LYSAGHT GALVANIZED STEEL BERHAD (CO P) ANNUAL REPO R T 2015 LYSAGHT GALVANIZED STEEL BERHAD

Transcription

1 ANNUAL REPORT

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3 CONTENTS Notice of Annual General Meeting 02 Corporate Information 04 Financial Highlight 05 Chairman s Statement 06 Profile of Directors 08 Audit Committee Report 11 Statement on Corporate Governance 15 Statement on Risk Management and Internal Control 25 Additional Compliance Information 28 Statement on Directors Responsibility 29 Directors Report 30 Statement by Directors 33 Statutory Declaration 33 Independent Auditors Report 34 Statements of Comprehensive Income 36 Statements of Financial Position 37 Statements of Changes in Equity 38 Statements of Cash Flows 39 Notes to the Financial Statements 40 List of Properties 82 Shareholding Distribution Schedule 83 Thirty Largest Shareholders 84 Substantial Shareholders 85 Directors Shareholdings 86 Form of Proxy enc.

4 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Thirty-Seventh Annual General Meeting ( 37th AGM ) of LYSAGHT GALVANIZED STEEL BERHAD ( the Company ) will be held at Dillenia & Eugenia Room, Ground Floor, Sime Darby Convention Centre, No. 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Thursday, 26 May 2016 at 10:30 a.m. to transact the following businesses:- A G E N D A AS ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the financial year ended 31 December 2015 together with the Directors and Auditors reports thereon. 2. To approve the payment of final single tier dividend of 15 sen per share for the financial year ended 31 December To approve the sum of RM516, for payment as Directors fees in respect of the financial year ending 31 December (Please refer to Explanatory Note A) Resolution 1 Resolution 2 4. To re-elect the following Directors who retire as Directors of the Company pursuant to Article 81 of the Company s Articles of Association:- i. Mr. Cheam Low Soo Resolution 3 ii. Madam Chew Meu Jong Resolution 4 5. To re-elect Mr. Lim Tiong Beng who retires as Director of the Company pursuant to Article 88 of the Company s Articles of Association. 6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to hold office until the conclusion of the next Annual General Meeting at such remuneration to be determined by the Directors of the Company. Resolution 5 Resolution 6 7. To transact any other business of which due notice shall have been given in accordance with the Company s Articles of Association and the Companies Act, NOTICE OF FINAL SINGLE TIER DIVIDEND ENTITLEMENT AND PAYMENT NOTICE IS ALSO HEREBY GIVEN THAT a final single tier dividend of 15 sen per share for the financial year ended 31 December 2015, if approved by shareholders at the 37th AGM, will be paid on 23 June 2016 to the depositors whose names appear in the Record of Depositors of the Company at the close of business on 10 June A depositor shall qualify for entitlement to the dividend in respect of:- (a) (b) Shares transferred to the Depositor s Securities Account before 4:00 p.m. on 10 June 2016 in respect of the transfers; and 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 DATUK TAN LEH KIAH LIM CHIEN JOO Company Secretaries Shah Alam, Selangor Darul Ehsan Date: 29 April LYSAGHT GALVANIZED STEEL BERHAD (CO P)

5 NOTICE OF ANNUAL GENERAL MEETING Notes: 1. A member whose name appear in the Record of Depositors as at 20 May 2016 shall be regarded as a member entitled to attend, speak and vote at the 37th AGM. He/She shall be entitled to appoint more than one (1) proxy (subject always to a maximum of two (2) proxies) to attend and vote at the Meeting. 2. A proxy may but need not be a member of the Company and there shall be no restrictions as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies) the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 4. The Form of Proxy must be duly completed and deposited at the Company s Share Registrar, ShareWorks Sdn. Bhd. at No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, Kuala Lumpur, Wilayah Persekutuan (KL) not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 5. If the appointer is a corporation, the Form of Proxy must be executed under its Seal or in the hand of an officer or attorney duly authorised in writing. 6. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 7. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. Explanatory Note A: This item of the Agenda is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this item of the Agenda is not put forward for voting. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 3

6 Corporate information BOARD OF DIRECTORS Dato Ir. Wan Razali bin Wan Muda Chairman/Independent Non-Executive Director (Redesignated as Chairman on ) Liew Swee Liew Hoi Foo Managing Director (Resigned on ) Chua Tia Bon Executive Director (Elected on and redesignated as Executive Director on ) Chew Meu Jong Non-Independent Non-Executive Director Ir. Aik Siaw Kong, KMN Independent Non-Executive Director Cheam Low Soo Independent Non-Executive Director Ee Beng Guan Independent Non-Executive Director (Elected on ) Lim Tiong Beng Independent Non-Executive Director (Appointed on ) Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob Chairman/Independent Non-Executive Director (Retired on ) Datuk Ir. Hamzah bin Hasan Independent Non-Executive Director (Redesignated as Chairman on ) (Retired on ) Wee Kee Hong Independent Non-Executive Director (Resigned on ) AUDIT COMMITTEE Lim Tiong Beng (Chairman) (Appointed as Chairman on ) Dato Ir. Wan Razali bin Wan Muda (Appointed on ) Cheam Low Soo NOMINATION COMMITTEE Cheam Low Soo (Chairman) (Appointed as Chairman on ) Ee Beng Guan (Appointed on ) REMUNERATION COMMITTEE Chew Meu Jong (Chairman) (Appointed as Chairman on ) Lim Tiong Beng (Appointed on ) Dato Ir. Wan Razali bin Wan Muda Ir. Aik Siaw Kong, KMN RISK MANAGEMENT COMMITTEE Ee Beng Guan (Chairman) (Appointed as Chairman on ) Chew Meu Jong (Appointed on ) Ir. Aik Siaw Kong, KMN (Appointed on ) COMPANY SECRETARIES Datuk Tan Leh Kiah (MAICSA ) Lim Chien Joo (MAICSA ) REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS No. 11, Jalan Majistret U1/26, Seksyen U1 Hicom-Glenmarie Industrial Park Shah Alam, Selangor Darul Ehsan Tel No : Fax No : lysaghtg@lysaghtmarketing.com.my Website : SHARE REGISTRAR ShareWorks Sdn Bhd ( U) 2-1 Jalan Sri Hartamas 8 Sri Hartamas, Kuala Lumpur Tel No : Fax No : EXTERNAL AUDITORS Ernst & Young (AF0039) 21 & 23, Jalan Hussein Ipoh, Perak Darul Ridzuan Tel No : Fax No : PRINCIPAL BANKERS Standard Chartered Bank Malaysia Bhd STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name : LYSAGHT Stock Code : 9199 Dato Ir. Wan Razali bin Wan Muda 4 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

7 FINANCIAL HIGHLIGHTS REVENUE (RM Mil) PROFIT AFTER TAX (RM Mil) SHAREHOLDERS FUND (RM Mil) LYSAGHT GALVANIZED STEEL BERHAD (CO P) 5

8 CHAIRMAN S STATEMENT DEAR SHAREHOLDERS, ON BEHALF OF THE BOARD OF DIRECTORS, I AM PLEASED TO PRESENT TO YOU THE ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS OF THE COMPANY AND GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER FINANCIAL RESULTS The Group recorded a turnover of RM63.9 million for the current financial year was marginally lower than that of RM65.2 million in previous financial year. Despite the reduced turnover, the Group s profit after tax for the current financial year increased by 45.5% to RM16.3 million from that of RM11.2 million in the previous financial year. This increase was mainly attributable to the capital gain from the disposal of an investment property and improved operating margins. The Group s balance sheet remained strong with shareholders equity of RM117.8 million. Net assets per ordinary share improved by 17.9% year-on-year from RM2.40 to RM2.83. PROSPECTS The market outlook for the Group s products remains very challenging. The competitive environment coupled with rising costs poses a serious challenge to the Group s profitability. This is substantiated by the reduced enquiries and lower pole requirements year-on-year. Nevertheless, the Group will continue to focus on its core competency in the design and manufacture of poles, masts, transmission poles, transmission or telecommunication towers and substation structures in the foreseeable future. At the same time, Management will endeavour to identify opportunities in order to enhance the Group s profitability. In view of the uncertain trading conditions going forward, the Group made a strategic decision to dispose an investment property, that is, 4-storey shop-office located in PJ Selatan, Selangor Darul Ehsan for a total cash consideration of RM6.4 million. This disposal has improved the Group s liquidity by a net disposal gain of RM3.8 million or 9.11 sen per ordinary share. The proceeds concerned has been utilised to enhance the Group s working capital. DIVIDENDS It has always the Board s intention to reward you with fair and equitable dividends on a sustainable basis. In the light of current challenging business conditions and uncertainties in the near term and the need to conserve working capital, the Board has proposed a final single tier dividend of 15 sen per ordinary share for the current financial year. 6 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

9 CHAIRMAN S STATEMENT CORPORATE SOCIAL RESPONSIBILITY The Group subscribes to the safety, health and environment regulations. Efforts have been made to conserve energy via the strict monitoring of the use of air-conditions and lights at the Group s premises. Training programs for skill development and improvement have been regularly conducted for the employees so as to ensure they can execute their roles and responsibilities more efficiently as well as for their career development. The Group is committed to a corporate culture that emphasises good Corporate Social Responsibility ( CSR ) and corporate citizenship throughout the Group. Our vision is to integrate our social and environmental responsibilities into our business practices for the sustainable growth and at the same time, not to neglect the need to strive for the betterment of the community and environment. The Group views CSR as an important component of all its activities. The Group subscribes to the belief that through its people and actions, it will and can make a positive impact on society. ACKNOWLEDGEMENT First and foremost, on behalf of my fellow Directors, I wish to convey our heartfelt appreciations to management and staff of the Group, for their dedication, loyalty and hard work in making the current financial year another profitable year. The Board would also like to thank Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob, Datuk Ir. Hamzah bin Hasan and Mr. Wee Kee Hong who stepped down from the Board in June 2015 for their invaluable contribution to the Group during their tenure as Board members. At the same time, the Board would also like to extend our warmest welcome to our new Directors, Mr. Chua Tia Bon, Mr. Ee Beng Guan and Mr. Lim Tiong Beng who joined us during the current financial year. I believe with their vast experience, they would be able to contribute tremendously to the Group s going forward. Last but not least, the Board also like to express its gratitude to our customers, bankers, advisors and the various governmental and regulatory authorities for their invaluable support and advice. Thank you. DATO IR WAN RAZALI BIN WAN MUDA Chairman LYSAGHT GALVANIZED STEEL BERHAD (CO P) 7

10 profile of directors DATO IR. WAN RAZALI BIN WAN MUDA Malaysian, Aged 62 Chairman/Independent Non-Executive Director Dato Ir. Wan Razali Bin Wan Muda, was appointed to the Board as an Independent Non-Executive Director of the Company on 20 August 2014 and was redesignated as Chairman of the Company on 8 July He is also the member of the Audit, Remuneration and Nomination Committees of the Company. Dato Ir. Wan Razali holds a degree in Mechanical Engineering from the University of Technology Malaysia. He is a registered Professional Engineer with the Board of Engineers, Malaysia and Fellow Member with Institution of Engineers, Malaysia and Council Member of Road Engineering of Asia & Australasia. He started his career in 1977 as an officer with the Royal Malaysian Air Force and was with Senior Management Team in a few Semi-Government Bodies. He then joined the AlloyMtd Group in 1994 and was entrusted to manage the Company fleet operation in heavy machineries and highway consultancy. He later led the group Tollways Division which took charge of tolled highway concession of Kuala Lumpur Karak Highway, Lebuhraya Pantai Timur Phase 1 and East West Link of KL-Seremban Expressway for 6 consecutive years. During his involvement with highway concessionaires, he was appointed as the honorary secretary for Persatuan Syarikat-syarikat Konsesi Lebuhraya Malaysia. He retired in April 2014, after 20 years serving the group in various capacities and positions. He has vast experience in aircraft engineering, highway engineering, building maintenance and gold mining. He sits as Director in a few engineering companies. Dato Ir. Wan Razali has attended all eleven (11) Board Meetings held during the financial year ended 31 December CHUA TIA BON Malaysian, Aged 65 Executive Director Mr. Chua Tia Bon, was elected to the Board as Non-Independent Non-Executive Director on 30 June 2015 and was redesignated as Executive Director of the Company on 9 July Mr. Chua obtained a Bachelor of Science (Honours) Degree in Mechanical Engineering from University of Strathclyde, Glasgow, United Kingdom. He is a Member of Institute of Engineers, Malaysia. He is also a Professional Engineer in Mechanical Engineering, Board of Engineers, Malaysia. In 1972, being one of the first batch of employees of the Group, he joined Lysaght Corrugated Pipe Sdn. Bhd. ( LCPSB ) as Production Supervisor. He was promoted to Production Engineer in LCPSB in In 1979, he was appointed as Product Development Engineer and in 1981, as Deputy Works Manager. In 1987, he was promoted to the position of General Manager for the Lysaght Group. He has extensive experience in the expansion of manufacturing operations, development of the company s products, research and development in improvement of manufacturing equipment and processes and general functions to ensure smooth operations of the business. His responsibility further includes overseeing and managing sales and marketing of Northern states of Peninsular Malaysia and some overseas customers. In 1994, when LGSB was listed on Bursa Malaysia, he continued his functions and responsibilities as before, a position he held until recently, when he was redesignated to Director Operations from July Since elected to the Board on 30 June 2015, Mr. Chua has attended all five (5) Board Meetings held during the financial year ended 31 December CHEW MEU JONG Australian, Aged 60 Non-Independent Non-Executive Director Madam Chew Meu Jong, was elected to the Board as Non-Independent Non-Executive Director at the Extraordinary General Meeting held on 30 September 2014 following the demise of her late father and founder member of the Lysaght Group of Companies, Mr Chew Kar Heing. She was appointed as Chairman of Remuneration Committee and also member of Risk Management Committee on 8 July Madam Chew was previously a Fellow of the Chartered Association of Certified Accountants, United Kingdom. She has been involved directly and indirectly in the businesses of the Lysaght (Malaysia) Sdn Bhd and its subsidiaries ( LMSB Group ). Since July 1987, Chew Meu Jong was put in charge of the operations of the LMSB Group in Australia engaged in investment holding of real estate. From 2009, she has been involved in assisting the late Mr Chew Kar Heing in the businesses of LMSB Group. She sits on the Board of Directors of Lysaght (Malaysia) Sdn Bhd, the Holding Company and some of the subsidiary companies of the Holding Company. Madam Chew has attended all eleven (11) Board Meetings held during the financial year ended 31 December LYSAGHT GALVANIZED STEEL BERHAD (CO P)

