42,552 12,942 13,098 47,919 1,312,098



74



Group

At 31 December 2012 (Cont’d)

Accumulated depreciation and impairmentAt 1 January 2012 68,211 538,923 34,569 9,193 - - 650,896Depreciation charge for the financial year (Note 8) 6,705 41,013 2,293 1,782 - - 51,793Disposal of a subsidiary (Note 17) (538) (5,452) (186) (52) - - (6,228)Disposals - (1,082) (612) (1,650) - - (3,344)Write off (1) (159) (875) - - - (1,035)Exchange differences (82) (1,017) (141) (3) - - (1,243)

At 31 December 2012 74,295 572,226 35,048 9,270 - - 690,839

Net carrying amountAt 31 December 2012 (restated) 311,158 237,908 7,504 3,672 13,098 47,919 621,259

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 - 506 - - (276) (230) -Disposals - - - - - (93) (93)Write off (Note a) - (276) (165) - - (41) (482)

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

Accumulated depreciation and impairmentAt 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 (restated) 100,100 33,147 1,145 819 898 2,246 138,355



75



Company

At 31 December 2012

At costAt 1 January 2012 (as previously stated) 116,928 139,720 13,723 5,029 - 455 275,855Effect of adopting the amendments to MFRS 116 - - - - 515 - 515

At 1 January 2012 (restated) 116,928 139,720 13,723 5,029 515 455 276,370Additions - 2,787 404 306 533 1,379 5,409Reclassifications - 835 - 144 (401) (578) -Disposals - (854) (42) (1,276) - (157) (2,329)Write off (Note a) - (521) (455) - - - (976)

At 31 December 2012 (restated) 116,928 141,967 13,630 4,203 647 1,099 278,474

Accumulated depreciation and impairmentAt 1 January 2012 14,396 97,468 12,334 3,591 - - 127,789Depreciation charge for the financial year (Note 8) 1,234 10,109 581 653 - - 12,577Disposals - (834) (42) (952) - - (1,828)Write off - (120) (455) - - - (575)

At 31 December 2012 15,630 106,623 12,418 3,292 - - 137,963

Net carrying amountAt 31 December 2012 (restated) 101,298 35,344 1,212 911 647 1,099 140,511

(a) Spare parts written off

Included in the Group’s and the Company’s property, plant and equipment are spare parts written off amounting to RM8,805,000 (2012: RM7,470,000) and RM276,000 (2012: RM401,000), respectively. These are classified as upkeep of machinery under “Adminstrative expenses” line item 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 RM509,000 (2012: RM1,473,000).

(c) Impairment of plant, machinery and equipment

During the financial year, 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%.



76


* 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 2013

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

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

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

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

Net carrying amountAt 31 December 2013 83,508 69,899 174,401 327,808

At 31 December 2012

At costAt 1 January 2012 86,831 80,733 204,146 371,710Additions/reclassifications 1,559 - 19,810 21,369 Disposal - - (7,082) (7,082) Write off - - (2) (2) Exchange differences - - (542) (542)

At 31 December 2012 88,390 80,733 216,330 385,453

Accumulated depreciation and impairmentAt 1 January 2012 4,882 8,532 54,797 68,211Depreciation charge for the financial year - 1,151 5,554 6,705Disposal - - (538) (538)Write off - - (1) (1) Exchange differences - - (82) (82)

At 31 December 2012 4,882 9,683 59,730 74,295




77


* 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 2013

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

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

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

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


At 31 December 2012

At costAt 1 January 2012/31 December 2012 42,213 39,790 34,925 116,928

Accumulated depreciation and impairmentAt 1 January 2012 2,133 3,885 8,378 14,396Depreciation charge for the financial year - 572 662 1,234

At 31 December 2012 2,133 4,457 9,040 15,630


The long term leasehold land of the Group has remaining tenure of 57 to 67 (2012: 58 to 68) years.



78

14. lAND uSE RIGHTS


CostAt 1 January 13,933 14,000 229 229Additions 1,634 1,445 - -Disposal of a subsidiary (Note 17) - (1,136) - -Exchange differences 893 (376) - -

At 31 December 16,460 13,933 229 229

Accumulated amortisationAt 1 January 1,776 1,711 228 228Amortisation charge during the financial year (Note 8) 245 153 - -Disposal of a subsidiary (Note 17) - (59) - -Exchange differences 244 (29) - -

At 31 December 2,265 1,776 228 228

Net carrying amountAt 31 December 14,195 12,157 1 1

Analysed as:Long term leasehold land 14,194 12,156 - -Short term leasehold land 1 1 1 1

14,195 12,157 1 1

The land use rights of the Group have remaining tenure of 33 to 44 (2012: 34 to 45) years.

15. INVESTMENT PROPERTIES


CostAt 1 January 30,061 28,726 19,389 18,054Additions 383 1,335 383 1,335 Transfer from property, plant and equipment (Note 13) 627 - 627 -

At 31 December 31,071 30,061 20,399 19,389

Accumulated depreciationAt 1 January 6,251 5,716 2,140 1,849 Depreciation charge for the financial year (Note 8) 538 535 312 291

At 31 December 6,789 6,251 2,452 2,140

Net carrying amountAt 31 December 24,282 23,810 17,947 17,249



79

15. INVESTMENT PROPERTIES (CONT’D)

Representing investment properties held under lease terms:

2013 2012 RM’000 RM’000

Group

Leasehold land 13,890 14,092Buildings 10,392 9,718

24,282 23,810

Company

Leasehold land 10,178 10,319Buildings 7,769 6,930

17,947 17,249

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 23 to 77 (2012: 24 to 78) years.

The estimated fair value of the investment properties of the Group and of the Company as at 31 December 2013 are approximately RM102,300,000 and RM73,000,000 (2012: RM94,703,000 and RM69,758,000), 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 2013

At costAt 1 January 2013 - 4,727 4,727Additions 2,375 163 2,538Acquisition of a subsidiary - 1 1 Transfer 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 4,590 Amortisation charge during the financial year (Note 8) - 178 178 Write 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



80

16. INTANGIBlE ASSETS (CONT’D)

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

At 31 December 2012

At costAt 1 January 2012 - 4,657 4,657 Additions - 230 230Transfer from property, plant and equipment (Note 13) - 19 19Write off - (177) (177)Exchange difference - (2) (2)

At 31 December 2012 - 4,727 4,727

Accumulated amortisationAt 1 January 2012 - 4,411 4,411 Amortisation charge during the financial year (Note 8) - 356 356 Write off - (175) (175)Exchange difference - (2) (2)

At 31 December 2012 - 4,590 4,590

Net carrying amountAt 31 December 2012 - 137 137

Computer software 2013 2012 RM’000 RM’000

Company

CostAt 1 January 1,656 1,628Additions 10 114Write off - (86)

At 31 December 1,666 1,656

Accumulated amortisationAt 1 January 1,599 1,538Amortisation charge during the financial year (Note 8) 60 147Write off - (86)

At 31 December 1,659 1,599

Net carrying amountAt 31 December 7 57



81

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% (2012: N/A). The cash flow projections are discounted using the current market assessment of the risks specific to the CGU at 10% (2012: N/A).

