Corporate Information - INSAGE 31-12-2015.pdf · demand for liquid nitrogen in Bintulu, Sarawak...

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Corporate Information

Corporate Milestone

Corporate Structure

Chairman’s Statement

Financial Highlights

Profile of Directors

Statement of Corporate Governance

Audit Committee Report

Statement on Risk Management andInternal Control

Additional Compliance Information

Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Statement Accompanying Notice ofAnnual General Meeting

Appendix 1

Form of Proxy

CONTENTS

SIG GASES BERHAD (875083-W)2

AUDIT COMMITTEE

Diong Tai Pew(Chairman)

Datuk Syed Ahmad Bin Alwee Alsree(Member)

Lee Ting Kiat(Member)

Lim Tin Teng @ Lim Jit Teng(Member)

REMUNERATION COMMITTEE

Peh Lam Hoh(Chairman)

Diong Tai Pew(Member)



REGISTRAR

Tricor Investor & Issuing Services Sdn Bhd (11342-H)Unit 32-01, Level 32, Tower A, Vertical Business SuiteAvenue 3, Bangsar South, No. 8, Jalan Kerinchi59200 Kuala Lumpur, MalaysiaTel : 03-2783 9299Fax : 03-2783 9222

REGISTERED OFFICE

Suite 1301, 13th FloorCity Plaza, Jalan Tebrau80300 Johor Bahru, JohorTel : 07-3354988Fax : 07-3354977

NOMINATING COMMITTEE




ESOS COMMITTEE


Lau Cheng Ming(Member)


Koh Beng San(Member)

SECRETARIES

Yong May Li (f) (LS 0000295)

Irene Juay Yee Luan (f) (MAICSA 7057249)

AUDITORS

Ernst & Young (AF0039)Suite 11.2, Level 11Menara Pelangi2, Jalan KuningTaman Pelangi80400 Johor Bahru, JohorTel : 07-3341740Fax : 07-3341749

PRINCIPAL BANKERS

Malayan Banking BerhadAmBank (M) BerhadHong Leong Bank Berhad

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad(“Bursa Securities”) Main Market

WEBSITE

http://www.siggases.com

1996Incorporation of Southern Industrial Gas Sdn Bhd

2012Acquired 40% in the equity of a joint venture to produce and supply liquids and compressed gases in Samalaju Industrial Park, Bintulu, Sarawak

Started production and supply of Hydrogen gases in Nilai

Set up Oxygen and Carbon Dioxide Re�lling facilities in Krubong, Melaka

Set up Oxygen Re�lling facility in Gebeng, Kuantan

Set up Argon Re�lling facility in Grandmet Industrial Park, Bintulu, Sarawak

2013Set up oxygen re�lling facility in Ipoh

2014Centralisation of production from Puchong to Nilai

Develop 8 units of Semi-Detached Industrial Buildings

2015Acquired a 60-year lease over land measuring 30 acres at Samalaju Industrial Park

2008Plant in Juru relocated to Bukit Minyak, Penang, with expanded facilities to re�ll oxygen, nitrogen, and carbon dioxide

2009Commenced Group’s Second production plant in Nilai, Negeri Sembilan, to produce acetylene and fuming gas

2010Listed on Main Market of Bursa Securities

1997Commenced factory in Senai, Johor to produce acetylene and carbon dioxide, and re�ll various industrial gases

2004Obtained ISO 9001:2000 in quality management of industrial gases production

2001Set up plant in Juru, Penang, to re�ll oxygen and carbon dioxide

Set up plant in Puchong, Selangor, to re�ll oxygen, nitrogen, argon, carbon dioxide and gas mixture

2003Commissioned Air Separation Unit (ASU) in Senai to produce liquid oxygen and liquid nitrogen

Set up plant in Krubong, Melaka, to re�ll oxygen

Lee Ting KiatIndependent Non-Executive Director

BOARD OF DIRECTORS

Peh Lam HohExecutive Chairman

Lau Cheng MingExecutive Director

Datuk Syed Ahmad Bin Alwee AlsreeNon-Independent Non-Executive Director

Lim Tin Teng @ Lim Jit TengIndependent Non-Executive Director

Diong Tai PewSenior Independent Non-Executive Director

CORPORATE INFORMATION

ANNUAL REPORT 2015 3

AUDIT COMMITTEE










REGISTRAR

Tricor Investor & Issuing Services Sdn Bhd (11342-H)Unit 32-01, Level 32, Tower A, Vertical Business SuiteAvenue 3, Bangsar South, No. 8, Jalan Kerinchi59200 Kuala Lumpur, MalaysiaTel : 03-2783 9299Fax : 03-2783 9222

REGISTERED OFFICE

Suite 1301, 13th FloorCity Plaza, Jalan Tebrau80300 Johor Bahru, JohorTel : 07-3354988Fax : 07-3354977

NOMINATING COMMITTEE




ESOS COMMITTEE


Lau Cheng Ming(Member)


Koh Beng San(Member)

SECRETARIES

Yong May Li (f) (LS 0000295)

Irene Juay Yee Luan (f) (MAICSA 7057249)

AUDITORS

Ernst & Young (AF0039)Suite 11.2, Level 11Menara Pelangi2, Jalan KuningTaman Pelangi80400 Johor Bahru, JohorTel : 07-3341740Fax : 07-3341749

PRINCIPAL BANKERS

Malayan Banking BerhadAmBank (M) BerhadHong Leong Bank Berhad

STOCK EXCHANGE LISTING

Bursa Malaysia Securities Berhad(“Bursa Securities”) Main Market

WEBSITE

http://www.siggases.com

1996Incorporation of Southern Industrial Gas Sdn Bhd

2012Acquired 40% in the equity of a joint venture to produce and supply liquids and compressed gases in Samalaju Industrial Park, Bintulu, Sarawak

Started production and supply of Hydrogen gases in Nilai

Set up Oxygen and Carbon Dioxide Re�lling facilities in Krubong, Melaka

Set up Oxygen Re�lling facility in Gebeng, Kuantan

Set up Argon Re�lling facility in Grandmet Industrial Park, Bintulu, Sarawak

2013Set up oxygen re�lling facility in Ipoh

2014Centralisation of production from Puchong to Nilai

Develop 8 units of Semi-Detached Industrial Buildings

2015Acquired a 60-year lease over land measuring 30 acres at Samalaju Industrial Park

2008Plant in Juru relocated to Bukit Minyak, Penang, with expanded facilities to re�ll oxygen, nitrogen, and carbon dioxide

2009Commenced Group’s Second production plant in Nilai, Negeri Sembilan, to produce acetylene and fuming gas

2010Listed on Main Market of Bursa Securities

1997Commenced factory in Senai, Johor to produce acetylene and carbon dioxide, and re�ll various industrial gases

2004Obtained ISO 9001:2000 in quality management of industrial gases production

2001Set up plant in Juru, Penang, to re�ll oxygen and carbon dioxide

Set up plant in Puchong, Selangor, to re�ll oxygen, nitrogen, argon, carbon dioxide and gas mixture

2003Commissioned Air Separation Unit (ASU) in Senai to produce liquid oxygen and liquid nitrogen

Set up plant in Krubong, Melaka, to re�ll oxygen

Lee Ting KiatIndependent Non-Executive Director

BOARD OF DIRECTORS

Peh Lam HohExecutive Chairman

Lau Cheng MingExecutive Director

Datuk Syed Ahmad Bin Alwee AlsreeNon-Independent Non-Executive Director

Lim Tin Teng @ Lim Jit TengIndependent Non-Executive Director

Diong Tai PewSenior Independent Non-Executive Director

CORPORATE MILESTONE


(Company No. 875083-W)

SOUTHERNINDUSTRIAL GAS

SDN BHD(380462-X)

100%

SOUTHERNOXYGENSDN BHD(788562-U)

100%

SOUTHERNCARBON DIOXIDE

SDN BHD(789834-H)

100%

SIGPROPERTIES

SDN BHD(1043951-K)

100%

IWATANI-SIGINDUSTRIAL GASES

SDN BHD(975110-V)

40%

CHAIRMAN’SSTATEMENT

Dear Shareholders,

On behalf of the Board of Directors of SIG Gases Berhad (SIGGAS), it is my great honour to present to you the Annual Report and Audited Financial Statements of SIGGAS and its group of companies (the Group) for the �nancial year ended 31 December 2014 (FY2014).

Given the challenging global-economic environment in 2014, the Malaysian economy weathered the year under review commendably, recording 6.0% expansion in Gross Domestic Product (GDP) which exceeded the 4.7% GDP growth achieved in 2013. During the year, the industrial and manufacturing sector too expanded creditably by achieving a reasonable growth of 3.50% over 2013.

CORPORATE STRUCTURE(“The Group”) CHAIRMAN’S

STATEMENT

Dear Shareholders,

In the year 2015, the global economy was indeed a challenging year that experienced numerous issues including sharp decline in crude oil prices, the slowing down of China economy, the stalling of Japanese and EC economies, together with uncertainty in US economy and interest rate changes. In the domestic scenario the implementation of the GST, the out�ow of the capital, the uncertainty caused by political bickering and signi�cant decline of the Ringgit against other major trading currencies, have brought about deteriorated business sentiment and environment.

Against this backdrop, Malaysia’s Gross Domestic Product (GDP) grew at a slower rate of 4.5% in 2015 as compared to 6.0% in 2014. Similarly, the local manufacturing sector grew at a slower pace of 4.9% in 2015 versus 6.2% in the previous year. However, the export-oriented manufacturing industries have bene�tted signi�cantly from favourable exchange rates.

SIG Gases Berhad (“SIGGAS”) and its group of companies (collectively, with SIGGAS is referred to as “the Group”) continued growing from strength to strength in our �nancial year ended 31 December 2015 (“FY2015”). To this end, I am pleased to present to you the Annual Report and �nancial statements of the Group for FY2015.

CHAIRMAN’SSTATEMENT

Dear Shareholders,

In the year 2015, the global economy was indeed a challenging year that experienced numerous issues including sharp decline in crude oil prices, the slowing down of China economy, the stalling of Japanese and EC economies, together with uncertainty in US economy and interest rate changes. In the domestic scenario the implementation of the GST, the out�ow of the capital, the uncertainty caused by political bickering and signi�cant decline of the Ringgit against other major trading currencies, have brought about deteriorated business sentiment and environment.

Against this backdrop, Malaysia’s Gross Domestic Product (GDP) grew at a slower rate of 4.5% in 2015 as compared to 6.0% in 2014. Similarly, the local manufacturing sector grew at a slower pace of 4.9% in 2015 versus 6.2% in the previous year. However, the export-oriented manufacturing industries have bene�tted signi�cantly from favourable exchange rates.

SIG Gases Berhad (“SIGGAS”) and its group of companies (collectively, with SIGGAS is referred to as “the Group”) continued growing from strength to strength in our �nancial year ended 31 December 2015 (“FY2015”). To this end, I am pleased to present to you the Annual Report and �nancial statements of the Group for FY2015.



CHAIRMAN’S STATEMENTCont’d

OpERATIONS REvIEw

During the year, the Group witnessed several initiatives that impacted positively the financial performance of the Group.

In FY2015, the Group continued to witness steady demand for our products including Acetylene and Fumigas from project jobs. We also increased our sales team to meet the demand of special gases, which received encouraging additional revenue.

Besides that, In East Malaysia, through our associate company Iwatani-SIG Industrial Gases Sdn Bhd (Iwatani-SIG), a second Air Separation Unit (ASU) plant in Samalaju, Sarawak was commissioned which effectively positioned the Group favourably in the Sarawak Corridor of Renewable Energy (SCORE).

In FY 2015, the Group completed its sale of the Puchong factory at a consideration of RM11,000,000. Following which, the Group has also redeveloped its industrial land at Bintulu, Sarawak into 8 units of Semi-detached industrial factories; 2 of which were retained for own use and the rest were intended to be sold.

FINANCIAL REvIEw

The group revenue in FY2015 leaped to a new height of RM75.7 million, up 15.8% from RM65.4 million previously.

The positive top line was boosted largely by the refilling and distribution segment which grew 21.9% to RM39.1 million in FY2015 from RM32.1 million previously. The higher demand for liquid nitrogen in Bintulu, Sarawak helped the manufacturing operations record a 10.2% jump in sales to RM35.5 million, as compared to RM32.2 million a year ago. Meanwhile, other gas related products and services noted sustained revenue of RM1.1 million in FY2015 on increased sales of welding products.

The commissioning of Iwatani-SIG’s second ASU plant in April 2015, increased the Group’s share of associate profit to RM1.1 million in FY2015, from RM0.5 million in the previous year.

Profit before tax was up 311% to RM8.6 million in FY2015 from RM2.1 million a year ago, on higher revenue as well as recognition of RM4.7 million gain on the disposal of our Puchong factory.

In the absence of a tax rebate on reinvestment allowance and write-off of capital equipment resulted in the Group recording a lower net profit of RM6.4 million in FY2015 versus RM9.9 million previously. It must be noted that the FY2014 higher net profit was partly impacted favourably by the reversal of deferred tax of RM7.8 million.

Earnings per share was lower at 3.4 sen in the year under review as compared to 6.6 sen posted in FY2014.

The Group’s balance sheet in FY2015 remained robust as higher retained earnings increased shareholders equity to RM119.1 million, up 4.5% from RM114.1 million a year ago.

Total borrowings reduced significantly to RM22.3 million from RM36.1 million, in tandem with lower cash and bank balances to RM5.4 million versus RM20.3 million. In addition to paring down our borrowings to strengthen our balance sheet, the Group also invested RM10.6 million in capital expenditure in the year under review, in order to sustain our growth momentum for the long term.

The Group’s gearing level was at a manageable 0.19 time, which gives the Group ample room to undertake further expansion plans when opportunities arise.

DIvIDEND

To reward our shareholders for their continued support, the Board proposed a final tax exempt (single-tier) dividend of 1.20 sen per ordinary share in respect of FY2015.

Once approved at the upcoming Annual General Meeting, this will translate to a dividend payout of RM2.25 million or 35% of the Group’s total FY2015 net profit.

INDUSTRy OUTLOOk AND GROwTh STRATEGIES

GDP growth in Malaysia is expected to remain muted in 2016, with Bank Negara Malaysia forecasting an expansion of between 4.0 and 4.5%. The considerations leading to this forecast include the ongoing and anticipated slowdown in major economies including Europe, USA and China; the continuously depressed crude oil and commodity prices.

These unfavourable conditions are also expected to adversely impact the growth of the domestic manufacturing sector, which is anticipated to slow to 4.1% in 2016, as businesses withold investment in capital expenditure.

Nonetheless, it is noteworthy that the Government remains committed to steer the economy forward, demonstrated most clearly by its Budget 2016 announcement as well as the 11th Malaysia Plan. The key thrusts of these initiatives include infrastructure developments to enhance transportation networks, a continuing focus on the creation of special economic and industrial zones to spread developments from Peninsular Malaysia to East Malaysia, as well as increased programmes to improve the socio-economic wellbeing of the overall society.

The Group plans to penetrate even deeper into the East Malaysia market, especially given the vast opportunities opening up with the rapid progress of the SCORE. To this end, the Group intends to set up a refilling plant in Bintulu, with a view to support our customers more efficiently and take advantage of the industrial boom in the state.


CHAIRMAN’S STATEMENTCont’d

Furthermore, SIGGAS’ strategically-located network positions us favourably to serve the rapidly-developing industrial regions in the country. To this end, the Group is actively exploring opportunities to fulfil demand for industrial gases from Petronas’ refinery and petrochemical integrated development project (RAPID) and other associated facilities in Pengerang, Johor.

Besides that, SIGGAS will continue to adopt cost-efficiency and enhance our productivity levels to improve our profitability going forward.

CORpORATE SOCIAL RESpONSIbILITy (CSR)

At SIGGAS, we believe that our pursuit of achieving our business objectives will require a balance between financial stability and our contribution not only to society, but the environment as well. Therefore, in the year under review, we have adhered to our sustainable CSR programme.

As part of our environmental preservation efforts, we continued to evaluate the safety of our manufacturing plants and the effects of the emissions to the environment. We have monitored our plants stringently and ensured that it is not harmful to the environment.

In enhancing the wellbeing of society, we continued to encourage the children of our employees to work hard in their studies and rewarded those who excelled in their public examinations from ‘Ujian Penilaian Sekolah Rendah (UPSR) up to Sijil Tinggi Persekolahan Malaysia (STPM), ‘A’ levels and Matriculation studies via our ‘SIG Academic Award 2015’.

The Group also provided donations to the Rotary Club to implement projects to enhance the wellbeing of the overall society.

CORpORATE GOvERNANCE

As a listed entity, SIGGAS has continued to adhere to the highest level of corporate governance to protect shareholders’ value by consistently running our operations with integrity and to the best of our abilities.

We are confident that these practices will bring us a long way and move the Company forward.

ACkNOwLEDGEMENTS

In light of the numerous challenges in the past year, I would like to express my gratitude to the Board of Directors, management team and employees of SIGGAS for your resilience and hard work that ensured that the Group weathered the storm last year. I look forward to your continued support and dedication in the coming year.

Additionally, I would like to extend my thanks to our valued shareholders, business partners, bankers and customers for their confidence in the Group. Thank you.