11 profile of directors IR. AIK SIAW KONG, KMN Malaysian, Aged 65 Independent Non-Executive Director Ir. Aik Siaw Kong, was appointed to the Board as an Independent Non-Executive Director on 20 August He is also the member of the Remuneration and Risk Management Committees of the Company. Ir. Aik graduated from University of Malaya with Bachelor of Civil Engineering (Hons) in In 2001, he obtained his MSc (Highway & Transportation) from UPM. He began his work career with the Public Works Department and had served as a Project Engineer on the construction of Kuantan-Segamat Highway (2 years), highway planning engineer with the Ministry of Works (3 years) and Highway Design Engineer with the Road Design Section JKR HQ (6 years). He has also served as an Assistant Director of Operations with the Malaysian Highway Authority for coordinating the planning, design and construction of the North-South Toll Expressway section in Kedah, Penang and Perak (5 years). From 1990 to 1994, he was the Senior Assistant Director of Roads Maintenance Section, overseeing the planning, budgeting and implementation of all maintenance programme of Federal Roads in Malaysia. In 1995, he joined the private sector and was involved in engineering consultancy services, specialising in road design and road safety auditing. He is an accredited Road Safety Auditor with JKR since Ir. Aik has attended ten (10) out of eleven (11) Board Meetings held during the financial year ended 31 December CHEAM LOW SOO Malaysian, Aged 64 Independent Non-Executive Director Mr. Cheam Low Soo, was elected to the Board as Independent Non-Executive Director of the Company on 25 June He was appointed as a member of Audit Committee on 21 August 2014 and the Chairman of Nomination Committee on 8 July Mr. Cheam was an associate member of the Institute of Chartered Secretaries and Administrators, United Kingdom. He served with the Inland Revenue Department of Malaysia from 1977 to In 1982, Mr. Cheam joined Lysaght Corrugated Pipe Sdn Bhd as the Company Secretary and was responsible for the financial and company secretarial functions of the Lysaght (Malaysia) Group of Companies. He had more than 12 years of experience with the Group and he was appointed to the Board of Lysaght Galvanized Steel Berhad on 30 August He left the Group in 1995 and now sits on the Board of a private limited company with interests in property investment. Mr. Cheam has attended all eleven (11) Board Meetings held during the financial year ended 31 December EE BENG GUAN Malaysian, Aged 60 Independent Non-Executive Director Mr. Ee Beng Guan, was elected to the Board as an Independent Non-Executive Director on 30 June He was appointed as Chairman of Risk Management Committee and also member of Nomination Committee on 8 July Mr. Ee is a lawyer by training and obtained his bachelor degree in law (LLB Hons) from the University of Hull, England in 1978, Utter Degree of Barrister-at-Law from the Middle Temple Inn, London in 1979 and Masters in Law (LLM) from University College London in Mr Ee was admitted as advocate and solicitor in the High Court of Malaya in He worked as an advocate and solicitor for approximately 4 years before joining a conglomerate in 1985 as its Head of Legal until his retirement in March, During his time with the conglomerate, he spent 7 years as corporate nominee and executive director of a stock broking company. As Head of Legal, he was in charge of legal, compliance, secretarial and share registration. He is presently in practice as an Advocate & Solicitor. Since his election to the Board on 30 June 2015, Mr. Ee has attended all five (5) Board Meetings held during the financial year ended 31 December LYSAGHT GALVANIZED STEEL BERHAD (CO P) 9

12 profile of directors LIM TIONG BENG Malaysian, Aged 63 Independent Non-Executive Director Mr. Lim Tiong Beng, was appointed to the Board as an Independent Non-Executive Director on 1 August He was appointed as Chairman of Audit Committee on 1 August 2015 and also member of Remuneration Committee on 23 November Mr. Lim is a Fellow of Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants and Chartered Tax Institute of Malaysia. He was formerly a Partner and National Tax Director of Ernst & Young Malaysia and has led their tax practice from 2001 until his retirement in December He has more than 30 years of professional experience with the firm and has indepth experience in taxation matters affecting different industry groups and multinationals operating both within Malaysia and globally. Prior to joining the profession in 1979, he had a short stint with the Inland Revenue Department and has also undertaken company secretarial and audit work. He is conversant with tax and other regulatory issues and has wide and varied experiences having advised clients from a diversified range of industries. Prior to his retirement he was also an active member of the local accounting and taxation bodies sitting on various working committees. Since his appointment on 1 August 2015, Mr. Lim has attended all three (3) Board Meetings held during the financial year ended 31 December Notes to Board of Directors profile: a. Family Relationship Save as disclosed of family relationship by Madam Chew Meu Jong, none of the Directors has any family relationship with any Director and/or any shareholder of the Company. b. Conflict of Interest None of the Directors has any personal interest or conflict of interest in any business arrangement involving the Group. c. Conviction of Offences None of the Directors has been convicted of any offence within the pass 10 years other than traffic offences (if any). d. Shareholdings The details of the Directors interest in the securities of the Company are set out on page 31 of the Annual Report. 10 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

13 AUDIT COMMITTEE REPORT GENERAL The Audit Committee was established to act as a committee of the Board with the primary objective of assisting the Board in fulfilling its fiduciary duties in relation to:- Assessing the processes in relation to the risk and control environment; Implement and support the oversight function of the Board in relation to overseeing financial reporting and internal controls; and Evaluating the internal and external audit processes. The Board reviews the term of office and performance of the Audit Committee and each member at least once every three (3) years to assess the extent to which the Audit Committee and its members have discharged its responsibilities as set out in its terms of reference. The terms of reference of the Audit Committee are reviewed at least once every three (3) years by the Board or as and when there are changes to the Malaysian Code on Corporate Governance 2012 or the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Audit Committee may also recommend any changes it consider necessary to the Board for approval. MEMBERS OF THE AUDIT COMMITTEE Name Designation Directorship Total Meetings Attended/No. of Meetings Held* Percentage Wee Kee Hong (ceased as member on 15 June 2015) Chairman Independent Non- Executive Director 3/3 100% Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (ceased as member on 22 June 2015) Member Independent Non- Executive Director 3/3 100% Datuk Ir. Hamzah bin Hasan (retired as member on 30 June 2015) Member Independent Non- Executive Director 3/3 100% Ir. Aik Siaw Kong (resigned on 8 July 2015) Member Independent Non- Executive Director 3/3 100% Lim Tiong Beng (appointed as member and Chairman on 1 August 2015) Chairman Independent Non- Executive Director 2/2 100% Dato Ir. Wan Razali bin Wan Muda (appointed as member on 8 July 2015) Member Independent Non- Executive Director 2/2 100% Cheam Low Soo Member Independent Non- Executive Director 5/5 100% TERMS OF REFERENCE A. Composition The Audit Committee shall be appointed by the Board from amongst the Board Members which fulfils the following requirements:- (a) The Audit Committee shall be appointed by the Board from amongst their number and shall consist of not less than three (3) members, all of whom must be Non-Executive Directors, with a majority of them being Independent Directors. The Audit Committee presently comprises three (3) members of the Board, of which all are Independent Non-Executive Directors. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 11

14 AUDIT COMMITTEE REPORT (b) (c) The Chairman of the Audit Committee shall be an Independent Non-Executive Director. At least one of the Audit Committee members shall be:- A member of the Malaysian Institute of Accountants ( MIA ); or If he is not a member of the MIA, he must have at least 3 years working experience and:- B. Frequency of Meetings i. he must have passed the examinations specified in part 1 of the 1st schedule of the Accountants Act, 1967; or ii. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or iii. fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad. Meetings of the Audit Committee shall be held not less than four (4) times a year. The internal auditors and external auditors shall normally be invited to attend the meetings. Other members of the Board and employees may attend the meetings upon invitation of the Audit Committee. C. Quorum The quorum for a meeting of the Audit Committee shall be two (2) provided always that the majority of members present must be independent directors and any decision shall be by a simple majority. D. Secretary The Company Secretary/ies of the Company or such substitute as appointed by the Board from time to time shall act as the Secretary of the Audit Committee. E. Rights The Audit Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company:- a) have authority to investigate any matter within its terms of reference; b) have the resources which are required to perform its duties; c) have full and unrestricted access to any information pertaining to the Group; d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any); e) be able to obtain independent professional or other advice; and f) be able to convene meetings with the external auditors, excluding the attendance of the executive Board Members, whenever deemed necessary. F. Responsibilities and Duties The responsibilities and duties of the Audit Committee shall include the following:- 1) review of the following and report the same to the Board:- a. with the external auditor, the audit plan; b. with the external auditor, his evaluation of the system of internal controls; c. with the external auditor, his audit report, management letter and management s response; 12 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

15 AUDIT COMMITTEE REPORT d. the assistance given by the employees of the Group to the external auditor; e. 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; f. the internal audit programme, process, the results of the internal audit programme, process or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit; g. the quarterly results and year-end financial statements, prior to the approval by the Board, focusing particularly on:- i. changes in or implementation of major accounting policy changes; ii. significant and unusual events; and iii. compliance with applicable financial reporting standards and other legal requirements. h. any related party transaction and conflict of interest situation that may arise within the Group including any transaction, procedure or course of conduct that raises questions of management integrity; i. any letter of resignation from the external auditors of the Company and its subsidiary companies; and j. whether there are reasons (supported by grounds) to believe that the Company s and its subsidiary companies external auditors are not suitable for re-appointment. 2) to assist the Board on Risk Management; 3) to consider the nomination, appointment (and re-appointment), resignation and dismissal of external auditors and make appropriate recommendations to the Board, including the audit fees; and 4) to establish policies and procedures to assess the suitability and independence of external auditors. SUMMARY OF ACTIVITIES A summary of the main activities carried out by the Audit Committee during the financial year is as follows:- Reviewed with the external auditors on their audit plan, the results of their audit and audit report and discussion of new or revised Financial Reporting Standards applicable to the Company and the Group; Reviewed and discussed with the external auditors, the results of the audit, the audit report and findings noted in the course of the audit of the Group s and the Company s financial statements; Met once with the external auditors without the presence of management and the Executive Directors; Reviewed the quarterly financial results and audited financial statements before recommending them to the Board for approval; Reviewed the related party transactions of the Group to ensure that the said transactions were not to the detriment of the Company and its minority shareholders; Reviewed risk management reports issued by Risk Management Committee; Reviewed the Internal Audit Plan and Reports, and where necessary, ensure that appropriate actions are taken by management on the recommendations of internal audit; Reviewed the independence and performance of the External Auditors and made recommendations to the Board of Directors on their re-appointment and audit fees; and Evaluated the performance of the internal auditors and recommended their fees. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 13

16 AUDIT COMMITTEE REPORT INTERNAL AUDIT FUNCTION The Group has outsourced its internal audit function to an independent professional consulting firm to assist the Audit Committee in discharging their responsibilities and duties. The role of the internal audit function is to undertake independent regular and systematic reviews of the system of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactory and effectively in the Group, and also provide independent, objective assurance on areas of operations reviewed, and makes recommendations based on best practices that will improve and add value to the Group. The Group s internal audit function adopts a systematic and disciplined approach to evaluate the adequacy and effectiveness of risk management, financial, operational, compliance and governance processes. Structured risk-based and strategic-based approaches are adopted in identifying internal audit activities that are aligned with the Group s strategic plans to ensure that the risks facing the Group are adequately reviewed. The internal auditors present their audit reports which include their findings and recommendations to the Audit Committee for its review and deliberation. The Audit Committee also appraised the adequacy of the comments, actions and measures to be taken by the management in resolving the audit issues reported and recommended for further improvement. The internal auditors also carried out follow-up reviews to monitor the implementation of the management s action plans and measures for reporting to the Audit Committee. For the financial year, the internal audit covered the review of the adequacy and effectiveness of the system of internal controls of Purchase and Payment System. The total cost incurred for internal audit function for the financial year was RM10,000. This report has been reviewed and approved for inclusion in this Annual Report by the Audit Committee on 30 March LYSAGHT GALVANIZED STEEL BERHAD (CO P)

17 CORPORATE GOVERNANCE STATEMENT The Malaysian Code of Corporate Governance 2012 ( Code ) sets out the broad principles and specific recommendations on structures and processes which companies should adopt in making good corporate governance as an integral part of their business dealings and culture. The Board of Directors ( Board ) acknowledges and fully supports the importance of corporate governance in directing and managing the businesses and affairs of the Group, and to safeguard and enhance shareholders value and performance of the Group. The Board is pleased to disclose below the manner in which it has applied the principles and complied with the recommended best practices set out in the Code throughout the financial year. PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES a. Roles and Responsibilities The Group is led by an experienced and diversified Board which comprises professionals from various fields to bring together a balance of skills, mix of experience and expertise in area relevant to enhance the growth of Group s business. The Directors collectively bring with them wide and varied technical, financial and legal experience to enable the Board to lead and control the Group effectively. The Independent Non-Executive Directors are persons of calibre and credibility with the ability to exercise independent judgment in the Board without fear or favour. Their role is to ensure that any decision of the Board is deliberated fully and objectively with regards to the long term interests of all stakeholders. The roles of the Chairman and Managing Director ( MD ) are strictly separated to ensure balance of power and authority and to maintain effective supervision and accountability of the Board and Management. The Chairman is responsible for ensuring Board effectiveness and ensures that conduct and working of the Board is in an orderly and effective manner. The MD takes on the primary responsibility of managing the Group s businesses and resources. He is responsible and accountable for the development and implementation of strategies, as well as overseeing and managing the day-to-day operations of the Group. b. Board Charter The Board has formally adopted a Board Charter that sets out the roles and responsibilities of the Board and the standard of conduct expected of Directors. The Board s function, amongst others, is to guide the Group on its short and long term goals, providing advice, stewardship and directions on management and business development of the Group. The Board s principal responsibilities, amongst others, are as follows:- Reviewing and adopting a strategic plan for the Group; Overseeing the conduct of the Group s business and to build sustainable value for shareholders; Identifying principal risks and ensuring the implementation of appropriate risk management, internal controls and mitigation measures; Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing Senior Management; Overseeing the development and implementation of a shareholder communications policy for the Group; and Reviewing the adequacy and the integrity of the management information and internal controls as well as legal and regulatory compliance systems of the Group. The roles and responsibilities of the Board and Management are clearly defined. The following matters (including any changes thereof) require approval from the Board, except where they are expressly delegated by the Board to a Committee, the Chairman, MD or a nominated member of Management:- Proposals for capital expenditure and acquisitions; Major issues and opportunities for the Company; Approval of the annual budget; Approval of the annual and quarterly financial statements, reports to shareholders and public announcements; Declaration and payment of dividends; Board composition, structure and succession; Group s external and internal audit requirements; Board and individual Board members evaluations and remuneration; MD s performance and remuneration; and Group s code of conduct and ethical standards. The Board has delegated certain responsibilities to the Audit Committee, Nomination Committee and Remuneration Committee. All these committees have clearly defined term of reference. The Chairmen of the various committees report to the Board the outcome of respective committee meetings. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 15

18 CORPORATE GOVERNANCE STATEMENT c. Access to Information and Advice The Board meets at least four (4) times a year, with additional meetings convened on an ad-hoc basis as and when the Board s approval and guidance are required. Upon consultation with the Chairman and the MD, due notice is given on the proposed dates of meetings during the financial year and the standard agenda and matters to be tabled to the Board. The agenda and Board papers for each Board meeting are circulated to all Directors in advance prior to each meeting to enable Directors to peruse the matters to be deliberated upon. The Board papers include, among others, the following documents or information:- Minutes of meetings of all committees of the Board; Performance reports of the Group, which include information on financial, strategic business issues and updates; Major operational, financial, legal, regulatory and corporate issues; and Board papers for other matters for discussion/approval. Management are also invited to join Board meetings to provide explanation or engage in dialogue with Board members as may be required. All deliberations, discussions and decisions of the Board meetings were minuted and recorded accordingly. All Directors have unrestricted access to the Senior Management and the service and advice of the Company Secretaries and Internal Auditors. The Directors as a whole or individually may also seek independent professional advice if necessary, at the Group s expense to enable them to discharge their duties and responsibilities. The Board is kept updated on the Group s activities and operations on a regular basis. The Directors also have access to all reports on the Group s activities, both financial and operational. The Directors also received updates from time to time on relevant new laws and regulations. Visits by the Directors to the Group s businesses were also arranged for enhancement of their knowledge in respect of the Group s businesses as well as better awareness of the risks associated with the Group s operations. d. Qualified and Competent Company Secretaries The Board has strong support from experienced, competent and knowledgeable Company Secretaries who work closely with the Chairman and MD to ensure timely and appropriate information flow within the Board and Board Committees. The Company Secretaries are also responsible to give clear and sound advice to the Board, through the Chairman, on all governance matters and assists the Board and Chairman on the implementation of an effective corporate governance system. The Company Secretaries attend all meetings of the Board and the relevant Board Committees and is responsible for the accuracy and adequacy of records of proceedings of the Board and Board Committees and resolutions. The appointment, remuneration and removal of the Company Secretaries are also a matter for the Board to decide to ensure that only qualified and suitable individual/s is engaged. The Company Secretaries are members of The Malaysian Institute of Chartered Secretaries and Administrators and they carry out, among others, the following specific tasks:- Compliance with the Companies Act 1965 and Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ); Attendance at Board s and Board Committees meetings and ensuring that these meetings are properly convened and proceedings are properly recorded; Timely communication of Board level decisions to Management; Appointments to the Board and Board Committees are properly made; Maintenance of records for the purposes of meeting statutory obligations; Facilitating the provision of information as may be requested by the Directors from time to time; and Advising the Board members on adherence to Board policies and procedures. e. Whistle-blowing The Board recognises the importance of whistle-blowing and is committed to maintaining the highest standards of ethical conduct within the Group. Whistle-blowing policy provides an avenue or course of action for employees, customers, suppliers or third parties, to escalate any wrong doing including conflict of interests, fraud and any other acts to deceive for monetary gains, by any member of the Board and Management as well as employees of the Group. 16 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