(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 2013 2012 RM’000 RM’000

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

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

107,439 107,439

Market value of quoted shares in Malaysia 74,048 69,769



82

17. INVESTMENT IN SuBSIDIARIES (CONT’D)

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

Name incorporation activities 2012/2013 2012/2013

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

Federal Metal Printing Factory, Sdn. Berhad Malaysia Metal printing 100 - and can manufacturer

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 100 - beverage 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 - Multi-Pet Sdn. Bhd. Malaysia Ceased operation 100 -

KJO International Sdn. Bhd. (formerly Malaysia Packaging machinery 100 - known as KJO Systems Sdn. Bhd.) manufacturer

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

Box-Pak (Johore) Sdn. Bhd. Malaysia Corrugated fibre board 55 45 carton manufacturer

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

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



83


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

Name incorporation activities 2012/2013 2012/2013

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

(1) Equals to the proportion of voting rights held(2) Audited by member firm of Ernst & Young Global(3) Audited by a firm other than Emst & Young

(a) Disposal of subsidiary

On 27 July 2012, the Company entered into an agreement with Nihon Canpack Co., Ltd. of Japan to dispose its entire 60% equity interest in a subsidiary, Kian Joo Canpack (Vietnam) Co., Ltd. The disposal was completed on 11 October 2012.

The disposal had the following effects on the financial position of the Group as at the end of the year:

2012 RM’000

Property, plant and equipment (Note 13) 25,670Land use rights (Note 14) 1,077Inventories 510Trade and other receivables 415Cash and bank balances 2,091Other current asset 201Trade and other payables (877)

Net assets disposed 29,087Non-controlling interest (11,446)Transfer from foreign exchange reserve 1,411

19,052Total disposal proceeds, settled by cash 27,001

Gain on disposal to the Group 7,949

Cash inflow arising on disposal:Cash consideration 27,001Cash and bank balances of subsidiary disposed (2,091)

Net cash inflow on disposal 24,910



84


(a) Disposal of subsidiary (Cont’d)

Loss on disposal to the Company is derived below:

2012 RM’000

Cost of investment 30,121Write off of intercompany balances 1,143

31,264Total disposal proceeds, settled by cash 27,001

Loss on disposal to the Company (4,263)

(b) Acquisition of subsidiary

On 28 October 2013, a subsidiary of the Company, Box-Pak (Malaysia) Berhad 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 identifiable assets and liabilities of AMBM as at the date of acquisition were:

Carrying Fair value amount recognised RM’000 RM’000

Property, plant and equipment 470 2,722Intangible asset 1 1Inventories 2,033 2,138Trade and other receivables and deposits 3,584 3,497Cash and cash equivalents 316 316Trade and other payables and accruals (3,852) (3,960)Bank borrowings (1,999) (1,999)Deferred tax liabilities - (590)

Net identifiable assets 553 2,125

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

RM’000

Total cost of the business combination 4,500Less: Cash and cash equivalents of subsidiary acquired (316)

Net cash outflow on acquisition 4,184

Goodwill arising on acquisition

RM’000

Fair value of net identifiable asset 2,125Goodwill 2,375

Cost of business combination 4,500



85


(b) Acquisition of subsidiary (Cont’d)

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.

Impact of acquisition in statements of comprehensive income

From the date of acquisition, AMBM has contributed a loss of RM222,000 to the Group’s profit after tax. If the combination had taken place at the beginning of the financial year, the Group’s profit after tax would be RM123,447,000 and revenue would have been RM1,299,637,000.

(c) Non-controlling interests in subsidiary

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

Box-Pak (Malaysia) Berhad 2013 2012 RM’000 RM’000

NCI percentage of ownership interest and voting interest 45.17% 45.17%Carrying amount of NCI 64,036 58,821

Profit allocated to NCI 5,420 7,530

Summarised financial information before intra-group eliminationAs at 31 DecemberNon-current assets 173,128 104,497Current assets 122,221 106,080Current liabilities (99,578) (54,551)

Net assets 195,771 156,026

Year ended 31 DecemberRevenue 300,137 264,334Profit for the year 11,932 18,963Total comprehensive income 15,993 16,683

Cash outflows from operating activities 24,004 9,701Cash outflows from investing activities (66,944) (10,626)Cash outflows from financing activities 42,523 (240)

Net decrease in cash and cash equivalents (417) (1,165)

Dividends paid to NCI (2,034) (1,423)

18. INVESTMENT IN A JOINT VENTuRE


Unquoted shares at cost 10,000 10,000 10,000 10,000Share of post-acquisition reserves 12,219 12,659 - -Less: Distribution of profits (1,750) - - -

20,469 22,659 10,000 10,000



86

18. INVESTMENT IN A JOINT VENTuRE (CONT’D)

Proportion (%) of Country of Principal ownership interestName incorporation activities 2013 2012

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

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

(a) Summarised statements of financial position

2013 2012 RM’000 RM’000

AssetsNon-current assetsProperty, plant and equipment 32,107 32,336 Intangible assets 4 13

Total non-current assets 32,111 32,349

Current assets Inventories 3,409 5,355 Trade and other receivables 6,706 3,778 Tax recoverable - 2 Cash and Bank Balances 2,230 7,526

Total current assets 12,345 16,661

Total assets 44,456 49,010

liabilitiesCurrent liabilitiesRetirement benefit obligations 1 1 Trade and other payables 2,030 2,966

Total current liabilities 2,031 2,967

Non-current liabilities Retirement benefit obligations 901 103 Deferred tax liabilities 586 623

Total non-current liabilities 1,487 726

Total liabilities 3,518 3,693

Net Assets 40,938 45,317



87

18. INVESTMENT IN A JOINT VENTuRE (CONT’D)

(b) Summarised statements of comprehensive income

2013 2012 RM’000 RM’000

Revenue 26,660 16,103 Cost of goods sold (25,679) (18,007)

Gross profit/(loss) 981 (1,904)Other income 441 450 Administrative expenses (1,576) (1,742)Finance costs (50) (50)

Loss before taxation (204) (3,246)Taxation (669) (40)

Loss for the financial year (873) (3,286)

Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in joint venture is as follows:

2013 2012 RM’000 RM’000

Net assets as 1 January 45,317 48,706 Distribution of profits (3,500) - Other comprehensive income (6) (103)Loss for the financial year (873) (3,286)

Net assets as 31 December 40,938 45,317 Interest in joint venture (%) 50 50

Carrying value of Group’s interest in joint venture 20,469 22,659

19. OTHER INVESTMENT

In the previous year, following the approval by the Board of Directors of a subsidiary via a resolution passed on 29 February 2012, the subsidiary transferred the corporate membership at Kuala Lumpur Golf & Country Club to a director of the Group.

The transfer resulted in a loss on disposal of RM90,000 (Note 8).