Mr. peh Lam hohExecutive Chairman


FINANCIAL hIGhLIGhTS

RM’000PROFIT BEFORE TAX

‘15

8,57

8

‘11 ‘12 ‘13 ‘14

2,08

8

1,95

6

3,51

2

2,18

7

RM’000PROFIT AFTER TAX

‘15

6,39

7

‘11 ‘12 ‘13 ‘14

9,92

2

2,65

3

2,43

4 3,28

7RM’000

REVENUE

‘15

75,7

05

‘11 ‘12 ‘13 ‘14

65,3

64

63,1

09

54,3

61 62,1

31

RM’000GROSS PROFIT

‘15‘11 ‘12 ‘13 ‘14

RM’000

EARNING BEFOREINTEREST, TAX, DEPRECIATION

& AMORTISATION

‘15

16,0

04

‘11 ‘12 ‘13 ‘14

9,79

4

9,55

8

8,12

8

8,31

3

24,5

00

15,5

93

16,9

94

18,6

09

20,8

62

RM’000

PROFIT BEFORE EXCEPTIONALITEM AND TAX

‘15

8,57

8

‘11 ‘12 ‘13 ‘14

3,63

9

1,95

6

3,51

2

2,18

7

Audited2011

Audited2012

Audited2013

Audited2014

Audited2015

RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 54,361 62,131 63,109 65,364 75,705

Gross Profit 15,593 16,994 18,609 20,862 24,500

Earning Before Interest, Tax, Depreciation & Amortisation 8,128 8,313 9,558 9,794 16,004

Profit Before Exceptional Item and Tax 3,512 2,187 1,956 3,639 8,578

Profit Before Tax 3,512 2,187 1,956 2,088 8,578

Profit After Tax 2,434 3,287 2,653 9,922 6,397


FINANCIAL hIGhLIGhTSCont’d

STATEMENT OF FINANCIAL pOSITION

Audited2011

Audited 2012

Audited 2013

Audited 2014

Audited2015

RM’000 RM’000 RM’000 RM’000 RM’000

Total Assets 131,465 152,109 155,875 168,523 158,323

Total Borrowings 20,790 33,848 36,959 36,057 22,261

Shareholders Equity 88,232 90,619 92,072 114,066 119,150

FINANCIAL INDICATOR

Audited2011

Audited 2012

Audited 2013

Audited2014

Audited2015

ROE % 3 4 3 9 5

Return On Total Assets % 1.85 2.16 1.70 5.89 4.04

Gearing Ratio % 23.56 37.35 40.14 31.61 18.68

Interest Cover Times 5.19 2.44 1.91 1.95 6.12

EPS Sen 1.62 2.19 1.77 6.61 3.41

Net Asset Per Share RM 0.59 0.60 0.61 0.61 0.64

Gross Dividend Per Share Sen 1.30 0.60 0.80 0.60 0.70

PE Ratio 44 30 34 7 16

Gross Dividend Price As At FYE 31 December % 1.83 0.92 1.33 1.04 1.30

Share Price As At FYE 31 December 0.71 0.65 0.60 0.46 0.54


DIRECTORSPROFILE OF

pEh LAM hOhExecutive Chairman

Mr Peh Lam Hoh, a Singaporean aged 66, is an Executive Chairman of the Company. He was appointed to the Board on 14 October 2009 and is responsible for overseeing the management of the Group. He is the Chairman of Remuneration Committee and the ESOS Committee of the Company.

Mr Peh began his career in 1969 when he joined the accounting department of a company. From 1970 to 1976, he was employed by a company engaged in manufacturing and trading of rubber. He then joined a company that was engaged in supplying industrial gases as a Partner in 1976. In 1978, Mr Peh formed Sing Swee Bee Enterprise Pte Ltd, which was initially engaged in trading. Sing Swee Bee Enterprise Pte Ltd started supplying industrial gases in 1981. Mr Peh founded Southern Industrial Gas Sdn. Bhd. in 1996 which is currently a wholly-owned subsidiary of the Company and has been instrumental in building and developing the Group into a manufacturer of industrial gases. He is currently a shareholder and Managing Director of several private companies, namely Sing Swee Bee Enterprise Pte Ltd, Sing Swee Bee Investments Pte Ltd, SSB Products Pte Ltd, Sing Swee Bee Industries Pte Ltd, SSB Cryogenic Equipment Pte Ltd, SSB Cryogenic Services Pte Ltd, Sing Swee Bee Sdn Bhd and Sing Hoh Realty Sdn Bhd. He is currently a shareholder and the President Director of PT Sing Swee Bee Indonesia and is also a shareholder and Director of Shanghai Yuhe Trading Co Ltd. Several of the companies in which he is a shareholder and a board member is engaged in importing, exporting and/or distributing industrial gases and related products and/or providing services related to industrial gases.

Mr Peh does not have any family relationship with any Director and/or major shareholder of the Company. Except for certain related party transactions of revenue in nature which are necessary for day to day operation of the Company and its subsidiaries and for which he is deemed to be interested, there are no other business arrangements with the Company in which he has personal interest. Mr Peh has no conviction for any offence within the past 10 years.

Mr Peh attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.


PROFILE OF DIRECTORSCont’d

DIRECTORSPROFILE OF

LAU ChENG MINGExecutive Director

Mr Lau Cheng Ming, a Malaysian aged 62, is an Executive Director of the Company. He was appointed to the Board on 14 October 2009 and is responsible for strategic planning and for the overall management of the Group. He is a member of ESOS Committee of the Company.

Mr Lau obtained his Bachelor of Commerce degree from the University of Canterbury, New Zealand in 1979. He has been an Associate Chartered Accountant with the New Zealand Society of Accounts since 1981. He began his career as a Junior Accountant with Hunt & Duthie & Co in New Zealand in 1978. He then joined Ernst & Whinney, New Zealand as a Senior Accountant in 1980. He was attached with Metas Holdings Sdn Bhd as the Financial Controller from 1982 to 1995, where he was responsible for evaluating investment portfolios and overseeing the management of associated companies. Mr Lau served as a Director of Bintulu Industrial Gas Sdn Bhd from 1982 to 1998. He also served as an Executive Director of B.I.G. Industries Bhd in 1995 and he is currently a Director and shareholder of a number of private companies.

Mr Lau does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company. Mr Lau has no conviction for any offence within the past 10 years.

Mr Lau attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.

DATUk SyED AhMAD bIN ALwEE ALSREENon-Independent Non-Executive Director

Datuk Syed Ahmad Bin Alwee Alsree, a Singaporean aged 50, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009. He is a member of Audit Committee and Nominating Committee of the Company.

Datuk Syed Ahmad Bin Alwee Alsree is Group Executive Director of Cahya Mata Sarawak Berhad (“CMS”) and having been appointed to the Board of CMS on 4 September 2006. He joined the CMS Group in February 2004 as Group General Manager - Human Resources, was appointed as Deputy Group Managing Director in September 2006, and was subsequently re-designated as Group Executive Director in August 2008. Datuk Syed Ahmad is the Deputy Chairman of K&N Kenanga Holdings Berhad and Kenanga Investment Bank Berhad. He is also a director of KKB Engineering Berhad and Kenanga Islamic Investors Berhad. He is Chairman of Samalaju Aluminium Industries Sdn Bhd, Kenanga Investors Berhad, CMS Cement Sdn Bhd, CMS Clinker Sdn Bhd, CMS Education Sdn Bhd, CMS Land Sdn Bhd and a director of several CMS subsidiaries in construction materials and

property development. Datuk Syed Ahmad graduated with a Bachelor of Law (LL.B.) degree from the National University of Singapore, and practised law in Singapore for over 10 years prior to joining CMS. He completed the Advanced Management Program (AMP) at Harvard Business School in 2012.

Datuk Syed Ahmad is the husband of Dato Hajjah Hanifah Hajar Taib who is a substantial shareholder of the Company. He does not have any conflict of interest with the Company. Datuk Syed Ahmad has no conviction for any offence within the past 10 years.

Datuk Syed Ahmad attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.

DIONG TAI pEwSENIOR Independent Non-Executive Director

Mr Diong Tai Pew, a Malaysian aged 64, is the Senior Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009 and was appointed as Senior Independent Non-Executive Director of the Company with effect from 19 February 2013. He is the Chairman of Audit Committee and Nominating Committee and a member of Remuneration Committee and ESOS Committee of the Company.

Mr Diong obtained his Diploma in Commerce from Tunku Abdul Rahman College, Malaysia in 1976. He is currently a Fellow Member of the Institute of Singapore Chartered Accountants, a Member of the Malaysian Institute of Accountants and a Fellow Member of the Chartered Tax Institute of Malaysia. He began his career in 1976 with a chartered accountants company in Singapore. He left the chartered accountants company in 1980 and has since been practising as a public accountant in Singapore under CA Diong. He is currently an Independent Non-Executive Director of VS International Group Ltd, a public listed company in Hong Kong and an Independent Non-Executive Director of Hengyang Petrochemical Logistics Ltd a public listed company in Singapore. He is the Chairman of the Audit Committee of the above-mentioned 2 public listed Companies.

Mr Diong does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company. Mr Diong has no conviction for any offence within the past 10 years.

Mr Diong attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.


PROFILE OF DIRECTORSCont’d

LEE TING kIATIndependent Non-Executive Director

Mr Lee Ting Kiat, a Malaysian aged 47, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 15 March 2011. He is a member of Audit Committee, Nominating Committee and Remuneration Committee of the Company.

Mr Lee graduated with a Bachelor of Laws from University of Malaya, Kuala Lumpur. Currently, he is a practising lawyer and the Managing Partner of Messrs Lee & Tengku Azrina, a firm set up by him and Tengku Azrina since 2005. Prior to the current firm, he was a partner in Messrs Zaid Ibrahim & Co., currently the largest legal firm in Malaysia, from 2000 – 2005. He was also a partner in Messrs Andrew Wong & Co. from 1995 – 1999. He did his pupilage and started his early days of practice in Messrs Azim, Tunku Farik & Wong (previously known as Azim, Ong & Krishnan) from 1991 – 1994. In his extensive career as an advocate and solicitor, he has wide experience in corporate and commercial, financing and property matters. He has advised in matters relating to mergers and acquisitions, corporate exercises, restructuring of corporations, foreign direct investment, financing matters, property development, joint venture agreements, conducting legal due diligence on companies and other commercial matters. His legal firm currently represents a large number of corporations, developers and banks.

Mr Lee does not hold any other directorship in other public companies.

Mr Lee does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company. Mr Lee has no conviction for any offence within the past 10 years.

Mr Lee attended four (4) out of five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.

LIM TIN TENG @ LIM JIT TENGIndependent Non-Executive Director

Mr Lim Tin Teng @ Lim Jit Teng, a Malaysian aged 72, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 23 May 2014. He is a member of Audit Committee and Remuneration Committee of the Company.

Mr Lim graduated with a Bachelor of Commerce from Melbourne, Australia and is a member of the Australian Society of Accountants, FCPA. He started his career with Bell Chemical Pty Ltd in Melbourne in 1969 and later joined Singapore Oxygen as Financial Accountant and seconded to Malaysian Oxygen Berhad in 1976. He had over 30 years’ experience in the industrial gases industry and had held various senior positions with Malaysian Oxygen Berhad. He was seconded to Commonwealth Industrial Gases Ltd, Sydney, Australia in 1988 for 4 months. He was the General Manager – Corporate Affairs prior to his retirement in 2003.

Mr Lim does not hold any other directorship in other public companies.

Mr Lim does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company. Mr Lim has no conviction for any offence within the past 10 years.

Mr Lim attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2015.


STATEMENT OF CORpORATE GOvERNANCE

The Board of Directors (“the Board”) and Management of SIGGAS recognise the importance of adopting high standards of corporate governance and ensures corporate governance is practised to protect shareholders’ value and to enhance the financial performance of SIGGAS and its group of companies (“the Group”). The Board fully supports the recommendations of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) which sets out the basic principles and recommendations for good corporate governance and best practice for listed companies.

The Board is committed and strives to apply the recommendations of the MCCG 2012 to promote that good corporate governance through sustainability practices throughout the Group and effectively to discharge its responsibilities to protect and enhance shareholders’ value.

This statement sets out how the Group has applied the principles set out in the MCCG 2012 and except where stated otherwise, its compliance with the best practices of the MCCG 2012 for the year ended 31 December 2015.

1. ESTAbLISh CLEAR ROLES AND RESpONSIbILITIES

Clear Functions of the board and Management

The Board is responsible for the overall governance of the Group and plays an active role in determining the long term direction, strategies and objectives of the Group in order to enhance shareholders’ value. The Board strives to ensure that the Group is managed effectively. In addition to fulfilling its commitment for increased shareholders’ value, the Board endeavours to uphold the interests of the Group’s customers, employees, suppliers and the communities where it operates, but bearing in mind the circumstances and requirements for successful business.

The Board is also assisted by several Board Committees, namely Audit Committee, Nominating Committee, Remuneration Committee and ESOS Committee to assist in the execution of Board functions. Although the Board may delegate powers and responsibilities to these committees, the Board retains ultimate accountability for discharging its duties. Descriptions of the current roles and responsibilities of these committees are set out in their respective Terms of Reference.

The Board had also delegated certain matters, such as carrying out or implementation of the Group business plan/strategies and the day to day management of the Company, to the Executive Chairman, Executive Director and Senior Executives of the Group.

Clear Roles and Responsibilities

Having regard to the commitments, the Board is expected to direct and supervise the management of the business by fulfilling the following responsibilities:-

l To review and approve strategies, business plans and significant policies and ensure that the Group’s goals are clearly established and to ensure continuity of Group’s business and direct and control all aspects of the business operations.

l To ensure a competent management by establishing policies for strengthening the performance of the Group with a view to proactively build the business through innovation, initiative, technologies, new products and the development of its business capital and safeguard Group’s assets;

l To monitor implementation, progress and performance of the strategies, policies, plans, legal and fiduciary obligations that affect the business by adopting performance appraisal measures;

l To review the adequacy and the integrity of the Group’s internal control systems and management information systems and to ensure that the Group has appropriate business risk management and systems for compliance with applicable laws, regulations, rules, directives and guidelines and controls in areas of significant financial and business risks;

l To delegate appropriate functions to the Board Committees and to ensure their effectiveness to address specific issues, considering recommendations of the Board Committees and acting on their reports;

l To ensure that the statutory accounts of the Company and Group are fairly stated and conform with the relevant regulations including acceptable accounting policies and standards to present a true and fair view of the Group’s financial condition and operational results in accordance with relevant accounting standards;


1. ESTAbLISh CLEAR ROLES AND RESpONSIbILITIES cont’d

Clear Roles and Responsibilities cont’d

Having regard to the commitments, the Board is expected to direct and supervise the management of the business by fulfilling the following responsibilities:- cont’d

l To ensure that there is in place an appropriate succession plan for members of the Board and Senior Management;

l To ensure that the Group adheres to high standards of ethics and corporate behaviour including transparency in the conduct of business. Directors are required to comply with the Directors’ Code of Conduct and amongst others includes the declaration of any personal, professional or business interests, direct or indirect which may conflict with directors’ responsibilities as a Board Member and to refrain from voting on such transaction with the Group; and

l To ensure that there is in place an appropriate investor relation and communication policy and to adhere to disclosure requirements of Bursa Securities.

Code of Conducts and Implementation

Codes of Conduct for Directors of the Group and Codes of Conduct and Ethics for Employees

The Board has formalised a Code of Conduct for Directors and Employees of the Group setting out the standards of conduct and behaviour expected from Directors and employees to inculcate good ethical conduct.

Directors and Management of SIGGAS Group are committed to adhering to the best practice in corporate governance and observing the highest standards of conduct, integrity and behaviour in all activities conducted by the Group, including the interaction with its customers, suppliers, shareholders, employees and business partners, and within the community and environment in which the Group operates.

All employees of the SIGGAS Group play an important role in establishing and enhancing the reputation, image and share

a serious responsibility for the good public relations of the SIGGAS Group and ensuring the observance to and compliance with the standards of integrity and behaviour and Company’s value that the SIGGAS Group is committed to. It is required that employees display the highest levels of professionalism in all aspects of their work and comply with this Code of Conduct and Ethics of the Group as set out in the Employees Handbook, and must at all times, comply with all applicable laws, regulations and other policies applicable within the SIGGAS Group.

whistle-blowing policy

The Board has formalised a Whistle-Blowing Policy with the aim of providing an avenue for raising concerns. Employees of the Group are expected to be vigilant about any wrongdoings, malpractices or irregularities at the workplace and report promptly such instances through designated channel for immediate rectification or other necessary measures in minimising potential financial or reputational loss.

The whistle-blowing policy provides employees of the Group with accessible avenue to report on suspected fraud, corruption, dishonest practices or other similar matters. It aims to encourage the reporting of such matters in good faith, with the confidence that employees making such reports will, to the extent possible, be protected from reprisal.

The whistle-blowing policy is available on the Company’s website www.siggases.com.

Company’s Strategies promote Sustainability The Group is mindful of the importance of business sustainability and has embraced sustainability in its operations, by

taking into consideration the impact on the environment, social and governance aspect of business operations.

STATEMENT OF CORpORATE GOvERNANCECont’d


1. ESTAbLISh CLEAR ROLES AND RESpONSIbILITIES cont’d

Access to Information and Advice

The Directors have full and unrestricted access to all information and can also seek independent professional advice whenever such services are needed to assist them in carrying out their duties at the Company’s expense. All Directors are provided with the agenda together with the Board papers at least 7 days prior to the Board Meetings to allow sufficient time for the Directors to review, consider and deliberate knowledgeably on the issues and to obtain further information and explanations to facilitate informed decision making.

Senior Managements of the Group are invited to attend Board meetings to provide additional insights and explanations on specific items of the agenda.