19 CORPORATE GOVERNANCE STATEMENT The Group encourages all employees to report any genuine concerns without fear of reprisal. To this end, the Group has instituted a strong corporate culture which prizes Team Spirit, Integrity, Commitment, Accountability and Excellence as core values. Management actively promotes and inculcates these values throughout the Group via regular engagement, dialogue and training programmes. These values guide the formulation of the Group s Policies & Procedures which all members of Management as well employees are required to adhere to. f. Sustainability Sustainability efforts and initiatives are embedded in the day-to-day operational activities or are organized via special programs for specific sustainability causes. By achieving a satisfactory balance on bottom-line growth, welfare safeguard of people and community within a harmonious state of the environment, such efforts are intended to benefit the shareholders, investors, operating environment, society, employees, customers, business partners, contractors, suppliers and other stakeholders. The Group is mindful of the importance of business sustainability in developing the business operations and corporate strategy of the Group. In this respect, the Board has always ensured that all aspects of the Group s business which have direct and indirect impacts on the work place, communities and environment are balanced with the interest of the Group s stakeholders. To its employees, the Group s system of rewards is based on the philosophy of pay for performance whereby employees are rewarded for productivity improvements and contributions to the Group s immediate and long term objectives. These rewards encompass not only monetary compensation but also performance recognition and career progression. PRINCIPLE 2: STRENGTHEN COMPOSITION To assist the Board to discharge its role and functions effectively, the Board has established the following committees:- 1. The Audit Committee The terms and reference as well as further information on the Audit Committee are set out in the Audit Committee Report on pages 11 to 14 of this Annual Report. 2. The Nomination Committee The members of Nomination Committee during the financial year were:- Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (ceased as member and Chairman on 22 June 2015) Datuk Ir. Hamzah bin Hasan (retired as member on 30 June 2015) Cheam Low Soo Chairman (appointed as member and Chairman on 8 July 2015) Dato' Ir. Wan Razali bin Wan Muda Ee Beng Guan (appointed as member on 8 July 2015) The Nomination Committee is primarily empowered by its terms of reference in carrying out the following functions amongst others, is to review annually the required mix of skills, gender and age diversity, experience and other qualities of the Directors and to recommend new appointments, if any, to the Board. The Nomination Committee meets at least once a year. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 17

20 CORPORATE GOVERNANCE STATEMENT The Board is conscious of meeting the Corporate Governance Blueprint 2011 issued by the Securities Commission on increasing women participation on Boards to reach 30% by However, the Board believes that given the current state of the Group s development, it is more important to have the right mix of skills on the Board rather than attaining the percentage concerned. In this respect, it must be noted that one of the Board is a woman. Nevertheless, the Group is committed to provide fair and equal opportunities and nurturing diversity at all levels within the Group. All persons, regardless of age, gender, ethnicity, cultural background or other personal factors, with appropriate experience and qualifications will be considered equally during recruitment, promotion, remuneration and training. The Group is also committed to workplace diversity ensuring that we value and respect our differences and that our workplace is fair, accessible, flexible and inclusive and free from discrimination. The Nomination Committee also assesses the effectiveness of the Board as a whole, all committees of the Board and the contribution of each individual Director. A Director who is subject to re-election and/or re-appointment at an Annual General Meeting ( AGM ) is assessed by the Nomination Committee before a recommendation is made to the Board and shareholders for his/her re-election and/or re-appointment. Candidates who fulfilled the requirements prescribed under the relevant laws and regulations may be proposed by the MD or any Director to the Nomination Committee for appointment as Director. In assessing the suitability of any candidate for directorship, the Nomination Committee will take into consideration the candidate s skills, knowledge, expertise, competence and experience, time commitment, character, professionalism and integrity. The Nomination Committee is satisfied with the contribution and performance of each individual Director and that all the Independent Directors complies with the criteria of Independence based on the Listing Requirements. On 1 August 2015, the Nomination Committee recommended to the Board, the appointment of Mr. Lim Tiong Beng to the Board and Audit Committee as an Independent Non-Executive Director and the Audit Committee Chairman (in place of Mr. Wee Kee Hong who resigned from the Board on 15 June 2015) respectively. On 23 November 2015, the Nomination Committee recommended Mr. Lim Tiong Beng to the Board to be appointed as a member of the Remuneration Committee. During the financial year, the Nomination Committee also assessed the overall effectiveness of the Board, the Board Committees and individual Directors contribution and performance. Based on the assessment undertaken for the financial year, the Nomination Committee (save for the members who abstained from deliberations on their own re-election/reappointment) recommended to the Board that the following directors be proposed for re-election at the forthcoming AGM:- Mr. Cheam Low Soo and Ms. Chew Meu Jong who are due to retire pursuant to Article 81 of the Company s Articles of Association Mr. Lim Tiong Beng who is due to retire pursuant to Article 88 of the Company s Articles of Association The Board (save for the members who had abstained from deliberations on their own re-election/re-appointment) supported the Nomination Committee s above recommendations. The Nomination Committee also has to ensure that all Directors undergo the appropriate induction programmes and receive continuous training. During the financial year, the Nomination Committee held three (3) meetings and details of the meeting attendance of its members were as follows:- No. of meetings Director attended Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (ceased as member and Chairman on 22 June 2015) 2/2 Datuk Ir. Hamzah bin Hasan (retired as member on 30 June 2015) 2/2 Cheam Low Soo (appointed as member and Chairman on 8 July 2015) 1/1 Dato' Ir. Wan Razali bin Wan Muda 3/3 Ee Beng Guan (appointed as member on 8 July 2015) 1/1 18 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

21 CORPORATE GOVERNANCE STATEMENT 3. The Remuneration Committee The members of Remuneration Committee during the financial year were:- Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (ceased as member and Chairman on 22 June 2015) Liew Swee Hoi Foo (resigned as member on 8 July 2015) Wee Kee Hong (ceased as member on 15 June 2015) Chew Meu Jong Chairman (appointed as member and Chairman on 8 July 2015) Dato' Ir. Wan Razali bin Wan Muda Ir. Aik Saw Kong Lim Tiong Beng (appointed as member on 23 November 2015) The Remuneration Committee s primary responsibility is to ensure that the Group s levels of remuneration commensurate with the skills and responsibilities expected of Senior Management as well as the Directors and that it is sufficient to attract and retain talent needed to run the Group successfully. The Board, as a whole, determines the remuneration of the Directors and each individual Director is required to abstain from discussing his/her own remuneration. The Remuneration Committee meets at least once a year. The Remuneration Committee s recommended remuneration for Directors and Senior Management is subject to Board s approval as it is the ultimate responsibility of the Board to approve the remuneration of the Directors and Senior Management. In relation to the fees for Directors, it will be presented at the AGM for shareholders approval. All Non-Executive Directors receive an annual fee upon shareholders approval at the AGM. Apart from this fee, the Non-Executive Directors were also paid attendance allowances to defray their travelling and other incidental costs for attending Board or Board Committees Meetings. The Remuneration Committee is guided by market norms and industry practices when making recommendations for the compensation and benefits of Directors. During the financial year, the Remuneration Committee held four (4) meetings and the details of the meeting attendance of its members were as follows:- Director Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (ceased as member and Chairman on 22 June 2015) Liew Swee Liew Hoi Foo (resigned as member on 8 July 2015) Wee Kee Hong (ceased as member on 15 June 2015) Chew Meu Jong (appointed as member and Chairman on 8 July 2015) No. of meetings attended 2/2 2/2 2/2 2/2 Ir. Aik Saw Kong 4/4 Dato' Ir. Wan Razali bin Wan Muda 4/4 Lim Tiong Beng (appointed as member on 23 November 2015) - # # No meetings of the Remuneration Committee were held from 23 November to 31 December LYSAGHT GALVANIZED STEEL BERHAD (CO P) 19

22 CORPORATE GOVERNANCE STATEMENT During the financial year, the aggregate remuneration of the Directors is categorised in the following table:- Remuneration Non-Executive (RM) Executive (RM) Salaries, bonuses and EPF - 2,081,647 Fees 505,912 - Benefits-in-kind - 36,326 Other allowances 110,000 - Total 615,912 2,117,973 Remuneration Non-Executive Executive Up to RM50,000 5* - RM50,001 to RM100, RM100,001 to RM150, RM300,001 to RM350,000-1* More than RM1,750,000-1 Total 10 2 * A Non-Executive Director was re-designated as an Executive Director with effect from 9 July The details of the remuneration for the Directors for the financial year are disclosed in Notes 5 to the Audited Financial Statements. PRINCIPLE 3: REINFORCE INDEPENDENCE The composition of the Board complies with the Listing Requirements. The majority of the Board comprises Independent Non-Executive Directors who are essential to bring objective and independence judgments to facilitate a balanced leadership in the Group. There are eight (8) members on the Board of Directors, comprising one (1) MD, one (1) Executive Director, one (1) Non-Independent Non-Executive Director and five (5) Independent Non-Executive Directors. The Chairman of the Board is an Independent Non-Executive Director. The appointment of any additional Director is to be made as and when it is deemed necessary by the existing Board upon recommendation from the Nomination Committee with due consideration given to add-on expertise and experience required for an effective Board. In accordance with the Company s Articles of Association, an election of Directors shall take place each year during the AGM. All Directors shall retire from office at least once every three (3) years, but shall be eligible for re-election. Any new or additional director appointed by the Board during the year shall hold office until the next AGM and shall then be eligible for re-election. At the forthcoming AGM, Mr. Cheam Low Soo and Ms. Chew Meu Jong will be standing for re-election pursuant to Article 81 of the Company's Articles of Association while Mr. Lim Tiong Beng will be standing for re-election pursuant to Article 88 of the Company's Articles of Association. The profiles of the above Directors are set out in the Directors Profile on pages 8 to 10 of this Annual Report. The Board recognises the importance of independence and objectivity in the decision making process. Each of the Independent Non-Executive Directors has declared his personal independence to the Board based on the criteria as set out in the Listing Requirements. These criteria, amongst others, include confirming that the director:- 1) is not an executive director of any related corporation in the Group; 2) has not been within the last 2 years and is not an officer of the Group; 3) is not a major shareholder of any corporation in the Group; 20 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

23 CORPORATE GOVERNANCE STATEMENT 4) is not a family member of any Executive Director, officer or major shareholder of any corporation in the Group; 5) is not acting as a nominee or representative of any Executive Director or major shareholder of the Group; 6) has not been engaged as an adviser by any corporation in the Group under such circumstances as prescribed by Bursa Securities Malaysia Berhad ( Bursa Securities ) or is not presently a partner, director (except as an independent director) or a major shareholder, as the case may be, of a firm or corporation which provides professional advisory services to any corporation in the Group under such circumstances as prescribed by Bursa Securities; 7) has not engaged in any transaction (including transaction of assets and services, joint ventures, financial assistance, etc.) with the said corporation under such circumstances as prescribed by Bursa Securities or is not presently a partner, director or a major shareholder, as the case may be, of a firm or corporation (other than subsidiaries of the listed issuer) which has been engaged in any transaction with the said corporation under such circumstances as prescribed by Bursa Securities; 8) has no immediate family member who is an executive officer (that is any Executive Director, officer or major shareholder) of any corporation in the Group; 9) has no immediate family member meeting any of the criteria set forth in points (3)-(8) above except with respect to item (6) in which case an immediate family member may be an employee (not a partner) of the independent auditor so long as such family member does not personally work on the any corporation in the Group; and 10) has no material relationship (as determined by the said corporation) with any corporation in the Group, either directly or as a partner, shareholder, director or officer of an organisation that has a material relationship with the said corporation. During the financial year, the Board has assessed and concluded that all the Independent Non-Executive Directors remain objective and independent. As recommended by the Code, the tenure of Directorship should also form part of the assessment criteria for independence of a Director. As of the end of the financial year, all Independent Non-Executive Directors have been in office for not more than 9 years. The Chairman, who is an independent director, leads the Board with a keen focus on governance and compliance. The positions of Chairman and MD are held by two different individuals. The MD manages the business and operations of the Group and implements the Board s decisions. The distinct and separate role of the Chairman and MD, with a clear division of responsibilities, ensures a balance of power and authority. PRINCIPLE 4: FOSTER COMMITMENT The Board members are mindful of the importance of devoting sufficient time and effort to carry out their responsibilities and to enhance their professional skills. Thus, each Director is expected to commit sufficient time and required to notify the Board prior to accepting any additional appointment of directorships in other public listed companies. The notification shall include an indication of time commitment required under the new appointment as recommended by the Code. The Board meets on a scheduled basis, at least four (4) times a year to oversee and monitor the development of the Group. Additional meetings are held on an ad-hoc basis to deliberate on matters requiring its immediate attention. The agenda and meeting papers for each item as well as minutes of previous meetings are circulated prior to the Board meetings to give the Directors sufficient time to review and to deliberate on the issues to be raised at the Board meetings. Upon recommendation by the Management/Board Committees, the Board will deliberate and discuss on all matters before any decisions are made. All proceedings of the Board meetings are minuted and signed by the Chairman of the meeting in accordance with the provision of Section 156 of the Companies Act, LYSAGHT GALVANIZED STEEL BERHAD (CO P) 21

24 CORPORATE GOVERNANCE STATEMENT A total of eleven (11) Board meetings were held during the financial year and the summary of attendance by the Directors at these meetings was as follows:- No. of meetings Director attended Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob 4/6 (retired on 22 June 2015) Datuk Ir. Hamzah bin Hasan 6/6 (retired on 30 June 2015) Wee Kee Hong 6/6 (resigned on 15 June 2015) Dato Ir. Wan Razali bin Wan Muda 11/11 (redesignated as Chairman on 8 July 2015) Liew Swee Hoi Foo 11/11 Chew Meu Jong 11/11 Ir. Aik Siaw Kong 10/11 Cheam Low Soo 11/11 Chua Tia Bon 5/5 (elected on 30 June 2015) Ee Beng Guan 5/5 (elected on 30 June 2015) Lim Tiong Beng 3/3 (appointed on 1 August 2015) A newly appointed Director must attend the Mandatory Accreditation Programme as specified by Bursa Securities. Orientation that include visits to the Group s business operations and meetings with key management, where appropriate, are also organised for newly-appointed Directors to facilitate their understanding of the Group s operations and businesses. All Directors are encouraged to attend training programs to supplement their knowledge in the latest developments relevant to the Group, especially in the areas of corporate governance and regulatory development so that they can discharge their responsibilities more effectively. The Nomination Committee and the Board assess the training needs of each of its Directors on an on-going basis, by determining areas that would best strengthen their contributions to the Group. The training programmes, seminars and/or conferences attended by the Directors in office at the end of financial year were as follows:- Director Training Programmes Dato Ir. Wan Razali bin Wan Muda Board Chairman Series: Tone from the Chair and establishing Boundaries Liew Swee Liew Hoi Foo Goods and Services Tax post-implementation issues Ir. Aik Siaw Kong Risk Management and Internal Control: Workshop for audit committee members Ee Beng Guan Fundamentals of Goods and Services Tax Lim Tiong Beng Mandatory Accreditation Programme (MAP) for directors of Public Listed Companies 22 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

