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GROUP FINANCIAL HIGHLIGHTS

Financial Year Ended 31 December 2008 2009 2010 2011 2012 (Restated) (Restated) (Restated)

Revenue (RM’Million) 413.71 405.93 449.05 630.98 780.04

Earnings Before Interest, Taxes, Depreciation and 38.13 58.89 49.48 62.41 229.72 Amortisation (RM’Million)

Profit Before Tax (RM’Million) 19.36 37.11 26.39 41.91 194.88

Profit After Tax (RM’Million) 17.45 31.34 20.79 34.52 178.13

Net Profit Attributable to Equity Holders (RM’Million) 17.31 31.05 19.44 32.41 170.72

Total Assets (RM’Million) 406.81 444.89 467.29 567.48 991.08

Shareholders’ Equity (RM’Million) 143.83 175.22 200.82 228.65 396.98

Return on Equity (%) 12.13 17.89 10.35 15.10 44.87

Earnings Per Share (Sen) 11.36 20.37 12.76 21.27 112.02

Net Asset Per Share (RM) 0.94 1.15 1.32 1.50 2.60

800

700

600

500

400

300

200

100Revenue(RM’Million)

413.71405.93

449.05

630.98

780.04

1000

900

800

700

600

500

400

300

200

100

TotalAssets

(RM’Million)

406.81444.89

467.29

567.48

991.08120

100

80

60

40

20

EarningsPer Share(Sen)11.36

20.37

12.76

21.27

112.02

200

180

160

140

120

100

80

60

40

20

2008 2009 2010 2011 2012

2008 2009 2010 2011 20122008 2009 2010 2011 2012

2008 2009 2010 2011 2012

19.36/17.45

37.11/31.34 26.39/

20.79

41.91/34.52

194.88/178.13

Profit Beforeand After Tax(RM’Million)

ProfitAfter Tax

ProfitBefore Tax

2 Corporate Information

3 Corporate Structure

4 Profile of Directors

6 Chairman’s Statement

10 Statement on Corporate Governance

18 Other Information

19 Audit Committee Report

22 Statement on Internal Control

24 Directors’ Responsibility Statement

25 Directors’ Report and Financial Statements

25 Directors’ Report

28 Statement by Directors

28 Statutory Declaration

29 Independent Auditors’ Report

31 Consolidated Statement of Financial Position

32 Consolidated Statement of Profit or Loss and Other Comprehensive Income

33 Consolidated Statement of Changes in Equity

34 Consolidated Statement of Cash Flows

36 Statements of Financial Position

37 Statement of Profit or Loss and Other Comprehensive Income

38 Statement of Changes in Equity

39 Statement of Cash Flows

40 Notes to the Financial Statements

95 List of Properties

97 Analysis of Shareholdings

99 Notice of Annual General Meeting

104 Statement Accompanying Notice of Annual General Meeting

105 Appendix I - Proposed Amendments to the Articles of Association of the Company

Form of Proxy

CONTENTS

BOARD OF DIRECTORSWilliam Maurice SamsonChairman/Independent Non-Executive Director

Marc Francis Yeoh Min ChangChief Operating Officer cum Executive Director

Chee Khay LeongExecutive Director

Tan Beng WahExecutive Director

Yeoh Jin HoeNon-Independent Non-Executive Director

Yeoh Jin BengNon-Independent Non-Executive Director

Razmi Bin AliasIndependent Non-Executive Director

See Ewe LinIndependent Non-Executive Director

AUDIT COMMITTEE/ REMUNERATION COMMITTEE/NOMINATING COMMITTEEWilliam Maurice Samson (Chairman)

See Ewe Lin

Razmi Bin Alias

COMPANY SECRETARIESTan Bee Keng MAICSA 0856474

Kwong Shuk Fong MAICSA 7032330

AUDITORSKPMG Chartered Accountants1st Floor, Wisma Penang Garden42, Jalan Sultan Ahmad Shah10050 Penang, MalaysiaTelephone No. : 604-227 2288Fax No. : 604-227 1888Email Address : [email protected]

SHARE REGISTRARTricor Investor Services Sdn Bhd Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur, Malaysia Telephone No. : 603-2264 3883Fax No. : 603-2282 1886Email Address : [email protected]

REGISTERED AND CORPORATE OFFICE 2B-4, Level 4Jalan SS 6/6, Kelana Jaya47301 Petaling JayaSelangor Darul Ehsan, Malaysia Telephone No. : 603-7804 8590Fax No. : 603-7880 1605Email Address : [email protected]

PRINCIPAL PLACE OF BUSINESSLot 2244, Jalan RajawaliBatu 9, Kampung Kebun Baru42500 Telok Panglima GarangKuala LangatSelangor Darul Ehsan, MalaysiaTelephone No. : 603-3122 1988Fax No. : 603-3122 2188Email Address : [email protected]

PRINCIPAL BANKERSKuwait Finance House (Malaysia) BerhadHSBC Bank Malaysia BerhadHong Leong Bank Berhad

STOCK EXCHANGE LISTINGMain Market Bursa Malaysia Securities BerhadStock Name : CANONEStock Code : 5105Sector : Industrial Products

CORPORATE INFORMATION2

CAN-ONE BERHAD (638899-K)

CORPORATE STRUCTURE

100% Aik Joo Can Factory Sdn Berhad

100% Canzo Sdn Bhd

100% Ajcan Sdn Bhd

100% Sanjung Nuri Sdn Bhd

100% Newmarq Sdn Bhd

100% PT Corum

100% Lumiera Corporation (Labuan) Pte Ltd

100% Grensing Pte Ltd

100% Amber Alliance Sdn Bhd

80% F & B Nutrition Sdn Bhd

100% Can-One International Sdn Bhd

32.9% Kian Joo Can Factory Berhad

100% Kian Joo Packaging Sdn Bhd

100% KJM Aluminium Can Sdn Bhd

100% Federal Metal Printing Factory, Sdn Berhad

100% Metal-Pak (Malaysia) Sdn Bhd

100% KJ Can (Selangor) Sdn Bhd

100% KJ Can (Johore) Sdn Bhd

100% Kian Joo Canpack Sdn Bhd

100% Kian Joo Canpack (Shah Alam) Sdn Bhd

100% Multi-Pet Sdn Bhd

100% Indastri Kian Joo Sdn Bhd

100% KJO Systems Sdn Bhd

100% KJ Can (Singapore) Pte Ltd

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

54.83% Box-Pak (Malaysia) Bhd

50% Kian Joo-Visypak Sdn Bhd

19%

81% Bintang Seribu Sdn Bhd

100% Great Asia Tin Cans Factory Company, Sdn Berhad

100% Box-Pak (Johore) Sdn Bhd

100% Box-Pak (Vietnam) Co., Ltd

100% Box-Pak (Hanoi) Co., Ltd

100% Can Ridge Sdn Bhd

(638899-K)

3

ANNUAL REPORT 2012

PROFILE OF DIRECTORS

He was appointed to the Board of Directors (“Board”) of Can-One Berhad (“Can-One” or “the Company”) as Independent Non-Executive Director on 8 April 2005 and assumed the position as Chairman of the Board on 29 April 2005. As the appointed Senior Independent Director to whom concerns may be conveyed, he also sits on the Audit Committee, Remuneration Committee and Nominating Committee of Can-One as Chairman.

His experience is extensive covering management, marketing, insurance, finance and also shipping, having been the Managing Director of Sandilands Buttery &

Company Ltd (“Sandilands”) prior to his retirement in 1980. After his retirement, he started his own trading company in which he is still actively involved.

He was a member of the British Institute of Management (United Kingdom), Institute of Management (Malaysia) and a Fellow of the Institute of Directors (London).

He has no family relationship with any Director and/or major shareholder of Can-One and has no conflict of interest with Can-One.

WILLIAM MAURICE SAMSON Independent Non-Executive Chairman, Malaysian. Aged 87

He was appointed to the Board of Can-One as Chief Operating Officer cum Executive Director on 8 April 2005. He relinquished the position on 11 July 2012 when he was appointed Chief Operating Officer cum Executive Director of associated company, Kian Joo Can Factory Berhad (“KJCFB”), which is listed on Bursa Malaysia Securities Berhad (“Bursa Securities”).

He remained on the Board of Can-One as Non-Independent Non-Executive Director until 2 January 2013, when he re-assumed the position of Executive Director to assist in the

management of the manufacturing facilities, sales and marketing and the development of new businesses in Can-One.

He has been with Can-One Group since 1977 and was previously responsible for the implementation of the Group’s broad operational strategies and policies as well as the day-to-day operations of the Group.


CHEE KHAY LEONG Executive Director, Malaysian. Aged 52

He was appointed to the Board of Can-One as Chief Operating Officer cum Executive Director on 6 July 2012.

He holds a Bachelor of Science Degree in Electrical and Electronic Engineering (Magna cum Laude) from Marquette University, United States of America (“USA”) and a Master of Business Administration in Finance from University of Southern Queensland, Australia.

He is currently responsible for implementation of Can-One Group’s board operational strategies and policies. In addition, he also oversees the day-to-day operations and performance

of the Group. His experience covers engineering, business development, management and marketing.

He was General Manager of the Engineering and Business Development units of the Group before his appointment to the Board. He was with Axiata Group Berhad group of companies from 2007 to 2010 serving in various senior engineering positions abroad before he left to join Can-One Group.

He is the son of Yeoh Jin Hoe (a Director and major shareholder of the Company) while Yeoh Jin Beng (a Director of the Company) is his uncle. He has no conflict of interest with Can-One.

MARC FRANCIS YEOH MIN CHANG Chief Operating Officer cum Executive Director, Malaysian. Aged 28

He was appointed to the Board of Can-One as Executive Director on 16 July 2012. He is responsible for the financial and administration affairs of the Group.

He holds a Bachelor of Accounting Degree and a Master in Business Administration from University Utara Malaysia. He is also a member of the Malaysian Institute of Accountants.

His experience covers finance, human resource, administration and marketing. He was General Manager of the Finance and

Administration units of wholly-owned subsidiary, Aik Joo Can Factory Sdn Berhad prior to his appointment to the Board. Previously, he was attached to Messrs KPMG Peat Marwick and a subsidiary of a listed company.


TAN BENG WAH Executive Director, Malaysian. Aged 44

4


PROFILE OF DIRECTORS

• NoneoftheDirectorshasconvictionforanyoffencewithinthepastten(10)years.

He joined the Board of Can-One as Non-Independent Non-Executive Director on 8 April 2005 and was re-designated as Independent Non-Executive Director on 16 July 2012. He is also a member of the Audit Committee, Remuneration Committee and Nominating Committee.

He holds a Diploma in Business Studies from Universiti Teknologi Mara, Malaysia, a Degree in Business Administration from Western Michigan University, USA and a Masters in Business Administration from Central Michigan University, Michigan, USA.

His experience covers finance and corporate functions, business development and trading. He owns several companies which are involved in financial consultancy, poultry farming, trading, transport, logistics, property and investment holding. Prior to that, he was a senior management staff in a local financial institution for fifteen (15) years.


RAZMI BIN ALIAS Independent Non-Executive Director, Malaysian. Aged 56

He was appointed as Non-Independent Non-Executive Director on the Board of Can-One on 8 April 2005.

His expertise is in the manufacture and trading of fast moving consumer products. He is one of the co-founders of Kaiserkorp Group which manufactures and distributes “KingKoil” and other branded mattresses in Malaysia. Prior to that, he was working for an international pharmaceutical company which deals in pharmaceutical and other specialty medical products.

He is the Managing Director of Ibufood Group of companies which is involved in the manufacture and distribution of instant noodles and other consumer food products.

He is the brother of Yeoh Jin Hoe (Director and major shareholder of the Company) and uncle of Marc Yeoh (the Chief Operating Officer cum Executive Director of the Company). He has no conflict of interest with Can-One.

YEOH JIN BENG Non-IndependentNon-ExecutiveDirector,Malaysian.Aged61

He was appointed as Independent Non-Executive Director on the Board of Can-One on 8 April 2005. He is also a member of the Audit Committee, Remuneration Committee and Nominating Committee.

He holds a Degree in Law (LLB) (Honours) from West London University (formerly known as Ealing College), United Kingdom. He practiced law at Messrs Lim Cheng Poh, Lim &

Rahim after passing the Local Certificate of Legal Practice in University Malaya in 1986. In 1991, he joined Messrs Ooi Lee & Company as partner, where he still practices.


SEE EWE LIN Independent Non-Executive Director, Malaysian. Aged 58

He was appointed to the Board of Can-One as Managing Director on 8 April 2005. He relinquished the position on 11 July 2012 when he was appointed Group Managing Director (“MD”) of KJCFB and remained on the Board of Can-One as Non-Independent Non-Executive Director.

He has extensive experience in the manufacturing and trading industries, having been the founder of several companies involved in the manufacturing sector. The Kaiserkorp Sdn Bhd group of companies (“Kaiserkorp Group”) which manufacture and distribute “KingKoil” and other branded mattresses as well as other sleep related products in Malaysia were started by him in the 1980s. He also founded Agrow (Malaysia) Sdn Bhd group of companies, which distribute sanitary wares, ironmongery, locks and builders’ hardware. Thereafter, he went on to establish Ibufood Corporation Sdn Bhd group of companies (“Ibufood Group”) which manufacture and distribute instant noodles, food seasonings, instant soups and marinades.

Under his leadership and guidance, Can-One Group had expanded its core business as a tin can manufacturer to include the manufacture of plastic jerry cans, bag-in-boxes, dairy and non-dairy products. He was instrumental in the acquisition by the Group of 32.9% equity interest in KJCFB.

He is currently an Executive Director in KJCFB’s subsidiary company, Bok-Pak (Malaysia) Bhd (“BPMB”), which is listed on the Main Market of Bursa Securities.

He is a major shareholder of Can-One and is the father of Marc Francis Yeoh Min Chang (“Marc Yeoh”) (the Chief Operating Officer cum Executive Director of the Company) while Yeoh Jin Beng is his brother (a Director of the Company). He has no conflict of interest with Can-One.

YEOH JIN HOE Non-Independent Non-Executive Director, Malaysian. Aged 66

5

ANNUAL REPORT 2012

CHAIRMAN’S STATEMENT

FINANCIAL REVIEWCan-One Group reached new heights in its performance for the FYE 2012, recording revenue of RM780.0 million as compared to RM631.0 million in the immediate preceding year.

The food products division continued to be the main catalyst of growth with strong demand for its products from existing and new customers following its expansion drive. The growth in the food products division also created increased internal demand for the general cans division.

Revenue of the general cans division increased by 3.7% driven mainly by increase in inter-segment sales of tin cans from RM80.3 million to RM87.6 million. The strong growth in revenue and improved cost control measures translated into better operating results. Pre-tax profit and post-tax profit of the Group increased to RM194.9 million and RM178.1 million respectively for the year under review compared to RM41.9 million and RM34.5 million respectively in financial year ended 31 December 2011 (“FYE 2011”). The profit of the Group for FYE 2012 was inclusive of the share of results of associated company, KJCFB. The share of associate results recognised in FYE 2012 of RM135 million included bargain purchase (difference between fair value of the acquired net asset and the purchase price) amount of RM103.8 million.

DIVIDENDIn view of the improved performance, the Board is pleased to recommend a first and final tax exempt dividend of 8% (4 sen per share), aggregating RM6.096 million, in respect of the FYE 2012 for approval by shareholders at the forthcoming Ninth Annual General Meeting of the Company.

CORPORATE DEVELOPMENT

New Associated CompanyThe acquisition of a 32.9% equity interest in KJCFB (“Acquisition”) by wholly-owned subsidiary, Can-One International Sdn Bhd (“CISB”) from Kian Joo Holdings Sdn Bhd-In Liquidation (“KJHSB”) was completed on 25 January 2012.

Changes In Key Management Following completion of the Acquisition, the nominees of CISB, Yeoh Jin Hoe and Chee Khay Leong took up executive board positions on KJCFB on 18 June 2012.

Marc Yeoh (the son of Yeoh Jin Hoe) joined the Board of Can-One as Chief Operating Officer (“COO”) cum Executive Director (“ED”) on 6 July 2012 to oversee the day-to-day operations and management of the Group.

Yeoh Jin Hoe relinquished his position as MD of Can-One and was re-designated on 11 July 2012 as a Non-Independent Non-Executive Director of the Company, subsequent to his appointment as Group MD of KJCFB.

Similarly, Chee Khay Leong relinquished his position as COO cum ED of Can-One and was re-designated on 11 July 2012 as Non-Independent Non-Executive Director of the Company, subsequent to his appointment as COO cum ED of KJCFB.

Tan Beng Wah was appointed on 16 July 2012 as an ED of Can-One to take over the position vacated by Ooi Teik Huat who resigned to assume the position of Group Chief Financial Officer of KJCFB.

Chee Khay Leong was re-designated as ED of Can-One on 2 January 2013 to render assistance to the new management team.

On behalf of the Board of Directors, I have pleasure in presenting the Annual Report

and audited Financial Statements of Can-One Berhad for the financial year ended

31 December 2012 (“FYE 2012).

66


MATERIAL LITIGATIONS(a) On 23 March 2009, CISB together with four (4) other defendants were served a Writ of Summons and a Statement of

Claims pertaining to the Acquisition.

The Plaintiffs are claiming:

i) against the other four (4) defendants and CISB damages amounting to RM55.0 million for alleged fraud and interest at rate of 8% per annum on the said sum, cost of action on a full indemnity basis and such further or any other reliefs as the Court may deem fit and proper to grant;

ii) an interim order restraining the defendants and each of them whether by themselves, their directors, their servants, or agents or otherwise howsoever from proceeding with the implementation of the Acquisition until the final hearing and disposal of the action; and

iii) a declaration that the award of the bid in the public tender exercise to CISB for the Acquisition is illegal, null and void.

CISB had applied to the High Court to set aside and/or strike out the Plaintiffs’ Writ of Summons and Statement of Claims. The case which was adjourned numerous times, has been fixed for mention on 14 May 2013.

(b) In May 2011, CISB served a writ of summons and a statement of claim on KJCFB and four (4) other defendants to claim, among others, the following:

i) a declaration that the proposed bonus issue of 222,083,893 new ordinary shares of RM0.25 each in KJCFB (“Bonus Shares”) to be credited as fully paid-up on the basis of one (1) Bonus Share for every two (2) shares in KJCFB (“KJCFB Shares”) held (“Proposed Bonus Issue”) and the proposed renounceable rights issue of 166,562,919 5-year warrants 2011/2016 on the basis of one (1) warrant for every four (4) KJCFB Shares held after the Proposed Bonus Issue at an issue price of RM0.01 per warrant (“Proposed Renounceable Rights Issue”) by KJCFB are in breach of the rights and interests of CISB under the Shares Sale Agreement dated 23 March 2009 and in breach of the Order of the Court of Appeal dated 25 August 2010 and the Order of the Federal Court dated 21 February 2011;

ii) a declaration that the Proposed Bonus Issue and the Proposed Renounceable Rights Issue and all shares issued in pursuance thereof are null and void; and

iii) an injunction that the defendants be restrained whether by themselves, their servants, agents or otherwise howsoever until such further Order from acting, implementing or continuing to act on or implement the Proposed Bonus Issue and the Proposed Renounceable Rights Issue by KJCFB or on any of the resolutions passed at any directors’ meetings and general meetings of KJCFB or on any approval of the regulatory authorities, incidental to the Proposed Bonus Issue and the Proposed Renounceable Rights Issue.

On 4 July 2011, the High Court dismissed CISB’s application for the said injunction.

On 8 July 2011, CISB filed the Notices of Appeal to the Court of Appeal against the decisions of the High Court. The Court of Appeal on 8 November 2011:

i) allowed CISB’s Appeal against the decision of the High Court given on 4 July 2011 in dismissing CISB’s suit (“CISB’s Appeal”); and

ii) dismissed CISB’s Appeal against the decision of the High Court given on 4 July 2011 in refusing CISB’s application for an injunction restraining the implementation of the Proposed Bonus Issue and the Proposed Renounceable Rights Issue pending the hearing of the suit of CISB.

CISB applied for leave to appeal to the Federal Court against the Court of Appeal’s decision in dismissing CISB’s Appeal on

the injunction. The Federal Court had fixed the said matter for mention on 16 May 2013 after numerous adjournments.