Qualified and Competent Company Secretary

The Company Secretaries provide support to the Board in fulfilling its fiduciary duties. The Company Secretaries also advise the Board on issues relating to the corporate governance and compliance with laws, rules and regulatory requirements. The Companies Secretaries attend and ensure that all Board meetings and Committee meetings are properly convened, and that accurate and proper record of the proceedings and resolutions passed are taken and maintained in the statutory records of the Company.

The Directors have unrestricted access to the advice and services of the Company Secretaries. board Charter

The Board has adopted a Board Charter to promote the standards of Corporate Governance and defines clear functions reserved for the Board and those delegated to Management to enhance accountability. The objective of the Board Charter shows that the Board remains fully resolved and committed to employing the principles of integrity, transparency and professionalism to ensure the practice of good corporate governance that will safeguard and enhance shareholders’ investment and value and at the same time protect the interests of the stakeholders.

The Board Charter provides guidance for Directors and Management regarding the responsibilities of the Board its Committee and Management.

The Board Charter is subject to review by the Board annually to ensure that it remains consistent with the Board’s objectives and responsibilities. The Board Charter is also available on the Company’s website www.siggases.com.

2. STRENGThEN COMpOSITION

NOMINATING COMMITTEE The Nominating Committee is primarily responsible for assessing and recommending for nomination to the Board

and assessing Directors standing for re-election at the forthcoming Annual General Meeting (“AGM”). The Nominating Committee comprises the following Directors during the financial year and as at the date of this Annual Report. The attendance details of each member at the Nominating Committee meeting are as follows:-

Composition of CommitteeNumber of meeting

attended

Diong Tai Pew (Chairman / Senior Independent Non-Executive Director)

1 / 1

Datuk Syed Ahmad Bin Alwee Alsree (Member / Non-Independent Non-Executive Director)

1 / 1

Lee Ting Kiat (Member / Independent Non-Executive Director)

1 / 1



2. STRENGThEN COMpOSITION cont’d

NOMINATING COMMITTEE cont’d The duties and responsibilities of the Nominating Committee are as follows:-

i. Recommend to the Board candidates for all directorships to be filled by the shareholders or the Board, taking into consideration the candidates’:

l skills, knowledge, expertise and experience; l professionalism; l integrity; and l in the case of candidates for the position of independent non-executive directors, the Nominating Committee

should also evaluate the candidates’ ability to discharge such responsibilities/functions as expected from independent non-executive directors.

ii. Consider, in making its recommendation, candidates for directorship proposed by the Executive Chairman and within the bounds of practicality, by any senior executive or any director or shareholder;

iii. Recommend to the Board, candidates to fill the seats on Board committees;

iv. Assist the Board in an annual review of the required mix of skills and experience and other qualities including core competencies which non-executive directors should bring to the Board; and

v. Annually assess the effectiveness of the Board as a whole, the Board committees and the contribution of each individual director, including independent non-executive directors and Executive Chairman. All assessments and evaluations carried out by the Nominating Committee in the discharge of all its functions should be properly documented.

The following nomination process was adopted by the Nominating Committee:-

i. Identification of candidates ii. Assess the suitability of candidates iii. Meeting up with candidates iv. Final discussion/ deliberation by Nominating Committee v. Recommendation to the Board.

The Nominating Committee had conducted the annual assessment on the Board and Board Committee inclusive of Board/Committee structure, operations, role and responsibilities and performance of Chairmen of Board and Committees. The Nominating Committee had also reviewed on the composition of Board Committee.

board Composition

In line with the Listing Requirements of Bursa Securities for the Main Market (“Main LR”), one-third (1/3) of the Board consists of Independent Non-Executive Directors, thereby bringing objective and independent judgement to facilitate a balanced leadership in the Group as well as to safeguard the interest of the stakeholders in ensuring that the highest standard of conduct and integrity are maintained. The Independent Directors comprise 50% of the Board.

Presently, the Board consists of six (6) members comprising the Executive Chairman, one (1) Executive Director, one (1) Non-Independent Non-Executive Director, one (1) Senior Independent Non-Executive Director and two (2) Independent Non-Executive Directors.

Collectively, the Directors have a wide range of experience and expertise in business, corporate, legal and financial matters that add value to the Board as a whole.

A brief description on the profile of each Director is presented on pages 10 to 12 of this Annual Report.




NOMINATING COMMITTEE cont’d

Diversity

The Board is of the view that while it is important to promote gender diversity, ethnicity and age the normal selection criteria based on an effective blend of competencies, skills, extensive experience and knowledge should remain a priority.

Re-election and Re-appointment

In accordance with Article 103 of the Company’s Articles of Association, one-third (1/3) of the Directors shall retire from office, at least once in every three (3) years. Retiring Directors shall be eligible to offer themselves for re-election at the AGM. Any Director appointed by the Board during the financial year is to retire at the next AGM held following their appointments.

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

At the forthcoming AGM, Mr Peh Lam Hoh and Mr Lee Ting Kiat are retiring in accordance with Article 103 of the Company’s Articles of Association and being eligible have offered for re-election.

At the forthcoming AGM, Mr Lim Tin Teng @ Lim Jit Teng shall retire in accordance with Section 129(2) of the Companies Act, 1965 and has offered himself for re-appointment.

procedure of Appointment of Director

The Company has in place formal and transparent procedures for the appointment of new Directors. The selection of new Directors is done via nominations by the major shareholders and/or holding company or recommendations from the Management or existing Directors prior to approval by the Board. New Board Members are to be appointed by appropriate recommendation of the Nominating Committee taking into account the integrity, independence, diversity in terms of age, gender, ethnicity, experience, leadership and the ability to exercise sound judgement relevant to the Company’s business, before recommended for the Board’s consideration. The decision on any appointment rests with the full Board.

Newly appointed Directors are expected to declare their time commitment to the Board, and if they sit in other listed corporations as a director, to notify the same to the Board.

The number of directorships in listed corporations held by any Board Member at any one time shall comply with the Main LR of Bursa Securities.

The Company Secretary shall assist to ensure all relevant procedures and compliances are fulfilled relating to the appointment of new Directors.





The Remuneration Committee is primarily responsible for the development and review of the remuneration policy and packages for the Board members. The remuneration policy aims to attract and retain Directors necessary for proper governance and the smooth running of the Company. The Remuneration Committee comprises the following Directors during the financial year and as at the date of this Annual Report. The attendance details of each member at the Remuneration Committee meetings are as follows:-


attended

Peh Lam Hoh (Chairman / Executive Chairman)

2 / 2

Diong Tai Pew (Member / Senior Independent Non-Executive Director)

2 / 2


1 / 2

Lim Tin Teng @ Lim Jit Teng(Member / Independent Non-Executive Director)(Appointed on 12 February 2015)

1 / 1

The duties and responsibilities of the Remuneration Committee are as follows:-

i. To determine a procedure for developing a remuneration policy which will enable the Company to attract and retain directors with the relevant experience and expertise needed to run the Group successfully.

ii. To recommend to the Board, the remuneration packages for all Executive Directors.

iii. To recommend to the Board, the implementation where practical of the provisions of the MCCG 2012 related to remuneration.

Executive Directors should play no part in decisions on their own remuneration. The determination of remuneration packages of non-executive directors, should be a matter for the Board as a whole. The individuals concerned should abstain from discussing their own remuneration.

Directors’ Remuneration The fees of Directors, including non-executive Directors, are determined by the Board with the approval from shareholders

at the AGM.

The objective of the Company’s policy on Directors’ remuneration is to attract and retain the Directors with the experience and expertise needed to run the Group effectively. The Executive Directors remuneration is structured so as to link rewards to corporate and individual performance whilst the remuneration of the Non-Executive Directors is determined in accordance with their experience and the level of responsibilities undertaken by them.

During the financial year ended 31 December 2015 the remuneration of the Directors are as follows:-

CategoryExecutive Directors

(RM)Non-Executive Directors

(RM)

Directors’ Fees 71,640 202,800

Other Emoluments 10,000 18,000

Total 81,640 220,800




REMUNERATION COMMITTEE cont’d

Directors’ Remuneration cont’d

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

Number of Directors

Range of remuneration Executive Non-Executive

RM50,000 and below - -

RM50,001 – RM100,000 - 4

RM100,001 – RM150,000 - -

RM150,001 – RM200,000 - -

RM200,001 – RM250,000 - -

RM250,001 – RM300,000 1 -

RM1,800,001 – RM1,850,000 1 -

3. REINFORCE INDEpENDENCE

Annual Assessment of Independence

The Board acknowledges the importance of Independent Non-Executive Directors. They perform a key role by providing unbiased and independent views, advice and judgement, which take into account the interests of the Group and all its stakeholders including shareholders, employees, customers, business associates and the community as a whole.

The Board assesses the independence of the Independent Non-Executive Directors on an annual basis by taking into account the individual Director’s ability to exercise independent judgement at all times and based on the criteria set out in the Main LR of Bursa Securities.

The Board has conducted an assessment of independence of the Independent Non-Executive Directors and have determined and were satisfied that all the three (3) Independent Non-Executive Directors remain objective and independent.

Tenure of Independent Directors

As at the date of this Statement, none of the Independent Directors has served more than 9 years on the Board.

However, if any of the Independents Directors service exceed 9 years, the relevant Independent Director may continue to serve subject to approval from shareholders.

Chairman/ Managing Director

The Chairman of the Company is Mr Peh Lam Hoh, who holds dual roles as Executive Chairman and Managing Director of the Group. Mr Peh is responsible for overseeing the management of the Company. The Board is aware that it is not in compliance with the best practices on the separation of the roles of the Chairman and Managing Director. However, the Board is satisfied with the dual role held by Mr Peh in view of his extensive experience with entrepreneurship skill and business acumen in industrial gas industry and with appropriate knowledge and competencies to address key risk and major issues concerning the Group’s policies and strategies. He has the full co-operation of the Board and Management who provide the necessary check and balances. The Executive Chairman plays an important role in developing the business of the Group and provides the Group with strong leadership and vision and is able to discharge his duties effectively and competently.



3. REINFORCE INDEpENDENCE cont’d

Executive Chairman

As the Board is chaired by an Executive Chairman, the Board noted the Recommendation 3.5 of the MCCG 2012, which states that the Board must comprise a majority of Independent Directors where the Chairman of the Board is not an Independent Director. Compliance with Recommendation 3.5 would require an increase in the current size of the Board. In line with Recommendation 3.5 of the MCCG 2012, the Company had on the Company’s 5th AGM held on 23 May 2014 appointed Mr Lim Tin Teng @ Lim Jit Teng as an Independent Non-Executive Director of the Company. Although the Board does not comprise a majority of Independence Directors, there is a majority of Non-Executive Directors, i.e. four (4) Non-Executive Directors out of six (6) members of the Board. The majority presence of the Non-Executive Directors provides an effective check and balance within the Board. The existing six (6) members of the Board are persons of high calibre and integrity and are responsible for overall governance of the Group by ensuring that the Group’s internal control, risk management and reporting procedures are well in place. The current size and composition of the Board are considered adequate to provide an optimum mix of skills, experience and expertise. Furthermore, the Board is of the view that with the current Board size, there is no disproportionate imbalance of power and authority on the Board between the Non-Independent and Independent Directors. The Board will continue to monitor and review the Board size and composition as may be needed.

4. FOSTER COMMITMENT

Time Commitment

Directors are expected to devote sufficient time commitment and attention to carry out their responsibilities. The Board Charter sets out a policy whereby newly appointed Directors are expected to declare their time commitment to the Board, and if they sit in other listed corporations as a director, to notify the same to the Board. The Board Charter also sets out the policy for Directors to limit the directorship of companies to a number in which they can best devote the time and effectiveness; each director has to make his own judgement of his abilities and how best to manage his time effectively in the Company in which he holds directorship. In the case of the maximum number of directorships in listed companies, he must comply with the Listing Requirements.

To facilitate Directors planning, proposed meeting schedule is prepared and present to the Directors at the beginning of each new financial year and at every Board of Directors meeting. The Directors have demonstrated their ability to devote sufficient time and commitment to their roles and responsibilities as Directors of the Company.

board Meetings

The Board meets at least once every quarter and additional meetings are convened as and when necessary. Five (5) Board Meetings were held during the financial year ended 31 December 2015. All proceedings of the Board meetings are duly minuted and signed by the Chairman of the meetings. A record of Directors’ attendance of Board Meeting held in the financial year ended 31 December 2015 is as follows:-

Name of Directors Attendance

Peh Lam HohLau Cheng MingDatuk Syed Ahmad Bin Alwee AlsreeDiong Tai PewLee Ting Kiat Lim Tin Teng @ Lim Jit Teng

5 / 55 / 55 / 55 / 54 / 55 / 5

The Board members are supplied with all necessary information prior to and in advance of each Board meeting to enable

them to have sufficient time to peruse through the meeting documents and to effectively discharge their responsibilities.

Additionally, in between Board meetings, the Directors also approved various matters requiring the sanction of the Board by way of Directors’ Circular Resolutions.



4. FOSTER COMMITMENT cont’d

Directors’ Training Directors’ training is an ongoing process as Directors recognise the need to continually keep themselves abreast and to

update themselves on developments of current industry as well as the new statutory and regulatory requirements to enable them to discharge their duties effectively.

During the financial year ended 31 December 2015, the Directors have attended their respective training programmes. The following are a list of training programmes attended by the Directors:-

Directors Seminars and briefings attended

Peh Lam Hoh l Advocacy Sessions on Management Discussion & Analysis for Chief Executive Officers and Chief Financial Officers by Bursa Securities on 30 June 2015

Lau Cheng Ming l Advocacy Sessions on Management Discussion & Analysis for Chief Executive Officers and Chief Financial Officers by Bursa Securities on 30 June 2015

Datuk Syed Ahmad Bin Alwee Alsree l Corporate Governance Breakfast Series with Directors: Board & Recognition by Bursa Securities on 26 November 2015

Diong Tai Pew l Risk Management for Directors and Senior Management and Guidelines on Statement of Risk Management and Internal Control by Boardroom Corporate Services (KL) on 23 June 2015.

l Ethical Issues for Internal Auditors by Institute of Chartered Accountants of Singapore on 15 December 2015.

l Roles and Responsibilities of Chief Internal Auditor by Institute of Chartered Accountants of Singapore on 19 December 2015.

Lee Ting Kiat l Malaysia Tax Summit 2015 organised by KPMG on 3 November 2015

Lim Tin Teng @ Lim Jit Teng l Handling Press Conference, Media Interviews and Tricky Media Questions by Bursatra Sdn. Bhd. on 28 October 2015

5. UphOLD INTEGRITy OF FINANCIAL STATEMENTS

Compliance with Applicable Financial Reporting Standards

In presenting the annual financial statements and quarterly announcement of its results, the Board aims to present a fair assessment of the Group’s position and prospects and takes responsibility to ensure that these financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable financial reporting standards in Malaysia.

The quarterly results and annual financial statements are reviewed by the Audit Committee together with Management and External Auditors to ensure accuracy and adequacy of information disclosed and to recommend to the Board for approval before releasing to the public via the Bursalink. The composition of the Audit Committee, terms of reference and the summary of activities are set out in pages 24 to 27 of this Annual Report.

The Directors’ Responsibility Statement in respect of the preparation of the Audited Financial Statements is set out in page 23 of this Annual Report.

The details of the financial statements of the Group and the Company are set out on pages 33 to 94 of this Annual Report.



5. UphOLD INTEGRITy OF FINANCIAL STATEMENTS cont’d

Assessment of Suitability and Independent of External Auditors

The key features underlying the relationship of the Board via the Audit Committee with the External Auditors are included in the Audit Committee Report as detailed in this Annual Report. The Company, through the Audit Committee maintains a transparent relationship with the External Auditors.

The External Auditors attended all the Audit Committee meetings which deliberated on the Audit Plan, Quarterly financial result and the Annual Financial Statements. From time to time, the External Auditors highlight to the Audit Committee and the Board on matters that require the Board’s attention.

The External Auditors are required to declare their independence annually to the Audit Committee and have provided the declaration in their annual audit plan and the report on their audit of the financial statements of the Group for the year ended 31 December 2015 presented to the Audit Committee of the Company.

6. RECOGNISE AND MANAGE RISk

Sound Framework to Manage Risk

The Board recognises the importance of good risk management practices and sound internal controls as a platform to good corporate governance. The Board acknowledges its overall responsibility for maintaining a sound system of risk management and internal control, and for reviewing its adequacy and integrity.

The Board through its Audit Committee has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and this process includes enhancing the risk management and internal control system as and when there are changes to the business environment and regulatory requirements. The process is reviewed by the Board and the Audit Committee on a periodical basis.

The Statement on Risk Management and Internal Control as set out in pages 28 to 30 of this Annual Report provides an overview of the management of risks and state of internal control within the Group.

Internal Audit Function

The Directors acknowledge their responsibilities for the Group and the Company to maintain a sound system of internal controls covering financial, operation and compliances and to safeguard shareholders’ investment and the Company’s assets.

The Activities of the Internal Auditors during the financial year are set out in the Audit Committee Report on page 27.

7. ENSURE TIMELy AND hIGh QUALITy DISCLOSURE

Corporate Disclosure policy

The Board recognises the importance of maintaining an effective communications policy that enables both the Board and the Management to communicate effectively with investors, stakeholders and the general public. The Board endeavours to provide timely and accurate disclosure of all material information of the Group to the shareholders and investors.