88

20. DEFERRED TAxATION

2013 2012 RM’000 RM’000

Group

At 1 January (as previously stated) 17,975 20,956Effect of adopting the amendments to MFRS 119 (1,147) -

At 1 January (restated) 16,828 20,956Recognised in the profit or loss (Note 11) (1,559) (2,981)Recognised in the other comprehensive income (928) (1,147)Acquisition of a subsidiary (Note 17) 590 -

At 31 December 14,931 16,828

Presented after appropriate offsetting as follows:

Deferred tax assets (3,366) (454)Deferred tax liabilities 18,297 17,282

14,931 16,828

Company

At 1 January (as previously stated) 296 (32)Effect of adopting the amendments to MFRS 119 (305) -

At 1 January (restated) (9) (32)Recognised in the profit or loss (Note 11) (13) 328Recognised in the other comprehensive income (228) (305)

At 31 December (250) (9)

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 2012 (as previously stated) 25,540 29,074 (8,094) (8,575) (514) (15,102) (1,373) 20,956Effect of adopting the amendments to MFRS 119 - - - - - - - -

At 1 January 2012 (restated) 25,540 29,074 (8,094) (8,575) (514) (15,102) (1,373) 20,956Recognised in profit or loss 5,810 (1,284) 1,253 174 13 (8,855) (92) (2,981)Recognised in other comprehensive income - - (1,147) - - - - (1,147)

At 31 December 2012 31,350 27,790 (7,988) (8,401) (501) (23,957) (1,465) 16,828

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



89

20. DEFERRED TAxATION (CONT’D)

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 2012 (as previously stated) 8,137 14,754 (3,462) (5,367) (14,068) (26) (32)Effect of adopting the amendments to MFRS 119 - - - - - - -

At 1 January 2012 (restated) 8,137 14,754 (3,462) (5,367) (14,068) (26) (32)Recognised in profit or loss (222) (268) 534 284 33 (33) 328Recognised in other comprehensive income - - (305) - - - (305)

At 31 December 2012 (restated) 7,915 14,486 (3,233) (5,083) (14,035) (59) (9)

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)

Deferred tax assets for the Group have not been recognised in respect of the following items:

2013 2012 RM’000 RM’000

Unabsorbed tax losses 10,224 10,221Unutilised capital allowances 13,728 13,728Unutilised reinvestment allowances 26,622 24,810

50,574 48,759

At the reporting date, the Group has unabsorbed tax losses, unutilised capital and reinvestment allowances of approximately RM50,574,000 (2012: RM48,759,000) 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 (2012: nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements (Note 40).



90

21. TRADE AND OTHER RECEIVABlES

Note 2013 2012 RM’000 RM’000 (restated)

Group

CurrentTrade receivablesThird parties 263,214 247,686Amount due from a related party 819 -

264,033 247,686Less: Allowance for impairment - third parties (3,115) (3,606)

Trade receivables, net (a) 260,918 244,080

Other receivablesOther receivables 16,421 15,101Refundable deposits 1,870 8,200Amounts due from a joint venture (b) 106 111

Other receivables, net 18,397 23,412

Total trade and other receivables 279,315 267,492Add: Cash and bank balances (Note 24) 146,383 133,683

Total loans and receivables 425,698 401,175

Company

CurrentTrade receivablesThird parties 32,003 29,318Amounts due from subsidiaries 8,713 6,593

40,716 35,911Less: Allowance for impairment - third parties - (203)

Trade receivables, net (a) 40,716 35,708

Other receivablesOther receivables 1,784 768Amounts due from a joint venture (b) 17 53Amounts due from subsidiaries (c) 47,588 44,306Refundable deposits 602 262

49,991 45,389Less: Allowance for impairment (17,167) (17,095)

Other receivables, net 32,824 28,294

73,540 64,002

Non-currentOther receivablesLoans to subsidiaries (d) 27,700 63,500

Total trade and other receivables (current and non-current) 101,240 127,502Add: Cash and bank balances (Note 24) 49,293 67,249

Total loans and receivables 150,533 194,751



91

21. TRADE AND OTHER RECEIVABlES (CONT’D)

(a) Trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2012: 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:

Group 2013 2012 RM’000 RM’000

Neither past due nor impaired 161,495 171,4301 to 30 days past due not impaired 66,886 47,81331 to 60 days past due not impaired 25,837 17,61661 to 90 days past due not impaired 4,003 4,73391 to 120 days past due not impaired 1,188 1,970More than 121 days past due not impaired 1,509 518 99,423 72,650Impaired 3,115 3,606

264,033 247,686

Company 2013 2012 RM’000 RM’000

Neither past due nor impaired 30,207 24,4541 to 30 days past due not impaired 8,607 6,52031 to 60 days past due not impaired 1,698 3,84461 to 90 days past due not impaired 184 74291 to 120 days past due not impaired 15 85More than 121 days past due not impaired 5 63 10,509 11,254Impaired - 203

40,716 35,911

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 RM99,423,000 (2012: RM72,650,000) and RM10,509,000 (2012: RM11,254,000) respectively that are past due at the reporting date but not impaired.



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(a) Trade receivables (Cont’d)

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:

Group 2013 2012 RM’000 RM’000

Trade receivables - nominal amounts 3,115 3,606Less: Allowance for impairment (3,115) (3,606)

- -

Company 2013 2012 RM’000 RM’000

Trade receivables - nominal amounts - 203Less: Allowance for impairment - (203)

- -

Movement in allowance accounts:

Group 2013 2012 RM’000 RM’000

At 1 January 3,606 3,117Charge for the financial year (Note 8) 328 693Reversal of impairment losses (Note 8) (252) (57)Written off (580) -Exchange differences 13 (147)

At 31 December 3,115 3,606

Company 2013 2012 RM’000 RM’000

At 1 January 203 212Reversal of impairment losses (Note 8) - (9)Written off (203) -

At 31 December - 203

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.



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(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% (2012: 0.5%) per annum, and have an average maturity of 2 (2012: 3) years.

22. OTHER ASSETS

Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 (restated)

CurrentPrepayments (a) 18,064 963 192 59

Non-currentNon-refundable deposits for acquisition of property, plant and equipment (b) 39,433 - - -

57,497 963 192 59

(a) Prepayments

Included in the prepayments are advance payment to suppliers for purchase of raw materials, land and building, and installation of machineries.

(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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23. INVENTORIES


Raw materials 167,277 165,854 24,227 12,916Work-in-progress 64,174 58,851 19,707 21,962Finished goods 48,577 43,844 1,884 2,211Consumables 4,254 5,008 801 675

284,282 273,557 46,619 37,764

During the financial year, the amounts of inventories recognised as expense in cost of sales of the Group and of the Company were RM826,336,000 (2012: RM767,133,000) and RM125,373,000 (2012: RM155,743,000), respectively.

24. CASH AND BANK BAlANCES

Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 Cash at banks and on hand 47,692 69,847 12,921 5,256Deposits with: Licensed banks 75,316 44,865 28,357 43,058 Other financial institution 23,375 18,971 8,015 18,935

146,383 133,683 49,293 67,249

Included in the deposits with licensed banks of the Group and of the Company are investments in income trust funds in Malaysia amounting to RM32,652,000 (2012: RM17,012,000) and RM25,051,000 (2012: RM17,012,000) respectively. Such trust funds invest in highly liquid assets, which are readily convertible to known amount of cash and subject to an insignificant risk of changes in value.

Other financial institution represents a building society in Malaysia.

The weighted average effective interest rates of deposits of the Group and of the Company at the reporting date were as follows:

Group Company 2013 2012 2013 2012

Weighted average effective interest rates (%) - Fixed rates 2.97% 2.56% 3.04% 2.69%



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25. PROVISIONS

Group 2013 2012 RM’000 RM’000

Provision for solid waste disposalAt 1 January 48 103Additional provision during the financial year (Note 8) 808 594Utilisation of provision during the financial year (798) (649)

At 31 December 58 48

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.