In respect of CISB’s Appeal, the High Court had in April 2013 struck out the aforesaid matter with no order as to costs.

CHAIRMAN’S STATEMENT 7

ANNUAL REPORT 2012

(c) The Federal Court on 5 January 2012 allowed the appeals of the Liquidators of KJHSB, including the Liquidator’s Appeals to proceed with the completion of the sale of 146,131,500 KJCFB shares held by KJHSB to CISB at a total consideration of RM241,116,975 (“FC Judgement”). CISB completed the Acquisition on 25 January 2012.

CISB received two (2) Notice of Motions and Affidavits in Support filed by Dato’ See Teow Chuan and thirteen (13) others on 14 February 2012 (“First Applicants”) followed by another two (2) Motions and Affidavits in Support filed by See Tiau Kee and ten (10) others on 24 February 2012 (“Second Applicants”).

They had applied for, among others, the following orders:

i) the Grounds of the FC Judgement and the consequent Orders of the Federal Court dated 5 January 2012 be reviewed and set aside pursuant to Rule 137 of the Rules of the Federal Court, 1995 and/or the inherent jurisdiction of the Federal Court;

ii) the said Appeals be re-heard by the Federal Court consisting of nine (9) Judges of the Federal Court other than those who heard and decided upon the said Appeals on 5 January 2012;

iii) CISB be restrained from selling and/or in any way disposing of the whole or any part of the 146,131,500 KJCFB shares purchased from KJHSB pending the hearing and final disposal of this Application and in the event the reliefs in paragraphs (i) and (ii) above are granted by the Federal Court, until the said Appeals are re-heard and finally disposed of by the Federal Court; and

iv) CISB be restrained from exercising any of its rights attached to or arising from the purchase of the 146,131,500 KJCFB shares by CISB from KJHSB pending the hearing and final disposal of this Application and in the event the reliefs in paragraphs (i) and (ii) above are granted by the Federal Court, until the said Appeals are re-heard and finally disposed of by the Federal Court

(collectively “Review Applications”).

The Federal Court on 3 April 2012 granted the Liquidators leave to issue committal proceedings against the First Applicants/Second Applicants and their solicitors for contempt of the Federal Court.

The Federal Court, after hearing the Review Applications on 22 January 2013, had adjourned the said Applications for decision to a date to be fixed.

THE INDUSTRY - TREND AND DEVELOPMENT

General Cans Division

The general cans division contributed revenue and pre-tax profit of RM351.3 million and RM32.9 million respectively in the FYE 2012 as compared to RM338.9 million and RM28.7 million respectively in the FYE 2011.

The Group is aggressively pursuing cost improvement programmes and enhancement of the Group’s operational efficiency to ensure the competitiveness of its products.

Food Products Division

The food products division contributed revenue and pre-tax profit of RM518.0 million and RM49.0 million respectively in the FYE 2012 as compared to RM372.4 million and RM13.8 million respectively in the FYE 2011.

The increase in revenue was driven by increase in production capacity along with better production consistency and marketing efforts which were put in place to capture a larger market share in ASEAN and Africa.

International Trading Division

The international trading division which commenced operation in 2012, started to contribute revenue and profit in the FYE 2012. It is principally involved in the trading of dairy products.

CHAIRMAN’S STATEMENT8


PROSPECTSDespite global uncertainties and slowdown, Malaysia’s economy continues to grow steadily. The Group expects a steady growth based on the outlook of the Malaysian economy which is forecast to grow between 4.5% to 5.5% in 2013.

The Board is confident that the expansion and marketing strategies adopted by the Group will reinforce the Group for further growth in 2013.

Barring any unfavorable movements in foreign currencies, exchange rates, interest rates and cost of key raw materials, the Board anticipates the results of the Group for the financial year ending 2013 to be satisfactory.

CORPORATE SOCIAL RESPONSIBILITYThe Group recognises its responsibilities as a corporate citizen and will continue to play an important role in the society.

During the year under review, the Group conducted the following activities:

• Donatedcashandgoodstolocalcharitableorganisations;• Providedinternshiptrainingopportunityforlocalundergraduates;• Continuedtoinvestinenvironmentfriendlyandenergysavingequipment;and• ContinuedtoprovideemploymentopportunitytoMalaysians.

APPRECIATIONOn behalf of the Board, I would like to thank the management and staff for their dedication and commitment to the Group.

I would like to express our sincere gratitude to our shareholders, customers, suppliers, bankers and business associates for their continued trust and support.

Last but not least, I would like to commend and thank my fellow Board Members for their unfailing support and active participation in the Board and for their wise counsel.

“Success Comes in Cans”

William Maurice SamsonChairman

17 April 2013

CHAIRMAN’S STATEMENT 9

ANNUAL REPORT 2012

STATEMENT ON CORPORATE GOVERNANCE

The Board of Can-One continues to uphold its commitment to good corporate governance practices throughout the Group as part of its duty to enhance stakeholders’ value.

The Board is pleased to report on the manner in which Can-One has applied the Principles as set out in the Malaysian Code on Corporate Governance (“MCCG”) 2012. Except for the departures explained in this statement, the Board is of the view that it has complied with the recommendations of good corporate governance as set out in the MCCG 2012 and the provisions in the Main Market Listing Requirements.

A. BOARD OF DIRECTORS

Role of 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, overseeing the conduct of the business, 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.

In this regard, the Board is guided by the documented and approved Board Charter which defines the Board’s responsibilities and matters specifically reserved for the Board as well as those which the Board may delegate to the Chief Operating Officer and Executive Directors. The Board Charter will be reviewed and amended as and when required, to ensure an optimum structure for efficient and effective decision making in the Group. Key matters specifically reserved for the Board’s collective approval include the annual business plan and budget, dividend policy, business continuity plan, issuance of new securities, business restructuring, expenditure above a certain limit, disposals of significant fixed assets and the acquisition or disposal of companies within the Group.

The division of responsibilities between the Board, the different Board Committees, the Chairman, the Chief Operating Officer and Executive Directors as well as the Directors’ Code of Best Practice are also incorporated in the Board Charter for reference by the Directors.

Board Composition and Balance

The Board is made up of eight (8) members, one (1) Chief Operating Officer cum Executive Director, two (2) Executive Directors and five (5) Non-Executive Directors, three (3) of whom are Independent.

The Board is headed and led by the Chairman while the Chief Operating Officer and Executive Directors lead the senior management team and take on the primary responsibility of executive management and oversee the operation of the Group. Their roles are separate with clearly defined responsibilities. The Chairman is primarily responsible for the effective running and orderly conduct of the Board. The Chief Operating Officer (“COO”) cum EDs is responsible for the day-to-day management of the Group. The COO and EDs are responsible for the overall performance and profitable operation of the Company and the Group. They work together with the senior management team to manage the business of the Group in a 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 role of the Non-Executive Directors is to help the Board to develop strategy and to provide constructive challenge to proposals by the management. They are responsible for scrutinising management’s performance in meeting goals and objectives set by the Board. The Board considers that all its Independent Directors are independent in that they are not employees and they 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. Having a deep appreciation of the Group’s business and activities, they are able to make a thorough evaluation of information received and to provide independence and objective views, advice and judgment which take into account the interests of the Group as well as shareholders and investors. As at the date of the Annual Report, all the Independent Directors have served the Company for less than nine (9) years.

The Board is satisfied with its existing number and composition. It is of the view that its members have the mix of skills, knowledge, experience and qualities which are essential in carrying out its responsibilities in an effective and competent manner as well as providing balance and independence of the Board. A brief description of the background of each Director is presented in the Profile of Directors in this Annual Report.

10



Appointments and Re-election of Directors

The Company has in place a formal and transparent procedure for the appointment of new Directors. The Nominating Committee established by the Board, reviews and considers the suitability of new nominee to be appointed as Director of the Company prior to recommending the proposed appointment to the Board for approval.

In accordance with the Company’s Articles of Association, all Directors are required to retire from office once at least in each two (2) years but shall be eligible for re-election.

The Articles also provide that all newly appointed Directors shall hold office until the next Annual General Meeting (“AGM”) of the Company after their appointment and shall be eligible for re-election. Directors, Marc Francis Yeoh Min Chang and Tan Beng Wah who were appointed during the financial year under review are due to retire at the forthcoming Ninth AGM of the Company. They have expressed their intention to seek re-election.

Directors of or over the age of seventy (70) years are required to submit themselves for re-appointment annually by shareholders with not less than three-fourth (3/4) majority in accordance with Section 129(6) of the Companies Act, 1965. Independent Non-Executive Director, William Maurice Samson, who is over the age of seventy (70) and due to retire at the conclusion of forthcoming Ninth AGM of the Company in accordance with Section 129(6) of the Companies Act, 1965, has expressed his intention to seek re-appointment at the said AGM.

Board Committees

The Board has delegated separate responsibilities to three (3) Board Committees namely, the Audit Committee, Nominating Committee and Remuneration Committee to assist it in the execution of its duties and responsibilities. These Committees which comprise of all Independent Non-Executive Directors, deliberate on matters delegated to them and report to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the Board.

(i) Audit Committee

The key functions, role and responsibilities of the Audit Committee which was formed on 15 September 2005 as well as its activities for the FYE 2012 are presented on pages 19 to 21of this Annual Report.

(ii) Nominating Committee

The Nominating Committee which was formed on 15 September 2005 is responsible for making recommendations for appointments to the Board and the Board Committees. Details of the composition of the Nominating Committee are presented on page 2 of this Annual Report.

The Nominating Committee recommends to the Board:

• candidatesfordirectorshipsproposedbyanyotherseniorexecutiveoranyDirectororshareholder;and • DirectorstofilltheseatsonBoardcommittees.

In addition, this Committee assesses:

• theeffectivenessoftheBoardasawholeandtheCommitteesoftheBoard;and • thecontributionofDirectors.

In making these recommendations, the Nominating Committee reviews the composition and size of the Board and determines the board balance. It also reviews the required mix of skills, experience, qualification and other core competencies required of a Director.

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ANNUAL REPORT 2012


The Committee shall meet at least once a year. Additional meetings will be scheduled, if considered necessary, by the Chairman of the Committee.

(iii) Remuneration Committee

The Remuneration Committee which was formed on 15 September 2005 is responsible for reviewing succession planning as well as the remuneration policies and practices of the Group. Details of the composition of the Remuneration Committee are presented on page 2 of this Annual Report.

The Committee shall meet at least once a year. Additional meetings will be scheduled, if considered necessary, by the Chairman of the Committee.

Both the Nominating Committee and the Remuneration Committee held one (1) meeting during the FY 2012 which was attended by all its members.

Board Meetings and Supply of Information

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of Can-One. This was evidenced by the full attendance record of the Directors at the Board meetings held during the FYE 2012 as set out below:-

Director Number of Board Meetings Attended/Held Percentage (%) of Attendance

William Maurice Samson 5/5 100

Marc Francis Yeoh Min Chang (a) 2/5 100

Chee Khay Leong 5/5 100

Tan Beng Wah (b) 2/5 100

Yeoh Jin Hoe 5/5 100

Yeoh Jin Beng 5/5 100

See Ewe Lin 5/5 100

Razmi Bin Alias 5/5 100

Ooi Teik Huat (c) 3/5 100

Notes :

(a) Appointedon6July2012 (b) Appointedon16July2012 (c) Resignedon16July2012

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, industry trends, future development, the quarterly or annual financial results, the minutes of preceding meetings of the Board and Board Committees, and relevant proposal papers (if any) to allow them sufficient time to review, consider and deliberate knowledgeably on the matters to be tabled.

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

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

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

12



The Directors have full access to all information pertaining to the Group’s businesses and affairs to enable them to discharge their duties. They have direct access to the services of the senior management employees and the Company Secretaries who are responsible to the Board for ensuring that all Board procedures are followed and that applicable laws and regulations are complied with.

In addition, Directors may seek external independent professional advice at the Company’s expense on matters pertaining to the Group’s operations or undertakings, as and when necessary, in fulfillment of their duties and responsibilities as Directors of the Company.

Directors’ Training and Education

All Directors have attended the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Securities including Marc Yeoh Min Chang and Tan Beng Wah who were appointed as Directors during the FYE 2012.

The Directors are mindful in evaluating their own training needs on a continuous basis to determine the relevant programmes or conference to keep themselves abreast with new statutory and regulatory requirements and current business developments relevant to the Directors’ area of responsibility.

During the FYE 2012, the Directors had attended the following training courses/programmes:

Director Course Title Organiser Date

William Maurice Samson Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism

MAP for Directors of Public Listed Bursatra Sdn Bhd 12 - 13 September Companies 2012 Hot Topics on Tax and Transfer Fortress Intelligence 27 September 2012 Pricing in Indonesia Sdn Bhd Marc Yeoh Min Chang (a)

Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism

Managing Corporate Risk and Bursa Malaysia 5 December 2012 Achieving Internal Control through Statutory Compliance

How to Conduct Domestic Inquiry Northern Ville 19 - 20 June 2012 Consulting Sdn Bhd

Making the Most of the Chief Financial The Institute of 4 July 2012 Officer Role: Everyone’s Responsibility? Chartered Accountants in England and Wales (“ICAEW”) Chee Khay Leong Asia CanTech 2012- Bangkok Asia CanTech 29 - 31 October 2012



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ANNUAL REPORT 2012


Director Course Title Organiser Date

How to Conduct Domestic Inquiry Northern Ville 19 - 20 June 2012 Consulting Sdn Bhd MAP for Directors of Public Listed Bursatra Sdn Bhd 12 - 13 September Companies 2012

Tan Beng Wah (b) Hot Topics on Tax and Transfer Fortress Intelligence 27 September 2012 Pricing in Indonesia Sdn Bhd The MIA Conference 2012 Malaysian Institute of 27 - 28 November Accountants 2012

Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism How to Conduct Domestic Inquiry Northern Ville 19 - 20 June 2012 Consulting Sdn Bhd

Making the Most of the Chief Financial ICAEW 4 July 2012 Officer Role: Everyone’s Responsibility?

Yeoh Jin Hoe Asia CanTech 2012- Bangkok Asia CanTech 29 - 31 October 2012



Razmi Bin Alias Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism

Yeoh Jin Beng Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism

See Ewe Lin Understanding Financial Statements Bursa Malaysia 3 December 2012 - Use of Healthy Scepticism

How to Conduct Domestic Inquiry Northern Ville 19 - 20 June 2012 Consulting Sdn Bhd Ooi Teik Huat (c)

Making the Most of the Chief Financial ICAEW 4 July 2012 Officer Role: Everyone’s Responsibility?

Notes :

(a) Appointedon6July2012 (b) Appointedon16July2012 (c) Resignedon16July2012

14



Directors’ Remuneration

The Remuneration Committee is responsible for recommending to the Board the remuneration framework for Directors as well as the remuneration package of the Executive Directors. The Directors do not participate in decisions regarding their own remuneration packages.

The current remuneration packages for the MD/COO and EDs comprise a combination of basic salary and a variable performance incentive. The remuneration of the Non-Executive Directors is based on a standard fee determined by the Board that reflects their expected roles and responsibilities. The Directors’ fees are approved by the Company’s shareholders at the AGM. Meeting allowance is paid to Directors and Board Committee members in accordance with the number of Board meetings and Board Committee meetings attended by each of them during a financial year. The Directors are also reimbursed reasonable expenses incurred by them in the course of carrying out their duties on behalf of the Company.

The remuneration of the Directors categorised into appropriate components for the FYE 2012 are as follows:

Category Executive Directors Non-Executive Directors

RM RM

Fees 100,000 390,000

Salaries 1,143,000 -

Bonuses 681,000 -

Other remuneration 218,880 -

Benefits-in-kind 35,040 -

Total 2,177,920 390,000

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

Remuneration Range Number of Directors

Executive Directors

RM150,001 – RM200,000 1

RM200,001 – RM250,000 1

RM300,001 – RM350,000 2

RM1,100,001 – RM1,150,000 1

Non-Executive Directors

Less than RM50,000 3

RM50,001 – RM100,000 3

B. SHAREHOLDERS

Communication with Shareholders and Investors

The Company recognises the importance of effective and timely communication with shareholders and investors and had established a “Disclosure Guideline” to keep them informed on the Group’s latest financial performance and material business/corporate matters affecting the Company. Such information is communicated through the Annual Report, the various disclosures and announcements to Bursa Securities and the Company’s corporate website.

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ANNUAL REPORT 2012


In addition, the Company’s website at www.canone.com.my provides an easy and convenient avenue for shareholders and investors to gain access to information on the Group such as its history, corporate structure, corporate information, corporate governance matters as well as the products offered by the Group. The COO, EDs and senior management of the Company, where they deem it practicable to do so, will engage with institutional shareholders based on mutual understanding of objectives and entertain visits from other fund managers or analysts.

The Company also uses the AGM scheduled annually in June as a forum for dialogue and interaction with shareholders. Members of the Board as well as the External Auditors of the Company are present to answer questions raised during the meetings on the agenda items and the performance of the Group. Each item of special business included in the notice of general meeting will be accompanied by a full explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting. William Maurice Samson, is the designated Senior Independent Non-Executive Director to whom concerns relating to the Group may be conveyed by shareholders and other stakeholders.

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. At the forthcoming Ninth AGM, the Board is proposing amendment to the Articles of Association to incorporate electronic voting to facilitate any future poll voting as and when required.

C. ACCOUNTABILITY AND AUDIT Financial Reporting

The Board takes due care and responsibility in presenting a balanced, clear and meaningful assessment of the Group’s performance and prospects in the announcement of the Group’s quarterly and annual financial statements. The Audit Committee plays a crucial role in reviewing the presentation of and information to be disclosed in the financial statements to ensure accuracy, adequacy and compliance with the appropriate accounting standards and provisions of the Companies Act, 1965 prior to recommendation of the financial statements for release to Bursa Securities and the Securities Commission.

Risk Management and Internal Control

The Board recognises the importance of maintaining and reviewing its risk management and internal control procedures to identify and assess key risks and controls and management’s plans to mitigate or eliminate the significant risks identified. This is to ensure a sound system of risk management and internal control to safeguard shareholders’ investment and the Group’s assets.

The Statement on Internal Control which provides an overview of the state of internal controls within the Group is set out on page 22 of this Annual Report.

Relationship with the External Auditors

The Board through the Audit Committee, has established transparent and appropriate relationship with the Group’s External Auditors. The role of the External Auditors and their participation during the FYE 2012 are set out in the Audit Committee Report on page 20 of this Annual Report.

D. SUSTAINABILITY

The Company recognises the importance of sustainability and its increasing impact to the business and is committed to the goal of developing a sustainable future. The Group is committed to providing a safe workplace for its employees and conducting its business in a way that is environmentally sound.

The Group’s dedication in supporting the local community within which it operates will remain steadfast and consistent. The Group has and will continue to implement initiatives designed to give back to the local community by donating cash and goods to local charitable organisations and providing internship training opportunity for the local undergraduates.

16



The Group maintains its various ISO certifications to systematically address its responsibility for safety, health and environment. To help safeguard and sustain the environment, the Group invests in environment friendly and energy saving equipment. It regularly maintains and upgrades its manufacturing plant to optimise use of energy and to ensure dust emissions are below the prescribed limits. The Group places utmost priority in maintaining the highest level of corporate governance and compliance with laws and regulations.

E. COMPLIANCE WITH MCCG 2012

The Group has substantially complied with the Principles of MCCG 2012 except as disclosed below:

Board Gender Diversity Policy

Corporate Governance Blueprint 2011 stated that the Board should ensure women participation on board to reach thirty per centum (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 17 April 2013.

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ANNUAL REPORT 2012

OTHER INFORMATION

SHARE BUY-BACKS

During the FYE 2012, there were no share buy-backs by the Company.

OPTIONS OR CONVERTIBLE SECURITIES

The Company’s Employees’ Share Option Scheme was established in conjunction with the Company’s listing on the Main Board of Bursa Securities on 29 July 2005. However, as at 31 December 2012, the Company has not granted any option.

No convertible securities were issued by the Company and/or exercised during the FYE 2012.

DEPOSITORY RECEIPT PROGRAMME

The Company did not sponsor any depository receipt programme during the FYE 2012.