Shareholders and investors are kept informed of all major developments within the Group by way of announcements through the Bursa Link, the Company’s Annual Reports, website and other circulars to shareholders with an overview of the SIGGAS Group’s financial and operational performance.

Leverage on Information Technology for Effective Dissemination of Information

The Company’s website at www.siggases.com incorporates an Investor Relations section which provides all relevant information on the Company accessible to the public. This section enhances the Investor Relations function by including all announcements made by the Company and its annual reports.



7. ENSURE TIMELy AND hIGh QUALITy DISCLOSURE cont’d

Leverage on Information Technology for Effective Dissemination of Information cont’d

The quarterly financial results are announced via Bursa Link immediately after the Board’s approval. This is important in ensuring equal and fair access to information provided to the investing public.

8. STRENGThEN RELATIONShIp bETwEEN COMpANy AND ShAREhOLDERS

Encourage Shareholder participation at General Meetings (“GMs”)

The GMs of the Company represents the principal forum for dialogue and interaction with all shareholders wherein the shareholders are given opportunities to raise questions. Shareholders are notified of the meeting and provided with a copy of the Company’s Annual Report before the meeting. The Board welcomes questions and feedback from shareholders during and at the end of shareholders’ meeting and ensures their queries are responded in a proper and systematic manner.

Notice of GMs and Annual Report are sent out to shareholders at least 21 days before the date of the meeting. In the case

of re-election of Directors, the Board will ensure that full information is disclosed through the notice of meeting regarding Directors who are retiring and who are willing to serve if re-elected.

Each item of special business included in the notice of the meeting will be accompanied by an explanatory statement for the proposed resolution to facilitate full understanding and evaluation of issues involved.

poll voting

In line with recommendations 8.2 of the MCCG 2012, which recommends that the Board should encourage poll voting for substantive resolutions. The voting on Resolutions 7 and 8 at the 6th AGM held on 8 May 2015 was conducted on a poll, rather than on a show of hands to give a fair and more accurate reflection of the views of shareholders.

Effective Communication and proactive Engagement

At the 6th AGM, all the Directors were present in person to engage directly and to communicate with the shareholders. This accounts for their stewardship of the Company. The Chairman invited shareholders to raise questions pertaining to the Company’s financial statements if there are doubts. The Chairman also invited shareholders to raise questions on other items of the agenda at the meeting, before putting a resolution to vote. The Directors, Management and External Auditors were in attendance to respond to the shareholders’ queries.

DIRECTORS’ RESpONSIbILITy STATEMENT IN RESpECT OF ThE pREpARATION OF ThE AUDITED FINANCIAL STATEMENTS

The Board is responsible for ensuring that the financial statements of the Group and the Company are drawn up in accordance with applicable approved accounting standards in Malaysia, the provisions of the Companies Act, 1965 and the Listing Requirements of Bursa Securities so as to give a true and fair view of the state of affairs of the Group and of the Company for the financial year.

In preparation of the financial statements for the year ended 31 December 2015, the Board is also responsible for the adoption of appropriate accounting policies and have applied them consistently in the financial statement with reasonable and prudent judgments and estimates. The Board is also satisfied that all relevant approved accounting standards have been followed in the preparation of the financial statements.

The Directors also have a general responsibility for taking such reasonable steps to preserve the assets of the Group and to prevent and detect fraud and other irregularities.

This Statement was approved by the Board of Directors on 7 April 2016.



AUDIT COMMITTEE REpORT

MEMbERShIp AND MEETINGS

The Audit Committee comprises the following Directors during the financial year and as at the date of this report. The attendance details of each member at the Audit Committee meetings held during the year are as follows:-


attended

Diong Tai Pew (Chairman / Senior Independent Non-Executive Director)

5 / 5

Datuk Syed Ahmad Bin Alwee Alsree (Member / Non-Independent Non-Executive Director)

5 / 5


4 / 5

Lim Tin Teng @ Lim Jit Teng(Member / Independent Non-Executive Director)(Appointed on 12 February 2015)

4 / 4

The meetings were appropriately structured through the use of agenda and board papers containing information relevant to the matters for deliberation, which were distributed to members with sufficient notice.

The Audit Committee was established on 15 December 2009 and its Terms of Reference are set out below:-

TERMS OF REFERENCE

1. Composition

The Audit Committee shall be appointed by the Board of Directors from amongst the directors of the Company and shall consist of not less than three (3) members, all of whom shall be Non-Executive Directors, with a majority of them being Independent Directors.

All members of the Audit Committee shall be financially literate and at least one of them shall be a member of the Malaysian Institute of Accountants or a person who fulfills the requirements under Paragraph 15.09(1)(c)(ii) and (iii) of the Main Market Listing Requirements. No alternate Director shall be appointed as a member of the Audit Committee.

The Chairman of the Audit Committee shall be an Independent Director.

2. Secretary

The Secretary to the Audit Committee is the Company Secretary.

3. Frequency of Meetings

Meetings shall be held not less than four (4) times a year. The External Auditors may request a meeting if they consider that one is necessary.

The Audit Committee may convene meetings with the External Auditors, the internal auditors or both, without the executive board members and the employees of the Company, whenever deemed necessary, but at least twice a year.

4. Quorum of Meetings

The quorum for each meeting shall be two (2) members, all of whom must be Independent Directors.


AUDIT COMMITTEE REpORTCont’d

TERMS OF REFERENCE cont’d

5. Authority

The Audit Committee is authorised by the Board to investigate any activity within its Terms of Reference. It shall have full and unrestricted access to any information pertaining to the Company and the Group and is authorised to seek any information it requires from any employee and all employees are directed to cooperate with any request made by the Audit Committee.

The Audit Committee shall have direct communication channels with the External Auditors and the internal auditors and is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

6. The Duties of the Audit Committee shall be:

i. To consider the appointment of the External Auditors, any questions of resignation or dismissal. To discuss with the External Auditors before the audit commences, the nature and scope of the audit, and the assistance given by the Company’s officers to the auditors and ensure coordination where more than one audit firm is involved;

ii. To discuss problems and reservations arising from the interim and final audits, and any matter the External Auditors may wish to discuss (in the absence of management where necessary);

iii. To review the quarterly and annual financial statements before submission to the Board, focusing particulars on:

l any change in accounting policies and practices; l significant adjustments resulting from the audit; l the going concern assumption; and l compliance with accounting standards and other legal requirements.

iv. To review the External Auditors’ management letter and management’s response;

v. To do the following, in relation to the internal audit and risk management functions:

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

l review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit and risk management functions;

l review any appraisal or assessment of the performance of members of the internal audit functions; l take cognisance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning; and l ensure that the internal audit and risk management function reports directly to the Audit Committee and

shall have access to the Chairman of the Committee.

vi. To consider any related party transaction that may arise within the Company or Group;

vii. To consider the major findings of internal investigations and management’s response; and

viii. To consider other topics as defined by the Board.

7. Reporting procedures

The Audit Committee shall report to the Board of Directors.


SUMMARy OF ACTIvITIES OF AUDIT COMMITTEE

During the financial year ended 31 December 2015, the Audit Committee held a total of five (5) meetings. The principal activities undertaken by the Audit Committee were summarised as follows:- a) Administering SIGGAS financial reporting, the Audit Committee reviewed the quarterly unaudited financial results for

the 4th quarter of 2014, 1st, 2nd, 3rd, 4th quarters of 2015 at its meeting held on 12 February 2015, 8 May 2015, 19 August 2015, 12 November 2015 and 18 February 2016 respectively together with the Management and External Auditors before recommending them for the Board’s consideration and approval for announcement to the public through Bursa Link.

b) On 2 April 2015 and 7 April 2016, the Audit Committee had reviewed and discussed with the Management and External Auditors on the audited financial statements of the Group for the year ended 31 December 2014 and 31 December 2015 prior to submission to the Board for their consideration and approval, respectively. The review was to ensure that the audited financial statements were drawn up in accordance with the provision of the Companies Act 1965 and applicable Financial Reporting Standards in Malaysia.

c) On 19 August 2015, the Audit Committee reviewed the External Auditors’ scope of work and the audit plans for year 2015 prior to the commencement of audit. The External Auditors had also declared their independence in relation to their audit for the financial year ended 31 December 2015 to the Audit Committee.

d) Reviewed the External Auditors’ management letter and the Management’s response.

e) Reviewed the Related Party Transactions (both new and recurrent) at its meeting held on 12 February 2015, 8 May 2015, 19 August 2015, 12 November 2015 and 18 February 2016 respectively together with the Management.

f ) Discussed with the Internal Auditors on the conduct of the audit activities according to the Proposed Internal Audit Plan for year 2015 approved by the Audit Committee. The Internal Auditors had presented their reports to the Audit Committee on 8 May 2015, 19 August 2015 and 12 November 2015 respectively. The reports contained:-

l The findings, status and progress of the Internal Audits including summaries of the audit reports issued; l Audit recommendations provided by the Internal Auditors; and l Management’s responses to those recommendations and actions for the recommendations.

g) The Audit Committee had reviewed the internal audit reports, which highlighted the risk profiles and assessments, recommendations and management responses. The following identified business processes/ areas of focus were covered by the Internal Auditors in year 2015:-

l Human Resource Management l Management Information System l Production l Refilling Process l Fire, Safety and Environment Regulations l Inventory Management l Distribution Management

h) Reviewed the related party transactions entered into by the Company and the Group. The Audit Committee had on 2 April 2015 reviewed the Circular to Shareholders in relation to the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature before recommending them for the Board’s consideration and approval.

i) The Audit Committee had also conducted meetings with the External Auditors and Internal Auditors without the presence of the Executive Directors and employees of the Company on 12 November 2015.



RISk MANAGEMENT AND INTERNAL AUDIT AND FUNCTIONS

The Company has outsourced its risk management and internal audit functions to Audex Governance Sdn. Bhd., which is tasked with the aim of providing assurance and assisting the Audit Committee and the Board in reviewing the adequacy and effectiveness of the risk management and internal control systems of the Company. The internal auditors also act as a source to assist the Audit Committee and the Board to strengthen and improve current management and operating procedures in pursuit of best practices.

The internal audit activities carried out for the financial year included the following:

l Prepared the Annual Internal Audit Plan for approval of the Audit Committee.

l Reviewed the system of internal control over the business processes/areas in accordance with the Group’s approved risk based internal audit plan approved and adopted by the Audit Committee.

l Followed up review on the implementation status of previously issued audit findings and recommendations.

The Risk Management and Internal Audit Reports incorporating the audit observations, potential implications, audit recommendations and management’s responses and action plans were issued to the Audit Committee.

EMpLOyEES’ ShARE OpTIONS SChEME

SIG Gases Berhad’s Employees’ Share Option Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at the Extraordinary General Meeting of the Company held on 11 May 2010. The ESOS was not implemented.



STATEMENT ON RISk MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

Pursuant to Paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the Board of Directors (“the Board”) of SIG Gases Berhad (“SIGGAS”) is pleased to report on its Statement on Risk Management and Internal Control, which provides an overview of the nature and state of risk management and internal controls of SIGGAS and its group of companies (“the Group”) during the financial year under review and up to the date of approval of this statement by the Board. This statement is guided by the latest Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers.

bOARD’S RESpONSIbILITIES

The Board recognises the importance of good risk management practices and sound internal controls as a platform to good corporate governance. The Board acknowledges its overall responsibility for maintaining a sound system of risk management and internal control, and for reviewing its adequacy and integrity. Due to the inherent limitations in any risk management and internal control system, such system is designed to manage risks that may impede the achievement of the Group’s business objectives rather than eliminate these risks. Therefore, the risk management and internal control system can only provide reasonable and not absolute assurance against fraud, material misstatement or loss.

The Board through its Audit Committee has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and this process includes enhancing the risk management and internal control system as and when there are changes to the business environment and regulatory requirements. The process is reviewed by the Board and the Audit Committee on a periodic basis.

The Management assists the Board in the implementation of the Board’s policies and procedures on risk and control by identifying and assessing the risks faced by the Group, and in the design and operation of suitable internal controls to mitigate these risks identified.

The Board is of the view that the risk management and internal control system in place for the year under review and up to the date of issuance of the annual report is adequate and effective to safeguard the shareholders’ investment, the interests of customers, regulators, employees and the Group’s assets.

Notwithstanding the above, the Board has also received assurance from the Executive Chairman and Senior Finance Manager that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.

kEy FEATURES OF ThE GROUp’S RISk MANAGEMENT AND INTERNAL CONTROL SySTEM

Key elements of the Group’s risk management and internal control system that have been established to facilitate the proper conduct of the Group’s businesses are described below:

1. Risk Management System

The Board is dedicated to strengthening the Group’s risk management framework to manage its key business risks within the Group and to implement appropriate risk management and internal control system to manage its significant risks. Senior Management reviews the existence of new significant risk and assesses the relevance of the Group’s existing risk profile on an ongoing basis. Significant risks that affect the Group’s business objectives have been continually monitored and any new significant risk identified are subsequently evaluated and managed.

Whilst the Board maintains ultimate control over risk and control issues, it has delegated to Executive Management the implementation of the system of risk management and internal control within an established parameters and framework. The responsibility for managing the risks of each department lies with the respective Heads of Department and it is during the periodic management meetings, implemented risk management activities that manage the Group’s significant risks are communicated to Executive Management.

Monthly Executive Committee and Management Meetings are held to discuss significant risks and the appropriate risk mitigation measures. Significant risks affecting the Group’s strategic and business plans are escalated to the Board at their scheduled meetings.


STATEMENT ON RISk MANAGEMENT AND INTERNAL CONTROLCont’d

kEy FEATURES OF ThE GROUp’S RISk MANAGEMENT AND INTERNAL CONTROL SySTEM cont’d

2. Internal Control System

n The Board of Director and the Audit Committee

The Board and Audit Committee meet at least four (4) times during the financial year to ensure that the Directors maintain full and effective control on all strategic and operational areas of the Group. The Chairman of the meetings would lead the presentation of the Audit Committee and Board papers that cover the Group’s pertinent and significant issues.

n Organisation Structure & Authorisation Procedures

The Group maintains a formal organisational structure that includes clear delegation of responsibilities and accountability. It sets out the roles and responsibilities, appropriate authority limits, review and approval procedures within the internal control system of the Group’s various business units.

n Periodical and/or Annual Budget

An annual budget is prepared by management and is tabled to the Board for approval. Periodic monitoring is carried out to measure the actual performance against budget in order to identify any significant variances arising and to facilitate the formulation and implementation of remedial action plans.

n Group Policies and Procedures

Documented policies and procedures are in place and are regularly reviewed and updated so as to ensure that it maintains its effectiveness and continues to support the Group’s business activities as the Group continues to grow. Certain business units within the Group are ISO accredited.

n Human Resource Policy

Comprehensive guidelines on employment and retention of employees are in place to ensure that the Group has a team of employees who are well trained and equipped with the necessary knowledge, skills and abilities to carry out their responsibilities effectively.

n Information and Communication

Information critical to the achievement of the Group’s business objectives are communicated through established reporting lines across the Group. This is to ensure that matters that require the Board and Senior Management’s attention are highlighted for review, deliberation and decision on a timely basis.

n Monitoring and Review

Scheduled operational and management meetings are held to discuss and review the business plans, budgets, financial and operational performances of the Group. Monthly management accounts containing key financial results, operational performances and comparison of actual performances against budgets are presented to the management team for monitoring and review. The quarterly financial statements are presented to the Board for their review and approval. The Board also plays an active role in deliberating and reviewing the business plans, strategies, performance and risks faced by the Group.

3. Internal Audit Function

The Group’s internal audit function is outsourced to a professional services firm, to assist the Board and Audit Committee in providing an independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control system.


kEy FEATURES OF ThE GROUp’S RISk MANAGEMENT AND INTERNAL CONTROL SySTEM cont’d

3. Internal Audit Function cont’d

During the financial year ended 31 December 2015, internal audit reviews were carried out in accordance with the approved risk based internal audit plan. Findings from the internal audit reviews, including the recommended corrective actions, were discussed with Senior Management prior to presenting to the Audit Committee at their scheduled meetings. In addition, follow up reviews were also conducted to ensure that corrective actions have been implemented in a timely manner.

Based on the internal audit review conducted, none of the weaknesses noted have resulted in any material losses, contingencies or uncertainties that would require a separate disclosure in this annual report.

The total cost incurred for outsourcing the internal audit function for the financial year ended 31 December 2015 was RM95,944.

The Group’s system of risk management and internal control applies principally to SIGGAS and its subsidiaries. The associated company has been excluded because the Group does not have full management control in the associated company. Nevertheless, the Group’s interest is secured through Board’s representation at the associated company and joint venture.

REvIEw OF STATEMENT

The External Auditors have performed limited assurance procedures on this Statement on Risk Management and Internal Control pursuant to the scope set out in Recommended Practice Guide (“RPG”) 5 (Revised), Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the Annual Report of the Group for the year ended 31st December 2015, and reported to the Board that nothing has come to their attention that causes them to believe the statement intended to be included in the Annual Report is not prepared, in all material respects, in accordance with the disclosures required by paragraph 41 and 42 of the Guidelines, nor is the Statement factually inaccurate.

RPG 5 does not require the External Auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Directors and management thereon. The report from the External Auditors was made solely for, and directed solely to the Board of Directors in connection with their compliance with the listing requirements of Bursa Malaysia Securities Berhad and for no other purposes or parties. The External Auditors do not assume responsibility to any person other than the Board of Directors in respect of any aspect of this report.