26. 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 42,443 35,366 14,698 12,332

Analysed as:Not later than 1 year 10,985 3,297 3,957 1,542Later than 1 year but not later than 2 years 102 2,864 25 681Later than 2 years but not later than 5 years 322 3,592 98 1,252Later than 5 years 31,034 25,613 10,618 8,857

42,443 35,366 14,698 12,332

Analysed as:Current 10,985 3,297 3,957 1,542Non-current 31,458 32,069 10,741 10,790

42,443 35,366 14,698 12,332



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26. RETIREMENT BENEFIT OBlIGATIONS (CONT’D)

Movements in the net liability were as follows:


At 1 January (as previously stated) 30,779 24,718 11,112 10,375Effect of adopting the amendments to MFRS 119 4,587 - 1,220 -

At 1 January (restated) 35,366 24,718 12,332 10,375Current service cost 4,353 6,143 1,900 1,100Past service cost (1,042) - (338) -Interest cost 1,434 1,401 524 514Amortisation of actuarial gains and transitional liabilities recognised - 319 - 14Remeasurement effects recognised in other comprehensive income 3,709 4,587 912 1,220Benefits paid by the plan (1,377) (1,802) (632) (891)

At 31 December 42,443 35,366 14,698 12,332

The amounts recognised in the profit or loss are as follows:


Group

Current service cost 4,353 6,143 1,900 1,100Past service cost (1,042) - (338) -Interest cost 1,434 1,401 524 514

Total, included in staff cost (Note 9) 4,745 7,544 2,086 1,614

Principal actuarial assumptions used:

2013 2012 % %

Discount rate 5.4 5.6Price inflation 3.5 3.5Expected rate of salary increases 6.0 5.0

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.



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26. RETIREMENT BENEFIT OBlIGATIONS (CONT’D)

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.

27. lOANS AND BORROwINGS

2013 2012 Maturity RM’000 RM’000

Group

CurrentUnsecured:Bankers acceptances On demand 32,358 15,851 Trust receipts/bills payable On demand 62,464 50,234 Revolving credit On demand 15,000 40,000Term loans 2014 22,799 16,269

132,621 122,354

Non-currentUnsecured:Term loans 2019 95,616 59,952

TotalBankers acceptances 32,358 15,851Revolving credit 15,000 40,000Trust receipts/bills payable 62,464 50,234 Term loans 118,415 76,221

228,237 182,306

Company

CurrentUnsecured:Bankers acceptances On demand 3,372 6,715Bills payable On demand 11,243 -Revoving credit On demand - 40,000

14,615 46,715



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27. lOANS AND BORROwINGS (CONT’D)

The remaining maturities of the loans and borrowings as at 31 December 2013 and 2012 are as follows:

2013 2012 RM’000 RM’000

Group

On demand or within one year 132,621 122,354More than 1 year and less than 2 years 26,147 19,498More than 2 years and less than 5 years 65,684 40,454More than 5 years 3,785 -

228,237 182,306

Company

On demand or within one year 14,615 46,715

Details of the term loans are as follows:

Drawdownloan Interest rate date Repayment Term

Type 1 Cost of fund + 0.9% Nov-09 16 quarterly instalments after 15 months of drawdown

Type 2 Cost of fund + 0.75% Jan-11 19 quarterly instalments after 15 months of drawdown

Type 3 Fixed 3.5% Oct-12 61 monthly instalments after 24 months of drawdown

Type 4 Cost of fund + 0.75% Apr-13 59 monthly instalments after 1 month of drawdown

Type 5 Cost of fund + 0.65% May-13 20 monthly instalments after 1 month of drawdown

Type 6 Cost of fund + 0.8% Oct-13 20 quarterly instalments after 3 months of drawdown

As at reporting date, the weighted average effective interest rates for the loans and borrowings, were as follows:

Group Company 2013 2012 2013 2012

Bankers acceptances 3.28% 3.44% 3.29% 3.54%Revolving credit 5.62% 4.40% - 4.40%Trust receipts/bills payable 0.84% 1.08% 0.84% -Term loans: - Fixed rates 3.50% 3.50% - - - Floating rates 3.97% 2.52% - -

Term loans

The term loans are secured by a corporate guarantee given by the Company to banks for credit facilities granted to certain subsidiary companies as further disclosed in Note 36(b).



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28. TRADE AND OTHER PAYABlES

Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

CurrentTrade payablesThird parties (a) 70,176 46,720 5,683 5,444

Other payablesAccrued operating expenses 35,317 31,917 8,665 5,814Other payables (b) 23,979 14,970 3,326 4,105Value added tax payable 720 438 - -Amounts due to subsidiaries (c) - - 46,160 15,182Amounts due to a joint venture (c) 8 26 - -

60,024 47,351 58,151 25,101

Total trade and other payables 130,200 94,071 63,834 30,545Add: Loans and borrowings (Note 27) 228,237 182,306 14,615 46,715

Total financial liabilities carried at amortised cost 358,437 276,377 78,449 77,260

(a) Trade payables

Trade payables are non-interest bearing and are normally settled on 60 days (2012: 60 days) terms.

(b) Other payables

These amounts are non-interest bearing. Other payables are normally settled on an average term of six months (2012: 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.

29. DERIVATIVES

2013 2012 RM’000 RM’000 Contract/ Contract/ Notional Asset / Notional Asset / amount (liabilities) amount (liabilities)

Group

Non-hedging derivatives:CurrentCommodity derivative contracts - - 21,883 1,098Currency swap contracts 43,525 (4,750) 12,497 (1,431)

43,525 (4,750) 34,380 (333)



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29. DERIVATIVES (CONT’D)

The commodity derivative contracts were used to hedge against raw material price movements for which firm commitments existed at the reporting date. As at 31 December 2013, there were no outstanding commodity derivative contracts at 31 December 2013. Currency swap contracts were used to hedge against foreign exchange and interest rate fluctuations arising from the Group’s Type 4 (as disclosed in Note 27) term loan repayments denominated in USD, for which firm commitments existed at the reporting date extending to October 2019. The loan tenure is disclosed in Note 27.

During the financial year, the Group recognised a loss of RM4,352,000 (31 December 2012: gain of RM2,779,000) arising from fair value changes of derivative liabilities. The fair value changes are attributable to changes in market prices of interest rates, as well as foreign exchange spot and forward rate.

30. FAIR VAluE MEASuREMENT

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.

quantitative disclosures fair value measurement hierarchy for assets as at 31 December 2013:

Fair value measurement using

quoted prices Significant Significant inactive 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) 102,300 - 102,300 -Investment in subsidiaries- market value of quoted shares in Malaysia (Note 17) 74,048 74,048 - -

liability measured at fair value:

Derivative financial liabilities:- Currency swap contracts (Note 29) 4,750 - 4,750 -

Company

Assets for which fair values are disclosed:

Investment properties (Note 15) 73,000 - 73,000 -Investment in subsidiaries- market value of quoted shares in Malaysia (Note 17) 74,048 74,048 - -

All the above financial assets and liability of the Group were valued at 31 December 2013.