IMPOSITION OF SANCTIONS/PENALTIES

There were no public sanctions and/or penalties imposed on the Company and its subsidiary companies, Directors or management by the relevant regulatory bodies during the FYE 2012.

NON-AUDIT FEES

During the FYE 2012, the Company paid non-audit fees of RM23,600.00 to Messrs KPMG’s affiliate.

PROFIT GUARANTEES

The Company did not receive any profit guarantee during the FYE 2012.

MATERIAL CONTRACTS

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’ and major shareholders’ interests which subsisted at the end of the FYE 2012 or, if not then subsisting, which were entered into since the end of the previous financial year.

18


AUDIT COMMITTEE REPORT

COMPOSITION

The Audit Committee comprises the following: Members

William Maurice Samson(Chairman/Independent Non-Executive Director)

See Ewe Lin(Member/Independent Non-Executive Director)

Razmi Bin Alias (Member/Independent Non-Executive Director)

Secretaries

Tan Bee KengKwong Shuk Fong

FUNCTIONS, ROLES AND RESPONSIBILITIES

The Audit Committee is responsible to the Board for the following in its role to ensure proper management of assets, liabilities, revenue and expenses of the Company and the Group and compliance with statutory obligations:

(a) to discuss and review with the External Auditors the audit plan before the audit commences;

(b) to review with the External Auditors their evaluation of the system of internal controls;

(c) to review with the External Auditors the audit report and to discuss problems and reservations arising from the interim and final audits, management letter and management’s response and any matter the External Auditors may wish to discuss (in the absence of management where necessary);

(d) to review the assistance given by the Company’s employees to the External Auditors;

(e) to review the audit fee of the External Auditors;

(f) to review the quarterly results and year-end financial statements prior to the approval of the Board, focusing particularly on:

(i) changes in or implementation of major accounting policies and practices;

(ii) significant adjustment arising from the audit;

(iii) significant and unusual events;

(iv) the going concern assumption; and

(v) compliance with accounting standards and other legal requirements.

(g) to review any letter of resignation from the External Auditors of the Company or the Group;

(h) to review whether there is any reason (supported by grounds) to believe that the Company’s External Auditors are not suitable for re-appointment;

(i) to recommend to the Board the nomination of a person or persons as External Auditors;

(j) to do the following, in relation to the internal audit function: (i) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has

the necessary authority to carry out its work;

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ANNUAL REPORT 2012

(ii) review the internal audit programme, processes and results of the internal audit process or investigation and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

(iii) review any appraisal or assessment of the performance of members of the internal audit function;

(iv) approve any appointment or termination of senior staff members of the internal audit function; and

(v) take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

(k) to consider any related-party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management’s integrity;

(l) to consider the major findings of internal investigations and management’s response;

(m) to report and make recommendations to the Board on any appropriate issues and findings in the course of performing its duties;

(n) to promptly report to Bursa Securities on any matter, reported by it to the Board which has not been satisfactorily resolved resulting in a breach of Bursa Securities’ Main Market Listing Requirements; and

(o) to carry out any other function that may be mutually agreed upon by the Audit Committee and the Board which would be beneficial to the Company and ensure the effective discharge of the Audit Committee’s duties and responsibilities.

NUMBER OF MEETINGS AND ATTENDANCE

The Audit Committee held five (5) meetings during the FYE 2012, which were attended by all its members.

SUMMARY OF ACTIVITIES

The main activities undertaken by the Audit Committee in discharging their responsibility during the FYE 2012 were as follows:

(i) Reviewed the quarterly unaudited financial reports of the Company and of the Group before recommendation to the Board for consideration and approval;

(ii) Reviewed the quarterly internal audit reports regarding significant risk areas and internal control matters coming to the attention of the Audit Committee and discussion on the findings with senior management to ensure that appropriate and timely measures have been taken to improve on the internal control system;

(iii) Reviewed with the External Auditors the audit report and their findings arising from the final audit;

(iv) Reviewed the annual financial statements of the Group and of the Company for the FYE 2011 with the External Auditors prior to the submission to the Board for approval;

(v) Discussed with the management and the External Auditors on developments in respect of the new Approved Accounting Framework - Malaysian Financial Reporting Standards (“MFRS”) applicable to the financial statements of the Group and of the Company for the FYE 2012 and their judgment of the items that may affect the financial statements;

(vi) Reviewed the assistance given by the Company’s employees to the Internal Auditors and External Auditors;

(vii) Reviewed the Audit Committee Report and Statement on Internal Control for inclusion in the Annual Report 2011;

(viii) Evaluated the performance of the External Auditors and made recommendation to the Board for their re-appointment;

(ix) Reviewed and approved the External Audit Plan in respect of the financial statements of the Group and of the Company for the FYE 2012 and the scope for the annual audit for the Group presented by the External Auditors; and

(x) Reviewed and approved the Internal Audit Plan for the Group for year 2013 presented by the Internal Auditors.

AUDIT COMMITTEE REPORT20


AUDIT COMMITTEE REPORT

INTERNAL AUDIT FUNCTION

In discharging its function, the Company engaged an external independent firm of professionals (“Internal Auditors”) to undertake independent regular and systematic review of the system of internal controls within the Group based on the approved Internal Audit Plan so as to provide reasonable assurance on the adequacy and effectiveness of governance, risk management and the internal control processes. The Internal Auditors provide the Audit Committee with independent and objective reports on the state of internal control of the Group’s operations, the extent of the branches’ compliance with the Group’s policies procedures and relevant statutory requirements and made recommendations where necessary. The Audit Committee then deliberates on the Internal Audit reports to ensure recommendations made are duly acted upon by the management.

A summary of activities of the internal audit function during the FYE 2012 is presented in the Statement on Risk Management and Internal Control. The Group paid a total fee of RM40,186.00 for services rendered in respect of internal audit for the FYE 2012.

This Statement is made in accordance with a resolution of the Board dated 17 April 2013.

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ANNUAL REPORT 2012

STATEMENT ON INTERNAL CONTROL

INTRODUCTIONThe Board recognises the importance of a sound risk management and system of internal control to meet the Group’s business objectives, safeguard shareholders’ interest and the Group’s assets. It affirms its overall responsibility for the Group’s risk management and system of internal control which includes the establishment of an appropriate control environment and framework as well as reviewing the adequacy and integrity of the systems.

However due to the inherent limitations in any system of internal controls, such a system is designed to identify and manage the Group’s risk within the acceptable risk profile, rather than eliminate the risk of failure to achieve business objectives. Thus, the system can only provide reasonable but not absolute assurance against material misstatement, loss or fraud. The significant areas covered by the Group’s risk management and system of internal controls are financial, organisational, operational environmental and compliance controls.

RISK MANAGEMENTThere is an ongoing process of identifying, evaluating and managing the significant risks faced by the Group in meeting its business objectives. The Group has formalised the process via the recent formation of a Risk Management Committee (“RMC”) which is entrusted with the responsibility of ensuring risk management implementation and governance in the Group. The Risk Management Working Group (“RMWG”) of each operating subsidiary bears responsibility for the identification of major business and compliance risks, oversees and ensures integration of risk management into their business processes to protect its interest covering strategic, factories, facilities and commercial risk. A formal Risk Management Framework, Risk Management Policy and Risk Agenda have been put in place to guide the implementation of risk strategies and initiatives to institutionalise risk management as a business culture throughout the Group.

INTERNAL CONTROL SYSTEMThe Group’s internal control mechanism is embedded in the various work processes and procedures at appropriate levels in the Group. The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures which are clearly set out in the Board Charter. The Board meets regularly and has a Schedule of Matters specifically reserved for its collective decision in order that effective control over strategic, management, financial, operational, environmental and compliance issues can be maintained.

The COO, EDs and senior management team are assigned with the responsibility of managing the Group. Key functions such as finance, tax, treasury, corporate, legal matters and contract awarding are controlled centrally by them. They are also accountable for the conduct and performance of the various branches. The COO, EDs and senior management team monitor the affairs of the branches through review of performance and operation reports and having regular management meetings with the branch heads to identify, discuss and resolve business, financial, operational and management issues. The meetings also serve as an excellent platform whereby the Group’s goals and objectives are communicated.

INTERNAL AUDITThe Audit Committee is responsible for reviewing and monitoring the adequacy, integrity and effectiveness of the Group’s system of internal control. In this respect, the Group outsourced the internal audit function to an independent external consulting firm, Messrs Tan Yen Yeow & Company (“Internal Auditors”). The internal audit function assists the Board of Directors to achieve the following objectives:

• Assesstheadequacyandintegrityofthecurrentinternalcontrolsystemandproviderecommendationstoimproveontheexisting control environment in relation to business processes and risk management practices;

• Evaluateexistingpoliciesandproceduresofkeybusinessprocessesandproviderecommendationsforenhancement;

• Highlightopportunitytoimproveefficiency,effectivenessandeconomicaspectsoftheGroup’soperations;

• Promoteasystemofinternalcontrolthatisresponsivetothedynamicandeverchangingbusinessenvironment;and

• Becosteffectiveandsustainableovertime.

The annual Internal Audit Plan is reviewed and approved by the Audit Committee prior to each financial year. The plan is developed based on the analysis of the businesses of the Group as well as past experience. The internal audit will focus its resources on areas of high risks which will be audited more frequently than low risk areas.

For purposes of identifying and prioritising risks, the internal audit team will discuss with the RMWG and the RMC, review management reports and financial statements.

22


STATEMENT ON INTERNAL CONTROL

During the financial year under review, the Internal Auditors carried out reviews on the following core areas of the branches to assess the adequacy and effectiveness of the internal control system, compliance with regulations and the Group’s policies and procedures by each of the branches:

• Revenue• SalesTransactions• AccountReceivablesandCreditControl• PurchasingandAccountPayables• InventoryManagement• FixedAssets• HumanResourceDevelopmentandPayroll• Safety,HealthandEnvironment• QualityAssurance

The findings of their audits were tabled at the Audit Committee meetings for deliberation and the Audit Committee’s expectation on the corrective measures were communicated to the respective heads of departments and branches.

OTHER ACTIVITIESSubsidiary operating companies were accredited ISO 9001:2008 and ISO:22000:2005 by Global Group Certification and SGS United Kingdom Ltd respectively. Documented internal procedures and standard operating procedures (“SOPs”) have been put in place since their accreditation. The SOPs covered major functional aspects such as product quality, productivity benchmarks, cost control, asset security and occupational safety procedures, human capital management, compliance with regulatory standards, among other matters. Surveillance audits are conducted periodically by assessors of the ISO certification body to ensure that the systems are adequately implemented.

The Group also operates a comprehensive information system which enables transactions to be captured, compiled and reported in a timely and accurate manner. The information system being automated, provides management with dependable data, analysis and other inputs relevant to the Group’s business operations.

Continuous training and development programmes are also provided to enhance employees’ competencies and maintain a risk control conscious culture.

CONCLUSIONThe Board is of the view that the risk management and system of internal controls in place for the year under review are sound and sufficient to safeguard the shareholders’ interests and the Group’s assets. The Board, having received assurance from the COO, EDs and Group Chief Financial Officer, is satisfied with the adequacy and effectiveness of the Group’s risk management and internal control system. There were no material internal control weaknesses which had resulted in material losses, uncertainties or contingencies that would require disclosure in this Annual Report.

This Statement on Internal Control only covers Can-One and its subsidiaries excluding the associated company and is made in accordance with a resolution of the Board dated 17 April 2013.

23

ANNUAL REPORT 2012

DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are required by law to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results and cash flows and changes in equity of the Group and of the Company for that period.

The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2012 as set on pages 31 to 94 of this Annual Report, the Group has used the Malaysian Financial Reporting Standards (“MFRSs”) and International Financial Reporting Standards (“IFRSs”), applied them consistently and made judgments and estimates that are reasonable and prudent. The Directors also consider that the MFRSs and IFRSs have been followed and confirm that the financial statements have been prepared on going concern basis.

The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965, disclosure provisions of the Listing Requirements of Bursa Securities and MFRSs and IFRSs.

The Auditors’ responsibilities are stated in their Report to the shareholders of the Company.

24


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

PRINCIPAL ACTIVITIES

The Company is principally engaged as an investment holding company, whilst the principal activities of its subsidiaries are disclosed in Note 4 to the financial statements.

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

RESULTS

Group Company RM’000 RM’000 Profit for the year attributable to: Owners of the Company 170,725 14,083 Non-controlling interests 7,403 - 178,128 14,083

RESERVES AND PROVISIONS

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

DIVIDENDS

Since the end of the previous financial year, the Company paid a first and final tax exempt dividend of 6% (3 sen) per share of RM0.50 each, totalling RM4,572,000 for the financial year ended 31 December 2011 on 30 July 2012.

The Board of Directors has proposed a first and final tax exempt dividend of 8% (4 sen) per share of RM0.50 each, totalling RM6,096,000 for the financial year ended 31 December 2012, subject to shareholders’ approval at the forthcoming annual general meeting.

DIRECTORS OF THE COMPANY

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

William Maurice Samson

Yeoh Jin Hoe

Yeoh Jin Beng

Chee Khay Leong

Razmi Bin Alias

See Ewe Lin

Marc Francis Yeoh Min Chang (Appointed on 6.7.2012)

Tan Beng Wah (Appointed on 16.7.2012)

Ooi Teik Huat (Resigned on 16.7.2012)

DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2012

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ANNUAL REPORT 2012

DIRECTORS’ INTERESTS IN SHARES

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

Balance at 1.1.2012/ *Date of Balance at appointment Bought (Sold) 31.12.2012

The Company

Direct interest in ordinary shares of RM0.50 each William Maurice Samson 80,000 - - 80,000Yeoh Jin Hoe 6,690,000 - - 6,690,000Yeoh Jin Beng 300,000 - - 300,000Chee Khay Leong 684,100 870,000 - 1,554,100See Ewe Lin 300,100 - - 300,100Marc Francis Yeoh Min Chang * 343,100 - - 343,100Tan Beng Wah * 2,000 - - 2,000 Deemed interest in ordinary shares of RM0.50 each Yeoh Jin Hoe 45,157,281 - - 45,157,281Razmi Bin Alias 911,119 - - 911,119

Subsidiary- PT Corum

Direct interest in ordinary shares of USD100 each Marc Francis Yeoh Min Chang # 10 60 - 70

#HeldintrustforNewmarqSdn.Bhd.

By virtue of his interests of more than 15% in the shares of the Company, Yeoh Jin Hoe is also deemed to have interests in the shares of all its subsidiaries during the financial year to the extent the Company has an interest.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm in which the Director is a member, or with a company in which the Director has a substantial financial interest.

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

ISSUE OF SHARES AND DEBENTURES

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

OPTIONS GRANTED OVER UNISSUED SHARES

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


26



OTHER STATUTORY INFORMATION

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

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

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

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

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

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

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

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

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

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

ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

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

In the opinion of the Directors, except for the bargain purchase gain as disclosed in Note 18 to the financial statements, the financial performance of the Group and of the Company for the financial year ended 31 December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

SIGNIFICANT EVENTS

Details of such events are disclosed in Note 33 to the financial statements.

AUDITORS

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

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

Marc Francis Yeoh Min Chang

Tan Beng Wah

Date : 17 April 2013

27

ANNUAL REPORT 2012

In the opinion of the Directors, the financial statements set out on pages 31 to 93 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 34 on page 94 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

Marc Francis Yeoh Min Chang

Tan Beng Wah


I, Khoo Kay Leong, the officer primarily responsible for the financial management of Can-One Berhad, do solemnly and sincerely declare that the financial statements set out on pages 31 to 94 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named at Georgetown in the State of Penang on 17 April 2013.

Khoo Kay Leong

Before me : GOH SUAN BEE (No. P125)Pesuruhjaya Sumpah(Commissioner for Oaths)Penang

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

28


INDEPENDENT AUDITORS’ REPORT

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Can-One Berhad, which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 31 to 93.

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 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 of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 5 to the financial statements.

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

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

TO THE MEMBERS OF CAN-ONE BERHAD

29

ANNUAL REPORT 2012

INDEPENDENT AUDITORS’ REPORT

OTHER REPORTING RESPONSIBILITIES

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 34 on page 94 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

OTHER MATTER(S)

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

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG AF 0758 Chartered Accountants

Ooi Kok Seng 2432/05/13 (J) Chartered Accountant


Penang

TO THE MEMBERS OF CAN-ONE BERHAD

30


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2012

Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Assets Property, plant and equipment 3 281,419 255,145 200,924Investment in associates 5 360,740 - -Other investments, including derivatives 6 - - 116Goodwill on consolidation 7 1,712 1,712 1,712 Total non-current assets 643,871 256,857 202,752 Other investments, including derivatives 6 - - 197Inventories 8 100,710 113,610 117,557Trade and other receivables, including derivatives 9 193,550 164,781 123,280Current tax assets 586 476 701Cash and cash equivalents 10 52,354 31,755 22,808 Total current assets 347,200 310,622 264,543 Total assets 991,071 567,479 467,295 Equity Share capital 11 76,200 76,200 76,200Reserves 12 320,778 152,446 124,615 Total equity attributable to owners of the Company 396,978 228,646 200,815 Non-controlling interests 14,309 6,906 4,797 Total equity 411,287 235,552 205,612 LiabilitiesLoans and borrowings 13 309,304 83,257 70,731Deferred tax liabilities 14 26,825 18,122 13,563 Total non-current liabilities 336,129 101,379 84,294 Loans and borrowings 13 145,360 164,190 119,313Trade and other payables, including derivatives 15 95,947 65,806 56,876Current tax payables 2,348 552 1,200 Total current liabilities 243,655 230,548 177,389 Total liabilities 579,784 331,927 261,683 Total equity and liabilities 991,071 567,479 467,295

The notes on pages 40 to 94 are an integral part of these financial statements.