CONCLUSION

The Board is of the view that the Group’s system of risk management and internal control is adequate to safeguard shareholders’ investments and the Group’s assets. However, the Board is also cognizant of the fact that the Group’s system of internal control and risk management practices must continuously evolve to meet the changing and challenging business environment. Therefore, the Board will, when necessary, put in place appropriate action plans to further enhance the system of internal control and risk management framework.

This statement was approved by the Board of Directors on 7 April 2016.

STATEMENT ON RISk MANAGEMENT AND INTERNAL CONTROLCont’d


1. UTILISATION OF pROCEEDS

TwO-CALL RIGhTS ISSUE On 5 September 2014, the Company had announced to undertake a renounceable two-call rights issue of 37,500,000 new

ordinary shares of RM0.50 each (“Shares”) (“Rights Shares”) on the basis of one (1) Rights Share for every four (4) existing Shares held on an entitlement date to be determined later, at an issue price of RM0.50 per Rights Share, of which the first call of RM0.36 per Rights Share was payable in cash and the second call of RM0.14 per Rights Share was capitalised from the share premium reserve of SIGGAS. On 20 October 2014, the Company had announced that the Board of Directors resolved that the Second Call be capitalised instead from the retained earnings reserve of SIGGAS (“Two-Call Rights Issue”).

On 23 December 2014, the Company had announced that as at the close of acceptance and payment for the Two-Call

Rights Issue at 5.00 p.m. on 17 December 2014, the Rights Shares had been oversubscribed by 15.70% over the total number of 37,500,000 Rights Shares available for subscription under the Two-Call Rights Issue.

On 30 December 2014, the Company had announced that 37,500,000 Rights Shares were listed and quoted on the Main Market of Bursa Securities, marking the completion of the Two-Call Rights Issue.

As at 31 December 2014, the Company has raised RM13.5 million from the Two-Call Rights Issues and the utilisation of the proceeds as of todate is as follows:-

No. Description

Estimatedtimeframe for

utilisations uponListing

proposedUtilisations

ActualUtilisations

balancesto be utilised

(RM’000) (RM’000) (RM’000) %

1 purchase of Equipment within 18 months

1.1 1 Hydrogen compressor 370 (370) - 0%

1.2 Cylinders & valves 3,680 (2,640) 1,040 28%

1.3 Upgrade computer system 150 (150) - 0%

2 Repayment of bank borrowings within 6 months 6,500 (6,500) - 0%

3 working Capital within 6 months 2,000 (2,000) - 0%

4 Expenses in relation to the Two-Call Rights Issue

within 3 months 800 (713) 87 11%

total 13,500 (12,373) 1,127 8%

2. ShARE bUy-bACkS

The Company did not engage in any share buy-backs arrangement during the financial year ended 31 December 2015.

3. OpTIONS OR CONvERTIbLE SECURITIES

The Company has not issued any options, warrants or convertible securities during the financial year ended 31 December 2015.

4. DEpOSITORy RECEIpT pROGRAM

During the financial year, the Company did not sponsor any Depository Receipt Program.

ADDITIONAL COMpLIANCE INFORMATION


5. SANCTIONS AND/OR pENALTIES

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

6. NON-AUDIT FEES

The amount of non-audit fees paid to the external auditors by the Group and by the Company for the financial year ended 31 December 2015 amounted to RM33,215.

7. vARIATION IN RESULTS

No variances of 10% or more between the audited results for the financial year ended 31 December 2015 and the unaudited results previously announced.

8. pROFIT GUARANTEE

During the financial year, there were no profit guarantees given by the Company.

9. MATERIAL CONTRACT

There were no material contracts entered into or subsisting between the Company and its subsidiaries involving Directors’ and Major Shareholders’ interest during the financial year ended 31 December 2015.

10. RECURRENT RELATED pARTy TRANSACTIONS (“RRpT”) OF REvENUE NATURE

The details of the recurrent related party transactions of revenue or trading in nature undertaken by the Company during the financial period are disclosed in Note 29 of the financial statements.

ADDITIONAL COMpLIANCE INFORMATIONCont’d

34

37

37

38

40

41

43

45

47

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flow

Notes to the Financial Statements

FINANCIAL STATEMENTS


DIRECTORS’ REPORT

The directors have the pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.

PRinciPal acTiviTiEs

The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are as disclosed in Note 14 to the financial statements.

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

REsulTs

Group company

RM RM

Profit net of tax 6,396,752 1,719,419

Profit attributable to:

Owners of the parent 6,396,752 1,719,419

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

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

DiviDEnD

The amounts of dividend paid by the Company since 31 December 2014 were as follows:

RM

In respect of the financial year ended 31 December 2014:

Final (single-tier) dividend of 0.7 sen on 187,500,000 ordinary shares declared on 7 April 2015 and paid on 18 June 2015 1,312,500

At the forthcoming Annual General Meeting, a final (single-tier) dividend in respect of the financial year ended 31 December 2015, of 1.2 sen on 187,500,000 ordinary shares, amounting to a dividend payable of RM2,250,000 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 equity as an appropriation of retained earnings in the financial year ending 31 December 2016.


DiREcTORs

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

Peh Lam Hoh Lau Cheng Ming Datuk Syed Ahmad Bin Alwee AlsreeDiong Tai PewLee Ting KiatLim Tin Teng @ Lim Jit Teng

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 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 as shown in Note 9 to the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 29 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 during the financial year were as follows:

number of ordinary shares of RM0.50 each

The company 1 January

2015 acquired sold 31 December

2015

Direct interest:

Peh Lam Hoh 7,762,180 - - 7,762,180

Lau Cheng Ming 2,758,800 - - 2,758,800

Diong Tai Pew 780,000 135,000 - 915,000

indirect interest:

Peh Lam Hoh 79,014,822 - - 79,014,822

Datuk Syed Ahmad Bin Alwee Alsree 71,909,241 - - 71,909,241

The other directors in office at the end of the financial year had no interest in shares in the Company or its related corporations during the financial year.

DIRECTORS’ REPORTCont’d


OThER sTaTuTORy infORMaTiOn

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

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves there were no known bad debts and that adequate provision had been made for doubtful debts; and

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

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

(i) It necessary to write off any bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; and

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

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

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

(e) As at the date of this report, there does not exist:

(i) 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

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

(f ) In the opinion of the directors:

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

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

auDiTORs

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 April 2016.

Peh lam hoh lau cheng Ming

DIRECTORS’ REPORTCont’d


We, Peh Lam Hoh and Lau Cheng Ming, being two of the directors of SIG Gases Berhad., do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 40 to 93 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 supplementary information set out in Note 36 on page 94 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 8 April 2016.

Peh lam hoh lau cheng Ming

I, Peh Lam Hoh, being the director primarily responsible for the financial management of SIG Gases Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 40 to 94 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared )by the abovenamed Peh Lam Hoh )at Johor Bahru in the State of Johor Darul )Ta’zim on 8 April 2016 ) Peh lam hoh Before me, harcharan singh a/l chanchel singh (No. J210)Commissioner for Oaths

STATEMENT BY DiREcTORsPursuant to Section 169(15) of the Companies Act, 1965

STATUTORY DEclaRaTiOnPursuant to Section 169(16) of the Companies Act, 1965


INDEPENDENT auDiTORs’ REPORTto the Members of siG Gases berhad(Incorporated in Malaysia)

REPORT On ThE financial sTaTEMEnTs

We have audited the financial statements of SIG Gases 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 40 to 93.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of 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 Of OThER lEGal anD REGulaTORy REquiREMEnT

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

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

(b) 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.

(c) 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.


OThER REPORTinG REsPOnsibiliTiEs

The supplementary information set out in Note 36 on page 94 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 Wun Mow sang AF 0039 1821/12/16(J) Chartered Accountants Chartered Accountant

Johor Bahru, Malaysia Date: 8 April 2016

INDEPENDENT auDiTORs’ REPORTto the Members of siG Gases berhad

(Incorporated in Malaysia)Cont’d


STATEMENTS OF cOMPREhEnsivE incOMEFor the financial year ended 31 December 2015

Group company

note 2015 2014 2015 2014

RM RM RM RM

Revenue 4 75,704,760 65,363,614 2,300,000 7,130,000

Cost of sales 5 (51,204,880) (44,501,884) - -

Gross profit 24,499,880 20,861,730 2,300,000 7,130,000

Other items of income 6 5,731,011 1,325,279 83,406 20,538

Other items of expenses

Administration expenses (20,949,168) (18,253,566) (641,251) (1,056,043)

Finance cost (1,835,095) (2,362,505) (222) (47)

Share of profit of an associate 15 1,131,100 517,009 - -

Profit before tax 7 8,577,728 2,087,947 1,741,933 6,094,448

Income tax (expense)/benefit 10 (2,180,976) 7,834,330 (22,514) 12,716

Profit net of tax and total comprehensive income for the year 6,396,752 9,922,277 1,719,419 6,107,164

Profit attributable to:

Owners of the parent 6,396,752 9,922,277 1,719,419 6,107,164

Total comprehensive income attributable to:

Owners of the parent 6,396,752 9,922,277 1,719,419 6,107,164

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

Basic 11 3.41 5.29

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


STATEMENTS OF financial POsiTiOnAs at 31 December 2015

Group company

note 2015 2014 2015 2014

RM RM RM RM

assets

non-current assets

Property, plant and equipment 12 108,037,603 106,021,159 6,219 7,512

Intangible assets 13 339,328 361,043 - -

Investment in subsidiaries 14 - - 50,400,004 50,400,004

Investment in an associate 15 8,347,357 7,216,257 - -

Deferred tax assets 24 - 1,000,000 - -

116,724,288 114,598,459 50,406,223 50,407,516

current assets

Inventories 16 5,601,457 3,621,769 - -

Inventory property 17 5,226,865 3,475,715 - -

Trade and other receivables 18 24,510,913 18,264,324 44,113,818 31,713,920

Tax recoverable 3,643 33,592 3,643 22,683

Other current assets 19 844,774 1,831,981 4,500 12,105

Cash and bank balances 20 5,410,965 20,323,130 1,004,508 15,677,677

41,598,617 47,550,511 45,126,469 47,426,385

Non-current assets held for sale 21 - 6,374,266 - -

41,598,617 53,924,777 45,126,469 47,426,385

Total assets 158,322,905 168,523,236 95,532,692 97,833,901

Equity and liabilities

current liabilities

Short term borrowings 22 19,760,122 25,288,390 - -

Trade and other payables 23 15,895,979 18,400,848 156,616 2,864,744

Tax payable 383,955 - - -

36,040,056 43,689,238 156,616 2,864,744

net current assets 5,558,561 10,235,539 44,969,853 44,561,641

non-current liabilities

Long term borrowings 22 2,500,915 10,768,316 - -

Deferred tax liabilities 24 632,000 - - -

3,132,915 10,768,316 - -

Total liabilities 39,172,971 54,457,554 156,616 2,864,744

net assets 119,149,934 114,065,682 95,376,076 94,969,157


Group company

note 2015 2014 2015 2014

RM RM RM RM

Equity attributable to equity holders of the company

Share capital 25 93,750,000 93,750,000 93,750,000 93,750,000

Reserves 26 25,399,934 20,315,682 1,626,076 1,219,157

Total equity 119,149,934 114,065,682 95,376,076 94,969,157

Total equity and liabilities 158,322,905 168,523,236 95,532,692 97,833,901


STATEMENTS OF financial POsiTiOnAs at 31 December 2015Cont’d


Total equity

share capital

non- Distributable

share premium

Distributable Retained

profits

note RM RM RM RM

Group

at 1 January 2015 114,065,682 93,750,000 1,019,862 19,295,820

Total comprehensive income 6,396,752 - - 6,396,752

Transactions with owners

Dividend on ordinary shares 34 (1,312,500) - - (1,312,500)

Total transactions with owners (1,312,500) - - (1,312,500)

closing balance at 31 December 2015 119,149,934 93,750,000 1,019,862 24,380,072

at 1 January 2014 92,072,409 75,000,000 1,548,866 15,523,543



Dividend on ordinary shares 34 (900,000) - - (900,000)

Issuance of ordinary shares:

- Payable in cash 25 13,500,000 13,500,000 - -

- Capitalised from retained profits 25 - 5,250,000 - (5,250,000)

Expenses for issuance of ordinary shares (529,004) - (529,004) -

Total transactions with owners 12,070,996 18,750,000 (529,004) (6,150,000)

closing balance at 31 December 2014 114,065,682 93,750,000 1,019,862 19,295,820

STATEMENTS OF chanGEs in EquiTyFor the financial year ended 31 December 2015



STATEMENTS OF chanGEs in EquiTyAs at 31 December 2015Cont’d

Total equity

share capital

non- Distributable

share premium

Distributable Retained

profits

note RM RM RM RM

company

Opening balance at 1 January 2015 94,969,157 93,750,000 1,019,862 199,295



Dividend on ordinary shares 34 (1,312,500) - - (1,312,500)

Total transactions with owners (1,312,500) - - (1,312,500)

closing balance at 31 December 2015 95,376,076 93,750,000 1,019,862 606,214

Opening balance at 1 January 2014 76,790,997 75,000,000 1,548,866 242,131



Dividend on ordinary shares 34 (900,000) - - (900,000)

Issuance of ordinary shares:

- Payable in cash 25 13,500,000 13,500,000 - -

- Capitalised from retained profits 25 - 5,250,000 - (5,250,000)

Expenses for issuance of ordinary shares (529,004) - (529,004) -

Total transactions with owners 12,070,996 18,750,000 (529,004) (6,150,000)

closing balance at 31 December 2014 94,969,157 93,750,000 1,019,862 199,295



STATEMENTS OF cash flOWFor the financial year ended 31 December 2015

Group company

2015 2014 2015 2014

RM RM RM RM

Operating activities

Profit before tax 8,577,728 2,087,947 1,741,933 6,094,448

Adjustments for:

Amortisation of intangible assets 64,789 64,458 - -

Bad debts recovered - (176,642) - -

Depreciation of property, plant and equipment 5,684,945 5,428,099 1,293 1,292

Gain on disposal of non-current assets held for sale (4,455,923) - - -

Gain on disposal of property, plant and equipment (246,049) (279,543) - -

Property, plant and equipment written off 87,810 256,654 - -

Interest expense 1,676,086 2,189,110 - -

Interest income (96,429) (933) (83,399) (933)

Reversal of allowance for impairment loss on trade receivables (182,340) (347,279) - -

Allowance for impairment loss on trade receivables 650,000 714,726 - -

Impairment loss of property, plant and equipment 2,374,438 1,551,029 - -

Unrealised foreign exchange loss/(gain) 7,071 (11,021) - -

Shares of results of associate (1,131,100) (517,009) - -

Total adjustments 4,433,298 8,871,649 (82,106) 359

Operating cash flows before changes in working capital 13,011,026 10,959,596 1,659,827 6,094,807

Changes in working capital

Inventories (1,979,688) 464,216 - -

Receivables (5,726,769) 2,317,989 (12,392,019) (5,291,920)

Payables (2,511,940) (3,326,932) (2,708,128) 2,746,991

Total changes in working capital (10,218,397) (544,727) (15,100,147) (2,544,929)

cash flows from/(used in) operating activities 2,792,629 10,414,869 (13,440,320) 3,549,878

Income taxes paid (147,208) (138,355) (9,705) (12,657)

Income taxes refunded 11,863 22,708 5,957 12,716

Interest paid (1,676,086) (2,189,110) - -

net cash flows generated from/(used in) operating activities 981,198 8,110,112 (13,444,068) 3,549,937


Group company

2015 2014 2015 2014

RM RM RM RM

investing activities

Additions to inventory property (1,751,150) (1,122,537) - -

Purchase of property, plant and equipment (10,027,656) (3,715,304) - -

Purchase of intangible assets (43,074) (122,656) - -

Proceeds from disposal of non-current assets held for sale 10,830,189 - - -

Proceeds from disposal of property, plant and equipment 639,990 373,110 - -

Interest income 96,429 933 83,399 933

Acquisition of addition investment in an associate - (2,080,000) - -

net cash flows (used in)/generated from investing activities (255,272) (6,666,454) 83,399 933

financing activities

Proceeds from issuance of ordinary shares - 13,500,000 - 13,500,000

Expenses from issuance of ordinary shares - (529,004) - (529,004)

Repayment of obligations under finance leases (1,044,292) (1,480,835) - -

Repayment of borrowings (2,248,000) (762,901) - -

(Repayment)/Proceeds from trade facilities/term loans (11,033,299) 1,341,000 - -

Dividends paid (1,312,500) (900,000) (1,312,500) (900,000)

net cash flows (used in)/generated from financing activities (15,638,091) 11,168,260 (1,312,500) 12,070,996

net (decrease)/increase in cash and cash equivalents (14,912,165) 12,611,918 (14,673,169) 15,621,866

cash and cash equivalents at beginning of the year 20,323,130 7,711,212 15,677,677 55,811

cash and cash equivalents at end of the year (note 20) 5,410,965 20,323,130 1,004,508 15,677,677

STATEMENTS OF cash flOWFor the financial year ended 31 December 2015Cont’d



1. cORPORaTE infORMaTiOn

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are as disclosed in Note 14. There have been no significant changes in nature of the principal activities during the financial year.

The Company is a public listed company,incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office is located at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor Darul Ta’zim.

The principal place of business is located at PLO137, Kawasan Perindustrian Senai III, Senai, 81400 Johor Bahru, Johor Darul Ta’zim.