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30. FAIR VAluE MEASuREMENT (CONT’D)

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 2013, as quoted by Bursa Malaysia Securities Berhad.

level 2 fair value

Level 2 fair value is derived from open-market values estimated by independent professionally qualified valuers.

The Group does not have any financial instruments classified as Level 3 as at 31 December 2013.

There have been no transfers between Level 1 and Level 2 during the year.

31. SHARE CAPITAl

Share capital (Issued and fully paid) Share premium 2013 2012 2013 2012 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 2013 2012 2013 2012 ‘000 ‘000 RM’000 RM’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

Share capital

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.



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32. OTHER RESERVES

Foreign currency Capital translation reserve reserve Total RM’000 RM’000 RM’000

Group

At 1 January 2012 4,480 (4,990) (510)Other comprehensive income:Foreign currency translation - (2,492) (2,492)Disposal of investment in a subsidiary - 1,411 1,411

At 31 December 2012 4,480 (6,071) (1,591)

At 1 January 2013 4,480 (6,071) (1,591)Other comprehensive income:Foreign currency translation - 6,407 6,407

At 31 December 2013 4,480 336 4,816

(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) Berhad, 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.

33. RETAINED EARNINGS

The Company may distribute dividends out of its entire retained earnings as at 31 December 2013 under the single-tier system.



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34. 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:

Group 2013 2012 RM’000 RM’000

Sale of finished goods to: A joint venture (388) (148) Subsidiaries of a substantial corporate shareholder (3,003) (38) Director-related companies (1,025) (959)Transfer of golf club membership to a director of the Company - 90Purchases from: A joint venture 27 3 Subsidiaries of a substantial corporate shareholder 229 3Rental of warehouse from a joint venture 111 104

Company 2013 2012 RM’000 RM’000

Sale of finished goods to: A subsidiary of a substantial corporate shareholder (5) - Subsidiaries (37,914) (94,321)Purchases from: A subsidiary of a substantial corporate shareholder 226 3 Subsidiaries 4,818 65,636Rental receivable from subsidiaries (819) (819)Dividend income received from subsidiaries (5,624) (23,392)Interest income receivable from subsidiaries (2,929) (4,248)

The related companies and their relationship with the Company are as follows:

Related companies Relationship

Box-Pak (Malaysia) Berhad 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. SubsidiaryHercules Sdn. Bhd. Former director of a subsidiary (See Leong Chye @ Sze Leong Chye)Hercules (Vietnam) Co., Ltd. Former director of a subsidiary (See Leong Chye @ Sze Leong Chye)F & B Nutrition Sdn. Bhd. A subsidiary of a significant corporate shareholderAik Joo Can Factory Sdn. Berhad A subsidiary of a significant corporate shareholder



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34. RElATED PARTY DISClOSuRES (CONT’D)

(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.

35. COMMITMENTS

(a) Capital commitments

Capital expenditure as at 31 December 2013 and 2012 is as follows:


Capital expenditureApproved and contracted for:Property, plant and equipment 129,015 37,239 40,940 673Others - 980 - -

129,015 38,219 40,940 673

(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 272 337 94 41Later than 1 year but not later than 5 years 46 110 - 1

318 447 94 42

36. CONTINGENCIES

(a) Contingent liabilities

On 7 January 2012, the Company received a writ and statement from its former managing director’s solicitors. The former managing director had claimed for, among other things, retirement gratuity amounting to RM6,530,000. The case is now pending court decision.



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36. CONTINGENCIES (CONT’D)

(b) Financial Guarantee

Company 2013 2012 RM’000 RM’000

Unsecured:Guarantees given to financial institutions for credit facilities granted to subsidiaries 36,812 22,578

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.

37. 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), 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 RM36,812,000 (2012: RM20,648,733) relating to a corporate guarantee provided by the Company to a bank on a subsidiary’s term loan.

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.



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37. FINANCIAl RISK MANAGEMENT OBJECTIVES AND POlICIES (CONT’D)

(a) Credit risk (Cont’d)

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 21. 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 21.

(b) liquidity risk

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 2013

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 267,571 99,707 4,486 371,764


Financial liabilities:Trade and other payables 94,071 - - 94,071Loans and borrowings 122,354 63,335 - 185,689Derivatives 333 - - 333

Total undiscounted financial liabilities 216,758 63,335 - 280,093



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(b) liquidity risk (Cont’d)

On demand or within one year RM’000

Company


Financial liabilities:Trade and other payables 63,834Loans and borrowings 14,615

Total undiscounted financial liabilities 78,449


Financial liabilities:Trade and other payables 30,545Loans and borrowings 46,715

Total undiscounted financial liabilities 77,260

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 RM586,000 and RM308,000 (2012: RM291,000 and nil) 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.



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(d) Foreign exchange 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.

The net unhedged financial assets and financial liabilities of the Group as at 31 December 2013 and 2012 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 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

31 December 2012

Cash and bank balances 47,159 - 863 - - - 48,022Trade receivables 21,306 48,827 6,505 - - - 76,638Trade payables (7,160) (18,579) (730) (649) - (1,470) (28,588)Other receivables 7,948 62 7 28 - 341 8,386Other payables (2,155) (715) (195) (751) (13) (23) (3,852)Loans and borrowings (113,959) - - - - - (113,959)

Net exposure (46,861) 29,595 6,450 (1,372) (13) (1,152) (13,353)

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.



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(d) Foreign exchange risk (Cont’d)

Profit net of tax Increase/(decrease) 2013 2012 RM’000 RM’000

Group

USD/RM - strengthened 3% (684) (1,406) - weakened 3% 684 1,406

VND/RM - strengthened 3% 724 888 - weakened 3% (724) (888)

SGD/RM - strengthened 3% 354 194 - weakened 3% (354) (194)

(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) 21Loans and borrowings (current) 27Loans and borrowings (non-current) - with floating rate 27Trade and other payables (current) 28

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.

38. 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 2013 and 2012.



110

38. CAPITAl MANAGEMENT (CONT’D)

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 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

Loans and borrowings 27 228,237 182,306 14,615 46,715Trade and other payables 28 130,200 94,071 63,834 30,545Less: Cash and bank balances 24 (146,383) (133,683) (49,293) (67,249)

Net debt 212,054 142,694 29,156 10,011

Equity attributable to the owners of the parent, representing total capital 1,037,452 970,895 378,174 418,626

Capital and net debt 1,249,506 1,113,589 407,330 428,637

Gearing ratio 17% 13% 7% 2%

39. 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.



111

39.

SEG

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2012

20

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112

39. SEGMENT INFORMATION (CONT’D)

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:

Revenue Non-current assets 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

Malaysia 731,331 687,334 651,335 611,847Vietnam 364,886 296,498 145,608 68,629Singapore 67,766 55,646 - -Others 126,584 123,367 - -

1,290,567 1,162,845 796,943 680,476

Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:

2013 2012 RM’000 RM’000

Property, plant and equipment 692,698 621,259Land use rights 14,195 12,157Investment properties 24,282 23,810Intangible assets 2,500 137Investment in a joint venture 20,469 22,659Other non-curent assets 39,433 -Deferred tax assets 3,366 454

796,943 680,476

40. DIVIDENDS

Group/Company 2013 2012 RM’000 RM’000

Recognised during the financial year:

Dividends on ordinary shares: Final tax exempt (single-tier) dividend of 10% for 2012: 2.50 sen (2011: 2.50 sen) per share 11,104 11,104 Special tax exempt (single-tier) dividend of 15% for 2012: 3.75 sen (2011: 3.75 sen) per share 16,656 16,656 Interim 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

55,520 55,520



113

40. DIVIDENDS (CONT’D)

Proposed but not recognised as a liability: Group/Company 2013 2012 RM’000 RM’000

Dividends on ordinary shares, subject to shareholders’ approval at the AGM: 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 27,760

At the forthcoming Annual General Meeting, a final tax exempt (single-tier) dividend of 10% (2.50 sen) and a special tax exempt (single-tier) dividend of 15% (3.75 sen) on 444,167,786 ordinary shares in respect of current financial year ended 31 December 2013, amounting to a dividend payable of RM27,760,487 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2014.