31

ANNUAL REPORT 2012

CONSOLIDATED STATEMENT OF PROFIT OR LOSS ANDOTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2012

Note 2012 2011 RM’000 RM’000 Continuing operations Revenue 16 780,040 630,983Cost of sales (668,918) (553,487) Gross profit 111,122 77,496 Selling and distribution expenses (10,265) (8,827)Administrative expenses (22,335) (16,188)Other operating expenses (17) (3,980) (32,617) (28,995)Other operating income 4,003 2,232 Results from operating activities 82,508 50,733

Interest income 178 356Finance costs 17 (22,785) (9,178) Net finance cost (22,607) (8,822) Share of profit of equity-accounted investee, net of tax 134,980 - Profit before tax 18 194,881 41,911Tax expense 21 (16,753) (7,389) Profit for the year 178,128 34,522 Other comprehensive income/(expense), net of tax Itemsthatmaybereclassifiedsubsequentlytoprofitorloss Foreign currency translation differences of foreign operations 6 -Reversal of fair value of available-for-sale financial assets upon disposal - (10)Share of other comprehensive income of equity-accounted investee, net of tax 2,173 - Total comprehensive income for the year 180,307 34,512 Profit attributable to : Owners of the Company 170,725 32,413Non-controlling interests 7,403 2,109 Profit for the year 178,128 34,522 Total comprehensive income attributable to : Owners of the Company 172,904 32,403Non-controlling interests 7,403 2,109 Total comprehensive income for the year 180,307 34,512 Basic earnings per ordinary share - sen 22 112.02 21.27


32


Attributable to the owners of the Company Non-distributable Distributable Non- Share Share Fair value Retained controlling Total capital premium reserve earnings Total interests equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2011 76,200 8,560 10 116,045 200,815 4,797 205,612 Other comprehensive expense for the year - Reversal of fair value of available-for-sale financial assets upon disposal - - (10) - (10) - (10)Profit for the year - - - 32,413 32,413 2,109 34,522 Total comprehensive income for the year - - (10) 32,413 32,403 2,109 34,512 Dividend (Note 23) - - - (4,572) (4,572) - (4,572) Total distribution to owners - - - (4,572) (4,572) - (4,572) At 31 December 2011 76,200 8,560 - 143,886 228,646 6,906 235,552

Note 11 Note 12 Note 12 Note 12 Attributable to the owners of the Company Non-distributable Distributable Foreign currency Non- Share Share translation Retained controlling Total capital premium reserve earnings Total interests equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2012 76,200 8,560 - 143,886 228,646 6,906 235,552 Other comprehensive income for the year - Foreign currency translation differences of foreign operations - - 6 - 6 - 6 - Share of currency translation differences of equity- accounted investee, net of tax - - 2,173 - 2,173 - 2,173

Total other comprehensive income for the year - - 2,179 - 2,179 - 2,179 Profit for the year - - - 170,725 170,725 7,403 178,128 Total comprehensive income for the year - - 2,179 170,725 172,904 7,403 180,307 Dividend (Note 23) - - - (4,572) (4,572) - (4,572) Total distribution to owners - - - (4,572) (4,572) - (4,572) At 31 December 2012 76,200 8,560 2,179 310,039 396,978 14,309 411,287

Note 11 Note 12 Note 12 Note 12


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

33

ANNUAL REPORT 2012

Note 2012 2011 RM’000 RM’000 Cash flows from operating activities Profit before tax from continuing operations 194,881 41,911 Adjustments for : Depreciation of property, plant and equipment 3 15,062 12,791 (Gain)/Loss on disposal of plant and equipment (261) 73 Interest expense 17 19,962 8,073 Interest income (178) (356) Gain on disposal of other investments - (13) Unrealised (gain)/loss on forward exchange contracts (675) 685Share of profit of equity-accounted investee, net of tax (31,226) -Bargain purchase gain on acquisition of equity-accounted investee (103,754) - Operating profit before changes in working capital 93,811 63,164 Changes in working capital : Inventories 12,900 3,947 Trade and other receivables (52,874) (41,501) Trade and other payables 30,810 8,442 Cash generated from operations 84,647 34,052 Tax paid (6,364) (3,253) Net cash from operating activities 78,283 30,799 Cash flows from investing activities Proceed from disposal of other investments - 119 Proceeds from disposal of plant and equipment 1,663 884 Acquisition of property, plant and equipment A (41,507) (67,038) Interest received 178 356 Dividend received 18,266 - Acquisition of an associate (217,753) - Net cash used in investing activities (239,153) (65,679)

Cash flows from financing activities Drawdown of term loans 263,694 31,590 Repayment of term loans (30,168) (17,916) Dividend paid 23 (4,572) (4,572) Revolving credits, net (9,000) 4,000 Bankers’ acceptances, net (28,865) 22,581 Foreign currency trade loans, net 13,101 17,738 Repayment of finance lease liabilities (2,417) (1,895) Interest paid (19,962) (8,073) Pledged deposits for bank borrowings (6,400) - Net cash from financing activities 175,411 43,453 Net increase in cash and cash equivalents 14,541 8,573Cash and cash equivalents at 1 January 31,381 22,808Effect of exchange differences on cash and cash equivalents 32 - Cash and cash equivalents at 31 December B 45,954 31,381

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2012

34


NOTE

A. Acquisition of property, plant and equipment

During the year, the Group acquired property, plant and equipment with an aggregate cost of RM42,753,000 (2011: RM67,969,000) of which RM1,246,000 (2011: RM931,000) was acquired by means of finance lease. The balance of RM41,507,000 (2011: RM67,038,000) was made by cash payments.

B. Cash and cash equivalents

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

Note 2012 2011 RM’000 RM’000 Cash and bank balances 10 39,904 28,763Short-term deposit with licensed banks (excluding deposit pledged) 10 6,050 2,992Bank overdrafts 13 - (374)

45,954 31,381


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2012 (CONT’D)

35

ANNUAL REPORT 2012

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2012

Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Assets Property, plant and equipment 3 10 6 4Investment in subsidiaries 4 82,486 82,486 69,486 Total non-current assets 82,496 82,492 69,490 Trade and other receivables, including derivatives 9 267,758 51,789 50,337Current tax assets - 475 643Cash and cash equivalents 10 6,689 95 68 Total current assets 274,447 52,359 51,048 Total assets 356,943 134,851 120,538 Equity Share capital 11 76,200 76,200 76,200Reserves 12 39,164 29,653 28,850 Total equity attributable to owners of the Company 115,364 105,853 105,050 Liabilities Loans and borrowings 13 238,092 - - Total non-current liability 238,092 - - Loans and borrowings 13 3,025 - -Trade and other payables, including derivatives 15 462 28,998 15,488 Total current liabilities 3,487 28,998 15,488 Total liabilities 241,579 28,998 15,488 Total equity and liabilities 356,943 134,851 120,538


36


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012

Note 2012 2011 RM’000 RM’000 Continuing operations Revenue 16 16,000 6,000Administrative expenses (1,562) (605) Results from operating activities 14,438 5,395Interest income 11,160 -Finance costs 17 (11,515) (1) Profit before tax 18 14,083 5,394Tax expense 21 - (19) Profit for the year representing total comprehensive income for the year 14,083 5,375


37

ANNUAL REPORT 2012

STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2012

Non- distributable Distributable Share Share Retained capital premium earnings Total equity RM’000 RM’000 RM’000 RM’000 At 1 January 2011 76,200 8,560 20,290 105,050 Profit for the year representing total comprehensive income for the year - - 5,375 5,375Dividend (Note 23) - - (4,572) (4,572) At 31 December 2011/1 January 2012 76,200 8,560 21,093 105,853 Profit for the year representing total comprehensive income for the year - - 14,083 14,083Dividend (Note 23) - - (4,572) (4,572) At 31 December 2012 76,200 8,560 30,604 115,364

Note 11 Note 12 Note 12


38


STATEMENT OF CASH FLOWFOR THE YEAR ENDED 31 DECEMBER 2012

Note 2012 2011 RM’000 RM’000 Cash flows from operating activities Profit before tax from continuing operations 14,083 5,394 Adjustments for : Depreciation of equipment 3 2 1 Dividend income (16,000) (6,000) Interest income (11,160) - Interest expense 17 11,514 1 Operating loss before changes in working capital (1,561) (604) Changes in working capital : Trade and other receivables (215,969) (1,452) Trade and other payables (28,536) 13,510 Cash (used in)/generated from operations (246,066) 11,454 Tax refunded 475 149 Dividend received 16,000 6,000 Net cash (used in)/from operating activities (229,591) 17,603 Cash flows from investing activities Acquisition of equipment 3 (6) (3) Increase in investment in a subsidiary 4 - (13,000) Interest received 11,160 - Net cash from/ (used in) investing activities 11,154 (13,003) Cash flows from financing activities Drawdown of term loan 13 241,117 - Dividend paid 23 (4,572) (4,572) Interest paid (11,514) (1) Pledged deposits for bank borrowings 10 (6,400) - Net cash from/(used in) financing activities 218,631 (4,573) Net increase in cash and cash equivalents 194 27 Cash and cash equivalents at 1 January 95 68 Cash and cash equivalents at 31 December A 289 95

NOTE

A. Cash and cash equivalents

Cash and cash equivalents included in the statement of cash flows comprise the following amount:

Note 2012 2011 RM’000 RM’000 Cash and bank balances 10 289 95


39

ANNUAL REPORT 2012

NOTES TO THE FINANCIAL STATEMENTS

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

REGISTERED OFFICE

2B-4 Level 4Jalan SS 6/6Kelana Jaya47301 Petaling JayaSelangor Darul Ehsan

PRINCIPAL PLACE OF BUSINESS

Lot 2244, Jalan RajawaliBatu 9, Kampung Kebun Baru42500 Telok Panglima GarangKuala LangatSelangor Darul Ehsan

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associate. The financial statements of the Company as at and for the financial year ended 31 December 2012 do not include other entities.

The Company is principally engaged as an investment holding company. The principal activities of its subsidiaries are disclosed in Note 4 to the financial statements.

The financial statements were authorised for issue by the Board of Directors on 17 April 2013.

1. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. These are the Group’s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied.

In the previous financial years, the financial statements of the Group and of the Company were prepared in

accordance with Financial Reporting Standards (FRSs) in Malaysia. The financial impact on transition to MFRSs are disclosed in Note 31.

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

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013

• MFRS10,ConsolidatedFinancialStatements • MFRS11,JointArrangements* • MFRS12,DisclosureofInterestsinOtherEntities* • MFRS13,FairValueMeasurement • MFRS119,EmployeeBenefits(2011) • MFRS127,SeparateFinancialStatements(2011)* • MFRS128,InvestmentsinAssociatesandJointVentures(2011) • ICInterpretation20,StrippingCostsintheProductionPhaseofaSurfaceMine* • AmendmentstoMFRS7,FinancialInstruments:Disclosures–OffsettingFinancialAssetsandFinancialLiabilities • AmendmentstoMFRS1,First-timeAdoptionofMalaysianFinancialReportingStandards–GovernmentLoans* • AmendmentstoMFRS1,First-timeAdoptionofMalaysianFinancialReportingStandards(AnnualImprovements 2009-2011 Cycle) • AmendmentstoMFRS101,PresentationofFinancialStatements(AnnualImprovements2009-2011Cycle) • AmendmentstoMFRS116,Property,PlantandEquipment(AnnualImprovements2009-2011Cycle)

40



1. BASIS OF PREPARATION (continued)

(a) Statement of compliance (continued)

• AmendmentstoMFRS132,FinancialInstruments:Presentation(AnnualImprovements2009-2011Cycle) • AmendmentstoMFRS134,InterimFinancialReporting(AnnualImprovements2009-2011Cycle)* • AmendmentstoMFRS10,ConsolidatedFinancialStatements:TransitionGuidance • AmendmentstoMFRS11,JointArrangements:TransitionGuidance* • AmendmentstoMFRS12,DisclosureofInterestsinOtherEntities:TransitionGuidance* MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014

• AmendmentstoMFRS10,ConsolidatedFinancialStatements:InvestmentEntities • AmendmentstoMFRS12,DisclosureofInterestsinOtherEntities:InvestmentEntities# • AmendmentstoMFRS127,SeparateFinancialStatements(2011):InvestmentEntities# • Amendments to MFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial

Liabilities

MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015

• MFRS9,FinancialInstruments(2009) • MFRS9,FinancialInstruments(2010) • AmendmentstoMFRS7,FinancialInstruments:Disclosures–MandatoryEffectiveDateofMFRS9andTransition

Disclosures

The Group and of the Company plans to apply the abovementioned standards, amendments and interpretations:

• fromtheannualperiodbeginningon1January2013forthosestandards,amendmentsorinterpretationsthatare effective for annual periods beginning on or after 1 January 2013, except for those marked with “*” which are not applicable to the Group and the Company.

• fromtheannualperiodbeginningon1January2014forthosestandards,amendmentsorinterpretationsthatare effective for annual periods beginning on or after 1 January 2014, except for those marked with “#” which are not applicable to the Group and the Company.

• fromtheannualperiodbeginningon1January2015forthosestandards,amendmentsorinterpretationsthatare effective for annual periods beginning on or after 1 January 2015.

The initial application of the standards, amendments and interpretations are not expected to have any material financial impacts to the current and prior periods financial statements of the Group upon their first adoption.

(b) Basis of measurement

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

(c) Functional and presentation currency

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

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with Malaysian Financial Reporting Standards (“MFRSs”) requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements.

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ANNUAL REPORT 2012


2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial statements and in preparing the opening MFRS Statements of financial position of the Group and of the Company at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

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

(ii) Business combinations

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

Acquisitions on or after 1 January 2011

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

• thefairvalueoftheconsiderationtransferred;plus • therecognisedamountofanynon-controllinginterestsintheacquiree;plus • ifthebusinesscombinationisachievedinstages,thefairvalueoftheexistingequityinterestintheacquiree;less • thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.

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

For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

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

Acquisitions before 1 January 2011

As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, i.e. 1 January 2011. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition.

(iii) Acquisitions of non-controlling interests

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

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

42



2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Basis of consolidation (continued)

Acquisitions before 1 January 2011 (continued)

(v) Associates

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

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

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

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that associate, with a resulting gain or loss being recognised in profit or loss. Any retained interest in the former associate at the date when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial asset.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss.

Investments in associates are measured in the Company’s statement of financial position at cost less any impairment losses. The cost of the investment includes transaction costs.

(vi) Non-controlling interests

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

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vii) Transactions eliminated on consolidation

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

(b) Foreign currency

(i) Foreign currency transactions

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

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

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ANNUAL REPORT 2012



(b) Foreign currency (continued)

(i) Foreign currency transactions (continued)

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

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences

arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk, which are recognised in other comprehensive income.

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

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 January 2011 which are treated as assets and liabilities of the Company. The income and expenses of foreign operations, are translated to RM at exchange rates at the dates of the transactions.

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

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

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

(c) Financial instruments

(i) Initial recognition and measurement

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

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

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

44




(c) Financial instruments (continued)

Financial assets (continued)

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

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

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

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

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

b) Held-to-maturity investments

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

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost

using the effective interest method.

(c) Loans and receivables

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

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

(d) Available-for-sale financial assets

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

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

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(g)(i)).

Financial liabilities

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

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ANNUAL REPORT 2012



(c) Financial instruments (continued)

Financial liabilities

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

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

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

(iii) Financial guarantee contracts

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

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

(iv) Regular way purchase or sale of financial assets

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

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade

date accounting. Trade date accounting refers to:

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

receivable from the buyer for payment on the trade date.

(v) Derecognition

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

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

(d) Goodwill

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

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

46




(e) Property, plant and equipment

(i) Recognition and measurement

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

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

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

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

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

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

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

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

The estimated useful lives are as follows: Years Leasehold land 44 – 99 Buildings 50 Plant and machinery 7 – 20 Furniture, fittings and office equipment 5 – 10 Motor vehicles 5

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ANNUAL REPORT 2012



(e) Property, plant and equipment (continued)

(iii) Depreciation (continued)

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

(f) Leased assets

(i) Finance lease

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

Minimum lease payments made under finance leases are apportioned between the finance expense and the

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

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

Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases, and the leased assets are not recognised on the statement of financial position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.

(g) Impairment

(i) Financial assets

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

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

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured

as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.

48




(g) Impairment (continued)

(i) Financial assets (continued)

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

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

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

(ii) Other assets

The carrying amounts of other assets (except for inventories and deferred tax asset) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to a group of cash-generating units that are expected to benefit from the synergies of the combination.

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

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

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

its estimated recoverable amount.

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

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

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ANNUAL REPORT 2012



(h) Inventories

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

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

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

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

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

(j) Equity instruments

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

(i) Issue expenses

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

(ii) Ordinary shares

Ordinary shares are classified as equity.

(k) Provisions

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

(l) Contingent liabilities

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

(m) Income tax

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

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates

enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

50




(m) Income tax (continued)

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

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

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

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

(n) Revenue and other income

(i) Goods sold

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

(ii) Dividend income

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

(iii) Interest income

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

(o) Borrowing costs

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

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

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

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ANNUAL REPORT 2012


(o) Borrowing costs (continued)

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

(p) Employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are

measured on an undiscounted basis and are expensed as the related service is provided.

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

The Group’s contributions to statutory pension funds are charged to profit or loss in the year to which they relate.

Once the contributions have been paid, the Group has no further payment obligations.

(q) Earnings per ordinary share

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

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

(r) Operating segments

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

NOTES TO THE FINANCIAL STATEMENTS52



3. PROPERTY, PLANT AND EQUIPMENT

At At 1 January Additions Reclassifications Disposals 31 December 2012 2012 RM’000 RM’000 RM’000 RM’000 RM’000 Group

Cost Freehold land 20,722 12 - - 20,734 Freehold building 28,409 - - - 28,409 Long-term leasehold land 17,410 423 - - 17,833 Short-term leasehold land 2,910 - - - 2,910 Leasehold building 39,831 1,401 12,933 - 54,165 Plant & machinery 207,908 24,555 11,336 (2,255) 241,544 Furniture, fitting and office equipment 6,206 1,666 15 - 7,887 Motor vehicles 9,311 1,791 - (410) 10,692 Capital expenditure-in-progress 15,651 12,905 (24,284) - 4,272 348,358 42,753 - (2,665) 388,446

At Foreign At 1 January Charge for exchange 31 December 2012 the year Disposals differences 2012 RM’000 RM’000 RM’000 RM’000 RM’000

Depreciation Freehold building 831 582 - - 1,413 Long-term leasehold land 248 366 - - 614 Short-term leasehold land 70 84 - - 154 Leasehold building 723 1,034 - - 1,757 Plant and machinery 82,770 11,822 (890) 15 93,717 Furniture, fitting and office equipment 3,526 507 - - 4,033 Motor vehicles 5,045 667 (373) - 5,339 93,213 15,062 (1,263) 15 107,027

At At 1 January 31 December 2011 Additions Reclassifications Disposals 2011 RM’000 RM’000 RM’000 RM’000 RM’000

Cost Freehold land 20,122 600 - - 20,722 Freehold building 28,409 - - - 28,409 Long-term leasehold land 14,110 3,300 - - 17,410 Short-term leasehold land 2,910 - - - 2,910 Leasehold building 24,150 15,681 - - 39,831 Plant & machinery 178,122 22,491 8,515 (1,220) 207,908 Furniture, fitting and office equipment 4,995 1,211 - - 6,206 Motor vehicles 8,085 1,516 - (290) 9,311 Capital expenditure-in-progress 996 23,170 (8,515) - 15,651 281,899 67,969 - (1,510) 348,358

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ANNUAL REPORT 2012

3. PROPERTY, PLANT AND EQUIPMENT (continued)

At At 1 January Charge for 31 December 2011 the year Disposals 2011 RM’000 RM’000 RM’000 RM’000

Group

Depreciation Freehold building 192 639 - 831 Long-term leasehold land - 248 - 248 Short-term leasehold land - 70 - 70 Leasehold building - 723 - 723 Plant and machinery 73,155 9,898 (283) 82,770 Furniture, fitting and office equipment 3,006 520 - 3,526 Motor vehicles 4,622 693 (270) 5,045 80,975 12,791 (553) 93,213

Carrying Carrying Carrying amounts amounts amounts At 31 At 31 At 1 December December January 2012 2011 2011 RM’000 RM’000 RM’000 Cost Freehold land 20,734 20,722 20,122 Freehold building 26,996 27,578 28,217 Long-term leasehold land * 17,219 17,162 14,110 Short-term leasehold land 2,756 2,840 2,910 Leasehold building 52,408 39,108 24,150 Plant and machinery 147,827 125,138 104,967 Furniture, fittings and office equipment 3,854 2,680 1,989 Motor vehicles 5,353 4,266 3,463 Capital expenditure-in-progress 4,272 15,651 996 281,419 255,145 200,924

* Long-term leasehold land with unexpired lease period of more than 50 years.

Included in property, plant and equipment of the Group is an amount of RM1,525,000 (31 December 2011 : RM1,588,000; 1 January 2011 : RM1,620,000) representing the carrying amount of buildings erected on land belonging to third parties.

Included in additions of plant and machinery during the financial year is an amount of RM Nil (31 December 2011 : RM210,000; 1 January 2011 : RM Nil) being borrowing costs capitalised at interest rate of Nil (31 December 2011 : 7.05%; 1 January 2011 : Nil) per annum.