2. suMMaRy Of siGnificanT accOunTinG POliciEs

2.1 basis of preparation

These financial statements for the year ended 31 December 2015 have been prepared on the historical cost basis and in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements are presented in Ringgit Malaysia (RM), which is also the functional currency of the Company.

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 Amendments and Annual Improvements mandatory for annual financial periods beginning on or after 1 July 2014:

DescriptionEffective for annual periods

beginning on or after

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014

Annual Improvements to MFRSs 2010–2012 Cycle 1 July 2014

Annual Improvements to MFRSs 2011–2013 Cycle 1 July 2014

The nature and impact of the new and amended MFRSs and IC Interpretation are described below:

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 and Company’s financial statements.

NOTES TO THE financial sTaTEMEnTsFor the financial year ended 31 December 2015


NOTES TO THE FINANCIAL STATEMENTSFor the financial year ended 31 December 2015Cont’d

2. suMMaRy Of siGnificanT accOunTinG POliciEs cont’d

2.2 changes in accounting policies cont’d

annual improvements to MfRss 2010–2012 cycle

The Annual Improvements to MFRSs 2010-2012 Cycle include a number of amendments to various MFRSs, which are summarised below.

(a) MfRs 2 share-based Payment

This improvement clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including:

- A performance condition must contain a service condition; - A performance target must be met while the counterparty is rendering service; - A performance target may relate to the operations or activities of an entity, or those of another entity in

the same group; - A performance condition may be a market or non-market condition; and - If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the

service condition is not satisfied.

This improvement is effective for share-based payment transactions for which the grant date is on or after 1 July 2014. The Group and the Company did not grant any awards during the second half of 2014. Thus, this amendment did not impact the Group and the Company.

(b) MfRs 3 business combinations

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 2014. This is consistent with the Group’s and the Company’s current accounting policy and thus, this amendment did not impact the Group and the Company.

(c) MfRs 8 Operating segments

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.

(d) MfRs 116 Property, Plant and Equipment and MfRs 138 intangible assets

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.


NOTES TO THE FINANCIAL STATEMENTSFor the financial year ended 31 December 2015

Cont’d


2.2 changes in accounting policies cont’d

(e) MfRs 124 Related Party Disclosures

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 Annual Improvements to MFRSs 2011-2013 Cycle include a number of amendments to various MFRSs, which are summarised below. The Group and the Company have applied the amendments for the first time in the current year.

(a) MfRs 3 business combinations

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 and the Company are not a joint arrangement and thus this arrangement is not relevant to the Group and the Company.

(b) MfRs 13 fair value Measurement

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 and the Company do not apply the portfolio exception.

(c) MfRs 140 investment Property

The amendments to MFRS 140 clarify that an entity acquiring investment property must determine whether:

- the property meets the definition of investment property in terms of MFRS 140; and

- the transaction meets the definition of a business combination under MFRS 3,

to determine if the transaction is a purchase of an asset or is a business combination.

2.3 standards and interpretations issued but not yet effective

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



Annual Improvements to MFRSs 2012–2014 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




2.3 standards and interpretations issued but not yet effective cont’d



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

MFRS 15 Revenue from Contracts with Customers 1 January 2018

MFRS 9 Financial Instruments (IFRS issued by IASB in July 2014) 1 January 2018

Amendments to MFRS 10 and MFRS 128: Sales or Contribution of Assets between an Investor and its Associate or Joint Venture

Deferred

The directors are of the opinion that the standards and amendments above would not have any material impact on

the financial statements in the year of initial adoption other than as discussed below:

amendments to MfRs 116 and MfRs 138: clarification of acceptable Methods of Depreciation and amortisation

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

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

amendments to MfRs 116 and MfRs 141 agriculture: bearer Plants

The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of MFRS 141. Instead, MFRS 116 will apply. After initial recognition, bearer plants will be measured under MFRS 116 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of MFRS 141 and are measured at fair value less costs to sell.

The amendments are effective for annual periods beginning on or after 1 January 2016 and are to be applied retrospectively, with early adoption permitted. These amendments are not expected to have any impact on the Group and the Company.

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 to an associate of a joint venture of assets 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.



Cont’d



amendments to MfRs 11 Joint arrangements: accounting for acquisitions of interests in Joint Operations

The amendments to MFRS 11 require that a joint operator which acquires an interest in a joint operations which constitute a business to apply the relevant MFRS 3 Business Combinations principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to MFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

These amendments are to be applied prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted.

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.

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

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.

MfRs 14 Regulatory Deferral accounts

MFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulations, to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of MFRS. Entities that adopt MFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in the account balances as separate line items in the statement of profit or loss and other comprehensive income. The standard requires disclosures on the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. Since the Group and the Company are existing MFRS preparer, this standard would not apply.





MfRs 15 Revenue from contracts with customers

MFRS 15 establishes a new five-step model 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 depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted.

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 Annual Improvements to MFRSs 2012-2014 Cycle include a number of amendments to various MFRSs, which are summarised below. The Directors of the Group and the Company do not anticipate that the application of these amendments will have a significant impact on the Group’s financial statements.

(a) MfRs 5 non-current assets held for sale and Discontinued Operations

The amendment to MFRS 5 clarifies that changing from one of these disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in MFRS 5.

The amendment also clarifies that changing the disposal method does not change the date of classification. This amendment is to be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

(b) MfRs 7 financial instruments: Disclosures

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.

(c) MfRs 119 Employee benefits

The amendment to MFRS 119 clarifies that 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.



Cont’d



annual improvements to MfRss 2012–2014 cycle cont’d

(d) MfRs 134 interim financial Reporting

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.

2.4 basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

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

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(i) The contractual arrangement with the other vote holders of the investee

(ii) Rights arising from other contractual arrangements

(iii) The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.




2.5 business combinations

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

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.

Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within equity as merger reserve. The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.

2.6 current versus non-current classification

Assets and liabilities in the statement of financial position are presented based on current/non-current classification. An asset is current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle; - Held primarily for the purpose of trading; - Expected to be realised within twelve months after the reporting period; or - Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve

months after the reporting period.

All other assets are classified as non-current. A liability is current when:

- It is expected to be settled in normal operating cycle; - It is held primarily for the purpose of trading; - It is due to be settled within twelve months after the reporting period; or - There is no unconditional right to defer the settlement of the liability for at least twelve months after the

reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.



Cont’d


2.7 Property, plant and equipment and depreciation

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

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold land 60-99 years Buildings 2% Plant and machinery 4 - 10% Cylinders 4% Other assets 10 - 20%

Assets under construction included in 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 values, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

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

2.8 intangible assets

All items of intangible assets are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when 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, intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation of intangible assets is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life of ten years.

2.9 subsidiaries

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

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

(ii) Exposure, or rights, to variable returns from its investment with the investee; and

(iii) The ability to use its power over the investee to affect its returns.




2.9 subsidiaries cont’d

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

2.10 associates

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

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

An associate is equity accounted for from the date on which the investee becomes an associate.

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

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

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

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

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

2.11 non-current asset classified as held for sale

The Group and the Company classify non-current assets as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Such non-current assets classified as held for sale are measured at the lower of its carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset 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 the classification.



Cont’d


2.11 non-current asset classified as held for sale cont’d

Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.

2.12 inventories

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

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

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

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

2.13 inventory property

Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value (“NRV”).

Cost includes:

- Freehold and leasehold rights for land

- Amounts paid to contractors for construction

- Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, construction overheads and other related costs

Non-refundable commissions paid to sales or marketing agents on the sale of real estate units are expensed when paid.

NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money if material, less costs to completion and the estimated costs of sale.

The cost of inventory property recognised in profit or loss on disposal is determined with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

2.14 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.




2.14 financial assets cont’d

The Group and the Company determine the classification of their financial assets at initial recognition and the categories include financial assets as follows:

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.

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

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

2.15 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.

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.



Cont’d

2. suMMaRy Of siGnificanT accOunTinG POliciEs cont’d 2.16 cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.17 borrowing costs

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

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

2.18 income tax

(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.

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.

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

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

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

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




2.18 income tax cont’d

(iii) Goods and services Tax (“GsT”)

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

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

- Receivables and payables that are stated with the amount of GST included.

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

2.19 Provisions

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

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

2.20 financial liabilities

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

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 and the Company have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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

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



Cont’d


2.21 fair value measurement 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.

Valuation techniques that are appropriate in the circumstances and for which sufficient data are available, are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Techinuques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

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 input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Policies and procedures are determined by senior management for both recurring fair value measurement and for non-recurring measurement.

External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case.

For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

2.22 Employee benefits

(i) Defined contribution plan

The Group makes contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related services is performed.




2.22 Employee benefits cont’d

(ii) 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. 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.

2.23 foreign currencies

(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 financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) functional 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.

2.24 Revenue recognition

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

(i) sale of goods

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

(ii) cylinder rental income

Cylinder rental is recognised based on the accrual basis.



Cont’d


2.24 Revenue recognition cont’d

(iii) cryogenic storage tank rental income

Cryogenic storage tank rental income is recognised based on the accrual basis.

(iv) interest income

Interest income is recognised using the effective interest method.

(v) Dividend income

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

2.25 impairment of non-financial assets

The Group and the Company assess 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 and the Company make an estimate of the asset’s recoverable amount.

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

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

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

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

2.26 leases

(a) as lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.




2.26 leases cont’d

(a) as lessee cont’d

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

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

(b) as lessor

Leases where the Group retained substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income.

2.27 segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 33, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.28 share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and 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.

2.29 contingencies

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

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

3. siGnificanT accOunTinG JuDGEMEnTs anD EsTiMaTEs

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



Cont’d

3. siGnificanT accOunTinG JuDGEMEnTs anD EsTiMaTEs cont’d

3.1 Key sources of estimation uncertainty

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

(a) 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 risk characteristics. The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 18.

(b) impairment of property, plant and equipment

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

During the current financial year, the Group has recognised impairment losses in respect of property, plant and equipment amounting to RM2,374,438 (2014: RM1,551,029). The carrying amount of property, plant and equipment of the Group as at 31 December 2015 is RM108,037,603 (2014: RM106,021,159).

(c) useful lives of plant and equipment

The cost of plant and equipment for the manufacture of industrial gases is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these plant and machinery to be within 10 to 25 years. These are common life expectancies applied in the industrial gases industry. 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. A 3% difference in the average useful lives of these assets from management’s estimates would result in approximately 2.4% variance in profit for the year.

(d) Deferred tax assets

Deferred tax assets are recognised for all unabsorbed capital allowances, unabsorbed reinvestment allowances and unrealised foreign exchange loss to the extent that it is probable that taxable profit will be available against which the deferred tax assets can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets of the Group at 31 December 2015 was RM12,882,000 (2014: RM13,297,000).



4. REvEnuE

Group company

2015 2014 2015 2014

RM RM RM RM

Sales of goods 72,199,866 62,009,712 - -

Cylinder rental income 3,157,700 3,028,324 - -

Rental income from cryogenic storage tank 347,194 325,578 - -

Dividend income - - 2,300,000 7,130,000

75,704,760 65,363,614 2,300,000 7,130,000

5. cOsT Of salEs

Cost of sales represents cost of inventories sold.

6. OThER iTEMs Of incOME

Group company

2015 2014 2015 2014

RM RM RM RM

Bad debts recovered - 176,642 - -

Interest income 96,429 20,522 83,399 20,522

Gain on disposal of non-current assets held for sale 4,455,923 - - -

Gain on disposal of property, plant and equipment 246,049 279,542 - -

Reversal of allowance for impairment loss on trade receivables 182,340 347,279 - -

Foreign exchange gain

- realised 7 35,321 7 16

Rental income 545,619 195,619 - -

Other income 204,644 270,354 - -

5,731,011 1,325,279 83,406 20,538



Cont’d

7. PROfiT bEfORE Tax

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

Group company

2015 2014 2015 2014

RM RM RM RM

Auditors’ remuneration

- statutory audits

- current year 95,500 85,000 32,000 30,000

- underprovision in prior year - (4,670) - (4,670)

- other services 33,215 30,215 23,675 20,470

Employee benefits expense (Note 8) 10,759,080 9,968,191 302,440 280,482

Non-executive directors’ remuneration (Note 9) 220,800 198,322 220,800 198,322

Amortisation of intangible assets (Note 13) 64,789 64,458 - -

Depreciation of property, plant and equipment(Note 12) 5,684,945 5,428,099 1,293 1,292

Gain on disposal of non-current assets held for sale (4,455,923) - - -

Gain on disposal of property, plant and equipment (246,049) (279,543) - -

Rental expenses 592,024 476,059 36 12

Property, plant and equipment written off 87,810 256,654 - -

Allowance for impairment loss on trade receivables 650,000 714,726 - -

Impairment loss on property, plant and equipment (Note 12) 2,374,438 1,551,029 - -

Reversal of allowance for impairment loss on trade receivables (182,340) (347,279) - -

Foreign exchange loss/(gain)

- realised 1,028,988 (35,321) (7) (16)

- unrealised 7,071 (11,021) - -

Interest expense 1,676,086 2,189,110 - -

8. EMPlOyEE bEnEfiTs ExPEnsEs

Group company

2015 2014 2015 2014

RM RM RM RM

Wages and salaries 9,753,937 9,196,174 302,440 280,482

Contributions to defined contribution plan 922,338 692,329 - -

Social security contributions 82,805 79,688 - -

10,759,080 9,968,191 302,440 280,482

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting to RM3,052,601 (2014: RM2,143,869) and RM81,640 (2014: RM82,160) respectively.



9. DiREcTORs’ REMunERaTiOn

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

Group company

2015 2014 2015 2014

RM RM RM RM

Directors of the company

Executive:

Salaries and other emoluments 1,895,112 1,853,106 10,000 14,000

Fees 95,640 92,160 71,640 68,160

Defined contribution plan 106,329 52,769 - -

2,097,081 1,998,035 81,640 82,160

Non-Executive:

Fees 202,800 175,322 202,800 175,322

Other emoluments 18,000 23,000 18,000 23,000

220,800 198,322 220,800 198,322

Total 2,317,881 2,196,357 302,440 280,482

Other directors of subsidiaries

Executive:

Salaries and other emoluments 811,900 119,470

Fees 46,065 12,000

Defined contribution plan 97,555 14,364

Total 955,520 145,834

Total executive directors’ remuneration 3,052,601 2,143,869 81,640 82,160

Total non-executive directors’ remuneration 220,800 198,322 220,800 198,322

Grand total directors’ remuneration 3,273,401 2,342,191 302,440 280,482 The number of directors of the Company whose total remuneration during the financial year fell within the following

bands is analysed below:

number of directors

2015 2014

Executive directors:

RM150,001 - RM200,000 - 1

RM250,001 - RM300,000 1 -

RM1,800,001-RM1,850,000 1 1

Non-Executive directors:

Below RM50,000 - 1

RM50,001-RM100,000 4 3



Cont’d

10. incOME Tax ExPEnsE/(bEnEfiT)

The major components of income tax expense/(benefit) for the years ended 31 December 2015 and 2014 are:

Group company

2015 2014 2015 2014

RM RM RM RM

statement of comprehensive income:

Current income tax

- Malaysian income tax 156,633 114,000 17,633 -

- Under/(over) provision in respect of prior years 133,343 670 4,881 (12,716)

- Real property gain tax 259,000 - - -

548,976 114,670 22,514 (12,716)

Deferred income tax (Note 24)

- Origination and reversal of temporary differences 512,000 (7,949,000) - -

- Overprovision in respect of prior years 1,120,000 - - -

1,632,000 (7,949,000) - -

Income tax 2,180,976 (7,834,330) 22,514 (12,716)

Reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2015 and 2014 are as follows:

Group company

2015 2014 2015 2014

RM RM RM RM

Profit before tax 8,577,728 2,087,947 1,741,933 6,094,448

Taxation at Malaysian statutory tax rate of 25% (2014: 25%) 2,144,432 521,987 435,483 1,523,612

Expenses not deductible for tax purposes 822,383 2,488,573 157,150 258,888

Income not subject to tax (1,429,981) (1,782,500) (575,000) (1,782,500)

Deferred tax assets recognised on reinvestment allowances (609,201) (9,063,060) - -

Under/(over)provision of income tax in respect of prior years 133,343 670 4,881 (12,716)

Underprovision of deferred tax in respect of prior years 1,120,000 - - -

Tax expense for the year 2,180,976 (7,834,330) 22,514 (12,716)

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective year of assessment 2016. The change in corporate tax rate in year of assessment 2016 does not have material impact to the Group.



11. EaRninGs PER shaRE

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

Group

2015 2014

Profit net of tax attributable to owners of the parent (RM) 6,396,752 9,922,277

Weighted average number of ordinary shares in issue 187,500,000 187,500,000

Basic earnings per share (sen) 3.41 5.29

Diluted earnings per share is equal to basic earnings per share as there is no potential dilutive ordinary shares as at 31 December 2015.