41. SIGNIFICANT EVENTS DuRING THE FINANCIAl YEAR

In addition to the significant events detailed elsewhere in the financial statements, other significant event during the financial year for the Group is as follows:

On February 2011, the Group proposed:

(i) a bonus issue of 222,083,893 new ordinary shares of RM0.25 each in the Company (“KJCF Shares”), to be credited as fully paid up, on the basis of one (1) Bonus Share for every two (2) KJCF Shares held (“Proposed Bonus Issue”); and

(ii) a renounceable rights issue of 166,562,919 five (5)-year warrants 2011/2016 (“Warrants”) on the basis of one (1) Warrant for every four (4) KJCF Shares held after the Proposed Bonus Issue at an issue price of RM0.01 per Warrant (collectively known as “the Proposal”).

On 20 August 2013, the Board had, after due deliberation, decided to abort the Proposals on the basis that the Proposals are not in the best interests of the Company.

42. SIGNIFICANT EVENT SuBSEquENT TO THE FINANCIAl YEAR END

The Company has on 26 November 2013 received a letter of offer from Aspire Insight Sdn. Bhd. (“Aspire Insight”) to acquire the entire business and undertaking including all of the assets and liabilities of the Company (“Offer”) for a consideration of RM1,465,753,693. The shareholders of Aspire Insight are Ekuiti Merdu Sdn. Bhd. and Alleyways Sdn. Bhd. The major shareholder of Alleyways Sdn. Bhd. is Chee Khay Leong, a director of the Company, while the major shareholder of Ekuiti Merdu Sdn. Bhd. is Employees Provident Fund Board.

On 10 January 2014, the Board of Directors deliberated and has accepted the Offer, pending completion of due diligence exercise. The Offer is also subject to shareholders’ approval.



114

43. COMPARATIVES

Certain comparative amounts of the Group and of the Company have been restated to conform with current year’s presentation as follows

As previously Increase/ stated (decrease) As restated RM RM RM

Group


Other current asset 2,156 (1,193) 963Other receivables 13,908 1,193 15,101

Short term deposits with: Licensed banks 27,853 17,012 44,865 Other financial institutions 35,983 (17,012) 18,971

Company


Short term deposits with: Licensed banks 26,046 17,012 43,058 Other financial institutions 35,947 (17,012) 18,935

Statement of comprehensive income for the financial year ended 31 December 2012

Revenue from: Others 195 (195) -

Interest income from: Fixed deposits 717 195 912



115

44. 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 2013 and 2012 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 779,090 688,862 211,480 255,989 - Unrealised 83,134 88,579 54,908 50,851

Share of retained profits of a joint venture - Realised 11,241 12,718 - - - Unrealised (646) - - -

872,819 790,159 266,388 306,840

Add: Consolidation adjustments 48,031 70,541 - -

Total retained profits as per financial statements 920,850 860,700 266,388 306,840

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.


location Description

Year of lastRevaluation/Acquisition

Area(Square Metres) Tenure

Expiry Date

Age ofBuildings

(Years)

2013 Net

Carrying Amount (RM’000)

Lot PT 2Jalan Perusahaan 4Batu Caves, Selangor

Land &Building

2009 12,450 Leasehold 5.9.2074 33 17,514

Lot No. 26685 (28833 - 28836)Batu Caves, Selangor

Land &Building

2009 7,299 Freehold - 19 7,300

Lot No. 28829 to 28832Batu Caves, Selangor

Land &Building

2009 16,923 Freehold - 18 26,603

Lot 6 Jalan Perusahaan 1Batu Caves, Selangor

Land &Building

2009 8,502 Leasehold 5.9.2074 25 12,231


Land &Building

2009 8,417 Leasehold 5.9.2074 37 9,450


Land &Building

2009 9,444 Leasehold 5.9.2074 37 12,240

Lot No. 3846, ChembongRembau, Negeri Sembilan

Land forDevelopment

1993 4,249 Leasehold 27.6.2049 - -

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 - 9 9,623

Lot 22 & 24, Section 16Town of Shah AlamSelangor

Land &Building

2009 3,902 Leasehold 31.10.2070 40 3,522

Lot 21, Section 15Town of Shah AlamSelangor

Land &Building

2009 1,951 Leasehold 31.10.2070 29 1,635

Lot 19, Jalan SU 4Section 22Shah Alam, Selangor

Land &Building

2009 19,776 Freehold - 15 19,546

Lot 135 Jalan Kawat 15/18Tapak Perusahaan Shah AlamTown of Shah Alam, Selangor

Land &Building

2009 11,427 Leasehold 12.6.2073 37 7,812

Lot 3 Jalan Kawat 15/18Tapak Perusahaan Shah AlamTown of Shah Alam, Selangor

Land &Building

2009 12,140 Leasehold 16.7.2074 22 11,330

Lot 18 Jalan Pengapit 15/19Shah Alam, Selangor

Land &Building

2009 7,641 Leasehold 4.11.2080 22 6,137

liSt oF propertieSAS AT 31 DECEMBER 2013


location Description

Year of lastRevaluation/Acquisition

Area(Square Metres) Tenure

Expiry Date

Age ofBuildings

(Years)

2013 Net

Carrying Amount (RM’000)


Land &Building

2009 18,848 Leasehold 5.9.2074 21 26,014


Land &Building

1993 12,840 Leasehold 5.9.2074 29 5,950

No 6, Jalan Kilang 1Kawasan Perindustrian Jelapang 30100 Ipoh, Perak

Land &Building

1991 5,344 Leasehold 15.7.2036 35 550

733 Jalan Tampoi81200 Johor Bahru, Johor

Land &Building

2009 16,586 Freehold - 45 11,664

23 Jalan Dewani, Lorong 1Johor Bahru, Johor

Shophouse 2009 180 Freehold - 33 469

Lot PT31619 Arab-Malaysian Industrial ParkNilai, Negeri Sembilan(previously Lots 13983, 16640, 16641 and 16642)

Land &Buildings

2009 52,586 Freehold - 16 49,900

Lot 16638Mukim Setul, Daerah Seremban Negeri Sembilan

Land forDevelopment

2012 4,654 Freehold - - 1,561

HS (D) 80122 PT No. 5141Mukim DamansaraDaerah Petaling, Selangor

Land &Building

2009 31,142 Freehold - 21 23,204

17 Dai Lo Doc Lap VSIP, Thuan An DistrictBinh Duong Province, Vietnam

Land &Building

2009 22,201 Leasehold 11.2.2046 11 8,728

PT 15637 (Lot C)Taman Perindustrian PuchongSection 3, Puchong, Selangor

Land &Building

2003 40,468 Leasehold 2.9.2090 12 17,947

HS (D) 187255, PTD 62907 &HS (D) 187256, PTD 62908Mukim TebrauDaerah Johor Bahru, Johor