3. PROPERTY, PLANT AND EQUIPMENT (continued)

The carrying amounts of plant and equipment acquired under finance lease arrangement are as follows :

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Plant and machinery 4,252 4,494 5,061 Motor vehicles 3,578 3,152 1,998 7,830 7,646 7,059

The carrying amounts of freehold land, factory building, plant and machinery pledged for banking facilities granted to the Group are as follows :

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Freehold land 18,942 6,285 6,285 Factory building 44,608 20,170 20,590 Plant and machinery 6,970 7,390 7,812 70,520 33,845 34,687

At At 1 January Additions 31 December RM’000 RM’000 RM’000 Company

2012 Cost Furniture, fittings and office equipment 10 6 16 Accumulated depreciation Furniture, fittings and office equipment 4 2 6

2011 Cost Furniture, fittings and office equipment 7 3 10

Accumulated depreciation Furniture, fittings and office equipment 3 1 4

At At At 31 December 31 December 1 January 2012 2011 2011 RM’000 RM’000 RM’000 Carrying amounts Furniture, fittings and office equipment 10 6 4

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ANNUAL REPORT 2012

4. INVESTMENT IN SUBSIDIARIES – COMPANY

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Unquoted shares, at cost 82,486 82,486 69,486

Details of the subsidiaries are as follows :

Name of Country of Effective ownership interest Principal subsidiary incorporation 31.12.2012 31.12.2011 1.1.2011 activities % % % Aik Joo Can Factory Malaysia 100 100 100 Manufacture of metal Sdn. Berhad and lithographed tin cans and plastic jerry cans Ajcan Sdn. Bhd. Malaysia 100 100 100 Letting of landed

property and property investment

Canzo Sdn. Bhd. Malaysia 100 100 100 Manufacture and

trading of plastic jerry cans and related products

Newmarq Sdn. Bhd. Malaysia 100 100 100 Investment holding Sanjung Nuri Sdn. Bhd. Malaysia 100 100 100 Property investment Can-One International Malaysia 100 100 100 Investment holding Sdn. Bhd. Amber Alliance Sdn. Bhd. Malaysia 100 100 100 Investment holding

Subsidiary of Amber Alliance Sdn. Bhd. F & B Nutrition Sdn. Bhd. Malaysia 80 80 80 Manufacture of dairy

and non-dairy products

Subsidiaries of Newmarq Sdn. Bhd. PT Corum # Indonesia 100 100 - Manufacturing and

trading of metal and lithographed tin cans and plastic jerry cans

Lumiera Corporation Malaysia 100 100 - Dormant (Labuan) Pte Ltd *

Grensing Pte Ltd # Singapore 100 100 - International trading

* The unaudited management financial statements were consolidated in the Group’s financial statements.

# Audited by other member firms of KPMG International.




5. INVESTMENT IN ASSOCIATES – GROUP

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 At cost : Quoted shares in Malaysia 241,864 - - Share of post-acquisition reserves 118,876 - - 360,740 - - Market value of quoted shares 326,000 - -

The summary of financial information for associate, not adjusted for the percentage ownership held by the Group are as follows : Effective Country of ownership Profit for Total incorporation interest Revenue the year Total assets liabilities % (100%) (100%) (100%) (100%) RM’000 RM’000 RM’000 RM’000 31 December 2012 Kian Joo Can Factory Berhad Malaysia 32.90 1,161,922 125,949 1,354,950 323,959

As at 31 December 2012, the entire quoted shares are charged to a financial institution for term loan granted to the Company.

6. OTHER INVESTMENTS, INCLUDING DERIVATIVES – GROUP

Quoted Unquoted shares in Note Total bonds Malaysia Derivatives RM’000 RM’000 RM’000 RM’000 1 January 2011 Non-current Available-for-sale 4,127 4,000 127 - Less : Impairment loss (4,011) (4,000) (11) - 116 - 116 - Current Financial asset at fair value through profit or loss : - Held for trading 6.1 197 - - 197 313 - 116 197 Representing items: At fair value 313 - 116 197 Market value of quoted shares 116 - 116 -

6.1 Derivatives

This represents fair value gain on forward exchange contracts at the end of the reporting period.

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ANNUAL REPORT 2012

7. GOODWILL ON CONSOLIDATION – GROUP

RM’000 At cost At 1 January 2011 1,712 At 31 December 2011 / 1 January 2012 1,712 At 31 December 2012 1,712

The above goodwill is in respect of the Group’s acquisition of the subsidiaries.

(a) Key sources of estimation

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units (“CGU”) to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from cash-generating unit and also to apply a suitable discount rate in order to calculate the present value of those cash flows.

(b) Recoverable amount based on value in use

The recoverable amount of a CGU is determined based on value in use calculations with the following key assumptions:

(i) Cash flows are projected based on the financial budgets approved by the Directors.

(ii) Discount rate used for cash flows discounting purposes are the management’s estimate of average cost of capital required in the respective segments. The discount rate applied for cash flow projections is at 10%.

(iii) Profit margins are projected based on the industry trends, historical profit margin achieved or predetermined profit margin for dairy products.

With regard to the assessment of value in use and fair value less costs to sell, management believes that no reasonably possible change in any of the above key assumptions would cause the recoverable amounts of the unit to be materially below its carrying amounts.

8. INVENTORIES – GROUP

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 At cost Raw materials 54,981 70,057 75,072 Work-in-progress 27,947 30,940 33,398 Manufactured inventories 17,782 12,613 9,087 100,710 113,610 117,557




9. TRADE AND OTHER RECEIVABLES, INCLUDING DERIVATIVES

Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Group Trade Trade receivables 186,566 133,042 92,157 Less: Allowance for impairment loss (1,895) (2,229) (1,740) 184,671 130,813 90,417

Non-trade Other receivables 290 63 315 Deposits 9.1 1,754 26,158 25,097 Prepayments 6,829 7,747 7,451 Financial assets at fair value through profit or loss : - Held for trading 9.2 6 - - 8,879 33,968 32,863 193,550 164,781 123,280

Company Amount due from subsidiaries 9.3 267,757 51,788 50,337 Prepayments 1 1 - 267,758 51,789 50,337

9.1 Deposits

This includes a refundable deposit of RM24,111,000 at 31 December 2011 and 1 January 2011 paid by the Group when the Group entered into a conditional shares sale agreement to acquire 146,131,500 ordinary shares of RM0.25 each, representing a 32.9% equity interest in Kian Joo Can Factory Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad, for a total cash consideration of RM241,117,000.

9.2 Derivatives

This represents fair value gain on forward exchange contracts at the end of the reporting period.

9.3 Amount due from subsidiaries

Included in the amount due from subsidiaries is RM239,734,000 (31 December 2011; 1 January 2011 : RM Nil) which earn interest ranging from 4.50% to 4.71% (31 December 2011; 1 January 2011 : Nil) per annum. Other than as disclosed, the non-trade receivables due from subsidiaries are unsecured, interest free and repayable on demand.

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10. CASH AND CASH EQUIVALENTS

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Group Cash and bank balances 39,904 28,763 22,808 Short-term deposit with licensed banks 12,450 2,992 - 52,354 31,755 22,808 Company Cash and bank balances 289 95 68 Short-term deposit with licensed banks 6,400 - - 6,689 95 68

Included in deposits placed with licensed banks of the Group and the Company is RM6,400,000 (31 December 2011 : RM Nil ;1 January 2011 : RM Nil) pledged for bank borrowings.

11. SHARE CAPITAL – GROUP/COMPANY

31.12.2012 31.12.2011 1.1.2011 Number of Number of Number of Amount shares Amount shares Amount shares RM’000 ‘000 RM’000 ‘000 RM’000 ‘000 Ordinary shares of RM0.50 each Authorised 100,000 200,000 100,000 200,000 100,000 200,000 Issued and fully paid 76,200 152,400 76,200 152,400 76,200 152,400

12. RESERVES

Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Group Non-distributable Share premium 12.1 8,560 8,560 8,560 Foreign currency translation reserve 12.2 2,179 - - Fair value reserve 12.3 - - 10 Distributable Retained earnings 310,039 143,886 116,045 320,778 152,446 124,615




12. RESERVES (continued)

Note 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000

Company Non-distributable Share premium 12.1 8,560 8,560 8,560 Distributable Retained earnings 30,604 21,093 20,290 39,164 29,653 28,850

12.1 Share premium

The share premium arose from the public issue.

12.2 Foreign currency translation reserve

Translation reserve relates to foreign currency differences arising from the translation of the financial statements of foreign operations.

12.3 Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired.

13. LOANS AND BORROWINGS

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Group

Current Secured Term loans 9,989 6,095 2,885 Bankers’ acceptances - 31,087 - Foreign currency trade loans 41,555 31,101 19,495 Finance lease liabilities 2,110 2,194 1,971 Bank overdrafts - 374 - 53,654 70,851 24,351 Unsecured Term loans 13,693 11,195 14,444 Bankers’ acceptances 2,222 - 8,506 Foreign currency trade loans 65,791 63,144 57,012 Revolving credits 10,000 19,000 15,000 145,360 164,190 119,313

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13. LOANS AND BORROWINGS – GROUP (continued)

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Non-current Secured Term loans 270,550 39,539 16,465 Finance lease liabilities 1,215 2,302 3,489 271,765 41,841 19,954 Unsecured Term loans 37,539 41,416 50,777 309,304 83,257 70,731 Company Current Secured term loans 3,025 - - Non-current Secured term loans 238,092 - -

Security

The secured borrowings are secured against legal charges over the freehold land, factory building and plant and machinery of certain subsidiaries, investment in associate, fixed deposits and corporate guarantee from the Company.

Finance lease liabilities are payable as follows :

31.12.2012 31.12.2011 1.1.2011 Present Present Present Future value of Future value of Future value of minimum minimum minimum minimum minimum minimum lease lease lease lease lease lease payments Interest payments payments Interest payments payments Interest payments RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Less than 1 year 2,229 119 2,110 2,394 200 2,194 2,242 271 1,971 Between 1 and 5 years 1,267 52 1,215 2,416 114 2,302 3,724 235 3,489 3,496 171 3,325 4,810 314 4,496 5,966 506 5,460




14. DEFERRED TAX LIABILITIES – GROUP

Deferred tax liabilities are attributable to the following :

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Property, plant and equipment 25,801 17,067 13,046 Revaluation 461 492 517 Provision & others 563 563 - 26,825 18,122 13,563

Movement in temporary differences during the year :

Recognised Recognised in profit in profit At or loss At or loss At 1.1.2011 (Note 21) 31.12.2011 (Note 21) 31.12.2012 RM’000 RM’000 RM’000 RM’000 RM’000 Property, plant and equipment 13,046 4,021 17,067 8,734 25,801 Revaluation 517 (25) 492 (31) 461 Provision & others - 563 563 - 563 13,563 4,559 18,122 8,703 26,825

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15. TRADE AND OTHER PAYABLES, INCLUDING DERIVATIVES

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

Trade Trade payables 68,201 39,469 40,387 Non-trade Other payables 19,345 18,574 13,335 Accrued expenses 8,401 7,094 2,973 Financial liabilities at fair value through profit or loss : - Held for trading 15.1 - 669 181 27,746 26,337 16,489 95,947 65,806 56,876 Company Non-trade Amount due to a subsidiary 15.2 11 28,780 15,318 Accrued expenses 451 218 170 462 28,998 15,488

15.1 Derivatives

This represents fair value loss on forward exchange contracts at the end of the reporting period.

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

16. REVENUE

Revenue for the Group represents the invoiced value of goods sold less discounts and returns.

Revenue for the Company represents dividend income.




17. FINANCE COSTS

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Interest payables: Bank overdrafts 4 31 - - Term loans 17,662 6,182 - - Other short-term borrowings 1,946 1,732 11,514 - Finance lease liabilities 350 338 - - 19,962 8,283 11,514 - Bank charges 2,823 1,105 1 1 22,785 9,388 11,515 1

Recognised in profit or loss 22,785 9,178 11,515 1 Capitalised on property, plant and equipment (Note 3) - 210 - - 22,785 9,388 11,515 1

18. PROFIT BEFORE TAX

Profit before tax is arrived at : Group Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000 After charging : Auditors’ remuneration Audit fees - KPMG - current year 120 96 22 30 - prior year (8) 6 (8) 6 Other services - KPMG 5 5 5 5 - Affiliates of KPMG 24 24 3 8 Impairment loss on receivables - 2,427 - - Depreciation of property, plant and equipment 3 15,062 12,791 2 1 Directors’ emoluments: Current Directors - Fees 490 344 240 144 - Others 1,739 1,511 421 413 Past Directors - Others 304 - 87 - Other Directors - Fees 50 50 - - - Others 211 291 - - Loss on disposal of plant and equipment - 73 - - Loss on foreign exchange - unrealised - 3,124 - - - realised 17 - - -

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ANNUAL REPORT 2012

18. PROFIT BEFORE TAX (continued) Group Company 2012 2011 2012 2011 Note RM’000 RM’000 RM’000 RM’000 Rental of land and building 205 398 - - Loss on forward exchange contracts - unrealised - 685 - - and after crediting : Dividend income from a subsidiary - unquoted shares - - 16,000 6,000 Bargain purchase gain on acquisition of associate 103,754 - - - Interest income 178 356 11,160 - Gain on disposal of plant and equipment 261 - - - Gain on disposal of other investments - 13 - - Gain on forward exchange contracts - unrealised 675 - - - Gain on foreign exchange - unrealised 1,958 - - - - realised - 2,170 - - Rental income from property 792 852 - -

19. KEY MANAGEMENT PERSONNEL COMPENSATION

The key management personnel compensations are as follows :

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

Current Directors - Fees 490 344 240 144 - Remuneration 1,739 1,511 421 413 - Benefits-in-kind 35 21 - - 2,264 1,876 661 557 Past Director - Remuneration 304 - 87 - Other Directors - Fees 50 50 - - - Remuneration 211 291 - - - Benefits-in-kind 7 13 - - 268 354 - - Other key management personnel - Remuneration 1,006 854 - - - Benefits-in-kind 23 34 - - 1,029 888 - - 3,865 3,118 748 557

Other key management personnel comprises persons other than the Directors of Group entities, having authority and responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.




20. EMPLOYEE INFORMATION Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Staff costs 41,917 33,115 999 546

Staff costs of the Group and of the Company include contributions to the Employees’ Provident Fund of RM2,358,000 (2011 : RM1,824,000) and RM107,000 (2011 : RM57,000) respectively.

21. TAX EXPENSE

Recognised in profit or loss Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Income tax expense on continuing operations 16,753 7,389 - 19 Share of tax of equity- accounted investee* 5,780 - - - Total income tax expense 22,533 7,389 - 19 Current tax expense Malaysian - current year 7,140 3,065 - - - prior years 403 (235) - 19 Overseas - current year 507 - - - 8,050 2,830 - 19 Deferred tax expense - current year 9,093 4,184 - - - prior years (390) 375 - - 8,703 4,559 - - Share of associate tax 5,780 - - - Total income tax expense 22,533 7,389 - 19

* It represents share of tax of equity-accounted investee in which it has included in the share of results of equity-

accounted investee as presented in statement of profit or loss and other comprehensive income.

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ANNUAL REPORT 2012

21. TAX EXPENSE (continued)

Reconciliation of effective tax expense

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Profit for the year 178,128 34,522 14,083 5,375 Total tax expense 22,533 7,389 - 19 Profit excluding tax 200,661 41,911 14,083 5,394 Income tax calculated using Malaysian tax rate of 25% (2011 : 25%) 50,165 10,478 3,521 1,349 Non-deductible expenses 4,655 359 479 151 Difference in different tax rate in foreign jurisdiction (267) - - - Tax exempt income (29,786) - (4,000) (1,500) Tax incentives (2,216) (3,563) - - Reversal of deferred tax on revaluation of property (31) (25) - - 22,520 7,249 - - Under provision in prior years 13 140 - 19 Total income tax expense 22,533 7,389 - 19

Subject to agreement by the Inland Revenue Board, the Company has Section 108 tax credit and exempt income to frank/distribute approximately RM7,808,000 and RM12,312,000 respectively from its retained earnings at 31 December 2012 if paid out as dividends.

The Finance Act, 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As such, the remaining Section 108 tax credit as at 31 December 2012 will be available to the Company until such time the credit is fully utilised or upon expiry of the transitional period on 31 December 2013, whichever is earlier.

22. EARNINGS PER ORDINARY SHARE

The calculation of basic earnings per ordinary share at 31 December 2012 was based on the Group’s profit attributable to the owners of the Company of RM170,725,000 (2011 : RM32,413,000) and on the weighted average number of ordinary shares outstanding during the year of 152,400,000 (2011 : 152,400,000).




23. DIVIDENDS

Dividends recognised by the Company :

Sen per share Total amount Date of (gross) RM’000 payment 2012 First and final 2011 tax exempt dividend 3.00 4,572 30 July 2012

2011 First and final 2010 tax exempt dividend 3.00 4,572 29 July 2011

2012 2011 Dividend per ordinary share – Gross (sen) 4.00 3.00

A first and final tax exempt dividend of 8% (4 sen) per share of RM0.50 each, totalling RM6,096,000 for the financial year ended 31 December 2012 has been proposed for shareholders’ approval at the forthcoming annual general meeting. These financial statements do not reflect the above dividend which will be accounted for as an appropriation of retained earnings in the financial year ending 31 December 2013 when approved by the shareholders. The gross dividend per ordinary share as disclosed above take into account the first and final tax exempt dividend proposed for the financial year ended 31 December 2012.

24. OPERATING SEGMENTS – GROUP

The Group has four reportable segments (three reportable segments in year 2011), as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group’s Managing Director (the chief operating decision maker) reviews internal management reports at least on a quarterly basis.

The following summary describes the operations in each of the Group’s reportable segments :

• Segment1-Generalcans-manufactureanddistributionoflithographedtincansandplasticjerrycans • Segment2-Foodproducts-manufactureanddistributionoffoodproducts • Segment3-Internationaltrading • Segment4-Propertyandinvestmentholding

Performance is measured based on segment operating profit as included in the internal management reports that are reviewed by the Group’s Chief Operating Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Management monitors the operating results of its business units separately for the purpose of making decision about resource allocation and performance assessment.

Segment assets The total of segment asset is measured based on all assets of a segment (excluding current tax assets), as included in the

internal management reports that are reviewed by the Group’s Managing Director. Segment total asset is used to measure the return of assets of each segment.

Segment liabilities

Segment liabilities information is neither included in the internal management reports nor provided regularly to the Group’s Managing Director. Hence, no disclosure is made on segment liability.

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ANNUAL REPORT 2012

24. OPERATING SEGMENTS (continued)

Segment capital expenditure

Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment and intangible assets other than goodwill.

Property Per and consolidated General Food International investment Reconciliations/ financial cans products trading holding Total Eliminations Note statements RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 31 December 2012 Segment profit/(loss) 32,930 49,080 3,467 132,011 217,488 (22,607) A 194,881 Included in the measure of segment profit/ (loss) are : Revenue from external customers 256,473 451,783 71,784 - 780,040 - 780,040 Inter-segments sales 94,880 66,409 43,475 34,326 239,090 (239,090) - Depreciation and amortisation (11,130) (3,795) - (50) (14,975) (87) (15,062)

Not included in the measure of segment profit/(loss) but provided to Group Managing Director : Finance costs (7,633) (3,610) (79) (13,214) (24,536) 1,751 (22,785) Interest income 1,915 14 - - 1,929 (1,751) 178 Income tax expense (7,710) (8,470) (509) - (16,689) (64) (16,753) Segment assets 338,549 273,443 10,582 367,911 990,485 586 C 991,071

Included in the measure of segment assets are : Addition to non-current assets other than financial instruments 28,522 14,226 - 5 42,753 - 42,753





Property and Per consolidated General Food investment Reconciliations/ financial cans products holding Total Eliminations Note statements RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

31 December 2011 Segment profit/(loss) 34,963 16,398 (628) 50,733 (8,822) A 41,911

Included in the measure of segment profit/ (loss) are : Revenue from external customers 262,131 368,852 - 630,983 - 630,983 Inter-segments sales 80,340 - 6,060 86,400 (86,400) - Depreciation and amortisation (9,709) (3,080) (2) (12,791) - (12,791) Other non-cash items (1,865) (562) - (2,427) - B (2,427)

Not included in the measure of segment profit/(loss) but provided to Group Managing Director : Finance costs (6,586) (2,592) - (9,178) - (9,178) Interest income 347 9 - 356 - 356 Income tax expense (4,089) (3,285) (15) (7,389) - (7,389)

Segment assets 337,166 197,843 31,994 567,003 476 C 567,479

Included in the measure of segment assets are : Addition to non-current assets other than financial instruments 48,900 19,069 - 67,969 - 67,969

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ANNUAL REPORT 2012


Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A The following items are added to/(deducted from) segment profit to arrive at “Profit before tax from continuing operations” presented in the consolidated statement of comprehensive income:

2012 2011 RM’000 RM’000 Finance costs (22,785) (9,178) Interest income 178 356 (22,607) (8,822)

B Other material non-cash expenses consist of the following items as presented in the respective notes to the financial

statements

2012 2011 RM’000 RM’000 Impairment of financial assets - (2,427)

C The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position :

2012 2011 RM’000 RM’000 Current tax assets 586 476

In presenting geographical information, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments and deferred tax assets.