25 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING BY THE COMPANY The Board endeavours to present a set of financial statements that provides a true and fair view of the state of affairs of the Company and of the Group at the end of each financial year. Before presenting the financial statements, the Directors have taken necessary steps to ensure that the Company and the Group apply accounting policies consistently, and that the policies are supported by reasonable and prudent judgment and estimates. The Board is required by the Companies Act, 1965 to prepare financial statements which reflect a true and fair view of the state of affairs of the Company and the Group and the financial results of the Company and the Group for each financial year. In preparing the financial statements, the Board is required to:- Adopt suitable accounting policies consistently; Make judgments and estimates that are prudent and reasonable; Comply with applicable accounting standards; Prepare financial statements on a going concern basis unless otherwise stated; and Ensure proper keeping of accounting records with reasonable accuracy. The Audit Committee, under its terms of reference, is tasked to assist the Board in making sure that the financial statements are prepared in accordance with the approved and applicable Malaysian Financial Reporting Standards and are in accordance with the provisions of the Companies Act, The Board is satisfied that in preparing the financial statements of the Company and the Group for the financial year, the Company and the Group have used appropriate accounting policies and applied them consistently and prudently. The Board is of the opinion that the financial statements have prepared in accordance with all relevant approved accounting standards and have been prepared on a going concern basis. The Audit Committee manages the relationship with its external auditors on behalf of the Board. The Audit Committee considers the re-appointment, remuneration and terms of engagement of the external auditors annually. Further information on the role of the Audit Committee in relation to both, internal auditors and external auditors are stated in the Audit Committee Report in pages 11 to 14 of this Annual Report. A summary of the activities of the Audit Committee during the financial year are set out in page 13 of this Annual Report. Annually, prior to the commencement of the audit engagement, the external auditors confirm to the Audit Committee on their independence and during the financial year, the external auditors have met once with the Audit Committee without the presence of the Management instead of twice due to no other matters that required to bring to the private session for discussion. PRINCIPLE 6: RECOGNISE AND MANAGE RISKS The Board is responsible for the Group s Risk Management framework and the establishment and continuous development of key policies and procedures pertaining to the system of internal control, which provides reasonable assurance of an effective and efficient operation, management of risks, safeguarding of assets, generation and retention of accurate financial records and compliance with applicable laws and regulations. The Board reviews all significant litigation, actions, transactions and issues, papers and reports to external/third parties which have an impact on the Group that may attract adverse public, governmental, regulatory or other interest to ensure compliance with relevant legislations. The Board through the Audit Committee works closely with internal and external auditors to review and improve the system of internal controls from time to time with the objective to safeguard the assets of the Group and to ensure proper accountability at all levels of the Group. Details of the Risk Management and Internal Control functions are stated in the Statement on Risk Management and Internal Control on pages 25 to 27 of this Annual Report. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 23

26 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE The Group recognises the importance of timely dissemination of relevant corporate and other information to and in dealing with shareholders, stakeholders, regulators and investing public. Although the Board does not have a formalised corporate disclosure policy, the Group has in place procedures to enable it to comply strictly with the disclosure requirements of all applicable legal and regulatory requirements. Information is disseminated via the annual reports, circulars to shareholders, press releases, quarterly financial results and announcements from time to time to as well as via Bursa Securities. All disclosures made by the Group to Bursa Securities, shareholders, investors and media are handled by duly qualified personnel (including MD or Company Secretary) within the prescribed disclosure requirements under the Listing Requirements and guided by the Corporate Disclosure Guide issued by Bursa Securities. Such disclosures would only be released to Bursa Securities, shareholders, investors and media after having reviewed and approved by Senior Management and/or MD and/or the Board (where necessary). To comply with Paragraph 9.21 of the Listing Requirements, the Group also maintains a website at that allows all shareholders, investors and the public to gain access to the information relating to corporate information, annual reports, analyst reports and quarterly results of the Group. PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS The Board recognises the importance of keeping shareholders, investors, research analysts and the media informed of the Group s business performance, operations and corporate developments. The AGM serves as a principal form for dialogue with shareholders. All shareholders are encouraged to attend the AGM, during which they can participate and given the opportunity to ask questions regarding the business operations and financial performance and position of the Group. The notice of AGM is dispatched to shareholders at least 21 days before the AGM and it is also advertised in a leading Malaysian daily newspaper. This Statement is made in accordance with the approval of the Board of Directors on 30 March LYSAGHT GALVANIZED STEEL BERHAD (CO P)

27 STATEMENT ON RISK management AND INTERNAL CONTROL This Statement on Risk Management and Internal Control which has been prepared in accordance with the Statement on Risk Management and Internal Control (Guidelines for Directors of Listed Issuers) ( Guidelines ) is made pursuant to Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ) which requires the Board to include in its Annual Report a statement about the state of its risk management and internal control. BOARD S RESPONSIBILITY The Board acknowledges its overall responsibility in establishing a sound risk management framework and internal control system as well as reviewing its adequacy and effectiveness. The Board is of the view that the risk management framework and internal control system are designed to manage the Group s risks within the acceptable risk appetite, rather than to eliminate the risk of failure to achieve the business goals and objectives. It can therefore only provide reasonable, rather than absolute assurance against material misstatement, fraud or loss. The Board confirms that there is an ongoing risk management process established to identify, evaluate and manage significant risks to mitigate the risks that may impede the achievement of the Group s business and corporate objectives. RISK MANAGEMENT The Group s Risk Management Framework is outlined in the Risk Management Policy. The Framework adopts a structured and integrated approach in managing key business risks with the aim of safeguarding shareholders interest and the Group s assets. The Audit Committee ( AC ) reviews the adequacy and effectiveness of the risk management process on a half yearly basis. The Risk Management Committee ( RMC ) was established during the financial year to identify and assess the risks and the effectiveness of the risk management process. The Board have adopted enterprise risk management framework to manage its risk. Broadly speaking, the RMC focus on four broad categories of risk namely, Credit Risk, Operational Risk, Market Risk and Compliance Risk. The RMC comprises the following Directors:- Ee Beng Guan Chairman (Independent Non-Executive Director) Ir. Aik Siaw Kong (Independent Non-Executive Director) Chew Meu Jong (Non-Independent Non-Executive Director) The on-going risk management review process involves the key management staff in each operating unit of the Group. The methodology enables RMC to identify the risk, assess its impact and finally put in place, policies and operating procedures to manage those risk. RMC will together with management continuously review and assess the risks associated with the company s business. RMC works closely with AC in managing the risks. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 25

28 STATEMENT ON RISK management AND INTERNAL CONTROL INTERNAL CONTROL SYSTEM The Board is committed to articulating, implementing and reviewing the Group s system of internal control. In this respect, it acknowledges the importance of the internal audit function in the process. The internal audit function has been outsourced to an independent professional service provider to assist the Board as well the AC and RMC in discharging their responsibilities and duties. During the financial year, the internal audit of the Group was carried out in accordance with a risk-based audit plan approved by AC. The internal audit provides an assessment of the adequacy, efficiency and effectiveness of the Group s system of internal control to ensure that the internal controls are viable and robust and where necessary, recommended improvements are presented to the AC at their quarterly meetings. In addition, the internal auditors also carried out followup reviews to ensure their recommendations for improvements to internal controls are implemented. The key elements of the Group s system of internal control include:- 1. A well-defined organisation structure with clearly defined lines of responsibility, authority and accountability; 2. Operational approval limits imposed on management in respect of day-to-day operations as well as major operating transactions; 3. Clear, formalised and documented internal policies and procedures are in place to ensure compliance with internal controls and relevant laws and regulations. Such policies and procedures are currently being reviewed by RMC; 4. Internal quality audits are conducted regularly on the Quality Management System (ISO 9001:2000). Surveillance audits are carried out by LLOYD s Register Quality Assurance periodically to ensure that the ISO 9001:2000 procedures have been complied with. Observations identified during these audits are documented and the relevant remedial action will be undertaken accordingly. These procedures are periodically reviewed to ensure they continue to be relevant as the Group s business evolves; 5. The Board and the AC meet every quarter to discuss the Group s financial performance, business operations and strategies, corporate updates and internal audit findings; 6. Training and development programmes are conducted to ensure that the staff are competent and kept up to date with the necessary knowledge to carry out their respective duties towards achieving the Group s objectives; 7. Sufficient insurance coverage is taken on major insurable assets to ensure these assets are adequately insured against any mishap that could result in material loss. A yearly policy renewal exercise is undertaken during which the coverage is reviewed based on the said assets carrying values or replacement values; 8. Management accounts and reports are prepared regularly for monitoring of actual performance; 9. Key functions such as finance, tax, treasury, corporate and legal matters are controlled centrally; 10. A fully independent AC with full and unrestricted access to both internal and external auditors; and 11. The quarterly financial results and yearly audited financial statements reviewed by the AC prior to their approval by the Board. 26 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

29 STATEMENT ON RISK management AND INTERNAL CONTROL ASSURANCE The Board has reviewed the adequacy and effectiveness of the Group s risk management and system of internal control for the financial year and up to the date of this Statement and is of the view that the risk management and system of internal control are satisfactory and there were no material losses incurred as a result of any weaknesses in internal controls that would require disclosure in this Annual Report. The Board will continuously improve and enhance the system of internal control to ensure its adequacy and relevance in safeguarding the shareholders interests and the Group s assets. Executive management is accountable to the Board for implementing and monitoring the systems of risk management and internal control and for providing assurance to the Board that it has done so. For the period covered by this Statement, the Managing Director (who also acted as the Chief Financial Officer) and Executive Director have provided assurance to the Board that the Group s risk management and internal control system are operating adequately and effectively in all material aspects based on the risk management and internal control systems adopted by the Group. Consequently, the Board is of the view that the Group s risk management and internal control framework and systems are in place for the period covered by this Statement for identifying, evaluating and managing significant risks faced or potentially to be encountered by the Group. REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS As required by Paragraph of the Listing Requirements, the external auditors have reviewed this Statement. Their review was performed in accordance with Recommended Practice Guide 5 (Revised 2015): Guidance for Auditors on the Review of Statement on Risk Management and Internal Control ( RPG 5 ), issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with the disclosures required by Paragraphs 41 and 42 of the Guidelines, nor is it factually inaccurate. RPG 5 does not require the external auditors to, and they did not, consider whether this Statement covers all risks and controls, or to form an opinion on the effectiveness of the Group s risk and control procedures. This statement has been approved by the Board on 30 March LYSAGHT GALVANIZED STEEL BERHAD (CO P) 27

30 ADDITIONAL COMPLIANCE INFORMATION A. UTILISATION OF PROCEEDS The Company did not raise any proceeds from corporate proposals during the financial year. B. SHARE BUYBACKS The Company did not buyback any of its shares or resell any treasury shares during the financial year. No treasury shares were retained or cancelled by the Company during the financial year. C. OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES The Company did not issue any options, warrants and convertible securities during the financial year. D. DEPOSITORY RECEIPT PROGRAMME The Company did not sponsor any depository receipt programme during the financial year. E. IMPOSITION OF SANCTIONS AND/OR PENALTIES There were no sanctions and/or penalties imposed on the Company and its subsidiary companies, Directors or management by the relevant regulatory bodies. F. VARIATION IN RESULTS There was no material deviation between the audited results of the Group for the financial year and the unaudited results for the same period announced on 25 February G. PROFIT ESTIMATES, FORECAST OR PROJECTION OR PROFIT GUARANTEE The Company did not issue any profit estimates, forecasts or projections during the financial year The Company or its subsidiary companies did not undertake any corporate proposal which involves it receiving a profit guarantee during the financial year. H. MATERIAL CONTRACTS There were no material contracts entered into by the Group involving the Directors and/or major shareholders interests, which were still subsisting at the end of the current financial year or which were entered into since the end of the previous financial year. I. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE Other than the related party transactions entered into in the ordinary course of business as disclosed in Note 24 to the financial statements, there were no other significant recurrent related party transactions of revenue or trading nature entered into the Company and its subsidiary companies during the financial year. J. NON AUDIT FEES Non-audit fees of RM31,900 were incurred for services rendered to the Group by the external auditors or a company affiliated to the external auditors during the financial year. 28 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

31 STATEMENT ON DIRECTORS RESPONSIBILITY The Board of Directors is required under Paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad to issue a statement explaining their responsibility in the preparation of the annual audited financial statements. The Directors are required by the Companies Act, 1965 to prepare financial statements which are in accordance with applicable Financial Reporting Standards in Malaysia and give a true and fair view of the financial position of the Group and the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year then ended. In preparing the financial statements, the Directors have:- Adopted suitable accounting policies and applied them consistently; Made prudent and reasonable judgements and estimates; Ensured that applicable accounting standards have been followed; and Applied the going concern basis that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. The Directors are responsible for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy the financial position of the Company and its subsidiaries and which enable them to ensure that the financial statements comply with the Companies Act, The Directors is further responsible for taking reasonable steps to safeguard the assets of the Company and for taking reasonable steps for the prevention of fraud and other irregularities. This Statement has been approved by the Board on 30 March LYSAGHT GALVANIZED STEEL BERHAD (CO P) 29

32 Directors report Directors report The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the year ended 31 December Principal activities The principal activity of the Company is the manufacturing of galvanized steel products and the principal activities of the subsidiaries are as stated in Note 9 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year. CORPORATE INFORMATION The immediate holding company is Lysaght (Malaysia) Sdn. Bhd., a company incorporated in Malaysia. As of date the directors have not received any formal notification of any change in this status. To the best of their knowledge based on publicly available corporate information provided by Lysaght (Malaysia) Sdn. Bhd., the directors regard Lysaght (Malaysia) Sdn. Bhd. as the ultimate holding company. Results Group RM Company RM Profit net of tax attributable to equity holders of the Company 16,305,337 21,755,304 There were no material transfers to or from reserves or provisions during the financial year. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividend No dividend has been paid for the financial year. At the forthcoming Annual General Meeting, a final single tier dividend in respect of the current financial year ended 31 December 2015, of RM0.15 per ordinary share, on 41,580,000 ordinary shares, amounting to a total dividend of RM6,237,000 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation of retained profits in the financial year ending 31 December Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are:- Cheam Low Soo Ir. Aik Siaw Kong Dato Ir. Wan Razali bin Wan Muda Chew Meu Jong Chua Tia Bon (appointed on 30 June 2015) Ee Beng Guan (appointed on 30 June 2015) Lim Tiong Beng (appointed on 1 August 2015) Tan Sri Dato Ir. (Dr.) Wan Abdul Rahman bin Haji Wan Yaacob (retired on 22 June 2015) Datuk Ir. Hamzah bin Hasan (retired on 30 June 2015) Wee Kee Hong (resigned on 15 June 2015) Liew Swee Liew Hoi Foo (resigned on 27 April 2016) 30 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

33 Directors report Directors benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 24 to the financial statements. Directors interests According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:- Number of ordinary shares of RM1 each Balance as at / Date of appointment Bought Sold During the year Balance as at Adjustment^ Balance as at date of the Directors Report Direct interest in Company Liew Swee Liew Hoi Foo 344, , ,400 Chua Tia Bon 12, ,600-12,600 Indirect interest in Company Liew Swee Liew Hoi Foo* 30,454, ,454,900-30,454,900 Chew Meu Jong**^ 22,978, ,978,200 22,946,700 31,500 Chua Tia Bon** 10, ,600-10,600 Indirect interest in holding company Lysaght (Malaysia) Sdn. Bhd. Liew Swee Liew Hoi Foo 3,152, ,152,270-3,152,270 Chew Meu Jong 7,375, ,375,281 7,375,281 - * comprises 1,100,400 shares held directly by spouse and children, 6,428,800 shares held via Ingli Sdn Bhd and 22,925,700 shares held via Lysaght (Malaysia) Sdn Bhd. ** shares held directly by spouse. ^ notification from Chew Meu Jong dated 19 April 2016 received by the Company on 21 April 2016 that:- (i) her position as Managing Director of Chew Bros (M) Sdn. Bhd. does not deemed her to hold interest in Lysaght (Malaysia) Sdn. Bhd.; and (ii) ceasation upon grant of probate obtained on her late father s 21,000 shares. Liew Swee Liew Hoi Foo is also deemed to have an interest in shares of the other related corporations by virtue of his interest in shares of the holding company to the extent that the holding company has an interest. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 31