Land &Building

2009 18,483 Freehold - 19 12,682

22 Dai Lo Huu NghiVSIP, Thuan An DistrictBinh Duong Province, Vietnam

Land &Building

2009 44,230 Leasehold 11.2.2046 10 27,895

Lot F-11-CNMy Phuoc Industrial Park 2Ben Cat DistrictBinh Duong Province, Vietnam

Land forDevelopment

2008 30,000 Leasehold 14.1.2055 - 993

Plot No. 014B/015 & 016AVSlP, Bac NinhPhu Chan CommuneTu Son Town Bac Ninh ProvinceVietnam

Land &Building

2011 35,762 Leasehold 30.11.2057 - 29,504

LiST of pRopERTiESAS AT 31 DECEMBER 2013


analYSiS oF SHareHolDinGSAS AT 28 fEBRUARY 2014

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 : 4,901

sIZE OF sHAREHOlDINGs

Size of shareholdingsNo. of

shareholders% of

shareholdersNo. of

shares held% of

issued shares

Less than 100 shares 56 1.14 1,881 0.00100 to 1,000 shares 486 9.92 353,041 0.081,001 to 10,000 shares 2,931 59.80 14,210,348 3.2010,001 to 100,000 shares 1,137 23.20 36,690,223 8.26100,001 to 22,208,388 shares 289 5.90 216,171,393 48.6722,208,389 shares and above 2 0.04 176,740,900 39.79

Total 4,901 100.00 444,167,786 100.00

suBsTANTIAl sHAREHOlDERs(According to the Register of Substantial Shareholders)

No. Name

Direct Indirect TotalNo. of

shares held% of the

issued sharesNo. of

shares held% of the

issued sharesNo. of

shares held% of the

issued shares

1. Maybank Nominees (Tempatan) Sdn Bhd - Kuwait Finance House (Malaysia) Berhad for Can-One International Sdn Bhd (“CISB”)

146,131,500 32.90 - - 146,131,500 32.90

2. Can-One Berhad (“Can-One”)

- - 146,131,500 (1) 32.90 (1) 146,131,500 32.90

3. Eller Axis Sdn Bhd (“EASB”)

- - 146,131,500 (2) 32.90 (2) 146,131,500 32.90

4. Yeoh Jin Hoe - - 146,131,500 (3) 32.90 (3) 146,131,500 32.90

5. Employees Provident Fund Board

44,536,400 10.03 - - 44,536,400 10.03

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, in which he holds more than 15% voting shares.


ANALYSiS of SHAREHoLDiNGSAS AT 28 fEBRUARY 2014

DIRECTORs’ sHAREHOlDINGs(According to the Register of Directors’ Shareholdings)

No. Name

Direct Indirect TotalNo. of

shares held% of the

issued sharesNo. of

shares held% of the

issued sharesNo. of

shares held% of the

issued shares

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

323,100 0.07 - - 323,100 0.07

2. Yeoh Jin Hoe - - 146,131,500 (1) 32.90 (1) 146,131,500 32.90

3. Chee Khay Leong - - - - - -

4. Dato’ Anthony See Teow Guan

6,056,850 1.36 176,007 (2) 0.04 (2) 6,232,857 1.40

5. See Teow Koon 2,032,855 0.46 464,735 (3) 0.10 (3) 2,497,590 0.56

6. Dato’ Tan Guan Cheong

- - - - - -

7. Dato’ Mah Siew Kwok

- - - - - -

8. Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz

- - - - - -

Notes:

(1) Deemed interest through EASB, in which he holds more than 15% voting shares.(2) Deemed interest through, his spouse and children.(3) Deemed interest through his spouse.



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 13,184,823 2.97

4. Amanahraya Trustees Berhad - Public SmallCap Fund

10,139,700 2.28

5. Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board (F Templeton)

9,276,700 2.09

6. Yong Har Chye 6,150,000 1.38

7. See Teow Chuan 5,958,410 1.34

8. Alliancegroup Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Teh Win Kee (8016787)

5,281,400 1.19

9. HSBC Nominees (Asing) Sdn Bhd - Exempt An for JPMorgan Chase Bank, National Association (Norges BK)

5,202,600 1.17

10. Citigroup Nominees (Asing) Sdn Bhd - CBNY for Dimensional Emerging Markets Value Fund

4,777,380 1.08

11. HSBC Nominees (Tempatan) Sdn Bhd - HSBC (M) Trustee Bhd for AMB Value Trust Fund (4249)

4,688,000 1.06

12. HSBC Nominees (Asing) Sdn Bhd - Exempt An for Credit Suisse (SG BR-TST-Asing)

4,100,000 0.92

13. Sanwoi (Malaysia) Sdn Bhd 4,073,600 0.92

14. See Teow Guan 3,500,292 0.79

15. Citigroup Nominees (Tempatan) Sdn Bhd - Employees Provident Fund Board (PHEIM)

3,150,300 0.71



No. NameNo. of

shares held% of

issued shares

16. HLIB Nominees (Tempatan) Sdn Bhd - Pledged Securities Account for Exosoft Sdn Bhd (MG0171-199)

3,070,000 0.69

17. See Chin Lam 3,024,535 0.68

18. CIMB Commerce Trustee Berhad - Public Focus Select Fund

2,841,200 0.64

19. See Teow Guan 2,556,558 0.58

20. Tan Kim Seng 2,500,000 0.56

21. HSBC Nominees (Tempatan) Sdn Bhd - HSBC (M) Trustee Bhd for RHB-OSK Equity Trust (3175)

2,340,000 0.53

22. See Teow Chuan Holdings Sdn Bhd 2,179,985 0.49

23. See Sew Chew @ See Siew Choo 2,067,418 0.47

24. See Teow Koon 2,032,855 0.46

25. Citigroup Nominees (Asing) Sdn Bhd - CBNY for DFA Emerging Markets Small Cap Series

1,893,880 0.43

26. Amanahraya Trustees Berhad - Public Strategic Smallcap Fund

1,841,400 0.41

27. Maybank Nominees (Tempatan) Sdn Bhd - Jincan Sdn Bhd

1,800,000 0.41

28. Raja Ashman Shah Bin Raja Azlan Shah 1,795,516 0.40

29. Migan Sdn Bhd 1,774,400 0.40

30. Citigroup Nominees (Asing) Sdn Bhd - CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group INC

1,772,080 0.40

Total 289,713,932 65.24

lIsT OF THIRTY (30) lARGEsT sHAREHOlDERs(According to the Record of Depositors)


NOTICE Is HEREBY GIvEN THAT the Fifty-Sixth Annual General Meeting (“AGM”) of Kian Joo Can Factory Berhad will be held at Ballroom I and II, Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Wednesday, 16 April 2014 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 2013 and the Reports of the Directors and Auditors thereon.