Geographical information

Revenue Non-current assets 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Malaysia 540,699 506,699 639,782 255,145 Asia (excluding Malaysia) 228,942 123,746 2,377 - Others 10,399 538 - - Consolidated 780,040 630,983 642,159 255,145





Major customers

The following are major customers with revenue equal or more than 10% of the Group’s total revenue:

Revenue General Food International cans products trading Total RM’000 RM’000 RM’000 RM’000 2012 All common control companies of : - Customer A 52,717 89,434 1,918 144,069

2011 All common control companies of : - Customer A 245 80,669 - 80,914 - Customer B 36,276 31,935 - 68,211

25. FINANCIAL INSTRUMENTS

25.1 Categories of financial instruments

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

(a) Loans and receivables (L&R); (b) Fair value through profit or loss (FVTPL); - Held for trading (HFT); (c) Available-for-sale financial assets (AFS); and (d) Other financial liabilities measured at amortised cost (OL).

Carrying FVTPL amount L&R/(OL) -HFT RM’000 RM’000 RM’000

Group 31 December 2012 Financial assets Trade and other receivables, including derivatives 184,967 184,961 6 Cash and cash equivalents 52,354 52,354 - 237,321 237,315 6

Financial liabilities Loans and borrowings (454,664) (454,664) - Trade and other payables, including derivatives (95,947) (95,947) - (550,611) (550,611) -

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ANNUAL REPORT 2012

25. FINANCIAL INSTRUMENTS (continued)

25.1 Categories of financial instruments (continued)

Carrying FVTPL amount L&R/(OL) -HFT RM’000 RM’000 RM’000

31 December 2011 Financial assets Trade and other receivables 130,876 130,876 - Cash and cash equivalents 31,755 31,755 - 162,631 162,631 -

Financial liabilities Loans and borrowings (247,447) (247,447) - Trade and other payables, including derivatives (65,806) (65,137) (669) (313,253) (312,584) (669)

Carrying L&R/ FVTPL amount (OL) -HFT AFS RM’000 RM’000 RM’000 RM’000 Group

1 January 2011 Financial assets Other investments, including derivatives 313 - 197 116 Trade and other receivables 90,732 90,732 - - Cash and cash equivalents 22,808 22,808 - - 113,853 113,540 197 116

1 January 2011 Financial liabilities Loans and borrowings (190,044) (190,044) - - Trade and other payables, including derivatives (56,876) (56,695) (181) - (246,920) (246,739) (181) -





25.1 Categories of financial instruments (continued)

Carrying amount L&R/(OL) RM’000 RM’000 Company

31 December 2012 Financial assets Trade and other receivables 267,758 267,758 Cash and cash equivalents 6,689 6,689 274,447 274,447

Financial liabilities Loans and borrowings (241,117) (241,117) Trade and other payables (462) (462) (241,579) (241,579)

31 December 2011 Financial assets

Trade and other receivables 51,789 51,789 Cash and cash equivalents 95 95 51,884 51,884

31 December 2011 Financial liabilities Trade and other payables (28,998) (28,998)

1 January 2011 Financial assets Trade and other receivables 50,337 50,337 Cash and cash equivalents 68 68 50,405 50,405

Financial liabilities Trade and other payables (15,488) (15,488)

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ANNUAL REPORT 2012


25.2 Net gains and losses arising from financial instruments

Group Company 2012 2011 2012 2011 RM’000 RM’000 RM’000 RM’000 Net (losses)/gains arising on : Loans and receivables 178 (2,071) 11,160 - Fair value through profit or loss : - HFT 675 (685) - - Available-for-sale financial assets - recognised in profit or loss - 3 - - - reclassified from equity to profit or loss - 10 - - Financial liabilities measured at amortised cost (22,785) (9,388) (11,515) (1) (21,932) (12,131) (355) (1)

25.3 Financial risk management

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

• Creditrisk • Liquidityrisk • Marketrisk

25.4 Credit risk

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

Receivables

Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally

financial guarantees by banks, shareholders or Directors of customers are obtained, and credit evaluations are performed on customers requiring credit over a certain amount.

Exposuretocreditrisk,creditqualityandcollateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by

the carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.





25.4 Credit risk (continued)

Receivables (continued)

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

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Domestic 151,082 111,722 80,095 Asia, other than Malaysia 35,484 18,519 11,875 Others - 2,801 187 186,566 133,042 92,157

Impairment losses

The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables as at the end of the reporting period was :

Individual Gross impairment Net RM’000 RM’000 RM’000 Group

31 December 2012 Not past due 93,274 - 93,274 Past due 1-30 days 35,851 - 35,851 Past due 31-120 days 53,278 - 53,278 Past due more than 120 days 4,163 (1,895) 2,268 186,566 (1,895) 184,671

31 December 2011 Not past due 75,500 - 75,500 Past due 1-30 days 29,160 - 29,160 Past due 31-120 days 25,915 - 25,915 Past due more than 120 days 2,467 (2,229) 238 133,042 (2,229) 130,813

1 January 2011 Not past due 67,875 - 67,875 Past due 1-30 days 11,797 - 11,797 Past due 31-120 days 10,514 - 10,514 Past due more than 120 days 1,971 (1,740) 231 92,157 (1,740) 90,417

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ANNUAL REPORT 2012


25.4 Credit risk (continued)

Receivables (continued)

Impairment losses (continued)

The movements in the allowance for impairment losses of trade receivables during the financial year were :

Group 2012 2011 RM’000 RM’000 At 1 January 2,229 1,740 Impairment loss recognised - 2,427 Impairment loss written off (334) (1,938)

At 31 December 1,895 2,229

The allowance account in respect of trade receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly.

Financial guarantees

Risk management objectives, policies and processes for managing the risk

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

Exposuretocreditrisk,creditqualityandcollateral

The maximum exposure to credit risk amounts to RM215 million (31 December 2011 : RM243 million ;1 January 2011 : RM177 million) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

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

The financial guarantees have not been recognised since the fair value on initial recognition was not material. Inter company balances


The Company provides advances to subsidiaries. The Company monitors the results of the related companies regularly.

Exposuretocreditrisk,creditqualityandcollateral

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

Advances are only provided to subsidiaries of the Company.

As at the end of the reporting period, there was no indication that the advances to subsidiaries are not recoverable. The Company does not specifically monitor the ageing of current advances to the subsidiaries. Nevertheless, these advances are not considered to be overdue and are repayable on demand.





25.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

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

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

Maturity analysis The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end

of the reporting period based on undiscounted contractual payments:

Carrying Contractual Contractual Under 1 - 2 2 - 5 More than amount interest rate cash flows 1 year years years 5 years RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000 Group

31 December 2012 Non-derivative financial liabilities Secured term loans 280,539 3.05 - 7.35 355,905 26,315 31,256 97,741 200,593 Unsecured term loans 51,232 4.70 - 7.50 57,700 16,452 15,470 25,716 62 Finance lease liabilities 3,325 2.30 - 3.90 3,496 2,229 868 399 - Bankers’ acceptances 2,222 3.80 - 3.90 2,222 2,222 - - - Foreign currency trade loan 107,346 1.00 - 3.54 107,346 107,346 - - - Revolving credits 10,000 4.41 - 4.75 10,000 10,000 - - - Trade and other payables, excluding derivatives 95,947 - 95,947 95,947 - - - 550,611 632,616 260,511 47,594 123,856 200,655

Derivative financial (assets)/liabilities Forward exchange contracts (gross settled) : Outflow - - 14,242 14,242 - - - Inflow (6) - (14,248) (14,248) - - - 550,605 632,610 260,505 47,594 123,856 200,655

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ANNUAL REPORT 2012

25. Financial instruments (continued)

25.5 Liquidity risk (continued)

Maturity analysis (continued)

Carrying Contractual Contractual Under 1 - 2 2 - 5 More than amount interest rate cash flows 1 year years years 5 years RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

Group

31 December 2011 Non-derivative financial liabilities

Secured term loans 45,634 6.60 - 7.35 58,664 8,859 16,685 18,655 14,465 Unsecured term loans 52,611 3.05 - 7.35 68,652 19,408 15,273 30,783 3,188 Finance lease liabilities 4,496 2.30 - 5.38 4,810 2,394 1,972 444 - Bankers’ acceptances 31,087 1.35 - 2.40 31,087 31,087 - - - Foreign currency trade loan 94,245 1.12 - 3.22 94,245 94,245 - - - Revolving credits 19,000 4.34 - 4.95 19,000 19,000 - - - Bank overdrafts 374 7.35 374 374 - - - Trade and other payables, excluding derivatives 65,137 - 65,137 65,137 - - - 312,584 341,969 240,504 33,930 49,882 17,653

Derivative financial (assets)/liabilities Forward exchange contracts (gross settled) :

Outflow 669 - 37,313 37,313 - - - Inflow - - (36,644) (36,644) - - - 313,253 342,638 241,173 33,930 49,882 17,653

1 January 2011 Non-derivative financial liabilities Secured term loans 19,350 6.30 - 7.25 24,504 4,102 4,102 10,081 6,219 Unsecured term loans 65,221 4.45 - 7.25 77,109 18,267 16,143 33,334 9,365 Finance lease liabilities 5,460 4.37 - 6.57 5,966 2,242 2,096 1,628 - Bankers’ acceptances 8,506 3.13 - 3.47 8,506 8,506 - - - Foreign currency trade loan 76,507 1.04 - 1.75 76,507 76,507 - - - Revolving credits 15,000 3.87 - 4.43 15,000 15,000 - - - Trade and other payables, excluding derivatives 56,695 - 56,695 56,695 - - - 246,739 264,287 181,319 22,341 45,043 15,584

Derivative financial (assets)/liabilities Forward exchange contracts (gross settled) : Outflow - - 23,254 23,254 - - - Inflow (16) - (23,270) (23,270) - - - 246,723 264,271 181,303 22,341 45,043 15,584





25.5 Liquidity risk (continued)

Maturity analysis (continued)

Carrying Contractual Contractual Under 1 - 2 2 - 5 More than amount interest rate cash flows 1 year years years 5 years RM’000 % RM’000 RM’000 RM’000 RM’000 RM’000

Company 31 December 2012 Non-derivative financial liabilities

Secured term loan 241,117 5.20 308,567 17,360 22,947 88,630 179,630 Trade and other payables 462 - 462 462 - - - 241,579 309,029 17,822 22,947 88,630 179,630

31 December 2011 Non-derivative financial liabilities

Trade and other payables 28,998 - 28,998 28,998 - - -

1 January 2011 Non-derivative financial liabilities

Trade and other payables 15,488 - 15,488 15,488 - - -

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ANNUAL REPORT 2012


25.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s financial position or cash flows.

25.6.1 Currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (USD) and Singapore Dollar (SGD).


The Group’s uses forward exchange contracts to hedge its foreign currency risk. Most of the forward exchange contracts have maturities of less than one year after the end of the reporting period. Where necessary, the forward exchange contracts are rolled over at maturity.

Exposure to foreign currency risk

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

Denominated in SGD USD RM’000 RM’000 Group

31 December 2012

Trade receivables 1,301 148,047 Cash and bank balances 147 27,619 Trade payables (2) (85,667) Foreign currency loan - (107,164) Net exposure 1,446 (17,165) 31 December 2011 Trade receivables 3,593 61,148 Cash and bank balances 917 3,436 Trade payables - (15,877) Foreign currency loan - (94,245) Net exposure 4,510 (45,538) 1 January 2011 Trade receivables 3,447 21,613 Cash and bank balances 2,301 8,821 Trade payables - (10,941) Foreign currency loan - (76,507) Net exposure 5,748 (57,014)





25.6 Market risk (continued)

25.6.1 Currency risk (continued)

Currency risk sensitivity analysis A 10% strengthening of the Ringgit Malaysia (RM) against the following currencies at the end of the reporting

period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

Profit or loss RM’000 Group

31 December 2012 SGD (108) USD 1,287 31 December 2011 SGD (338) USD 3,415

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

25.6.2 Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short term receivables and payables are not significantly exposed to interest rate risk.


The Group is exposed to interest rate risk through the impact of rate changes on interest bearing loans and borrowings and interest earning deposits. The Group’s policy is to borrow principally on the floating basis but to retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate loans and borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.

Exposure to interest rate risk

The interest rate profile of the Group’s significant interest earning and interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was :

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Fixed rate instruments Financial assets 12,450 2,992 - Financial liabilities (147,416) (30,984) (20,214) (134,966) (27,992) (20,214)

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ANNUAL REPORT 2012


25.6 Market risk (continued)

25.6.2 Interest rate risk (continued)

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Floating rate instruments Financial liabilities (307,248) (216,463) (169,830) Company 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Fixed rate instruments Financial assets 6,400 - - Floating rate instruments Financial liabilities (241,117) - -

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

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

(b) Cashflowsensitivityanalysisforvariablerateinstruments

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

Group Company Profit or loss Profit or loss 100 bp 100 bp 100 bp 100 bp Increase Decrease Increase Decrease RM’000 RM’000 RM’000 RM’000 31 December 2012 Floating rate instruments (2,304) 2,304 (1,808) 1,808 31 December 2011 Floating rate instruments (1,623) 1,623 - -

25.7 Fair value of financial instruments

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





25.7 Fair value of financial instruments (continued)

The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows :

31.12.2012 31.12.2011 1.1.2011 Carrying Fair Carrying Fair Carrying Fair amount value amount Value amount Value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Group

Forward exchange contract - Assets 6 6 - - 197 197 - Liabilities - - 669 669 181 181 Fixed rate term loans 24,524 * 24,524 26,488 *26,488 14,754 *14,754 Finance lease liabilities 3,325 * 3,325 4,496 *4,496 5,460 *5,460

* The fair value of these fixed interest financial instruments is determined by discounting the relevant cash flows using current interest rates for similar financial instruments at the end of reporting date. Since the current interest rates do not significantly differ from the intrinsic rate of these financial instruments, the fair value of these financial instruments therefore, closely approximate their carrying amounts at the end of reporting date.

The following summarises the methods used in determining the fair value of financial instruments reflected

in the above table.

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

25.7.1 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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

31 December 2012 Financial assets Forward exchange contracts - 6 - 6 31 December 2011 Financial liabilities Forward exchange contracts - 669 - 669

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ANNUAL REPORT 2012

26. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and determine to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

During 2012, the Group’s strategy which was unchanged from 2011, was to maintain the debt-to-equity ratio at below 1.5 : 1. The debt-to-equity ratios at 31 December 2012, 31 December 2011 and 1 January 2011 were as follows:

Group 31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Total borrowings (Note 13) 454,664 247,447 190,044 Less : Cash and cash equivalents (Note 10) (52,354) (31,755) (22,808) Net debt 402,310 215,692 167,236

Total equity 411,287 235,552 205,612

Debt-to-equity ratios 0.98 0.92 0.81

There were no changes in the Group’s approach to capital management during the financial year.

The Group is also required to maintain a maximum debt-to-equity ratio of 1.5 to comply with a bank covenant, failing which, the bank may call an event of default.

27. OPERATING LEASES - GROUP

Total future minimum lease payments under non-cancellable operating leases are as follows :

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Less than 1 year - 40 300 Between 1 and 5 years - - 40 - 40 340

The Group leases land and factory facilities under operating leases. The leases typically run for a period of 3 years, with an option to renew the lease after that date.




28. CAPITAL AND OTHER COMMITMENTS - GROUP

31.12.2012 31.12.2011 1.1.2011 RM’000 RM’000 RM’000 Property, plant and equipment Contracted but not provided for 6,491 15,376 15,394

Investment commitment for acquisition of an associate (Note A) - 217,006 217,006

Note A

In 2009, the Group, via its wholly owned subsidiary, Can-One International Sdn. Bhd. entered into a conditional share sale agreement to acquire 146,131,500 ordinary shares of RM0.25 each, representing 32.9% equity interest in Kian Joo Can Factory Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad for a total consideration of RM241,117,000 (“Acquisition”).

The Acquisition has been approved by the shareholders of the Company, the Ministry of International Trade and Industry and the Securities Commission in 2009. The Acquisition has been completed on 25 January 2012.

29. CONTINGENT LIABILITIES - COMPANY

Corporate guarantees

The Company has provided corporate guarantees amounting to RM495,230,000 (31 December 2011 : RM484,685,000 ; 1 January 2011 : RM463,670,000) to secure banking facilities granted to its certain subsidiaries. As at 31 December 2012, the amount of facilities utilised amounted to RM214,757,000 (31 December 2011 : RM243,430,000 ;1 January 2011 : RM176,675,000).

Continuing financial support

The Company has undertaken to provide continuing financial support to certain subsidiaries to enable them to meet their financial obligations as and when they fall due.

30. RELATED PARTIES

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include certain Directors and certain members of senior management of the Group.

The Group has related party relationship with its significant investors, subsidiaries, associates and key management personnel.

Related party transactions have been entered into the normal course of business under normal trade terms. The significant related party transactions of the Group and of the Company, other than key management personnel compensation as disclosed in the Note 19 to the financial statements, are as follows :

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ANNUAL REPORT 2012

30. RELATED PARTIES (continued)

2012 2011 RM’000 RM’000 Group Dividend income from an associate 18,266 - Company Interest income from a subsidiary 11,160 - Dividend income from a subsidiary 16,000 6,000

Non-trade balances with subsidiaries are disclosed in Note 9 and Note 15 to the financial statements. All outstanding balances are to be settled in cash.

31. EXPLANATION OF TRANSITION TO MFRSs

As stated in Note 1(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs.

The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRS statement of financial position at 1 January 2011 (the Group’s date of transition to MFRSs).

In preparing the opening consolidated statement of financial position at 1 January 2011, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous FRSs. An explanation of how the transition from previous FRSs to MFRSs has affected the Group’s financial position, financial performance and cash flows is set out as follows:

31.1 Reconciliation of financial position

1.1.2011 31.12.2011 Effect of Effect of Transition Transition Group Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Assets Property, plant and equipment a 195,040 5,884 200,924 249,261 5,884 255,145 Other investment, including derivatives 116 - 116 - - - Goodwill on consolidation 1,712 - 1,712 1,712 - 1,712 Total non-current assets 196,868 5,884 202,752 250,973 5,884 256,857

Other investment, including derivatives 197 - 197 - - - Inventories 117,557 - 117,557 113,610 - 113,610 Trade and other receivables 123,280 - 123,280 164,781 - 164,781 Current tax assets 701 - 701 476 - 476 Cash and cash equivalents 22,808 - 22,808 31,755 - 31,755 Total current assets 264,543 - 264,543 310,622 - 310,622 Total assets 461,411 5,884 467,295 561,595 5,884 567,479




31. EXPLANATION OF TRANSITION TO MFRSs (continued)

31.1 Reconciliation of financial position (continued)

1.1.2011 31.12.2011 Effect of Effect of Transition Transition Group Note FRSs to MFRSs MFRSs FRSs to MFRSs MFRSs RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Equity Share capital 76,200 - 76,200 76,200 - 76,200 Reserves a 13,488 (4,918) 8,570 13,478 (4,918) 8,560 Retained earnings d 100,312 15,733 116,045 128,153 15,733 143,886 Non-controlling interests 4,797 - 4,797 6,906 - 6,906 Total equity 194,797 10,815 205,612 224,737 10,815 235,552 Liabilities Loans and borrowings 70,731 - 70,731 83,257 - 83,257 Deferred tax liabilities c 18,494 (4,931) 13,563 23,053 (4,931) 18,122 Total non-current liabilities 89,225 (4,931) 84,294 106,310 (4,931) 101,379 Loans and borrowings 119,313 - 119,313 164,190 - 164,190 Trade and other payables, including derivatives 56,876 - 56,876 65,806 - 65,806 Current tax payables 1,200 - 1,200 552 - 552 Total current liabilities 177,389 - 177,389 230,548 - 230,548 Total liabilities 266,614 (4,931) 261,683 336,858 (4,931) 331,927 Total equity and liabilities 461,411 5,884 467,295 561,595 5,884 567,479

31.2 Material adjustments to the statements of profit or loss and other comprehensive income and cash flows for 2011

There are no material differences between the statements of profit or loss and other comprehensive income and cash flows presented under MFRSs and the statement of profit or loss and other comprehensive income and cash flows presented under FRSs.