34 Directors report Other statutory information (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:- (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render:- (i) (ii) the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Company misleading. (c) (d) (e) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist:- (i) (ii) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Group or of the Company which has arisen since the end of the financial year. (f) In the opinion of the directors:- (i) (ii) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made. Auditors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April Dato Ir. Wan Razali bin Wan Muda Cheam Low Soo 32 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

35 Statement by directors Pursuant to Section 169(15) of the Companies Act, 1965 We, Dato Ir. Wan Razali bin Wan Muda and Cheam Low Soo, being two of the directors of Lysaght Galvanized Steel Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 36 to 80 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the year then ended. The information set out in Note 29 to the financial statements on page 81 have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by Malaysian Institute of Accountants. Signed on behalf of the Board in accordance with a resolution of the directors dated 28 April Dato Ir. Wan Razali bin Wan Muda Cheam Low Soo Statutory declaration Pursuant to Section 169(16) of the Companies Act, 1965 I, Ong Siew Sung (NRIC No.: ), being the officer primarily responsible for the financial management of Lysaght Galvanized Steel Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 36 to 81 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed Ong Siew Sung at Ipoh in the State of Perak Darul Ridzuan on 28 April Ong Siew Sung Before me, Commisioner For Oaths LYSAGHT GALVANIZED STEEL BERHAD (CO P) 33

36 Independent auditors report To the Members of Lysaght Galvanized Steel Berhad (Incorporated in Malaysia) Report on the financial statements We have audited the financial statements of Lysaght Galvanized Steel Berhad, which comprise the statements of financial position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 36 to 80. Directors responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 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) (b) (c) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary have been properly kept in accordance with the provisions of the Act. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. 34 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

37 Independent auditors report To the Members of Lysaght Galvanized Steel Berhad (Incorporated in Malaysia) Other reporting responsibilities The supplementary information set out in Note 29 to the financial statements on page 81 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Lim Eng Huat No. 2403/04/17 (J) Chartered Accountant Ipoh, Perak Darul Ridzuan, Malaysia Date: 28 April 2016 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 35

38 Statements of comprehensive income For the Financial Year Ended 31 December 2015 Group Company Note RM RM RM RM Revenue 4 63,887,049 65,242,014 50,932,796 52,709,752 Cost of sales (37,951,843) (41,073,151) (37,322,566) (40,436,123) Gross profit 25,935,206 24,168,863 13,610,230 12,273,629 Other items of income Interest income 1,561, ,576 1,549, ,056 Other income 5,825,538 2,637,806 17,149,046 28,992,704 Other items of expense Administrative expenses (9,204,418) (9,114,207) (6,800,210) (6,978,680) Selling and distribution expenses (3,743,824) (3,677,350) (1,273,386) (1,359,410) Other operating costs (59,114) (111,968) (59,114) (111,968) Profit before tax 5 20,315,067 14,521,720 24,176,407 33,420,331 Income tax expense 6 (4,009,730) (3,287,075) (2,421,103) (1,694,105) Profit net of tax 16,305,337 11,234,645 21,755,304 31,726,226 Other comprehensive income Items that will be reclassified to profit and loss in the future: Foreign currency translation 1,706, , Total comprehensive income 18,012,105 11,409,471 21,755,304 31,726,226 Profit net of tax attributable to: Equity holders of the Company 16,305,337 11,234,645 21,755,304 31,726,226 Total comprehensive income attributable to: Equity holders of the Company 18,012,105 11,409,471 21,755,304 31,726,226 Earnings per share attributable to equity holders of the Company (sen): Basic/Diluted, for profit for the year The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 36 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

39 Statements of financial position As at 31 December 2015 Group Company Note RM RM RM RM Assets Non-current assets Property, plant and equipment 8 30,923,757 31,278,440 26,500,267 27,120,489 Investments in subsidiaries , ,561 Other investments , , , ,523 Goodwill 7,871 7, ,062,151 31,416,834 26,759,351 27,379,573 Current assets Inventories 11 20,925,932 24,161,873 20,517,043 23,746,017 Trade and other receivables 12 13,980,345 18,302, ,392 1,027,310 Other current assets Tax recoverable - 487, ,895 Cash and bank balances 13 62,391,443 33,165,022 58,781,565 27,382,414 97,297,720 76,118,081 79,703,000 52,644,306 Investment property held for sale 14-2,608,759-2,608,759 97,297,720 78,726,840 79,703,000 55,253,065 Total assets 128,359, ,143, ,462,351 82,632,638 Equity and liabilities Current liabilities Trade and other payables 15 8,325,187 8,533,031 8,668,192 7,084,591 Retirement benefits 16 1,830-1,830 - Tax payable 1,473,478 1,063, ,808-9,800,495 9,596,239 9,159,830 7,084,591 Net current assets 87,497,225 69,130,601 70,543,170 48,168,474 Non-current liabilities Retirement benefits , ,307 98, ,177 Deferred tax liabilities , , , , , , , ,177 Total liabilities 10,548,339 10,344,247 9,809,177 7,734,768 Net assets 117,811,532 99,799,427 96,653,174 74,897,870 Equity attributable to equity holders of the Company Share capital 18 41,580,000 41,580,000 41,580,000 41,580,000 Other reserves 19 4,089,871 2,383, Retained profits 20 72,141,661 55,836,324 55,073,174 33,317,870 Total equity 117,811,532 99,799,427 96,653,174 74,897,870 Total equity and liabilities 128,359, ,143, ,462,351 82,632,638 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 37

40 Statements of changes in equity For the Financial Year Ended 31 December 2015 Group Non-distributable Share Capital Exchange Distributable Retained capital reserve reserve profits Total Note RM RM RM RM RM At 1 January ,580, ,998 1,708,279 70,381, ,169,556 Total comprehensive income ,826 11,234,645 11,409,471 Dividends (25,779,600) (25,779,600) At 31 December ,580, ,998 1,883,105 55,836,324 99,799,427 Total comprehensive income - - 1,706,768 16,305,337 18,012,105 At 31 December ,580, ,998 3,589,873 72,141, ,811,532 Company Distributable Share Retained capital profits Total Note RM RM RM At 1 January ,580,000 27,371,244 68,951,244 Total comprehensive income - 31,726,226 31,726,226 Dividends 21 - (25,779,600) (25,779,600) At 31 December ,580,000 33,317,870 74,897,870 Total comprehensive income - 21,755,304 21,755,304 At 31 December ,580,000 55,073,174 96,653,174 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 38 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

41 Statements of cash flows For the Financial Year Ended 31 December 2015 Group Company RM RM RM RM Operating activities Profit before tax 20,315,067 14,521,720 24,176,407 33,420,331 Adjustments for: Depreciation 1,245,331 1,530, ,946 1,243,868 Dividend received from a subsidiary - - (12,000,000) (27,500,000) Gain on disposal of property, plant and equipment (4,065) - (4,065) - Gain on disposal of investment property (3,791,241) - (3,791,241) - Impairment loss on trade receivables 151, , Interest income from fixed deposits (1,561,679) (618,576) (1,549,841) (604,056) Reversal of impairment loss on trade receivables (30,000) (143,440) - - Unrealised (gain)/loss on foreign exchange, net (199,749) (264,131) 19,335 (78,991) Total adjustments (4,190,353) 608,321 (16,403,866) (26,939,179) Operating profit before changes in working capital 16,124,714 15,130,041 7,772,541 6,481,152 Changes in working capital: Inventories 3,235,941 6,349,120 3,228,974 6,311,678 Receivables 4,201,896 1,184, ,588 3,447,584 Payables (248,229) 733,911 1,564,266 1,180,279 Total changes in working capital 7,189,608 8,267,242 5,416,828 10,939,541 Cash from operations 23,314,322 23,397,283 13,189,369 17,420,693 Income tax paid (3,109,900) (3,612,449) (1,442,400) (2,405,000) Net cash flows from operating activities 20,204,422 19,784,834 11,746,969 15,015,693 Investing activities Purchase of property, plant and equipment (308,845) (1,060,409) (302,959) (940,935) Proceeds from disposal of property, plant and equipment 5,300-5,300 - Proceeds from disposal of investment property 6,400,000-6,400,000 - Interest received 1,561, ,576 1,549, ,056 Dividend received from a subsidiary ,000,000 27,500,000 Net cash flows from/(used in) investing activities 7,658,134 (441,833) 19,652,182 27,163,121 Financing activity Dividends paid, representing net cash flows used in financing activity - (25,779,600) - (25,779,600) Net increase/(decrease) in cash and cash equivalents 27,862,556 (6,436,599) 31,399,151 16,399,214 Effect of foreign exchange rate changes 1,363, , Cash and cash equivalents at 1 January 33,165,022 39,325,629 27,382,414 10,983,200 Cash and cash equivalents at 31 December (Note 13) 62,391,443 33,165,022 58,781,565 27,382,414 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 39

42 Notes to the financial statements For the Financial Year Ended 31 December Corporate information The principal activity of the Company is the manufacturing of galvanized steel products. The principal activities of the subsidiaries are described in Note 9. There have been no significant changes in the nature of the principal activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are located at No. 11, Jalan Majistret U1/26, Seksyen U1, Hicom-Glenmarie Industrial Park, Shah Alam, Selangor Darul Ehsan. The immediate holding company is Lysaght (Malaysia) Sdn. Bhd., a company incorporated in Malaysia. The details of the Company s ultimate holding company are found in the Directors Report. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 April Summary of significant accounting policies 2.1 Basis of preparation The financial statements of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Company adopted new and amended MFRS which are mandatory for financial periods beginning on or after the dates as described fully in Note 2.2. The financial statements have been prepared on a historical cost basis unless otherwise stated in the summary of significant accounting policies. The financial statements are presented in Ringgit Malaysia ( RM ) unless otherwise indicated. 2.2 Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except as follows: On 1 January 2015, the Group and the Company adopted the following new and amended MFRSs mandatory for annual financial periods beginning on or after the dates as stated below: Effective for annual periods beginning on Description or after Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014 Annual Improvements to MFRSs Cycle 1 July 2014 Annual Improvements to MFRSs Cycle 1 July 2014 The nature and impact of the new and amended MFRSs are described below: (a) Amendments to MFRS 119 Defined Benefit Plans: Employee Contributions The amendments to MFRS 119 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. For contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees periods of service. These amendments have been applied retrospectively. The application of these amendments has had no material impact on the disclosures or the amounts recognised in the Group s financial statements. 40 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

43 2. Summary of significant accounting policies 2.2 Changes in accounting policies Notes to the financial statements For the Financial Year Ended 31 December 2015 (b) Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle include a number of amendments to various MFRSs, which are summarised below. The Group has applied the amendments for the first time in the current year. Standards MFRS 3 Business Combinations MFRS 8 Operating Segments Descriptions The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets) should be measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The amendments are effective for business combinations for which the acquisition date is on or after 1 July This is consistent with the Group s current accounting policy and thus, this amendment did not impact the Group. The amendments are to be applied retrospectively and clarify that:- - an entity must disclose the judgements made by management in applying the aggregation criteria in MFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and - the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. The Group has not applied the aggregate criteria as mentioned above. The Group continues to present the reconciliation of segment assets to total assets. MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets MFRS 124 Related Party Disclosures The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between gross and carrying amounts of the asset. This amendment did not have any impact on the Group. The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. The amendment is not applicable to the Group as the Group does not receive any management services from other entities. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 41

44 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.2 Changes in accounting policies (c) Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle include a number of amendments to various MFRSs, which are summarised below. Standards MFRS 3 Business Combinations MFRS 13 Fair Value Measurement Descriptions The amendments to MFRS 3 clarify that the standard does not apply to the accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively. The Group does not have a joint arrangement and thus this amendment is not relevant to the Group. The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS 139 as applicable). The Group does not apply the portfolio exception. 2.3 Standards issued but not yet effective The standards that are issued but not yet effective up to date of issuance of the Group s and the Company s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective. Description Effective for annual periods beginning on or after Annual Improvements to MFRSs Cycle 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 101: Disclosure Initiatives 1 January 2016 Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception 1 January 2016 MFRS 14 Regulatory Deferral Accounts 1 January 2016 Amendments to MFRS 112: Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017 Amendments to MFRS 107: Disclosure Initiative 1 January 2017 MFRS 15 Revenue from Contracts with Customers 1 January 2018 MFRS 9 Financial Instruments 1 January 2018 MFRS 16 Leases 1 January 2019 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred (a) Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle include a number of amendments to various MFRSs, which are summarised below. The directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group s and the Company s financial statements. 42 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

45 2. Summary of significant accounting policies 2.3 Standards issued but not yet effective Notes to the financial statements For the Financial Year Ended 31 December 2015 (a) Annual Improvements to MFRSs Cycle Standards MFRS 7 Financial Instruments: Disclosures Descriptions The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required. In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report. MFRS 119 Employee Benefits MFRS 134 Interim Financial Reporting The amendment to MFRS 119 clarifies that the market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. MFRS 134 requires entities to disclose information in the notes to the interim financial statements if not disclosed elsewhere in the interim financial report. The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. (b) Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation The amendments clarify that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset forms part of the business) rather than the economic benefits that are consumed through the use of an asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group has not used a revenue-based method to depreciate its non-current assets. (c) Amendments to MFRS 127: Equity Method in Separate Financial Statements The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group s and the Company s financial statements. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 43

46 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.3 Standards issued but not yet effective (d) Amendments to MFRS 101: Disclosure Initiatives The amendments to MFRS 101 include narrow-focus improvements in the following five areas:- - Materiality - Disaggregation and subtotals - Notes structure - Disclosure of accounting policies - Presentation of items of other comprehensive income arising from equity accounted investments The directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group s and the Company s financial statements. (e) Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate s or joint venture s interests in subsidiaries. The amendments are to be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group s and the Company s financial statements. (f) MFRS 15 Revenue from Contracts with Customers MFRS 15 establishes a new five-step models that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective. The core principle of MFRS 15 is that an entity should recognise revenue which depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The directors anticipate that the application of MFRS 15 will have a material impact on the amounts reported and disclosures made in the Group s and the Company s financial statements. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date. (g) MFRS 9 Financial Instruments In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group s financial assets, but no impact on the classification and measurement of the Group s financial liabilities. 44 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

47 2. Summary of significant accounting policies 2.3 Standards issued but not yet effective Notes to the financial statements For the Financial Year Ended 31 December 2015 (h) MFRS 16 Leases Currently under MFRS 117, leases are classified either as finance leases or operating leases. A lessee recognises on its statement of financial position assets and liabilities arising from the former but not the latter. As a result, many users have resorted to adjust the lessees financial statements for the effects of operating leases commitments to enable comparison with entities that borrow to buy assets. MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will be brought onto its statement of financial position as recording certain leases as off-balance sheet leases will no longer be allowed except for some limited practical exemptions. In other words, for a lessee that has material operating leases, the assets and liabilities reported on its statement of financial position are expected to increase substantially. The Group is currently assessing the impact of MFRS 16 and plans to adopt the new standard on the required effective date. (i) Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments clarify that:- - gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint venture are recognised in the entity s financial statements only to the extent of unrelated investors interests in the associate or joint venture; and - gains and losses resulting from transactions involving the sale or contribution of assets to an associate of a joint venture that constitute a business is recognised in full. The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after a date to be determined by Malaysian Accounting Standards Board. Earlier application is permitted. These amendments are not expected to have any impact on the Group. 2.4 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. The Company controls an investee if and only if the Company has all the following:- (i) (ii) (iii) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its investment with the investee; and The ability to use its power over the investee to affect its returns. When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company s voting rights in an investee are sufficient to give it power over the investee:- (i) (ii) (iii) The size of the Company s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; Potential voting rights held by the Company, other vote holders or other parties; Rights arising from other contractual arrangements; and LYSAGHT GALVANIZED STEEL BERHAD (CO P) 45