2. To declare the following dividends in respect of the financial year ended 31 December 2013:

(i) a final tax exempt (single-tier) dividend of 10% (2.50 sen per share) (ii) a special tax exempt (single-tier) dividend of 15% (3.75 sen per share)

3. To approve the payment of Directors’ Fees amounting to RM632,000 in respect of the financial year ended 31 December 2013.

4. To re-elect as Director, See Teow Koon who retires pursuant to Article 104 of the Company’s Articles of Association.

5. To re-elect the following Directors of the Company who retire pursuant to Article 108 of the Company’s Articles of Association:

(i) Dato’ Tan Guan Cheong (ii) Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz (iii) Dato’ Mah Siew Kwok

6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration.

As sPECIAl BusINEss

7. To consider and, if thought fit, to pass the following as an Ordinary Resolution:

Retaining designation of Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar as Independent Non-Executive Director in accordance with Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012

“THAT 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, be and is hereby retained as Independent Non-Executive Director of the Company.”

8. 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:

Resolution 1

Resolution 2Resolution 3

Resolution 4

Resolution 5

Resolution 6Resolution 7Resolution 8

Resolution 9

Resolution 10

Resolution 11

notice oF annual General meetinG


(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;

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.


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 25 March 2014 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;

Resolution 12

NoTiCE of ANNUAL GENERAL MEETiNG


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 a 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.”


Proposed payment to Dato’ See Teow Chuan of a sum of RM5,800,000 being full and final settlement of his retirement gratuity

“THAT, subject to compliance with the Companies Act 1965, the Companies Regulations 1966, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the provisions of the Company’s Memorandum and Articles of Association and all other applicable laws, guidelines, rules and regulations, approval be and is hereby given for the Company to pay, without admission of liability, to Dato’ See Teow Chuan (“Dato’ See”) a sum of RM5,800,000 (“Settlement Sum”) in full and final settlement of his retirement gratuity, provided that the payment of the Settlement Sum shall constitute full, final and complete discharge and release of all and any claims that Dato’ See and the Company, its subsidiaries and Directors have or may have against each other, arising out of and in connection with Dato’ See’s employment with the Company and/or its subsidiaries, including, without limitation, all claims in any civil suit and all related matters arising thereto;

AND THAT the Directors of the Company be and are hereby authorised to complete and to do all such acts and things as they may consider expedient or necessary (including, without limitation, executing all such documents as may be required) to give effect to the Settlement Sum and the settlement of any civil suit as contemplated and/or authorised by this resolution.”

11. 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.


Resolution 13


NOTICE OF DIvIDEND PAYMENT AND ENTITlEMENT DATE

NOTICE Is AlsO HEREBY GIvEN THAT the final tax exempt (single-tier) dividend of 10% (2.50 sen per share) and special tax exempt (single-tier) dividend of 15% (3.75 sen per share) in respect of the financial year ended 31 December 2013 (“Dividends”), if approved by the shareholders at the Fifty-Sixth Annual General Meeting of the Company, will be paid to shareholders on 6 May 2014. The entitlement date for the Dividends shall be 24 April 2014.

Shareholders will only be entitled to the Dividends in respect of:

(a) shares transferred into their Securities Account before 4.00 p.m. on 24 April 2014, for transfers; and

(b) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board

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

Batu Caves, Selangor Darul Ehsan25 March 2014

Notes:

(A) GENERAL MEETING RECORD OF DEPOSITORS

Only members whose name appears in the General Meeting Record of Depositors as at 8 April 2014 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 proxy form 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 10 - Retaining designation of y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar as Independent Non-Executive Director in accordance with Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012

Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar has served on the Board as Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years. The Board recommends retaining Y.A.M. Tunku Naquiyuddin as Independent Non-Executive Director for the following reasons:

(i) he fulfils the criteria stated under the definition of “Independent Director” as defined in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and he is able to provide proper check and balance thus bringing an element of objectivity to the Board of Directors;

(ii) he actively participated in the Board’s and Board Committees’ deliberations and decision making in an objective and independent manner; and

(iii) he has devoted sufficient time and attention to his professional obligations for informed and balanced decision making.

Resolution 11 - Proposed renewal of authority for the Company to purchase its own shares

The Ordinary Resolution 11 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 25 March 2014 which is despatched together with the Company’s Annual Report 2013.

Resolution 12 - 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 12 proposed, if passed, will renew the mandate for the Company and its subsidiary companies to enter into the RRPTs with Kian Joo-Visypak Sdn Bhd, 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 25 March 2014.

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 25 March 2014 which is despatched together with the Company’s Annual Report 2013.

Resolution 13 - Proposed payment to Dato’ See Teow Chuan of a sum of RM5,800,000 being full and final settlement of his retirement gratuity

Dato’ See Teow Chuan was the former Managing Director of the Company. At the Fifty-Fourth AGM of the Company held on 18 June 2012, the Ordinary Resolution on the proposed payment of retirement benefit and ex-gratia payment of RM4,537,575 and RM1,815,030 respectively to Dato’ See Teow Chuan was not passed.

The Ordinary Resolution 13, if passed, will give authority to the Company to pay Dato’ See Teow Chuan a sum of RM5,800,000 as full and final settlement of his retirement gratuity provided that the payment of the Settlement Sum shall constitute full, final and complete discharge and release of all and any claims that he and the Company, its subsidiaries and Directors have or may have against each other, arising out of and in connection with his employment with the Company and/or its subsidiaries, including, without limitation, all claims in any civil suit and all related matters arising thereto.


FORM OF PROxYCDS 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-Sixth Annual General Meeting of the Company to be held at Ballroom I and II, Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 16 April 2014 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 Against1 To receive the audited Financial Statements of the Group and of the Company

for the financial year ended 31 December 2013 and the Report of the Directors and Auditors thereon

2 To declare a final tax exempt (single-tier) dividend of 10% (2.50 sen per share) for the financial year ended 31 December 2013

3 To declare a special tax exempt (single-tier) dividend of 15% (3.75 sen per share) for the financial year ended 31 December 2013

4 To approve the payment of Directors’ Fees amounting to RM632,000 in respect of the financial year ended 31 December 2013

5 To re-elect Director, See Teow Koon who retires pursuant to Article 104 of the Articles of Association of the Company

6 To re-elect Director, Dato’ Tan Guan Cheong who retires pursuant to Article 108 of the Articles of Association of the Company

7 To re-elect Director, Y.A.M. Tunku Zain Al-’Abidin Ibni Tuanku Muhriz who retires pursuant to Article 108 of the Articles of Association of the Company

8 To re-elect Director, Dato’ Mah Siew Kwok who retires pursuant to Article 108 of the Articles of Association of the Company

9 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remunerationSpecial Business

10 To retain designation of Y.A.M. Tunku Naquiyuddin Ibni Almarhum Tuanku Ja’afar as Independent Non-Executive Director in accordance with Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012

11 Proposed renewal of authority for the Company to purchase its own shares12 Proposed renewal of shareholders’ mandate for the Company and its

subsidiaries to enter into recurrent related party transactions of a revenue or trading nature

13 Proposed payment to Dato’ See Teow Chuan of a sum of RM5,800,000 being full and final settlement of his retirement gratuity

Signature/Seal of Shareholder Date

Notes:

(i) Only members whose name appears in the General Meeting Record of Depositors as at 8 April 2014 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 proxy form 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 Jaya, Selangor Darul EhsanMalaysia

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