12. PROPERTy, PlanT anD EquiPMEnT

Group

freehold land and

buildings

long term leasehold

land Plant and

machinery cylinders construction

in progress Other assets Total

RM RM RM RM RM RM RM

cost: at 1 January 2014 25,229,361 5,878,138 44,091,673 56,453,305 1,272,935 11,958,482 144,883,894

Additions 558,610 53,403 1,493,535 715,539 348,042 546,175 3,715,304

Adjustment - - - - - 22,934 22,934

Written off - (342) (15,053) (770,351) - (80,733) (866,479)

Disposals - - (27,951) (143,288) - (328,291) (499,530)

Impairment loss (Note 7) - - (2,769,693) - - - (2,769,693)

Reclassification 990,580 - - - (990,580) - -

at 31 December 2014 26,778,551 5,931,199 42,772,511 56,255,205 630,397 12,118,567 144,486,430

at 1 January 2015 26,778,551 5,931,199 42,772,511 56,255,205 630,397 12,118,567 144,486,430

Additions 594,245 2,706,568 2,412,000 2,899,802 671,856 1,273,107 10,557,578

Written off - - (93,257) - (24,880) (59,892) (178,029)

Disposals - - (313,625) (183,882) - (414,445) (911,952)

Impairment loss (Note 7) - - - (7,587,299) - - (7,587,299)

at 31 December 2015 27,372,796 8,637,767 44,777,629 51,383,826 1,277,373 12,917,337 146,366,728



Cont’d

12. PROPERTy, PlanT anD EquiPMEnT cont’d

Group

freehold land and

buildings

long term leasehold

land Plant and

machinery cylinders construction

in progress Other assets Total

RM RM RM RM RM RM RM

accumulated depreciation:

at 1 January 2014 2,135,419 854,852 11,645,444 15,847,336 - 4,764,641 35,247,692

Charge for the year (Note 7) 477,530 86,510 1,783,028 2,192,269 - 888,762 5,428,099

Adjustment - - - - - 23,932 23,932

Written off - (14) (7,183) (543,338) - (59,290) (609,825)

Disposals - - (18,665) (85,921) - (301,377) (405,963)

Impairment of assets (Note 7) - - (1,218,664) - - - (1,218,664)

at 31 December 2014 2,612,949 941,348 12,183,960 17,410,346 - 5,316,668 38,465,271

at 1 January 2015 2,612,949 941,348 12,183,960 17,410,346 - 5,316,668 38,465,271

Charge for the year (Note 7) 494,712 128,164 1,902,501 2,236,038 - 923,530 5,684,945

Written off - - (45,753) - - (44,466) (90,219)

Disposals - - (6,273) (132,013) - (379,725) (518,011)

Impairment of assets (Note 7) - - - (5,212,861) - - (5,212,861)

at 31 December 2015 3,107,661 1,069,512 14,034,435 14,301,510 - 5,816,007 38,329,125

net carrying amount:

at 31 December 2014 24,165,602 4,989,851 30,588,551 38,844,859 630,397 6,801,899 106,021,159

at 31 December 2015 24,265,135 7,568,255 30,743,194 37,082,316 1,277,373 7,101,330 108,037,603




computer, furniture and fitting

company 2015 2014

RM RM

cost:

at 1 January/at 31 December 12,925 12,925

accumulated depreciation:

at 1 January 5,413 4,121

Charge for the year (Note 7) 1,293 1,292

at 31 December 6,706 5,413

net carrying amount:

at 31 December 6,219 7,512

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM 529,922 (2014: RM Nil) by means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to RM10,027,656 (2014: RM3,715,304).

The carrying amount of property, plant and equipment held under finance leases at the reporting date were as follows:

Group

2015 2014

RM RM

Plant and machinery 303,919 326,771

Other assets - motor vehicles 1,941,883 2,546,233

2,245,802 2,873,004

Assets pledged as security

Certain property, plant and equipment of the Group with carrying amount of RM2,400,000 (2014: RM2,400,000) are pledged to secure bank facilities as stated in Note 22 to the financial statements.



Cont’d


Analysis of land and buildings

The net book value of land and buildings is analysed as follows:

Group

2015 2014

RM RM

Freehold land 2,400,000 2,400,000

Long term leasehold land 7,568,255 4,989,851

Factory buildings 21,865,135 21,765,602

31,833,390 29,155,453

13. inTanGiblE assETs

Group

2015 2014

RM RM

cost

At 1 January 762,457 662,735

Additions 43,074 122,656

Adjustment - (22,934)

At 31 December 805,531 762,457

accumulated amortisation

At 1 January 401,414 360,888

Adjustment - (23,932)

Amortisation (Note 7) 64,789 64,458

At 31 December 466,203 401,414

net carrying amount 339,328 361,043

Amortisation expense

The amortisation of intangible assets, comprising software, is included in the “Administrative expenses” line items in the statements of comprehensive income.



14. invEsTMEnT in subsiDiaRiEs

company

2015 2014

RM RM

Unquoted shares, at cost 50,400,004 50,400,004

The subsidiaries, all of which were incorporated in Malaysia, are as follows:

name of subsidiaries Equity interest held Principal activities

2015 2014

Southern Industrial Gas Sdn Bhd 100% 100% Manufacturing, refilling and distribution of industrial gases

Southern Oxygen Sdn Bhd 100% 100% Manufacturing and distribution of liquid oxygen, liquid nitrogen and liquid argon.

- yet to commence operations

Southern Carbon Dioxide Sdn Bhd

100% 100% Manufacturing and distribution of liquid carbon dioxide.

- yet to commence operations

SIG Properties Sdn Bhd 100% 100% Properties development and building contractor.- yet to commence operations

15. invEsTMEnT in an assOciaTE

Group

2015 2014

RM RM

Unquoted shares, at cost 6,560,000 6,560,000

Share of post-acquisition reserves 1,787,357 656,257

8,347,357 7,216,257

Details of the associate, which was incorporated in Malaysia, are as follows:

held through southern industrial Gas sdn bhd:

name of associate Equity interest held Principal activities

2015 2014

Iwatani-SIG Industrial Gases Sdn. Bhd.*

40% 40% Manufacturing and distribution of liquid products and compressed gases

* Audited by a firm other than Ernst & Young



Cont’d

15. invEsTMEnT in an assOciaTE cont’d

The summarised financial information of the Group’s investment in associate is as follows:

2015 2014

RM RM

Current assets 5,526,195 1,710,982

Non-current assets 39,794,484 37,361,711

Current liabilities (6,779,071) (4,184,573)

Non-current liabilities (17,673,215) (16,847,477)

Equity 20,868,393 18,040,643

Proportion of the Group’s ownership 40% 40%

carrying amount of the investment 8,347,357 7,216,257

2015 2014

RM RM

Revenue 13,126,813 7,985,406

Cost of good sold (6,723,197) (4,125,138)

Other income 38,122 186,731

Administrative expenses (2,704,056) (2,265,278)

Profit before tax 3,737,682 1,781,721

Income tax expense (909,932) (489,199)

Profit for the year 2,827,750 1,292,522

Group’s share of profit for the year 1,131,100 517,009

The associate had no contingent liabilities or capital commitments as at 31 December 2014 or 2015.

16. invEnTORiEs

Group

2015 2014

RM RM

At cost:

Raw materials 1,305,476 596,240

Consumables 3,414,783 2,429,686

Finished goods 881,198 595,843

5,601,457 3,621,769



17. invEnTORy PROPERTy

2015 2014

RM RM

cost

At 1 January 3,475,715 2,353,178

Additions 1,751,150 131,957

Reclassification from property, plant and equipment (Note 12) - 990,580

At 31 December 5,226,865 3,475,715

The subsidiary applied and received approval from the relevant authority to develop its industrial land at Bintulu, Sarawak into 8 units of semi-detached industrial factories. The subsidiary intends to retain 2 units for its own use and the remaining 6 units shall be for sale. The construction has been fully completed during the financial year but the issuance of Certificate of Completion is pending as at reporting date. The carrying amount of the industrial land in respect of the 6 units of proposed industrial units is RM5,226,865 (2014: RM3,475,715).

18. TRaDE anD OThER REcEivablEs

Group company

2015 2014 2015 2014

RM RM RM RM

Trade receivables

Third parties 27,166,689 20,636,282 - -

Amounts due from director-related companies 431,730 228,298 - -

27,598,419 20,864,580 - -

Less: Allowance for impairment

Third parties (3,087,506) (2,619,846) - -

Trade receivables, net 24,510,913 18,244,734 - -

Other receivables

Amount due from subsidiaries - - 44,113,818 31,694,330

Interest receivable - 19,590 - 19,590

- 19,590 44,113,818 31,713,920

Total trade and other receivables 24,510,913 18,264,324 44,113,818 31,713,920

Add: Cash and bank balances (Note 20) 5,410,965 20,323,130 1,004,508 15,677,677

Total loans and receivables 29,921,878 38,587,454 45,118,326 47,391,597



Cont’d

18. TRaDE anD OThER REcEivablEs cont’d

Trade receivables

The amounts due from director-related companies are unsecured, non-interest bearing and are repayable upon demand.

The Group’s normal trade credit term ranges from 90 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. Trade receivables are recognised at their original invoice amounts which represent their fair values on initial recognition.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.

Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:

2015 2014

RM RM

Neither past due nor impaired 20,868,566 16,170,506

1 to 30 days past due not impaired 1,062,837 523,248

31 to 60 days past due not impaired 480,425 385,328



More than 121 days past due not impaired 1,056,344 654,735

3,642,347 1,901,940

Impaired 3,087,506 2,792,134

27,598,419 20,864,580

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. More than 75% (2014: 78%) of the Group’s trade receivables arose from customers with more than 5 years of experience with the Group and losses have occurred infrequently.

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 has trade receivables amounting to RM3,642,347 (2014: RM1,901,940) that are past due at the reporting date but not impaired.

The trade receivables that are past due but not impaired are unsecured in nature.



18. TRaDE anD OThER REcEivablEs cont’d

Trade receivables cont’d

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:

individually impaired

2015 2014

RM RM

Trade receivables - nominal amounts 3,087,506 2,792,134

Less: Allowance for impairment (3,087,506) (2,619,846)

- 172,288

Movement in allowance accounts:

2015 2014

RM RM

At 1 January 2,619,846 3,445,943

Bad debt recovered - (176,642)

Bad debt written off - (1,016,902)

Charge for the year 650,000 714,726

Reversal of allowance for impairment losses (182,340) (347,279)

At 31 December 3,087,506 2,619,846

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.

Other receivables

Amount due from subsidiaries are unsecured, interest free and repayable on demand.

19. OThER cuRREnT assETs

Group company

2015 2014 2015 2014

RM RM RM RM

Prepayment 764,890 1,447,091 4,500 3,625

Non refundable deposits paid for purchase of property, plant and equipment 79,884 384,890 - 8,480

844,774 1,831,981 4,500 12,105



Cont’d

20. cash anD banK balancEs

Group company

2015 2014 2015 2014

RM RM RM RM

Cash on hand and at banks 5,361,633 20,275,327 1,004,508 15,677,677

Short term deposits with licensed bank 49,332 47,803 - -

Cash and bank balances (Note 18) 5,410,965 20,323,130 1,004,508 15,677,677

The weighted average effective interest rates and average maturity days for short term deposits of the Group as at 31 December 2015 was 3.15% (2014: 3.15%) and 31 days (2014: 31 days).

21. nOn cuRREnT assET classifiED as hElD fOR salE

2015 2014

RM RM

Freehold land and building - 6,374,266

During the year, the Company has completed the disposal of its freehold land and building for a cash consideration of RM10,830,189.

22. bORROWinGs

interest rates per annum Maturity

Group

2015 2014 RM RM

currentSecured:

Bankers’ acceptances (3.77% - 4.18%) 2015 5,879,000 6,127,000

Term loans (5.05% - 5.27%) 2015 3,943,088 6,633,300

Obligations under finance leases (Note 28) (3.60%) 2015 438,034 1,028,090

Revolving credit (3.15% - 4.35%) 2015 9,500,000 11,500,000

19,760,122 25,288,390

non-currentSecured:

Term loans (5.05% - 5.27%) 2015 - 2017 2,149,509 10,492,597

Obligations under finance leases (Note 28) (3.60%) 2015 - 2016 351,406 275,719

2,500,915 10,768,316



22. bORROWinGs cont’d

interest rates per annum Maturity

Group 2015 2014

RM RM

Total borrowingsBankers’ acceptances 2015 5,879,000 6,127,000

Term loans 2015 to 2017 6,092,597 17,125,897

Obligations under finance leases 2015 to 2016 789,440 1,303,809

Revolving credit 2015 9,500,000 11,500,000

22,261,037 36,056,706

The remaining maturities of the loan and borrowings are as follows:

On demand or within one year 19,760,121 25,288,390

More than 1 year and less than 2 years 2,327,184 5,418,807

More than 2 years and less than 5 years 173,732 5,349,509

22,261,037 36,056,706

The above banking facilities are secured by way of corporate guarantee from the Company and specified debenture on certain property, plant and equipment of the Group, both present and future as disclosed in Note 12.

The term loans are repayable over a period of 4 years to 7 years.

The bankers’ acceptances and revolving credit are repayable upon maturity.

23. TRaDE anD OThER PayablEs

Group company

2015 2014 2015 2014

RM RM RM RM

Trade payables

Third parties 5,291,515 3,995,535 - -

Amounts due to director-related companies 4,241,020 5,893,753 - -

9,532,535 9,889,288 - -

Other payables

Cylinder deposits refundable 1,304,943 1,084,769 - -

Accruals 1,231,480 1,569,287 100,608 82,290

Sundry payables 3,827,021 5,857,504 56,008 2,782,454

6,363,444 8,511,560 156,616 2,864,744

Total trade and other payables 15,895,979 18,400,848 156,616 2,864,744

Add: Borrowings (Note 22) 22,261,037 36,056,706 - -

Total financial liabilities carried at amortised cost 38,157,016 54,457,554 156,616 2,864,744



Cont’d

23. TRaDE anD OThER PayablEs cont’d

Trade payables

These amounts owing are unsecured and interest free except for balances of RM3,575,748 (2014: RM5,860,443) due to certain director-related companies which carried interest at 7.50% (2014: 7.50%) per annum on late payment of overdue invoices.

The normal trade credit term granted to the Group ranges from 60 to 90 days (2014: 60 - 90) days.

Other payables

Sundry payables are non-interest bearing and have no fixed term of repayment. Sundry payables are normally settled on an average term of two months (2014: average term of two months).

24. DEfERRED TaxaTiOn

Group

2015 2014

RM RM

At 1 January (1,000,000) 6,949,000

Recognised in the profit or loss (Note 10) 1,632,000 (7,949,000)

At 31 December 632,000 (1,000,000)

Presented after appropriate offsetting as follows:

Deferred tax assets (12,882,000) (13,297,000)

Deferred tax liabilities 13,514,000 12,297,000

632,000 (1,000,000)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities of the Group:

accelerated capital

allowances Total

RM RM

At 1 January 2015 12,297,000 12,297,000

Recognised in profit or loss 1,217,000 1,217,000

At 31 December 2015 13,514,000 13,514,000

At 1 January 2014 13,620,000 13,620,000

Recognised in profit or loss (1,323,000) (1,323,000)

At 31 December 2014 12,297,000 12,297,000



24. DEfERRED TaxaTiOn cont’d

Deferred tax assets of the Group:

unabsorbed reinvestment

allowances

unrealised foreign

exchange loss

unabsorbed capital

allowance Total

RM RM RM RM

At 1 January 2015 (11,622,450) (2,820) (1,671,730) (13,297,000)

Recognised in profit or loss (228,410) (1,520) 644,930 415,000

At 31 December 2015 (11,850,860) (4,340) (1,026,800) (12,882,000)

At 1 January 2014 (4,801,960) (41,120) (1,827,920) (6,671,000)

Recognised in profit or loss (6,820,490) 38,300 156,190 (6,626,000)

At 31 December 2014 (11,622,450) (2,820) (1,671,730) (13,297,000)

25. shaRE caPiTal

number of ordinary shares of RM0.50 each amount

2015 2014 2015 2014

RM RM

Authorised

At 1 January/At 31 December 400,000,000 400,000,000 200,000,000 200,000,000

Issued and fully paid

At 1 January 187,500,000 150,000,000 93,750,000 75,000,000

Issued during the year:

- Payable in cash - 27,000,000 - 13,500,000

- Capitalised from retained profits - 10,500,000 - 5,250,000

- 37,500,000 - 18,750,000

At 31 December 187,500,000 187,500,000 93,750,000 93,750,000

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

During the previous financial year, the Company increased its issued and paid up ordinary share capital from RM75,000,000 to RM93,750,000 by way of a two-call rights issue, of which the first call of RM0.36 per rights share was payable in cash and the second call of RM0.14 per rights share was capitalised from the retained earnings reserve, on the basis of one rights share for every four existing shares held. The enlarged issued and paid up share capital of the Company were listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 30 December 2014.



Cont’d

26. REsERvEs

Group company

2015 2014 2015 2014

RM RM RM RM

non-distributable

Share premium 1,019,862 1,019,862 1,019,862 1,019,862

Distributable

Retained earnings 24,380,072 19,295,820 606,214 199,295

25,399,934 20,315,682 1,626,076 1,219,157

The movements in the reserves are shown in the statements of changes in equity.

Share premium represents the premium arising from the issue of shares.

27. RETainED PROfiTs

The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 and 31 December 2014 under the single tier system.