48 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.4 Basis of consolidation (iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance. Changes in the Group s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company. When the Group losses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiary s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment. Business combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-bytransaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. The accounting policy for goodwill is set out in Note LYSAGHT GALVANIZED STEEL BERHAD (CO P)

49 2. Summary of significant accounting policies 2.5 Foreign currencies Notes to the financial statements For the Financial Year Ended 31 December 2015 (i) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Ringgit Malaysia ( RM ), which is also the Company s functional currency. (ii) Foreign currency transactions Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity. (iii) Foreign operations The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in profit or loss. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date. 2.6 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 47

50 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.6 Property, plant and equipment Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the other property, plant and equipment as follows:- Long term leasehold land 1.00% to 1.60% Buildings and electrical installation 2% Plant and machinery 10% to 20% Motor vehicles 20% to 33 1/3% Furniture, fittings and office equipment 10% Renovation 20% Capital work-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in profit or loss in the year the asset is derecognised. 2.7 Intangible asset Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group s cash-generating units that are expected to benefit from the synergies of the combination. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.5. Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition. 48 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

51 2. Summary of significant accounting policies 2.8 Impairment of non-financial assets Notes to the financial statements For the Financial Year Ended 31 December 2015 The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units ( CGU )). In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on goodwill is not reversed in a subsequent period. 2.9 Subsidiaries A subsidiary is an entity over which the Company has all the following:- (i) (ii) (iii) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its investment with the investee; and The ability to use its power over the investee to affect its returns. In the Company s separate financial statements, investments in subsidiaries are accounted for at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss Financial assets Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-tomaturity investments and available-for-sale financial assets. (i) Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 49

52 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.10 Financial assets (i) Financial assets at fair value through profit or loss Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date. The Group and the Company have not designated any financial assets as at fair value through profit or loss. (ii) Loans and receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. (iii) Held-to-maturity investments Financial assets with fixed or determinable payments and fixed maturity are classified as held-tomaturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-tomaturity investments are derecognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current. (iv) Available-for-sale financial assets Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an availablefor-sale equity instrument are recognised in profit or loss when the Group s and the Company s right to receive payment is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. 50 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

53 2. Summary of significant accounting policies 2.10 Financial assets Notes to the financial statements For the Financial Year Ended 31 December 2015 (iv) Available-for-sale financial assets A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. (i) Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group s and the Company s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (ii) Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand and short term deposits with licensed bank that are readily convertible as known amount of cash and which are subject to an insignificant risk of changes in values. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 51

54 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.13 Inventories Inventories are stated at lower of cost and net realisable value. Cost is determined principally on the weighted average basis except for production supplies which is determined on the first-in-first-out basis. The cost of raw materials comprises costs of purchase and incidental costs to bring the inventories to their location at reporting date. The cost of finished goods and work-in-progress comprise raw materials, direct labour, other direct costs and appropriate proportions of production overheads. 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 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and by the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as at fair value through profit or loss. (ii) Other financial liabilities The Group s and the Company s other financial liabilities include trade payables, other payables and loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. 52 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

55 2. Summary of significant accounting policies 2.15 Financial liabilities Notes to the financial statements For the Financial Year Ended 31 December 2015 (ii) Other financial liabilities A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss Employee benefits (i) Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and of the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. (ii) Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ( EPF ). The Group s foreign subsidiary makes contributions to its statutory pension scheme, the Central Provident Fund ( CPF ). (iii) Retirement benefits 2.17 Leases As lessor Under the agreement with the Metal Industry Employees Union, with effect from 1 January 1983, the Group contributes directly to the Employees Provident Fund as retirement benefits for the workers based on percentages as provided in the agreement. The contributions are charged to profit or loss in the financial year to which they relate. The provision for retirement benefits made in the financial statements is in respect of employees who joined the Group prior to 1 January 1983 in accordance with the above said agreement. Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. The accounting policy for rental income is set out in Note 2.18(iii) Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:- (i) Sale of goods Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 53

56 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.18 Revenue (ii) Interest income Interest income is recognised on an accrual basis using the effective interest method. (iii) Rental income 2.19 Income taxes Rental income is recognised over the period of tenancy. (i) Current tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. (ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except:- - where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:- - where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. 54 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

57 2. Summary of significant accounting policies 2.19 Income taxes Notes to the financial statements For the Financial Year Ended 31 December 2015 (ii) Deferred tax Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. (iii) Goods and Services Tax ( GST ) The net amount of GST being the difference between output GST and input GST, payable to or receivable from the respective authorities at the reporting date, is included in other payables or other receivables in the statement of financial position Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group. Contingent liabilities and assets are not recognised in the statement of financial position of the Group Fair value measurement The Group measures financial instruments, such as, derivatives and non-financial assets at fair value model, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Note 27 B(ii). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:- - In the principal market for the asset or liability, or - In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 55

58 Notes to the financial statements For the Financial Year Ended 31 December Summary of significant accounting policies 2.22 Fair value measurement All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:- Level 1 - Level 2 - Quoted (unadjusted) market prices in active markets for identical assets and liabilities Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 - Valuation techniques for which the lowest level inputs that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level inputs that is significant to the fair value measurement as a whole) at the end of each reporting period. The Group determines the policies and procedures for both recurring fair value measurement, such as investment properties and unquoted available-for-sale financial assets, and for non-recurring measurement, such as assets held for distribution in the discontinued operation. External valuers are involved for valuation of significant assets, such as properties. Involvement of external valuers is decided upon annually. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above Investment property held for sale The Group classifies investment property measured using the cost model under promise or mandate of sale according to MFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Such investment property classified as held for sale is measured at the lower of its carrying amount and fair value less costs to sell. The criteria for held for sale is regarded as met only when the sale is highly probable and the investment property is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the sale will be withdrawn. Management must be committed to the sale expected within one year from the date of reclassification. Investment property is not depreciated once classified as held for sale and is presented separately as a current item in the statements of financial position. 3. Significant accounting estimates and judgements (a) Critical judgements made in applying accounting policies No critical judgement is made by management in the process of applying the Group s accounting policies that have significant effects on the amounts recognised in the financial statements. (b) Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. 56 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

59 Notes to the financial statements For the Financial Year Ended 31 December Significant accounting estimates and judgements (b) Key sources of estimation uncertainty Depreciation of property, plant and equipment The cost of property, plant and equipment are depreciated on a straight-line basis over the asset s useful life. Management estimates the useful life of plant and machinery to be 5 to 10 years, based on the level of expected usage. Management also estimates that these assets will have minimal residual values at the end of its useful life. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. Impairment of loans and receivables The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit characteristics. The carrying amount of the Group s loans and receivables at the reporting date is disclosed in Note Revenue Revenue for the Group and the Company represents invoiced sales after allowance for goods returned and trade discounts. 5. Profit before tax Group Company RM RM RM RM (a) This is arrived at after charging: Auditors remuneration - annual statutory audit 77,043 69,614 40,700 40,700 - non-audit services 31,900 82,800 23,100 74,000 Depreciation - property, plant and equipment (Note 8) 1,245,331 1,488, ,946 1,201,092 - investment property - 42,776-42,776 Impairment loss on trade receivables (Note 12(a)) 151, , Realised loss on foreign exchange - 218, ,574 Rental of properties paid to third party 137, ,844 90,000 90,000 Unrealised loss on foreign exchange 19,335-19,335 - LYSAGHT GALVANIZED STEEL BERHAD (CO P) 57

60 Notes to the financial statements For the Financial Year Ended 31 December Profit before tax Group Company RM RM RM RM (a) and crediting: Dividend income received from a subsidiary - - (12,000,000) (27,500,000) Gain on disposal of property, plant and equipment (4,065) - (4,065) - Gain on disposal of investment property (3,791,241) - (3,791,241) - Interest income from fixed deposits (1,561,679) (618,576) (1,549,841) (604,056) Realised gain on foreign exchange (1,543,922) (735,610) (351,844) - Rental income - third party (40,768) (170,400) (40,768) (170,400) - a subsidiary (Note 24) - - (120,000) (120,000) Reversal of impairment loss on trade receivables (Note 12(a)) (30,000) (143,440) - - Unrealised gain on foreign exchange (219,084) (264,131) - (78,991) (b) Employee information Staff cost (including directors emoluments): Wages and salaries 12,958,902 13,084,070 10,290,062 10,645,992 Employees Provident Fund 1,604,031 1,631,515 1,404,476 1,433,471 Central Provident Fund 112,301 93, SOCSO 110, ,533 99, ,601 Other staff related expenses 176, , , ,912 14,962,436 15,097,013 11,954,171 12,339,976 (c) Directors remuneration* Executive: Salaries and other emoluments 1,276, ,000 1,276, ,000 Employees Provident Fund 325, , , ,780 Bonus 480, , , ,000 Benefits in kind 36,326 28,000 36,326 28,000 2,117,973 2,005,780 2,117,973 2,005,780 Non-executive: Directors of the Company: Fees 505, , , ,879 Allowances 110,000 64, ,000 64, , , , ,379 Other directors: Salaries and other emoluments 617, , Total 3,351,391 2,525,472 2,733,885 2,305, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

61 Notes to the financial statements For the Financial Year Ended 31 December Profit before tax (c) Directors remuneration* * The number of directors of the Company whose total remuneration during the year fall within the following bands are as follows:- Number of directors Executive directors: RM300,001 to RM350,000** 1 - RM1,750,001 to RM1,800, RM2,000,001 to RM2,050, Non-executive directors: Below RM50,001** 5 10 RM50,001 to RM100, RM100,001 to RM150, ** One of the non-executive directors was redesignated as executive director with effect from 9 July Income tax expense Group Company RM RM RM RM Malaysian income tax: Current tax: - Current year provision 3,001,640 2,496,000 2,221,640 1,666,000 - Real property gain tax 131, , Under provision in prior year 31,016 41,615 67,078 43,105 3,164,041 2,537,615 2,420,103 1,709,105 Deferred tax (Note 17): - Relating to origination and reversal of temporary differences 17,848 (17,664) 24,304 (17,664) - Relating to reduction in tax rate (23,202) - (21,945) - - Under/(Over) provision in prior year 6,354 2,664 (1,359) 2,664 1,000 (15,000) 1,000 (15,000) Foreign income tax: Current tax: - Current year provision 837, , Under provision in prior year 7,687 1, , , ,009,730 3,287,075 2,421,103 1,694,105 Domestic income tax is calculated at the Malaysian statutory tax rate of 25% of the estimated assessable profit for the year. The statutory tax rate will be reduced to 24% from the current year s tax rate of 25%, effective Year of Assessment Taxation for the other jurisdiction is calculated at the rate prevailing in the jurisdiction. During the current financial year, the income tax rate applicable to the subsidiary in Singapore is 17% (2014: 17%). LYSAGHT GALVANIZED STEEL BERHAD (CO P) 59

62 Notes to the financial statements For the Financial Year Ended 31 December Income tax expense A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2015 and 31 December 2014 are as follows:- Group Company RM RM RM RM Profit before tax 20,315,067 14,521,720 24,176,407 33,420,331 Taxation at applicable rate 5,078,767 3,630,430 6,044,102 8,355,083 Effect of different tax rate for foreign subsidiary (444,108) (447,598) - - Effect of changes in tax rates on opening balance of deferred tax (23,202) - (21,945) - Income not subject to tax (1,008,383) (198,593) (3,947,810) (6,875,000) Expenses not deductible for tax purposes 230, , , ,253 Under provision of current tax in prior year 31,016 41,615 67,078 43,105 Under/(Over) provision of deferred tax in prior year 6,354 2,664 (1,359) 2,664 Under provision of foreign income tax in prior year 7,687 1, Real property gain tax 131, ,385 - Tax expense for the year 4,009,730 3,287,075 2,421,103 1,694, Earnings per share (a) Basic The earnings per share has been calculated based on the Group s profit net of tax of RM16,305,337 (2014 : RM11,234,645) and on the number of ordinary shares of 41,580,000 (2014 : 41,580,000). (b) Diluted There is no dilutive effect on earnings per share as the Company has no potential issue of ordinary shares. 60 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

63 Notes to the financial statements For the Financial Year Ended 31 December Property, plant and equipment Furniture, fittings Buildings and office Long term and equipment leasehold Freehold electrical Plant and Motor and land land installation machinery vehicles renovation Total Group RM RM RM RM RM RM RM Cost At 1 January ,102,103 9,457,959 11,592,387 27,163,886 2,469,136 2,258,280 65,043,751 Additions ,550-50, ,845 Disposals (55,050) - - (55,050) Exchange reserve 587, ,637 49, ,042 At 31 December ,689,950 9,457,959 11,592,387 27,367,386 2,513,773 2,358,133 65,979,588 Accumulated depreciation At 1 January ,842,697-3,067,181 24,885,179 2,028,347 1,941,907 33,765,311 Depreciation charge for the year (Note 5) 287, , , ,457 94,972 1,245,331 Disposals (53,815) - - (53,815) Exchange reserve 59, ,456 26,430 99,004 At 31 December ,188,968-3,299,029 25,311,265 2,193,260 2,063,309 35,055,831 Net carrying amount At 31 December ,500,982 9,457,959 8,293,358 2,056, , ,824 30,923,757 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 61

64 Notes to the financial statements For the Financial Year Ended 31 December Property, plant and equipment Furniture, fittings Buildings and office Long term and equipment Capital leasehold Freehold electrical Plant and Motor and work-inland land installation machinery vehicles renovation progress Total Group RM RM RM RM RM RM RM RM Cost At 1 January ,025,970 9,187,350 11,243,567 26,838,086 2,376,446 2,198,159 40,500 63,910,078 Additions - 270, , , ,829 53,851-1,060,409 Disposals (13,225) - - (13,225) Transfers , (40,500) - Exchange reserve 76, ,086 6,270-86,489 At 31 December ,102,103 9,457,959 11,592,387 27,163,886 2,469,136 2,258,280-65,043,751 Accumulated depreciation At 1 January ,564,949-2,835,333 24,296,719 1,738,713 1,842,915-32,278,629 Depreciation charge for the year (Note 5) 270, , , ,184 95,805-1,488,078 Disposals (13,225) - - (13,225) Exchange reserve 6, ,675 3,187-11,829 At 31 December ,842,697-3,067,181 24,885,179 2,028,347 1,941,907-33,765,311 Net carrying amount At 31 December ,259,406 9,457,959 8,525,206 2,278, , ,373-31,278, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

65 Notes to the financial statements For the Financial Year Ended 31 December Property, plant and equipment Furniture, fittings Buildings and office Long term and equipment leasehold Freehold electrical Plant and Motor and land land installation machinery vehicles renovation Total Company RM RM RM RM RM RM RM Cost At 1 January ,122,586 9,457,959 11,592,387 27,119,407 2,109,395 1,145,695 59,547,429 Additions ,550-44, ,959 Disposals (55,050) - - (55,050) At 31 December ,122,586 9,457,959 11,592,387 27,322,907 2,109,395 1,190,104 59,795,338 Accumulated depreciation At 1 January ,514,333-3,067,180 24,840,700 1,948,145 1,056,582 32,426,940 Depreciation charge for the year (Note 5) 116, , ,901 72,523 20, ,946 Disposals (53,815) - - (53,815) At 31 December ,631,201-3,299,028 25,266,786 2,020,668 1,077,388 33,295,071 Net carrying amount At 31 December ,491,385 9,457,959 8,293,359 2,056,121 88, ,716 26,500,267 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 63