31.3 Notes to reconciliations

(a) Property, plant and equipment – Deemed cost exemption

Under FRSs, the Group measured its land and buildings at valuation. The last valuation was carried out in 2009.

Upon transition to MFRSs, the Group elected to apply the optional exemption to use that previous revaluation as deemed cost under MFRSs. The revaluation reserve of RM4,918,000 at 1 January 2011 and 31 December 2011 was reclassified to retained earnings.

The Group elected to apply the optional exemption to measure certain property, plant and equipment at fair value at the date of transition to MFRSs and use that fair value as deemed cost under MFRSs.

The aggregate fair value of these property, plant and equipment at 1 January 2011 was determined to be RM200,924,000 compared to the then carrying amount of RM195,040,000 under FRSs.

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ANNUAL REPORT 2012


31.3 Notes to reconciliations (continued)

The impact arising from the change is summarised as follows: Group 1.1.2011 31.12.2011 RM’000 RM’000 Consolidated statement of financial position Capital reserve 4,918 4,918 Property, plant and equipment 5,884 5,884 Related tax effect (87) (87) Adjustment to retained earnings 10,715 10,715

(b) Unutilised reinvestment allowance

The Group recognised unutilised reinvestment allowance as deferred tax assets or as a reduction in the tax applied to deferred tax liabilities, the Group made a restropective adjustment and recognised the resulting adjustments directly in retained earnings at the date of transition to MFRS framework.

The impact arising from the change is summarised as follows: Group 1.1.2011 31.12.2011 RM’000 RM’000 Consolidated statement of financial position Deferred tax liabilites 5,018 5,018 Adjustment to retained earnings 5,018 5,018

(c) Income tax

The changes that affected the deferred tax liabilities are as follows:

Group Note 1.1.2011 31.12.2011 RM’000 RM’000 Property, plant and equipment a 87 87 Unutilised reinvestment allowance b (5,018) (5,018) Decrease in deferred tax liabilities (4,931) (4,931)





31.3 Notes to reconciliations (continued)

(d) Retained earnings

The changes that affected the retained earnings are as follows: Group Note 1.1.2011 31.12.2011 RM’000 RM’000 Property, plant and equipment a 10,715 10,715 Deferred tax liabilities b 5,018 5,018 Increase in retained earnings 15,733 15,733

32. MATERIAL LITIGATION

a) On 23 March 2009, Can-One International Sdn. Bhd. (“CISB”) together with 4 other defendants were served a Writ of Summons and a Statement of Claim pertaining to the Acquisition (as mentioned in Note 28).

The plaintiffs are claiming:

i) against the other 4 defendants and CISB damages amounting to RM55,000,000 for alleged fraud and interest at rate of 8% per annum on the said sum, cost of action on a full indemnity basis and such further or any other reliefs as the Court may deemed fit and proper to grant,

ii) an interim order restraining the 4 defendants and each of them whether by themselves, their directors, their servants, or agents or otherwise howsoever from proceeding with the implementation of the Acquisition until the final hearing and disposal of the action,

iii) a declaration that the award of the bid in the public tender exercise to CISB for the Acquisition is illegal, null and void.

The Board of Directors has referred the matter to its solicitors. Upon obtaining legal advice, the Directors are of the opinion that the suit against CISB is unlikely to succeed.

CISB has applied to the High Court to set aside and/or strike out the Plaintiffs’ Writ and Statement of Claim. The case has been fixed for mention on 14 May 2013.

b) In May 2011, CISB served a Writ of Summons and a Statement of Claim on Kian Joo Can Factory Berhad (“KJCFB”)

and 4 other defendants to claim the following:

i) a declaration that the proposed bonus issue of 222,083,893 new ordinary shares of RM0.25 each in KJCFB (“Bonus Shares”) to be credited as fully paid-up on the basis of 1 Bonus Share for every 2 shares in KJCFB (“KJCFB Shares”) held (“Proposed Bonus Issue”) and the proposed renounceable rights issue of 166,562,919 5 year warrants 2011/2016 on the basis of 1 warrant for every 4 KJCFB Shares held after the Proposed Bonus Issue at an issue price of RM0.01 per warrant (“Proposed Renounceable Rights Issue”) by KJCFB are in breach of the rights and interests of CISB under the Shares Sale Agreement dated 23 March 2009 (“SSA”) and in breach of the Order of the Court of Appeal dated 25 August 2010 and the Order of the Federal Court (“FC’) dated 21 February 2011;

ii) a declaration that the other 4 Defendants, as the shareholders or contributories of Kian Joo Holdings Sdn. Bhd. - In Liquidation (“KJHSB”) and as directors of KJCFB, are in breach of the Order of the Court of Appeal dated 25 August 2010 and the Order of the FC dated 21 February 2011;

iii) a declaration that the Defendants by their respective acts and involvement in the Proposed Bonus Issue and the Proposed Renounceable Rights Issue are in contempt of the Court of Appeal and the FC;

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ANNUAL REPORT 2012

32. MATERIAL LITIGATION (continued)

iv) a declaration that the Proposed Bonus Issue and the Proposed Renounceable Rights Issue and all shares issued in pursuance thereof are null and void;

v) an injunction that the Defendants be restrained whether by themselves, their servants, agents or otherwise howsoever until such further Order from convening any directors’ meetings or any ordinary or extraordinary general meetings of KJCFB for purposes of approving or for any purposes incidental to the Proposed Bonus Issue and the Proposed Renounceable Rights Issue by KJCFB;

vi) an injunction that the Defendants be restrained whether by themselves, their servants, agents or otherwise howsoever until such further Order from acting, implementing or continuing to act on or implement the Proposed Bonus Issue and the Proposed Renounceable Rights Issue by KJCFB or on any of the resolutions passed at any directors’ meetings and general meetings of KJCFB or on any approval of the regulatory authorities, incidental to the Proposed Bonus Issue and the Proposed Renounceable Rights Issue;

vii) an injunction that the four Defendants be restrained whether by themselves, their servants, agents or

otherwise howsoever until such further Order from taking, continuing and directing any steps or actions to be taken with a view to passing, effecting or enforcing any decisions or resolutions, whether incidental to the Proposed Bonus Issue and the Proposed Renounceable Rights Issue or any other corporate exercise, including declaring any benefits or dividends or causing any dispositions, which may have the effect of diluting the share capital or assets of KJCFB and/or affect or prejudice the rights and interests of CISB under the SSA and/or the said shares thereunder;

viii) an inquiry into the damages suffered by CISB by reason of the Defendants’ breach of the rights and interests of CISB under the SSA;

ix) such further and/or other requisite accounts, inquiries, directions or reliefs as may be appropriate to safeguard the rights and interests of CISB under the SSA; and

x) costs.

On 4 July 2011, the High Court dismissed CISB’s application for the said injunction.

On 8 July 2011, CISB filed the Notices of Appeal to the Court of Appeal against the decisions of the High Court.

The Court of Appeal had on 8 November 2011:

i) allowed CISB’s Appeal against the decision of the High Court given on 4 July 2011 in striking out CISB’s suit (“CISB’s Appeal”); and

ii) dismissed CISB’s Appeal against the decision of the High Court given on 4 July 2011 in refusing CISB’s application for an injunction restraining the implementation the Proposed Bonus Issue and the Proposed Renounceable Rights Issue pending the hearing of the suit of CISB.

In respect of CISB’s Appeal, the High Court had struck out the said matter with no order as to cost.

CISB, has applied for leave to appeal to the Federal Court (“FC”) against the Court of Appeal’s decision in dismissing CISB’s Appeal on the injunction. The Federal Court had fixed the said matter for mention on 16 May 2013.

c) The FC on 5 January 2012, allowed the appeals of the Liquidators of KJHSB, including the Liquidator’s Appeals to

proceed with the completion of the sale of 146,131,500 KJCFB shares held by KJHSB to CISB at a total consideration of RM241,116,975 (“FC Judgement”). CISB had on 25 January 2012 completed the acquisition of the said KJCFB shares.

CISB received 2 Notice of Motions and Affidavits in Support filed by Dato’ See Teow Chuan and 13 others on 14 February 2012 (“First Applicants”) followed by another 2 Motions and Affidavits in Support filed by See Tiau Kee and 10 others on 24 February 2012 (“Second Applicants”).




32. MATERIAL LITIGATION (continued)

They have applied for the following orders:

i) The Grounds of FC Judgement and the consequent Orders of the FC dated 5 January 2012 be reviewed and set aside pursuant to Rule 137 of the Rules of the FC, 1995 and/or the inherent jurisdiction of the FC;

ii) The said Appeals be re-heard by the FC consisting of 9 Judges of the FC other than those who heard and decided upon the said Appeals on 5 January 2012;

iii) The Liquidators of KJHSB, Ooi Woon Chee and Ng Kim Tuck be restrained from distributing the said proceeds of RM241,116,975 from the sale of the 146,131,500 shares of KJCFB to CISB and the said proceeds be retained in a monthly fixed deposit account in a local bank pending the hearing and final disposal of this Application and in the event the reliefs in paragraphs (i) and (ii) above are granted by the FC, until the said Appeals are re-heard and finally disposed of by the FC;

iv) CISB be restrained from selling and/or in any way disposing of the whole or any part of the 146,131,500 KJCFB Shares purchased from KJHSB pending the hearing and final disposal of this Application and in the event the reliefs in paragraphs (i) and (ii) above are granted by the FC, until the said Appeals are re-heard and finally disposed of by the FC;

v) CISB be restrained from exercising any of its rights attached to or arising from the purchase of the 146,131,500 KJCFB Shares by CISB from KJHSB pending the hearing and final disposal of this Application and in the event the reliefs in paragraphs (i) and (ii) above are granted by the FC, until the said Appeals are re-heard and finally disposed of by the FC;

vi) Costs of this Application be costs in the cause; and

vii) Any other or further reliefs that the FC deems fit and proper to grant in the circumstances

(collectively “Review Applications”).

The FC on 3 April 2012 granted the Liquidators leave to issue committal proceedings against the First Applicants/Second Applicants and their solicitors for contempt of the FC. The FC after hearing the Review Applications on 22 January 2013, had adjourned the said Application for decision to a date to be fixed.

33. SIGNIFICANT EVENTS

During the financial year: (i) The Company via its wholly-owned subsidiary, Can-One International Sdn. Bhd., acquired equity interest of 32.90%

in Kian Joo Can Factory Berhad from Kian Joo Holdings Sdn. Bhd. - In Liquidation. The acquisition was completed on 25 January 2012.

(ii) Newmarq Sdn. Bhd., a wholly-owned subsidiary of the Company subscribed for cash, the paid-up capital of the following companies:

a) an additional 6,000 new ordinary shares of USD100 each in its wholly-owned subsidiary, PT Corum (a Company incorporated in Indonesia). The issued and fully paid-up share capital of PT Corum was increased from 1,000 ordinary shares of USD100 each to 7,000 ordinary shares of USD100 each; and

b) an additional 999,999 new ordinary shares at the subscription price of SGD1 each in its wholly-owned subsidiary, Grensing Pte. Ltd. (a Company incorporated in Singapore). The issued and fully paid-up share capital of Grensing Pte. Ltd. was increased from 1 ordinary shares of SGD1 each to 1,000,000 ordinary shares of SGD1 each.

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ANNUAL REPORT 2012

34. SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS OR LOSSES

The breakdown of the retained earnings of the Group and of the Company as at 31 December, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows :

Group Company 31.12.2012 31.12.2011 31.12.2012 31.12.2011 RM’000 RM’000 RM’000 RM’000 Total retained earnings of the Company and its subsidiaries : - Realised 272,091 206,358 30,604 21,093 - Unrealised (17,337) (9,254) - - 254,754 197,104 30,604 21,093 Total retained earnings of associate : - Realised 20,993 - - - - Unrealised 113,987 - - -

389,734 197,104 30,604 21,093

Less: Consolidation adjustments (79,695) (53,218) - -

Total retained earnings 310,039 143,886 30,604 21,093

The determination of realised and unrealised profits is based on the Guidance of 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, issued by Malaysian Institute of Accountants on 20 December 2010.



LIST OF PROPERTIES

Location Tenure Area Description and Approximate Net Book Year of Last (Square Existing Use Age of Value as at Revaluation/ metres) Buildings 31.12.2012 Acquisition (Years) (RM’000) 4829, Tingkat Mak Mandin 5 99 years Land Office and Factory Office Block 4,226 2011 Mak Mandin Industrial Estate leasehold 6,380.40 Buildings/Industrial - 46 13400 Butterworth expiring on Pulau Pinang 23.9.2070 Built-up Factory Malaysia 3,001.70 - 24

4821, Tingkat Mak Mandin 5 99 years Land Office and Factory 42 2,974 2011 Mak Mandin Industrial Estate leasehold 4,269.27 Buildings/Industrial 13400 Butterworth expiring on Pulau Pinang 11.12.2066 Built-up Malaysia 2,161.85

4822, Tingkat Mak Mandin 5 99 years Land Office and Factory 42 2,168 2011 Mak Mandin Industrial Estate leasehold 2,905.36 Building/Industrial 13400 Butterworth expiring on Pulau Pinang 29.9.2071 Built-up Malaysia 3,372.38

5888, Lorong Mak Mandin 7 99 years Land Factory 42 3,166 2011 Mak Mandin Industrial Estate leasehold 4,990.57 Building/Industrial 13400 Butterworth expiring on Pulau Pinang 28.8.2067 Built-up Malaysia 3,260 Lot No.1983, Mukim 14 60 years Land Vacant Land Not Applicable 1,483 2011 Seberang Prai Utara leasehold 5,128.81 Mak Mandin Industrial Estate expiring on 13400 Butterworth 3.6.2051 Pulau Pinang Malaysia 5102, Jalan Permatang Pauh 99 years Land Office and Factory 42 5,292 2011 Mak Mandin Industrial Estate leasehold 9,100.32 Buildings/Industrial 13400 Butterworth expiring on Pulau Pinang 6.12.2069 Built-up Malaysia 5,372.49

Lot 2244, Jalan Rajawali Freehold Land Office and Factory 15 13,869 2011 Batu 9, Kampung Kebun Baru 16,199.60 Buildings/Industrial 42500 Teluk Panglima Garang Kuala Langat Built-up Selangor Darul Ehsan 11,020.07 Malaysia Lot 2243, Jalan Rajawali Freehold Land Factory 1 18,997 2011 Batu 9, Kampung Kebun Baru 17,830.97 Buildings/Industrial 42500 Teluk Panglima Garang Kuala Langat Build-up Selangor Darul Ehsan 9,471 Malaysia

95

ANNUAL REPORT 2012

LIST OF PROPERTIES

Location Tenure Area Description and Approximate Net Book Year of Last (Square Existing Use Age of Value as at Revaluation/ metres) Buildings 31.12.2012 Acquisition (Years) (RM’000) Lot 2234, Jalan Rajawali Freehold Land Office and Factory Office Block 13,759 2011 Batu 9, Kampung Kebun Baru 16,313.60 Buildings/Industrial and Factory - 42500 Teluk Panglima Garang 16 Kuala Langat Built-up Selangor Darul Ehsan 7,158.37 New Factory Malaysia - 5

Lot 2223 Jalan Kasawari Freehold Land Factory buildings 3 14,113 2011 Batu 9, Kampung Kebun Baru 16,313.96 42500 Teluk Panglima Garang Kuala Langat Built-up Selangor Darul Ehsan 9,731.13 Malaysia

Lot 1, Persiaran Raja Lumu Land under Built-up Office and Factory 17 1,525 2011 Pandamaran Industrial Estate tenancy with 1,858.06 Buildings/Industrial 42000 Port Klang renewable Selangor Darul Ehsan option Malaysia

Lot 8985 99 years Land Office and Factory 5 14,762 2011 Off Jalan Ikan Bawal leasehold 13,715 Buildings/Industrial Telok Gong expiring on 42000 Port Klang 16.10.2068 Built-up Selangor Darul Ehsan 7,394.34 Malaysia PLO 324, Jalan Suasa 60 years Land Office and Factory Office Block 9,246 2011 Kawasan Perindustrian leasehold 8,093.71 Buildings/Industrial and Factory - Pasir Gudang expiring on approximately 81700 Pasir Gudang 30.9.2045 Built-up 20 Johor Darul Takzim 6,537.03 Malaysia Factory 2 - approximately 17

Factory 3 - approximately 9

PLO 718, Jalan Keluli 8 60 years Land Office and Factory Factory 1 - 7 14,533 2011 Kawasan Perindustrian leasehold 28,779.41 Buildings/Industrial Factory 2 – 2 Pasir Gudang expiring on 81700 Pasir Gudang 19.3.2067 Built-up Johor Darul Takzim 13,121.16 Malaysia

96


ANALYSIS OF SHAREHOLDINGSAS AT 9 MAY 2013

Authorised share capital : RM100,000,000Issued and fully paid-up share capital : RM76,200,000Class of shares : Ordinary shares of RM0.50 eachVoting rights : One (1) vote per ordinary share heldNo. of shareholders : 1,754

ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of shareholdings No. of shareholders % of shareholders No. of shares held % of issued shares

Less than 100 shares 8 0.45 160 *100 to 1,000 shares 299 17.04 243,810 0.161,001 to 10,000 shares 971 55.36 4,595,830 3.0110,001 to 100,000 shares 363 20.70 12,322,700 8.09100,001 to 7,619,999 shares 112 6.39 90,080,219 59.117,620,000 shares and above 1 0.06 45,157,281 29.63

Total 1,754 100.00 152,400,000 100.00

* Negligible

SUBSTANTIAL SHAREHOLDERS (According to the Register of Substantial Shareholders)

Direct Indirect Total No. of % of No. of % of No. of % of Name shares held issued shares shares held issued shares shares held issued shares

Eller Axis Sdn Bhd 45,157,281 29.63 - - 45,157,281 29.63 (“EASB”) Yeoh Jin Hoe 6,690,000 4.39 45,157,281 (a) 29.63 (a) 51,847,281 34.02

Notes:

(a) Deemedinterestbyvirtuethathehasmorethan15%votingsharesinEASB

DIRECTORS’ SHAREHOLDINGS(According to the Register of Directors’ Shareholdings)

Direct Indirect Total No. of % of No. of % of No. of % of Name shares held issued shares shares held issued shares shares held issued shares

William Maurice Samson 80,000 0.05 - - 80,000 0.05Marc Francis Yeoh 343,100 0.23 - - 343,100 0.23 Min ChangChee Khay Leong 1,554,100 1.02 - - 1,554,100 1.02Tan Beng Wah 2,000 * - - 2,000 *Yeoh Jin Hoe 6,690,000 4.39 45,157,281 (a) 29.63 (a) 51,847,281 34.02Razmi Bin Alias - - 911,119 (b) 0.60 (b) 911,119 0.60Yeoh Jin Beng 300,000 0.20 - - 300,000 0.20See Ewe Lin 300,100 0.20 - - 300,100 0.20

Notes:

(a) Deemedinterestbyvirtuethathehasmorethan15%votingsharesinEASB(b) Deemedinterestbyvirtuethathehasmorethan15%votingsharesinIskaTenagaSdnBhd* Negligible

97

ANNUAL REPORT 2012

ANALYSIS OF SHAREHOLDINGSAS AT 9 MAY 2013

LIST OF THIRTY (30) LARGEST SHAREHOLDERS (According to the Record of Depositors) No. of % of issued No. Name shares held shares held 1. Eller Axis Sdn Bhd 45,157,281 29.63

2. Sanwoi (Malaysia) Sdn Bhd 7,590,000 4.98

3. Agnes Goh Cheng Suan 5,000,000 3.28

4. Scott Sebastian Yeoh Min Hsing 4,500,000 2.95

5. HLIB Nominees (Tempatan) Sdn Bhd 4,390,000 2.88 - Pledged Securities Account for Yeoh Jin Hoe (MG0183-199)

6. Koperasi Permodalan Felda Malaysia Berhad 4,000,000 2.62

7. Winchem (Malaysia) Sdn Bhd 3,630,000 2.38

8. HSBC Nominees (Asing) Sdn Bhd 3,557,500 2.33 - Exempt An for JPMorgan Chase Bank, National Association (NORGES BK) 9. Citigroup Nominees (Tempatan) Sdn Bhd 3,224,500 2.12 - Universal Trustee (Malaysia) Berhad for CIMB Islamic Small Cap Fund