66 Notes to the financial statements For the Financial Year Ended 31 December Property, plant and equipment Furniture, fittings Buildings and office Long term and equipment Capital leasehold Freehold electrical Plant and Motor and work-inland land installation machinery vehicles renovation progress Total Company RM RM RM RM RM RM RM RM Cost At 1 January ,122,586 9,187,350 11,243,567 26,793,607 2,109,395 1,109,489 40,500 58,606,494 Additions - 270, , ,300-36, ,935 Disposals , (40,500) - At 31 December ,122,586 9,457,959 11,592,387 27,119,407 2,109,395 1,145,695-59,547,429 Accumulated depreciation At 1 January ,397,466-2,835,333 24,252,240 1,706,361 1,034,448-31,225,848 Depreciation charge for the year (Note 5) 116, , , ,784 22,134-1,201,092 At 31 December ,514,333-3,067,180 24,840,700 1,948,145 1,056,582-32,426,940 Net carrying amount At 31 December ,608,253 9,457,959 8,525,207 2,278, ,250 89,113-27,120, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

67 Notes to the financial statements For the Financial Year Ended 31 December Investments in subsidiaries Company RM RM Unquoted shares at cost 128, ,561 Details of the subsidiaries are as follows:- % of ownership interest held by Country of the Group* Name of company incorporation Principal activities Direct subsidiary Lysaght Marketing Sdn. Bhd. Malaysia Trading in galvanized masts, poles and other related products. Indirect subsidiary **Lysaght Marketing (S) Pte. Ltd. Singapore Trading in galvanized lighting columns and high masts, gantries, transmission and telecommunication towers, power poles and general lattice structures. * Equals to the proportion of voting rights held ** Audited by Ernst & Young, Singapore 10. Other investments Group and Company RM RM Unquoted shares at cost 130, ,523 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 65

68 Notes to the financial statements For the Financial Year Ended 31 December Inventories At cost Group Company RM RM RM RM Raw materials 11,468,183 14,886,410 11,468,183 14,886,410 Work-in-progress 3,821,962 3,614,052 3,821,961 3,614,052 Finished goods 4,839,594 4,762,950 4,430,706 4,347,094 Production supplies 383, , , ,024 20,513,311 23,531,436 20,104,422 23,115,580 At net realisable value Raw materials 294, , , ,120 Production supplies 117, , , ,317 20,925,932 24,161,873 20,517,043 23,746,017 The cost of inventories of the Group and of the Company recognised as an expense during the financial year amounted to RM23,605,835 (2014 : RM24,637,675) and RM22,769,320 (2014 : RM24,254,682) respectively. 12. Trade and other receivables Group Company RM RM RM RM Trade receivables Third parties 18,157,397 22,265,026 13,635 64,108 Allowance for impairment (4,628,196) (4,377,649) (11,236) (11,236) 13,529,201 17,887,377 2,399 52,872 Amounts owing from a subsidiary ,748 Trade receivables, net 13,529,201 17,887,377 2, ,620 Other receivables Other receivables 202, , , ,400 Deposits 138, ,644 89,690 94,290 Goods and Services Tax receivable 109, , , , , ,690 Total trade and other receivables 13,980,345 18,302, ,392 1,027,310 Add: Cash and bank balances 62,391,443 33,165,022 58,781,565 27,382,414 Less: Goods and Services Tax receivable (109,994) - (109,994) - Total loans and receivables 76,261,794 51,467,643 59,075,963 28,409,724 (a) Trade receivables Trade receivables are non-interest bearing and are generally on 30 to 90 days (2014 : 30 to 90 days) terms. Other credit terms are assessed and approved on a case-by-case basis. They are recognised at their original invoice amounts which represent their fair values on initial recognition. 66 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

69 12. Trade and other receivables Notes to the financial statements For the Financial Year Ended 31 December 2015 (a) Trade receivables Ageing analysis of trade receivables The ageing analysis of the Group s and the Company s trade receivables are as follows:- Group Company RM RM RM RM Neither past due nor impaired 3,261,796 4,972, ,240 1 to 30 days past due not impaired 5,378,929 4,437,502 1,404 25, to 60 days past due not impaired 2,428,849 3,246, to 90 days past due not impaired 1,141,173 2,690, to 120 days past due not impaired 614, , More than 121 days past due not impaired 704,281 2,226, ,267,405 12,914,439 1,404 25,380 13,529,201 17,887,377 2, ,620 Impaired 4,628,196 4,377,649 11,236 11,236 18,157,397 22,265,026 13, ,856 Receivables that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. None of the Group s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired The Group and the Company have trade receivables amounting to RM10,267,405 (2014 : RM12,914,439) and RM1,404 (2014 : RM25,380) respectively that are past due at the reporting date but not impaired. These receivables are regular customers with good payment records but slow in payment. Receivables that are impaired The Group s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows: Group Company Individually impaired Individually impaired RM RM RM RM Trade receivables- nominal amounts 4,628,196 4,377,649 11,236 11,236 Less: Allowance for impairment (4,628,196) (4,377,649) (11,236) (11,236) LYSAGHT GALVANIZED STEEL BERHAD (CO P) 67

70 Notes to the financial statements For the Financial Year Ended 31 December Trade and other receivables (a) Trade receivables Receivables that are impaired (cont d ) Group Company RM RM RM RM Movement in allowance accounts: At 1 January 4,377,649 4,405,818 11,236 11,236 Charge for the year (Note 5) 151, , Reversal of impairment losses (Note 5) (30,000) (143,440) - - Bad debts written off - (5,150) - - Exchange differences 129,497 16, At 31 December 4,628,196 4,377,649 11,236 11,236 Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. (b) Related party balance The amounts owing from a subsidiary in the previous year was mainly from normal trading transactions. The amounts was unsecured, interest free and on 30 to 90 days terms. 13. Cash and bank balances Group Company RM RM RM RM Cash at banks and on hand 3,885,251 6,748, , ,346 Short term deposits with - licensed financial institution 58,206,192 26,416,068 58,206,192 26,416,068 - licensed banks 300, Cash and bank balances 62,391,443 33,165,022 58,781,565 27,382,414 Short-term deposits are made for varying periods of between five days and one month (2014 : two days and one month) depending on the immediate cash requirements of the Group and of the Company, and earn interests at the respective short-term deposit rates. The weighted average effective interest rate as at 31 December 2015 for the Group and for the Company was 3.17% (2014 : 3.52%). 14. Investment property held for sale On 5 September 2014, the Company entered into a sale and purchase agreement with a third party for the disposal of the investment property for a total consideration of RM6,400,000. On 16 December 2014, the required consent for the transfer of title has been obtained from the relevant authority. The disposal was completed in current financial year. 68 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

71 14. Investment property held for sale Notes to the financial statements For the Financial Year Ended 31 December 2015 Group and Company Leasehold land Building Total RM RM RM Cost At 1 January ,325 2,760,086 3,647,411 Disposals (887,325) (2,760,086) (3,647,411) At 31 December Accumulated depreciation At 1 January , ,270 1,038,652 Disposals (149,382) (889,270) (1,038,652) At 31 December Net carrying amount At 31 December Cost At 1 January Reclassified from investment property 887,325 2,760,086 3,647,411 At 31 December ,325 2,760,086 3,647,411 Accumulated depreciation At 1 January Reclassified from investment property 149, ,270 1,038,652 At 31 December , ,270 1,038,652 Net carrying amount At 31 December ,943 1,870,816 2,608, Trade and other payables Group Company RM RM RM RM Trade payables Third parties 2,398,537 1,907,692 2,274,702 1,889,924 Other payables Amount owing to a subsidiary - - 3,369,628 1,060,880 Other payables 1,590,811 1,326, , ,716 Accruals 4,018,682 4,726,470 2,845,176 3,436,971 Deposit - 572, ,100 Goods and Services Tax payable 317, ,926,650 6,625,339 6,393,490 5,194,667 Total trade and other payables 8,325,187 8,533,031 8,668,192 7,084,591 Less: Goods and Services Tax payable (317,157) Total financial liabilities carried at amortised cost 8,008,030 8,533,031 8,668,192 7,084,591 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 69

72 Notes to the financial statements For the Financial Year Ended 31 December Trade and other payables (a) Trade payables The normal trade credit terms granted to the Group and the Company range from 30 to 60 days (2014 : 30 to 60 days). (b) Other payables The amounts owing to a subsidiary is unsecured, non-interest bearing and repayable on demand. Included in other payables of the Group and of the Company is a provision made for increment and backpay claims of union employees amounting to RM160,000 (2014 : RM160,000). The provision is made based on management s best estimate of the amount of claims agreeable by the Company. The matter has been brought to court and is pending hearing. Any further adjustment will be made upon finalisation of the case. 16. Retirement benefits Group Company RM RM RM RM At 1 January and 31 December 181, , , ,177 Analysed as: Current 1,830-1,830 - Non-current 179, ,307 98, , , , , ,177 With effect from 1 January 1983, the Group and the Company have discontinued their retirement benefits plan. The amount vested in the eligible employees as at 1 January 1983 will be retained in the financial statements until retirement of these employees. 17. Deferred tax Group Company RM RM RM RM At 1 January 566, , , ,000 Recognised in profit or loss (Note 6) 1,000 (15,000) 1,000 (15,000) Exchange reserve At 31 December 568, , , ,000 Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities 568, , , , , , , , LYSAGHT GALVANIZED STEEL BERHAD (CO P)

73 Notes to the financial statements For the Financial Year Ended 31 December Deferred tax The components and movements of deferred tax assets and liabilities during the financial year are as follows:- Property, plant and equipment Provisions Total RM RM RM Group Deferred tax assets At 1 January ,577 (105,660) (95,083) Recognised in profit or loss 18,984 (10,845) 8,139 At 31 December ,561 (116,505) (86,944) At 1 January ,577 (123,660) (113,083) Recognised in profit or loss - 18,000 18,000 At 31 December ,577 (105,660) (95,083) Deferred tax liabilities At 1 January , ,784 Recognised in profit or loss (7,139) - (7,139) Exchange reserve At 31 December , ,311 At 1 January , ,697 Recognised in profit or loss (33,000) - (33,000) Exchange reserve At 31 December , ,784 Company Deferred tax assets At 1 January (95,000) (95,000) Recognised in profit or loss - 1,000 1,000 At 31 December (94,000) (94,000) At 1 January (113,000) (113,000) Recognised in profit or loss - 18,000 18,000 At 31 December (95,000) (95,000) Deferred tax liabilities At 1 January 2015 and 31 December , ,000 At 1 January , ,000 Recognised in profit or loss (33,000) - (33,000) At 31 December , ,000 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 71

74 Notes to the financial statements For the Financial Year Ended 31 December Share capital Number of ordinary shares of RM1 each Amount RM RM Authorised 100,000, ,000, ,000, ,000,000 Issued and fully paid 41,580,000 41,580,000 41,580,000 41,580,000 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company s residual assets. 19. Other reserves Group Non-distributable Capital Exchange reserve reserve Total RM RM RM At 1 January ,998 1,708,279 2,208,277 Foreign currency translation - 174, ,826 At 31 December ,998 1,883,105 2,383,103 Foreign currency translation - 1,706,768 1,706,768 At 31 December ,998 3,589,873 4,089,871 (i) (ii) Capital reserve arose from profit attributable to the shareholders of the Company capitalised by a subsidiary by way of bonus share issue. Exchange reserve of the Group arose from the translation of a foreign subsidiary s statement of financial position and statement of comprehensive income into Ringgit Malaysia at the rate of exchange prevailing as at year end. The reserve is utilised to set-off exchange gains or losses arising from the abovementioned transactions. 20. Retained profits The Company may distribute dividends out of its entire retained profits as at 31 December 2015 and 31 December 2014 under the single tier system. 72 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

75 Notes to the financial statements For the Financial Year Ended 31 December Dividends Dividends in respect of year Dividends recognised in year RM RM RM RM Recognised during the year: Final dividend for 2013: 12% single tier, on 41,580,000 ordinary shares (12.00 sen per ordinary share) ,989,600 Special interim dividend for 2014: 50% single tier, on 41,580,000 ordinary shares (50.00 sen per ordinary share) - 20,790,000-20,790,000 Final dividend for 2015: 15% single tier, on 41,580,000 ordinary shares (15.00 sen per ordinary share)* 6,237, ,237,000 20,790,000-25,779,600 * At the forthcoming Annual General Meeting, a final single tier dividend in respect of the current financial year ended 31 December 2015, of RM0.15 per ordinary share, on 41,580,000 ordinary shares, amounting to a total dividend of RM6,237,000 will be proposed for shareholders approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in shareholders equity as an appropriation of retained profits in the financial year ending 31 December Commitments Operating lease commitment - as lessor The Group had entered into a non-cancellable operating lease agreement on its investment property portfolio. The lease had remaining non-cancellable lease terms 4 months as at 31 December The Company has entered into a non-cancellable operating lease agreement on its property portfolio. The lease has remaining non-cancellable lease terms of 24 months (2014 : 12 months) as at year end. The future minimum lease payments receivable under non-cancellable operating lease contracted for as at the reporting date but not recognised as receivables, are as follows: Group Company RM RM RM RM Not later than 1 year - 42, , ,600 Later than 1 year and not later than 5 years , , , ,600 Group Company RM RM RM RM Rental income 40, , , ,400 Direct expenses generating rental income (included in administrative expenses) (1,982) (13,846) (36,064) (47,928) LYSAGHT GALVANIZED STEEL BERHAD (CO P) 73

76 Notes to the financial statements For the Financial Year Ended 31 December Contingent liabilities No liability is expected to arise as the Company monitors the performance of its subsidiaries to ensure they meets the contracted obligations of the projects. For the financial years ended 31 December 2015 and 2014, no performance guarantee is given to any third party in connection with projects to be performed by its subsidiaries. 24. Related parties Group and Company The significant related party transactions during the year are as follows:- (a) With subsidiaries Lysaght Marketing Sdn. Bhd. Lysaght Marketing (S) Pte. Ltd. Company Company RM RM RM RM Rental of office (Note 5(a)) 120, , Sales of galvanized products 34,267,845 36,420,559 16,320,540 14,315,446 Amount owing (to)/from (748,181) (1,060,880) (2,621,447) 605,748 (b) Compensation of key management personnel The remuneration of directors and other members of key management during the year was as follows:- Group and Company RM RM Short term employee benefits 2,093,028 2,361,050 Employees Provident Fund 365, ,036 2,458,761 2,775,086 Included in the total compensation of key management personnel are:- Group and Company RM RM Directors remuneration (Note 5(c)) 2,117,973 2,005, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

77 Notes to the financial statements For the Financial Year Ended 31 December Segment information Group (a) Business segments The Group operates within a single business segment. (b) Geographical segments Group Total revenue from external customers RM 000 RM 000 Malaysia 35,328 37,029 Singapore 24,277 23,188 Hong Kong Others 4,087 4,366 63,887 65,242 No disclosure of the carrying amount of segment assets and liabilities and cost to acquire property, plant, equipment and intangibles is required as segment assets and liabilities located outside Malaysia and total cost incurred to acquire segment assets outside Malaysia are less than 10 per cent of the total assets and liabilities of all geographical segments. 26. Financial risk management objectives and policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, liquidity risk, credit risk and foreign exchange risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Managing Director and the Finance and Admin Manager. It is, and has been throughout the current and previous financial years, the Group s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Group s and the Company s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. (a) Interest rate risk Interest rate risk is the risk that fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of the changes in the market interest rate. The Group and the Company are exposed to interest rate risk in respect of their short term deposits with licensed banks. However, the fluctuation in interest rates, if any, is not expected to have a material impact on the financial performance of the Group and of the Company. Sensitivity analysis for interest rate risk The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables held constant, of the Group s profit net of tax. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 75