10. HLIB Nominees (Tempatan) Sdn Bhd 2,532,300 1.66 - Pledged Securities Account for Taipanmatics Sdn Bhd (MG0170-199) 11. HSBC Nominees (Tempatan) Sdn Bhd 2,253,800 1.48 - HSBC (M) Trustee Bhd for MAAKL Al-Fauzan (5170)

12. See Seok Yong 2,200,000 1.44

13. EB Nominees (Tempatan) Sendirian Berhad 2,000,000 1.31 - Pledged Securities Account for Patricia Woon Lai Ching @ Lee Yah Seng (SFC) 14. Yeoh Jin Aik 2,000,000 1.31

15. Yeoh Jin Hoe 2,000,000 1.31

16. Maybank Nominees (Tempatan) Sdn Bhd 1,929,100 1.27 - Maybank Trustees Berhad for CIMB-Principal Small Cap Fund (240218) 17. HSBC Nominees (Tempatan) Sdn Bhd 1,714,300 1.12 - HSBC (M) Trustee Bhd for OSK-UOB Growth and Income Focus Trust (4892) 18. HSBC Nominees (Tempatan) Sdn Bhd 1,527,000 1.00 - HSBC (M) Trustee Bhd for OSK-UOB Equity Trust (3175) 19. UOBM Nominees (Tempatan) Sdn Bhd 1,470,400 0.96 - UOB-OSK Asset Management Sdn Bhd for Uni.Asia Life Assurance Berhad (Par Fund) 20. Citigroup Nominees (Asing) Sdn Bhd 1,413,000 0.93 - CIPLC for PHEIM SICAV-SIF 21. Low Kam Fatt 1,347,600 0.88

22. HSBC Nominees (Tempatan) Sdn Bhd 1,282,000 0.84 - HSBC (M) Trustee Bhd for OSK-UOB Small Cap Opportunity Unit Trust (3548) 23. HLIB Nominees (Tempatan) Sdn Bhd 1,077,200 0.71 - Pledged Securities Account for Exosoft Sdn Bhd (MG0171-199) 24. Zainuddin Bin Din 1,000,000 0.66

25 Maybank Nominees (Tempatan) Sdn Bhd 967,200 0.63 - Maybank Trustees Berhad for MAAKL-CM Shariah Flexi Fund (270785) 26. Iska Tenaga Sdn Bhd 911,119 0.60

27. Chee Khay Leong 870,000 0.57

28 Patricia Woon Lai Ching @ Lee Yah Seng 815,700 0.54

29. Citigroup Nominees (Tempatan) Sdn Bhd 706,100 0.46 - Exempt An for American International Assurance Berhad 30. Kumpulan Wang Simpanan Guru-Guru 684,300 0.45 Total 111,750,400 73.30

98


NOTICE OF ANNUAL GENERAL MEETING

Resolution 1

Resolution 2

Resolution 3Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

NOTICE IS HEREBY GIVEN THAT the Ninth Annual General Meeting of Can-One Berhad (“Can-One” or “the Company”) will be held at Greens III (Sport Wing), Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 19 June 2013 at 10.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive the audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2012 and the Reports of the Directors and Auditors thereon.

2. To declare a first and final tax exempt dividend of 8% (4 sen per share) for the financial year ended

31 December 2012. 3. To re-elect the following Directors of the Company who retire pursuant to Article 101 of the Company’s

Articles of Association: • MarcFrancisYeohMinChang • TanBengWah

4. To approve the payment of Directors’ Fees amounting to RM240,000.00 in respect of the financial year ended 31 December 2012.

5. To re-appoint Messrs KPMG as Auditors of the Company and to authorise the Directors to fix their

remuneration. AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass the following resolution pursuant to Section 129(6) of the Companies Act, 1965:

“THAT pursuant to Section 129(6) of the Companies Act, 1965, William Maurice Samson be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company.”

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

Authority to Directors to issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT subject to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental and/or regulatory authorities, if applicable, the Directors of the Company be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company at any time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued share capital of the Company for the time being;

AND THAT such authority shall continue to be in force until:

(a) 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

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever occurs first.

AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.”

AGENDA

99

ANNUAL REPORT 2012


Resolution 9

Resolution 10


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 RM0.50 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company, provided that:

(i) the aggregate number of shares to be purchased pursuant to this resolution shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company as at the date of the share buy-back;

(ii) an aggregate amount of the funds not exceeding the retained profits and share premium reserve of the Company as at the date of the share buy-back, be utilised by the Company for the purchase of its own shares; and

(iii) the shares of the Company to be purchased may be cancelled, retained as treasury shares, distributed as dividends or resold on Bursa Securities, or a combination of any of the above, at the absolute discretion of the Directors;

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:

(a) 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

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) 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.”

9. To consider and, if thought fit, to pass the following resolution as a Special Resolution:

Proposed amendments to the Articles of Association of the Company

“THAT the proposed amendments to the Articles of Association of the Company as set out in Appendix I of the Annual Report 2012 of the Company be and are hereby approved AND THAT the Proposed Amended Articles as set out therein be and are hereby adopted.”

100




Proposed 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 27 May 2013, provided that:

(i) such transactions are necessary for the day-to-day operations of the Company and/or its subsidiaries and are carried out in the ordinary course of business on normal commercial terms and on terms not more favourable to the parties with which such recurrent transactions are to be entered into than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and

(ii) the shareholders’ mandate is subject to annual renewal and disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year;

AND THAT the mandate conferred by this resolution shall continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it will lapse, unless by 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.”

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.

NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE

NOTICE IS ALSO HEREBY GIVEN THAT the first and final tax exempt dividend of 8% (4 sen per share) in respect of the financial year ended 31 December 2012 (“Dividend”), if approved by shareholders at the Ninth Annual General Meeting of the Company, will be paid to shareholders on 31 July 2013. The entitlement date for the Dividend shall be 15 July 2013.

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

(a) shares transferred into their Securities Account before 4.00 p.m. on 15 July 2013, 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)Kwong Shuk Fong (MAICSA 7032330)Company Secretaries

Petaling Jaya27 May 2013

Resolution 11

101

ANNUAL REPORT 2012


Notes:

(A) GENERAL MEETING RECORD OF DEPOSITORS

Onlymemberswhosenameappears intheGeneralMeetingRecordofDepositorsasat12June2013shallbeentitledtoattendthisMeeting or appoint proxy to attend and vote in his stead.

(B) PROXY

(i) AmemberoftheCompanyentitledtoattendandvoteatthisMeetingisentitledtoappointnotmorethantwo(2)proxiesofhisownchoicetoattendandvoteinhisstead.AproxymaybutneednotbeamemberoftheCompanyandamembermayappointanypersontobehisproxywithoutlimitationandtheprovisionsofSection149(1)(b)oftheCompaniesAct,1965shallnotapplytothe Company.

(ii) Ifamemberappointstwo(2)proxies,themembermustspecifytheproportionofhisshareholdingtoberepresentedbyeachproxy,failingwhich,theappointmentshallbeinvalid.

(iii) Where amember of the Company is an exempt authorised nomineewhich holds ordinary shares in the Company formultiplebeneficialowners inone(1)securitiesaccount(“omnibusaccount”),there isno limittothenumberofproxieswhichtheexemptauthorised nominee may appoint in respect of each omnibus account it holds.

(iv) Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororhisattorneydulyauthorisedinwritingorifthe appointor is a corporation, under its common seal or under the hand of an officer or its attorney duly authorised in that behalf.

(v) Tobevalid,theinstrumentappointingaproxymustbecompletedanddepositedattheRegisteredOfficeoftheCompanyat2B-4,Level4,JalanSS6/6,KelanaJaya,47301PetalingJaya,SelangorDarulEhsan,Malaysia,notlessthanforty-eight(48)hoursbeforethetime appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll, before the time appointed for the taking of the poll).

(vi) Any alteration in the form of proxy must be initialled.

(C) EXPLANATORY NOTES ON SPECIAL BUSINESS

Resolution pertaining to re-appointment of Director pursuant to Section 129(6) of the Companies Act, 1965

There-appointmentofWilliamMauriceSamson,apersonovertheageofseventy(70)years,asDirectoroftheCompanytoholdofficeuntiltheconclusionofthenextAnnualGeneralMeeting(“AGM”)oftheCompanyshalltakeeffectiftheproposed Resolution 7 has been passedbyamajorityofnotlessthanthree-fourths(3/4)ofsuchmembersasbeingentitledtovoteinpersonor,whereproxiesareallowed,by proxy, at the Ninth AGM.

Resolution pertaining to Authority to Directors to issue shares pursuant to Section 132D of the Companies Act, 1965

TheCompanyhad,attheEighthAGMheldon28June2012,obtaineditsshareholders’approvalforthegeneralmandateforissuanceofsharespursuanttoSection132DoftheCompaniesAct,1965(“theAct”).TheCompanydidnotissueanynewsharessinceobtainingthemandateuptothedateofthisnoticeandaccordingly,noproceedswereraised.

TheOrdinaryResolutionproposedisarenewalofthegeneralmandateforissuanceofsharesbytheCompanyunderSection132DoftheAct.TheOrdinaryResolutionproposed,ifpassed,willempowertheDirectorsoftheCompany,fromthedateoftheforthcomingNinthAGM, to issue and allot ordinary shares from unissued share capital of the Company up to an aggregate amount not exceeding ten per centum(10%)ofthetotalissuedsharecapitaloftheCompanyforsuchpurposesastheDirectorsintheirabsolutediscretionconsidertobeintheinterestoftheCompany,withouthavingtoconveneageneralmeeting.Therenewedauthorityfromtheshareholderswillbeeffective immediately upon passing of the Ordinary Resolution and shall continue to be in force until:

(i) the conclusion of the next AGM; or (ii) theexpirationoftheperiodwithinwhichthenextAGMoftheCompanyisrequiredbylawtobeheld;or (iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whicheveroccursfirst.

TherenewedgeneralmandatewillprovideflexibilitytotheCompanytoraisecapitalforpurposeoffundingfutureinvestment,workingcapitaland/oracquisitions.

102



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

TheOrdinaryResolutionproposed,ifpassed,willrenewtheauthorityfortheCompanytopurchasethroughBursaMalaysiaSecuritiesBerhadsuchnumberofordinarysharesintheCompanyuptoanaggregateamountnotexceedingtenpercentum(10%)ofthetotalissuedandpaid-upsharecapitaloftheCompany.Therenewedauthorityfromtheshareholderswillbeeffectiveimmediatelyuponpassingof the Ordinary Resolution and shall continue to be in force until:

(i) the conclusion of the next AGM; or (ii) theexpirationoftheperiodwithinwhichthenextAGMoftheCompanyisrequiredbylawtobeheld;or (iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whicheveroccursfirst.

For further information, please refer to the Share Buy-Back Statement dated 27May 2013which is despatched together with theCompany’sAnnualReport2012.

Resolution pertaining to Proposed amendments to the Articles of Association of the Company

TheSpecialResolutionproposed,ifpassed,willensurethefollowing:

(a) streamliningoftheArticlesofAssociationoftheCompanywiththerecentamendmentstotheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad;and

(b) improvement of specific provisions in the Articles of Association of the Company for better clarify and ease of administration through electronic channels.

Resolution pertaining to Proposed shareholders’ mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature

TheOrdinaryResolutionproposed,ifpassed,willallowtheCompanyanditssubsidiariestoenterintorecurrentrelatedpartytransactionsofarevenueortradingnaturewiththepartieswithwhichsuchrecurrenttransactionsaretobeenteredintoprovidedsuchtransactionsare carried out in the ordinary course of business and are necessary for the day-to-day operations of the Company and/or its subsidiaries basedontermswhicharenotmorefavourabletothesaidpartiesthanthosegenerallyavailabletothepublicandarenottothedetrimentof the minority shareholders of the Company.

Forfurtherinformationpertainingthereto,pleaserefertotheCirculartoShareholdersdated27May2013whichisdespatchedtogetherwiththeCompany’sAnnualReport2012.

103

ANNUAL REPORT 2012

DIRECTOR WHO IS STANDING FOR RE-APPOINTMENT

The Director who is over the age of seventy (70) years and seeking re-appointment at the Ninth Annual General Meeting is William Maurice Samson.

The profile of William Maurice Samson is set out on page 4 of this Annual Report whereas details of his interests in the shares of the Company is disclosed in page 97 of this Annual Report.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGPURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD


104

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The existing Articles of Association of the Company which are to be amended are reproduced below with the Proposed Articles after Amendments.

Article Existing Articles Article Proposed Amended Articles No. (words underlined to be deleted) No. (words in bold to be inserted)

18(b) 18(b)Directors not to participate in issue of shares to employees

No Director shall participate in an issue of shares to employees unless shareholders in general meeting have approved of the specific allotment to be made to such Director.

For the purpose of this Article 18(b), a Director shall mean a director of the Company or any of its subsidiaries which are not dormant;

Directors not to participate in issue of shares to employees

Except in the case of an issue of shares on a pro-rata basis to shareholders, no Director shall participate in an issue of shares to employees unless shareholders in general meeting have approved of the specific allotment to be made to such Director.

For the purpose of this Article 18(b), a Director shall mean a director of the Company or any of its subsidiaries which are not dormant;

51(a)

65

51(a)

65

Contents of notice

There shall appear with reasonable prominence in every notice calling a general meeting a statement that a Member entitled to attend and vote is entitled to appoint not more than two (2) proxies to attend and vote instead of him and that a proxy need not be a Member of the Company;

Taking of a poll

If a poll be duly demanded (and the demand be not withdrawn), it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the Chairman may direct, and the result of a poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The Chairman may (and if so requested shall) appoint scrutineers for the purposes of a poll, and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll.

Contents of notice

There shall appear with reasonable prominence in every notice calling a general meeting a statement that a Member entitled to attend and vote is entitled to appoint proxy(ies) in accordance with Article 78 to attend and vote instead of him and that a proxy need not be a Member of the Company;

Taking of a poll

If a poll is duly demanded (and the demand is not withdrawn), it shall be taken in such manner and either at once or after an interval or adjournment or otherwise as the Chairman may direct, and the result of a poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The Chairman may (and if so requested shall) appoint scrutineers for the purposes of a poll, and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll.

Appendix I 105

ANNUAL REPORT 2012


65(Cont’d)

A poll may be conducted manually using ballot or voting papers or electronically using various forms of electronic voting devices. Such votes shall be counted by the poll administrator, and verified by the scrutineers, as may be appointed by the Chairman of the meeting for the purpose of determining the outcome of the resolution(s) to be decided on poll.

76

77

76

77

Proxy need not be a Member

A proxy may but need not be a Member of the Company and a Member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the Member to speak at the meeting.

Deposit of proxies

An instrument appointing a proxy must be left at the Office or such other place (if any) as is specified for that purpose in the notice convening the meeting not less than forty-eight (48) hours before the time appointed for the holding of the meeting or adjourned meeting (or in the case of a poll before the time appointed for the taking of the poll) at which it is to be used, and in default shall not be treated as valid. A proxy shall be entitled to vote on a show of hands on any question at any general meeting.

Proxy need not be a Member

A proxy may but need not be a Member of the Company and a Member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a) and (b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the Member to speak at the meeting.

Deposit of proxies

An instrument appointing a proxy must be left at the Office or such other place (if any) as is specified for that purpose in the notice convening the meeting not less than forty-eight (48) hours before the time appointed for the holding of the meeting or adjourned meeting (or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll) at which it is to be used, and in default shall not be treated as valid. A proxy shall be entitled to vote on a show of hands on any question at any general meeting.

Appendix I106106



78 78Nomination of proxy

Where a Member of the Company is an Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

Where an Authorised Nominee appoints two (2) proxies, or where an Exempt Authorised Nominee appoints two (2) or more proxies, the appointment shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies.

Nomination of proxy

(a) A Member shall not, subject to provisions in Article 78(b), be entitled to appoint more than two (2) proxies to attend and vote at the same meeting instead of him. Where a Member appoints two (2) proxies to attend and vote at the same meeting, the appointment shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies.

(b) Where a Member of the Company is an Authorised Nominee, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.

Where an Authorised Nominee appoints two (2) proxies, or where an Exempt Authorised Nominee appoints two (2) or more proxies, the appointment shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies.

168 168Alteration of Articles

No deletion, addition or other forms of amendments to these Articles shall be made without the prior written approval of the Exchange.

Alteration of Articles

Subject to the provisions of the Act, the securities laws and the Memorandum of Association, no amendment whether by way of rescission, alteration or addition shall be made to these Articles unless the same has been passed by a Special Resolution of the Members in general meeting.

Appendix I 107

ANNUAL REPORT 2012

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I/We …………………………………………..…………………..........................(NRIC/Company No. ...………………………………….………) (FullNameinBlockLetters)

of ……………………………………………………………………..………………….....................………Tel No. ……………......……………… (Address)

being a member of Can-One Berhad hereby appoint:

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Ninth Annual General Meeting of the Company to be held at Greens III (Sport Wing), Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Wednesday, 19 June 2013 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.

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

Full Name (in Block Letters) NRIC/Passport No. No. of Shares % of Shareholding

CDS Account No. No. of shares held

FORM OF PROXY

RESOLUTION ORDINARY BUSINESS FOR AGAINST

1 To receive the audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2012 and the Report of the Directors and Auditors thereon.

2 To declare a first and final tax exempt dividend of 8% (4 sen per share) for the financial year ended 31 December 2012.

3 To re-elect as Director, Marc Francis Yeoh Min Chang who retires pursuant to Article 101 of the Company’s Articles of Association.

4 To re-elect as Director, Tan Beng Wah who retires pursuant to Article 101 of the Company’s Articles of Association.

5 T o approve the payment of Directors’ Fees amounting to RM240,000.00 in respect of the financial year ended 31 December 2012.

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

SPECIAL BUSINESS

7 To re-appoint William Maurice Samson as Director pursuant to Section 129(6) of the Companies Act, 1965.

8 Authority to Directors to issue shares pursuant to Section 132D of the Companies Act, 1965.

9 Proposed renewal of authority for the Company to purchase its own shares

10 Proposed amendments to the Articles of Association of the Company

11 Proposed shareholders’ mandate for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature

*and/or (*delete if not applicable)

ANNUAL REPORT 2012

Dated this ……………….. day of ……………………… 2013.

---------------------------------------Signature/Seal of Shareholders

Notes:

(i) OnlymemberswhosenamesappearintheGeneralMeetingRecordofDepositorsasat12June2013shallbeentitledtoattendthismeetingorappointproxytoattendandvote in his stead.

(ii) AmemberoftheCompanyentitledtoattendandvoteatthisMeetingisentitledtoappointnotmorethantwo(2)proxiesofhisownchoicetoattendandvoteinhisstead.AproxymaybutneednotbeamemberoftheCompanyandamembermayappointanypersontobehisproxywithoutlimitationandtheprovisionsofSection149(1)(b)oftheCompaniesAct,1965shallnotapplytotheCompany.

(iii) Ifamemberappointstwo(2)proxies,themembermustspecifytheproportionofhisshareholdingtoberepresentedbyeachproxy,failingwhich,theappointmentshallbeinvalid.

(iv) WhereamemberoftheCompanyisanexemptauthorisednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(“omnibusaccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachomnibusaccountitholds.

(v) Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororhisattorneydulyauthorisedinwritingoriftheappointorisacorporation,underitscommon seal or under the hand of an officer or its attorney duly authorised in that behalf.

(vi) Tobevalid,theinstrumentappointingaproxymustbecompletedanddepositedattheRegisteredOfficeoftheCompanyat2B-4,Level4,JalanSS6/6,KelanaJaya,47301PetalingJaya,SelangorDarulEhsan,Malaysia,notlessthanforty-eight(48)hoursbeforethetimeappointedfortheholdingoftheMeetingoradjournedMeeting(orinthecase of a poll, before the time appointed for the taking of the poll).

(vii) Any alteration in this form must be initialled.

The Company SecretaryCAN-ONE BERHAD2B-4, Level 4, Jalan SS 6/6 Kelana Jaya47301 Petaling JayaSelangor Darul EhsanMalaysia

AFFIXSTAMPHERE

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