78 Notes to the financial statements For the Financial Year Ended 31 December Financial risk management objectives and policies (a) Interest rate risk Sensitivity analysis for interest rate risk Increase/ Decrease in basis points Effect on profit net of tax Increase/ (Decrease) RM , (109,699) , (49,530) (b) Liquidity risk The Group actively manages its operating cash flows and the availability of funding so as to ensure that all financing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash to meet its working capital requirements. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group s and of the Company s liabilities at the reporting date based on contractual undiscounted repayment obligations Group Financial liabilities: On demand or within one year One to five years Total RM RM RM Trade and other payables 8,008,030-8,008,030 Company Financial liabilities: Trade and other payables 8,668,192-8,668, Group Financial liabilities: On demand or within one year One to five years Total RM RM RM Trade and other payables 8,533,031-8,533,031 Company Financial liabilities: Trade and other payables 7,084,591-7,084, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

79 Notes to the financial statements For the Financial Year Ended 31 December Financial risk management objectives and policies (c) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group s exposure to credit risk arises primarily from trade and other receivables. The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 12. Financial assets that are past due but not impaired Information regarding trade and other receivables that are either past due but not impaired is disclosed in Note 12. (d) Foreign exchange risk Foreign currency risk arises when transactions are denominated in currencies other than the functional currency of the Group, and such changes will impact the Group s profit. The Group operates internationally and is exposed mainly to United States Dollar and Singapore Dollar. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable sales and purchases give rise to foreign exchange exposures. The Group has not used any forward contracts to hedge against its exposure to foreign currency risk. The Group manages its foreign currency risk by following a policy of a fixed foreign exchange rate regime. These rates are fixed at between 50 to 100 basis point below the bank rate at the time of sale. Upon receipt of sales proceeds, the foreign currency is converted at the current bank rate within seven calendar days. The difference is accounted for in the foreign exchange account. The Group does not use any derivative financial instruments to hedge this risk. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 77

80 Notes to the financial statements For the Financial Year Ended 31 December Financial risk management objectives and policies (d) Foreign exchange risk The net unhedged financial assets/(liabilities) of the Group and of the Company that are not denominated in their functional currencies are as follows:- Functional currency of the Group entity Ringgit Malaysia United States Singapore Dollar Dollar Total RM RM RM At 31 December 2015 Trade receivables 183, , ,194 Cash and bank balances 716, ,762 1,173, , ,014 1,712,244 At 31 December 2014 Trade receivables 206, , ,614 Cash and bank balances 524, , , ,928 1,008,328 Functional currency of the Group entity Singapore Dollar At 31 December 2015 Trade receivables 814, ,946 Cash and bank balances 138, , , ,222 At 31 December 2014 Trade receivables 663, ,648 Cash and bank balances 78,585-78, , ,233 Functional currency of the Company Ringgit Malaysia At 31 December 2015 Cash and bank balances 1,812 1,062 2,874 Amount owing to a subsidiary - (2,621,447) (2,621,447) 1,812 (2,620,385) (2,618,573) At 31 December 2014 Amount owing from a subsidiary - 605, , LYSAGHT GALVANIZED STEEL BERHAD (CO P)

81 Notes to the financial statements For the Financial Year Ended 31 December Financial risk management objectives and policies (d) Foreign exchange risk Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group s profit net of tax to a reasonably possible change in the USD and SGD exchange rates against the functional currency of the Group entities, with all other variables held constant. Effect on Profit Net of Tax Increase/(Decrease) Group Company RM RM RM RM USD/RM - strengthened 3% 20,255 16, weakened 3% (20,255) (16,457) (41) - SGD/RM - strengthened 3% 18,270 6,231 (58,959) (13,629) - weakened 3% (18,270) (6,231) 58,959 13,629 USD/SGD - strengthened 3% 21,447 16, weakened 3% (21,447) (16,308) - - (e) Commodity price risk The Group purchases steel on an ongoing basis as its operating activities require a continuous supply of steel to manufacture its products. Sensitivity analysis for commodity price risk At the reporting date, if the steel price had been 7% (2014 : 2%) higher/lower, with all other variables held constant, the Group s profit net of tax would have been RM758,098 (2014 : RM197,863) lower/higher. 27. Fair value of financial instruments A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value Group and Company Note RM RM Other investments, at cost , ,523 Other investments carried at cost Fair value information has not been disclosed for the Group s other investments that are carried at cost because fair value cannot be measured reliably. B. Determination of fair value (i) Fair value of financial instruments that are carried at fair value The Group does not have any financial assets and liabilities carried at fair value classified using the fair value hierarchy as at 31 December 2015 and 31 December LYSAGHT GALVANIZED STEEL BERHAD (CO P) 79

82 Notes to the financial statements For the Financial Year Ended 31 December Fair value of financial instruments B. Determination of fair value (ii) Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:- Group Note Company Note Trade and other receivables (current) Amount owing from a subsidiary (current) - 12 Amount owing to a subsidiary (current) - 15 Trade and other payables (current) The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values due to their short-term nature. 28. Capital management The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2015 and 31 December The Group and the subsidiaries are not subject to any externally imposed capital requirements. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group s policy is to keep the gearing ratio at 0%. For the years ended 31 December 2015 and 31 December 2014, the Group has zero gearing. Note Group Company RM RM RM RM Trade and other payables 15 8,325,187 8,533,031 8,668,192 7,084,591 Less: Cash and bank balances 13 (62,391,443) (33,165,022) (58,781,565) (27,382,414) Net debt (54,066,256) (24,631,991) (50,113,373) (20,297,823) Equity attributable to the equity holders 117,811,532 99,799,427 96,653,174 74,897,870 Total capital 117,811,532 99,799,427 96,653,174 74,897,870 Gearing ratio 0% 0% 0% 0% 80 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

83 Notes to the financial statements For the Financial Year Ended 31 December Supplementary information - breakdown of retained profits into realised and unrealised The breakdown of the retained profits of the Group and of the Company as at 31 December 2015 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants. Total retained profits of the Company and its subsidiaries Group Company RM RM RM RM - Realised 72,535,757 56,228,439 55,624,174 33,867,870 - Unrealised (568,367) (566,701) (551,000) (550,000) 71,967,390 55,661,738 55,073,174 33,317,870 Less: Consolidation adjustments 174, , Total retained profits as per audited financial statements 72,141,661 55,836,324 55,073,174 33,317,870 LYSAGHT GALVANIZED STEEL BERHAD (CO P) 81

84 LIST of properties Location Description Existing Use Approximate Land Area Tenure Approximate Age of Buildings (years) Net Book Value (RM) Date of Acquisition Plot 66, Medan Tasek, Tasek Industrial Estate, Ipoh, Perak Darul Ridzuan, Malaysia Industrial Land With Factory Building Office and Factory 145,829 sq ft Leasehold 99 years expiring on ,433, Plot 89, Medan Tasek, Tasek Industrial Estate, Ipoh, Perak Darul Ridzuan, Malaysia Industrial Land With Factory Building Training Room and Factory 139,396 sq ft Leasehold 99 years expiring on ,812, Plot 9, Medan Tasek, Tasek Industrial Estate, Ipoh, Perak Darul Ridzuan, Malaysia Industrial Land With Factory Building Office and Factory 130,005 sq ft Leasehold 99 years expiring on ,404, Plot 43, Medan Tasek, Tasek Industrial Estate, Ipoh, Perak Darul Ridzuan, Malaysia Industrial Land With Factory Building Factory and Storage 132,311 sq ft Leasehold 99 years expiring on ,889, Plot 67, Medan Tasek, Tasek Industrial Estate, Ipoh, Perak Darul Ridzuan, Malaysia Industrial Land Storage 89,998 sq ft Leasehold 99 years expiring on N/A 1,227, No.11 Jalan Majistret U1/26, Seksyen U1, Hicom-Glenmarie Industrial Park, Shah Alam, Selangor Darul Ehsan, Malaysia Freehold land with office building and warehouse Office and Warehouse 39,945 sq ft Freehold land 21 11,476, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

85 shareholding distribution schedule As at 31 March 2016 Authorised Share Capital Issued and Fully Paid-up Capital Class of Shares Voting Rights : RM100,000, : RM41,580, : Ordinary shares of RM1.00 each : One vote per ordinary share held DISTRIBUTION OF SHAREHOLDINGS (AS PER THE RECORD OF DEPOSITORS) No. of % of % of Issued Range of Shareholdings Shareholders Shareholders No. of Shares capital Less than 100 Shares % % 100 to 1, % 216, % 1,001 to 10,000 1, % 4,601, % 10,001 to 100, % 5,071, % 100,001 to less than 5% of issued shares % 2,335, % 5% and above of issued shares % 29,354, % TOTAL 1, % 41,580, % LYSAGHT GALVANIZED STEEL BERHAD (CO P) 83

86 thirty largest shareholders As at 31 March 2016 LIST OF 30 LARGEST SECURITIES ACCOUNT HOLDERS (AS PER THE RECORD OF DEPOSITORS) No Name of Shareholders No. of Shares Held Percentage (%) 1 Lysaght (Malaysia) Sdn Bhd 22,925, Ingli Sdn Bhd 6,428, Chew Mee Lee 729, Liew Swee Liew Hoi Foo 344, DB (Malaysia) Nominee (Tempatan) Sendirian Berhad 268, MIDF Amanah Asset Management Berhad for Liew Wah Tang (SS01652) 6 Tan Ka Lian 177, Bina Securities & Management Sdn Bhd 172, Maybank Nominees (Tempatan) Sdn Bhd 161, Pledged securities account for Liew Kon Liew Kong 9 Liew Sui Kum 134, Tew Kok Kian 126, Public Nominees (Tempatan) Sdn Bhd 120, Pledged securities account for Tam Tam Seng Sen (E-PPG) 12 Liew Ing Shian 102, Tew Kok Keong 96, Lee Tek Lee Teh Moh 87, Lai Chin Loy 87, HLIB Nominees (Tempatan) Sdn Bhd 84, Pledged securities account for Ang Poh Eng 17 Eng Ah Eng Bean Keng 84, Public Nominees (Tempatan) Sdn Bhd 72, Pledged securities account for Lee Kin Kheong (E-IMO) 19 Public Nominees (Tempatan) Sdn Bhd 70, Pledged securities account for Tan Tian Tan Tian Song (E-PPG) 20 Maybank Nominees (Tempatan) Sdn Bhd 70, Pledged securities account for Chang Mei Lun 21 Siow Loon Piow 68, Teoh Ah Yet 67, Ong Yoke Meng 64, Teh Chong Yan 60, Loke Yoke Lim Yoke Toi 60, Chim Luang Eng 52, Maybank Securities Nominees (Asing) Sdn Bhd 52, Mayban Nominees (S) Pte Ltd for Tan Soo Seng 28 Ng Sey Hoe 50, Wong Hooi Sang 49, Ang Ah Ang Siew Kee 46, TOTAL 32,914, LYSAGHT GALVANIZED STEEL BERHAD (CO P)

87 substantial shareholders As at 31 March 2016 Substantial Shareholders ( As per the Register of Substantial Shareholders) No. Name of Shareholders Direct Shareholdings Indirect Shareholdings No. of Shares % No. of Shares % 1 Lysaght (Malaysia) Sdn Bhd 22,925, Ingli Sdn Bhd 6,428, Liew Swee Liew Hoi Foo 344, ,454,900* Chew Mee Lee 729, ,069,500* Chew Bros (M) Sdn Bhd ,925,700* Lim Iee Kuan ,946,700* The Late Chew Kar Heing 21, ,925,700* ChewKarHeing Sdn Bhd ,925,700* Yusuf bin Jamil ,097,900* WTWT Sdn Bhd ,925,700* Janfreys Sdn Bhd ,097,900* Bina Securities & Management Sdn Bhd 172, ,925,700* Notes: *1 Deemed interest through Lysaght (Malaysia) Sdn. Bhd., Ingli Sdn. Bhd. and family members direct interest in the Company. *2 Deemed interest through Ingli Sdn. Bhd. and family members direct and indirect interest in the Company. *3 Deemed interest through Lysaght (Malaysia) Sdn. Bhd. *4 Deemed interest through Lysaght (Malaysia) Sdn. Bhd. and spouse s direct inerest in the Company. *5 Deemed interest through Lysaght (Malaysia) Sdn. Bhd. and Bina Securities & Management Sdn. Bhd. *6 Deemed interest by virtue of being the holding company of Bina Securities & Management Sdn. Bhd. LYSAGHT GALVANIZED STEEL BERHAD (CO P) 85

88 directors shareholdings As At 31 March 2016 Directors Shareholdings (As per the Register of Directors Shareholdings) No. Name of Directors Direct Shareholdings Indirect Shareholdings No. of Shares % No. of Shares % 1 Dato Ir. Wan Razali Bin Wan Muda Liew Swee Liew Hoi Foo 344, ,454,900* Chua Tia Bon 12, ,600* Chew Meu Jong ,500* Ir. Aik Siaw Kong Cheam Low Soo Ee Beng Guan Lim Tiong Beng Notes: *1 Deemed interest through Lysaght (Malaysia) Sdn. Bhd., Ingli Sdn. Bhd. and family members direct interest in the Company. *2 Deemed interest through his/her spouse s shareholdings in the Company. 86 LYSAGHT GALVANIZED STEEL BERHAD (CO P)

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91 FORM OF PROXY No. of shares held CDS Account No. I/We NRIC No./Passport No./Co. No (FULL NAME IN BLOCK LETTERS) of (ADDRESS) being a member/members of LYSAGHT GALVANIZED STEEL BERHAD (46426-P), hereby appoint NRIC No./Passport No. (FULL NAME IN BLOCK LETTERS) of or failing him/her of (ADDRESS) NRIC No./Passport No. (FULL NAME IN BLOCK LETTERS) (ADDRESS) or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the 37th Annual General Meeting of the Company to be held at Dillenia & Eugenia Room, Ground Floor, SimeDarby Convention Centre, No. 1A, Jalan Bukit Kiara 1, Kuala Lumpur on Thursday, 26 May 2016 at 10:30 a.m. and at any adjournment thereof. ORDINARY RESOLUTION FOR AGAINST 1. To approve the payment of final single tier dividend of 15 sen per share for the financial year ended 31 December To approve the payment of Directors Fees for the financial year ending 31 December To re-elect Mr. Cheam Low Soo as Director of the Company. 4. To re-elect Madam Chew Meu Jong as Director of the Company. 5. To re-elect Mr. Lim Tiong Beng as Director of the Company 6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to hold office until the conclusion of the next Annual General Meeting at such remuneration to be determined by the Directors of the Company. (Please indicate with an X in the space provided on how you wish to cast your vote. If you do not do so, the proxy will vote or abstain from voting at his discretion.) Dated this day of Notes: Signature(s) of member(s) (If shareholder is a corporation, this part should be executed under seal) 1. A member whose name appear in the Record of Depositors as at 20 May 2016 shall be regarded as a member entitled to attend, speak and vote at the 37th AGM. He/She shall be entitled to appoint more than one (1) proxy (subject always to a maximum of two (2) proxies) to attend and vote at the Meeting. 2. A proxy may but need not be a member of the Company and there shall be no restrictions as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting. 3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies) the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 4. The Form of Proxy must be duly completed and deposited at the Company s Shares Registrar, ShareWorks Sdn. Bhd. at No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, Kuala Lumpur, Wilayah Persekutuan (KL) not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof. 5. If the appointer is a corporation, the Form of Proxy must be executed under its Seal or in the hand of an officer or attorney duly authorised in writing. 6. Where a member of the Company is an authorised nominee as defined under the Central Depositories Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 7. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

92 1st fold here The Share Registrar AFFIX STAMP SHAREWORKS SDN BHD No. 2-1, Jalan Sri Hartamas 8, Sri Hartamas, Kuala Lumpur Wilayah Persekutuan (KL) 2nd fold here

93

94 LYSAGHT GALVANIZED STEEL BERHAD (CO P) No. 11, Jalan Majistret U1/26 Seksyen U1, Hicom-Glenmarie Ind. Park Shah Alam PO Box No. 7818, Shah Alam Selangor Darul Ehsan, Malaysia. Tel : Fax : lysaght_sales@lysaghtmarketing.com.my