28. cOMMiTMEnTs

(a) capital commitments

Group

2015 2014

RM RM

Capital expenditure:

Approved and contracted for:

Property, plant and equipment 1,821,591 4,550,962

Approved but not contracted for:

Property, plant and equipment - 3,380,000

1,821,591 7,930,962



28. cOMMiTMEnTs cont’d

(b) finance lease commitments

The Group has finance leases for certain items of plant and equipment (Note 12). These leases do not have terms of renewal, but have purchase options at nominal value at the end of the lease terms.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

2015 2014

RM RM

Minimum lease payments:

Not later than 1 year 473,583 1,077,897

Later than 1 year and not later than 2 years 195,720 280,957

Later than 2 years and not later than 5 years 179,404 -

Total minimum lease payments 848,707 1,358,854

Less: Amounts representing finance charges (59,267) (55,045)

Present value of minimum lease payments 789,440 1,303,809

Present value of payments:

Not later than 1 year 438,034 1,028,090

Later than 1 year and not later than 2 years 177,674 275,719

Later than 2 years and not later than 5 years 173,732 -

Present value of minimum lease payments 789,440 1,303,809

Less: Amount due within 12 months (Note 22) (438,034) (1,028,090)

Amount due after 12 months (Note 22) 351,406 275,719



Cont’d

29. siGnificanT RElaTED PaRTy TRansacTiOns

(a) sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Group

2015 2014

RM RM

To/from director-related companies:

Sales of finished goods 692,048 733,404

Transport income 91,648 81,418

Purchases 10,459,342 6,560,744

Purchase of property, plant and equipment 2,454,077 526,995

Purchase of spare parts 640,878 480,151

Rental paid 345,254 351,686

Interest paid 369,144 561,474

Travelling expenses paid on behalf 7,597 5,757

Transport charges paid 165,725 75,122 Director-related companies are those companies which are able to exercise significant influence over the Company

or which are subject to significant influence from the same source as the Company.

A director of the Company, namely Mr. Peh Lam Hoh is a director of Sing Swee Bee Sdn. Bhd., Sing Swee Bee Enterprise Pte. Ltd. and SSB Cryogenic Equipment Pte. Ltd., being related parties which the Group has transacted with during the year.

(b) compensation of key management personnel

Group company

2015 2014 2015 2014

RM RM RM RM

Short-term employee benefits 3,127,807 3,123,808 302,440 280,482

Post-employment benefits:

Defined contribution 237,375 173,183 - -

3,365,182 3,296,991 302,440 280,482

Included in the total key management personnel are:

Executive Directors’ remuneration 3,052,601 2,143,869 81,640 82,160



30. faiR valuE Of financial insTRuMEnTs

(a) fair value of financial instruments by classes that are carried at fair value and whose carrying amounts are reasonable approximation of fair value

note

Trade and other receivables (current) 18

Trade and other payables (current) 23

Borrowings (current and non-current) 22

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The fair values of borrowings are estimated by discounting expected future cash flows at the market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

(b) 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

The fair values of financial assets and liabilities by classes that are not carried at fair values and whose carrying amounts are not reasonable approximation of fair values are as follows:

2015 2014

Group carrying

value fair value carrying

value fair value

RM RM RM RM

financial liabilites

Obligation under finance lease 789,440 792,060 1,303,809 1,296,493

Fair value hierarchy

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: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.



Cont’d

30. faiR valuE Of financial insTRuMEnTs cont’d

As at 31 December 2015, the Group held the following liabilities disclosed at fair value:

Total level 1 level 2 level 3

RM RM RM RM

at 31 December 2015

Obligation under finance lease 792,060 - 792,060 -

at 31 December 2014

Obligation under finance lease 1,296,493 - 1,296,493 -

There were no transfers between the various fair value measurement levels during the financial year.

31. financial RisK ManaGEMEnT ObJEcTivEs anD POliciEs

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Management. The audit committee provides independent oversight to the effectiveness of the risk management process.

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) 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.



31. financial RisK ManaGEMEnT ObJEcTivEs anD POliciEs cont’d

(a) credit risk cont’d

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2015 2014

RM % of total RM % of total

by country:

Malaysia 25,389,306 92.00% 20,147,770 96.52%

Singapore 1,421,997 5.15% 583,408 2.79%

Brunei 710,085 2.57% 101,715 0.49%

China 52,121 0.19% 41,687 0.20%

Vietnam 24,939 0.09% - 0.00%

27,598,448 100.00% 20,874,580 100.00%

by industry sectors:

Dealers 8,385,141 30.38% 7,866,143 37.70%

Construction and engineering 4,177,278 15.14% 2,302,915 11.04%

Gas manufacturer 3,010,681 10.91% 1,940,887 9.30%

Fabrication work 2,560,635 9.28% 1,038,371 4.98%

Refrigerant 1,209,732 4.38% 1,100,805 5.28%

Others 8,254,981 29.91% 6,615,459 31.71%

27,598,448 100.00% 20,864,580 100.00%

At the reporting date, approximately 30.38% (2014: 37.70%) of the Group’s trade receivables were due from dealers who are located in Malaysia.

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 18. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable banks with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 18.



Cont’d


(b) liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group and the Company actively manage its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2015

On demand or within one year

One to five years Total

Group RM RM RM

financial liabilities:

Trade and other payables 15,895,979 - 15,895,979

Loans and borrowings 19,795,672 2,524,632 22,320,304

Total undiscounted financial liabilities 35,691,651 2,524,632 38,216,283

company


Trade and other payables 156,616 - 156,616

Total undiscounted financial liabilities 156,616 - 156,616




(b) liquidity risk cont’d

2014

On demand or within one year

One to five years Total

Group RM RM RM



Loans and borrowings 25,338,199 10,773,552 36,111,751

Total undiscounted financial liabilities 43,739,048 10,773,552 54,512,600

company



Total undiscounted financial liabilities 2,864,744 - 2,864,744

(c) interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and Company’s exposure to interest rate risk arises primarily from their loans and borrowings.

Sensitivity analysis for interest rate risk

During the financial year, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM107,358 (2014: RM173,764) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assured movement in basis points for interest rate sensitivity analysis is based on the current market environment.

(d) foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the entities. The foreign currencies in which these transactions are denominated are mainly United States Dollars (“USD”) and Singapore Dollars (“SGD”).



Cont’d


(d) foreign currency risk cont’d

The net financial liabilities of the Group which are not denominated in its functional currency are as follows:

2015 2014

RM RM

financial liabilities held on non-functional currencies

SGD 1,107,541 5,302,833

USD 831,802 371,444

1,939,343 5,674,277

The Company does not hedge its foreign currency exposure.

Sensitivity analysis of foreign exchange rate changes

The following table demonstrates the sensitivity of the Company’s profit net of tax to a reasonably possible change in the SGD/RM and USD/RM exchange rate, with all other variables held constant.

2015 (Decrease)/ increase in

profit net of tax

2014 (Decrease)/ increase in

profit net of tax

RM RM

SGD/RM - strengthen by 3% (2014: 3%) (33,226) (159,085)

- weaken by 3% (2014: 3%) 33,226 159,085

USD/RM - strengthen by 3% (2014: 3%) (24,954) (11,143)

- weaken by 3% (2014: 3%) 24,954 11,143

32. 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 2014.



32. caPiTal ManaGEMEnT cont’d

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 below 50%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Equity includes share capital, share premium and reserve.

Group company

note 2015 2014 2015 2014

RM RM RM RM

Borrowings 22 22,261,037 36,056,706 - -

Trade and other payables 23 15,895,979 18,400,848 156,616 2,864,744

Less:

Cash and bank balances 20 (5,410,965) (20,323,130) (1,004,508) (15,677,677)

Net debt 32,746,051 34,134,424 (847,892) (12,812,933)

Equity 119,149,934 114,065,682 95,376,076 94,969,157

Total capital 119,149,934 114,065,682 95,376,076 94,969,157

capital and net debt 151,895,985 148,200,106 94,528,184 82,156,224

Gearing ratio 22% 23% N/A N/A

33. sEGMEnT infORMaTiOn

The Group is organized into the following operating segments:

(1) Manufacturing (2) Refilling and distribution (3) Other products and services

Group

Total

2015

Manufacturing Refilling and

Distribution

Other Products and

services RM RM RM RM

Revenue 35,478,083 39,109,416 1,117,261 75,704,760

Results

Profit for reportable segment 9,287,283 14,998,114 214,483 24,499,880

Other income 5,731,011

Administrative expenses (20,949,168)

Finance costs (1,835,095)

Share of results of associate 1,131,100

Profit before tax 8,577,728

Income tax expense (2,180,976)

Total comprehensive income 6,396,752



Cont’d

33. sEGMEnT infORMaTiOn cont’d

Group 2014

Manu facturing Refilling and

distribution

Other Products and

services Total RM RM RM RM

Revenue 32,202,401 32,088,131 1,073,082 65,363,614

Results

Profit for reportable segment 9,318,145 11,384,874 158,711 20,861,730

Other income 1,325,279

Administrative expenses (16,702,537)

Finance costs (2,362,505)

Other operating expense (1,551,029)

Share of results of associate 517,009

Profit before tax 2,087,947

Income tax expense 7,834,330

Total comprehensive income 9,922,277

Segmental assets and liabilities information is neither included in the internal management reports nor provided regularly to the Managing Director. Hence, no disclosure is made on segment assets and liabilities.

34. DiviDEnDs

Dividends in respect of year Dividends recognised in year

2015 2014 2013 2015 2014 RM RM RM RM RM

Recognised during the year:

Final (single-tier) dividend: 0.6 sen on 150,000,000 ordinary shares - - 900,000 - 900,000

First and Final (single-tier) dividend of 0.7 sen on 187,500,000 ordinary shares - 1,312,500 - 1,312,500 -

- 1,312,500 900,000 1,312,500 900,000 At the forthcoming Annual General Meeting, a final (single-tier) dividend in respect of the financial year ended 31

December 2015, of 1.2 sen on 187,500,000 ordinary shares, amounting to a dividend payable of RM2,250,000 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 equity as an appropriation of retained earnings in the financial year ending 31 December 2016.

35. auThORisaTiOn Of financial sTaTEMEnTs fOR issuE

The financial statements for the year ended 31 December 2015 were authorised for issue in accordance with a resolution of the directors on 8 April 2016.



36. 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.

Group company

2015 2014 2015 2014

RM RM RM RM

Total retained profits

- Realised 23,224,715 14,197,841 606,214 199,295

- Unrealised (632,000) 4,441,722 - -

22,592,715 18,639,563 606,214 199,295

Associated company

- Realised 1,787,357 656,257 - -

Retained profits as per financial statements 24,380,072 19,295,820 606,214 199,295


LIST OF PROPERTiEs

As at the 31 December 2015, we own the following properties:-

no. location Description/Existing useDate of

acquisitionDate of

revaluation

approximate land area/

built-up area

approximate age of

building/Tenure

auditednbv as at

31December 2015(RM) Encumbrances

1. PLO 137, Kawasan Perindustrian Senai III, 81400 Senai, Johor

Double storey detached office and factory/Manufacturing of liquid oxygen, liquid nitrogen and Acetylene gas, and refilling of industrial gas such as oxygen, nitrogen, Argon, carbon dioxide and Gas Mixture

05/12/1996 - 14,516 square meter/

4,359 square meter

18 years/60 years lease

expiring on 13.02.2060

4,397,774.41 Nil

2. Plot 235, Taman Perindustrian Bukit Minyak, Penang

Single storey detached office and refilling plant/Refilling of industrial gases such as oxygen, Nitogen and carbon dioxide

20/11/2006 - 5,192 square meter/

943 square meter

8 years/60 years lease

expiring on 08.08.2067

2,379,542.29 Nil

3. GRN 128880, Lot 10688, Jalan Permata ¼ (previously known as Lot 114 HS(D) 110941, PT 16767), Kawasan Perindustrian Arab Malaysian, Mukim Setul Daerah Seremban, Negeri Sembilan

Single storey detached office and factory/Manufacturing of dissolved Acetylene gas and Fuming Gas and Hydrogen

18/07/2008 1 January 2011

12,536 square meter/

5,886 square meter

6 years/Freehold

13,517,286.39 Charged to RHB Bank Bhd

4. Lot 8392 & 8393 (PN 49651 & 49648), Mukim Krubong, Daerah Melaka Tengah, Melaka

Single storey-detached office and factory/Refilling of industrial gases such as oxygen

29/05/2010 - 4,218 square meter/1,229

square meter

3 years/ 99 years 3,833,014.91 Nil

5. Lot 41/129 & 42/129, Lot 129, Kawasan Perindustrian Gebeng Fasa II, Kuantan, Pahang

Single storey-detached office and factory/Refilling of industrial gases such as oxygen

31/05/2010 - 8,094 square meter/1,218

square meter

3 years/ 99 years 4,101,355.63 Nil

6. Lot 4033 in block no. 26, Kemena Land district

8 units of semi-detachedIndustrial Buildings

01/07/2011 - 8,938 square meter

N/A/60 years 7,049,995.76 Nil

7. Lot no. 146Block 1, KemenaLand District,SamalajuIndustrial park,Bintulu, Sarawak

Industrial Land 27/01/2015 - 141,200 square meter

N/A/60 years 3,058,658.17 Nil

Total 38,337,627.56


Authorised Share Capital : RM200,000,000.00 Issued and Fully Paid-Up Capital : RM93,750,000.00 Class of Shares : Ordinary Shares of RM0.50 each Voting Rights : One vote per ordinary share

analysis by sizE Of hOlDinGs

size of holdingsno. of

holders %no. of

shares %

1 – 99 6 0.29 246 0.00

100 – 1,000 211 10.25 124,279 0.07

1,001 – 10,000 1,013 49.22 5,622,325 3.00

10,001 – 100,000 732 35.57 22,105,557 11.79

100,001 – 9,374,999 (*) 94 4.57 81,065,771 43.23

9,375,000 and above (**) 2 0.10 78,581,822 41.91

Total 2,058 100.00 187,500,000 100.00

Remark: * Less than 5% of Issued Shares ** 5% and above of Issued Shares

DiREcTORs shaREhOlDinGs

Direct indirect

no. of shares held %


Peh Lam Hoh 7,762,180 4.14 79,014,822 (a) 42.14

Lau Cheng Ming 2,758,800 1.47 - -

Datuk Syed Ahmad Bin Alwee Alsree - - 71,909,241 (b) 38.35

Diong Tai Pew 915,000 0.49 - -

Lee Ting Kiat - - - -

Lim Tin Teng @ Lim Jit Teng - - - -

Notes:-(a) Deemed interest/ Indirect interest:- By virtue of his interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965: 65,625,000 shares By virtue of his interest in SSB Cryogenic Equipment Pte Ltd pursuant to Section 6A of the Companies Act, 1965: 12,956,822 shares By virtue of his spouse, Mdm Ng Swee Gek’s interest: 370,500 shares By virtue of his daughter-in-law, Ms Lee Si Yun’s interest: 62,500 shares

(b) Deemed interest/ Indirect interest:- By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act,

1965: 65,625,000 shares By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib’s interest: 6,284,241 shares

ANALYSIS OF shaREhOlDinGsas at 31 March 2016


lisT Of subsTanTial shaREhOlDERs

Direct indirect



Phoenix SIG Holdings Sdn. Bhd. 65,625,000 35.00 - -

SSB Cryogenic Equipment Pte Ltd 12,956,822 6.91 - -

Peh Lam Hoh 7,762,180 4.14 79,014,822 (a) 42.14

Datuk Syed Ahmad Bin Alwee Alsree - - 71,909,241 (b) 38.35

Dato Hajjah Hanifah Hajar Taib 6,284,241 3.35 65,625,000 (c) 35.00

Notes:-a) Deemed interest/ Indirect interest:- By virtue of his interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965: 65,625,000 shares By virtue of his interest in SSB Cryogenic Equipment Pte Ltd pursuant to Section 6A of the Companies Act, 1965: 12,956,822 shares By virtue of his spouse, Mdm Ng Swee Gek’s interest: 370,500 shares By virtue of his daughter-in-law, Ms Lee Si Yun’s interest: 62,500 shares

(b) Deemed interest/ Indirect interest:- By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act,

1965: 65,625,000 shares By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib’s interest: 6,284,241 shares

(c) Deemed interest by virtue of her interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965.

ANALYSIS OF shaREhOlDinGsas at 31 March 2016

Cont’d


ANALYSIS OF shaREhOlDinGsas at 31 March 2016Cont’d

lisT Of TOP 30 hOlDERs as aT 31 MaRch 2016

nO. naME hOlDinGs %

1 PHOENIX SIG HOLDINGS SDN. BHD. 65,625,000 35.000

2 SSB CRYOGENIC EQUIPMENT PTE LTD 12,956,822 6.910

3 PEH LAM HOH 7,762,180 4.139

4 LOH PEI YON 6,527,305 3.481

5 HANIFAH HAJAR TAIB 6,284,241 3.351

6 KONG KHIM TUCK 4,742,865 2.529

7 NELTY AGUSTINA SUSANTO 4,412,500 2.353

8 FAHAD MOHD F S BUZWAIR 4,332,000 2.310

9 CHIN HOOI NAN 3,630,000 1.936

10 SYED ZAFILEN BIN SYED ALWEE 3,462,500 1.846

11 ADINAMAJU SDN BHD 3,110,625 1.659

12 LAU CHENG MING 2,758,800 1.471

13 KWA LI DA, ALEX (KE LIDA) 2,718,025 1.449

14 CHEN CHIN PENG 1,950,000 1.040

15 CITIGROUP NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED (CLIENT A/C-R ES)

1,926,000 1.027

16 KHONG KAR YOW 1,489,005 0.794

17 PEH AH KAM 1,200,775 0.640

18 VOON CHEE KEEN 1,015,977 0.541

19 PEH HOCK SOON 958,802 0.511

20 SAM FONG @ CHAN SAM FONG 923,000 0.492

21 PROMSERV SDN.BHD. 915,000 0.488

22 NG CHENG GUAN 816,508 0.435

23 PROMSERV SDN.BHD. 700,000 0.373

24 HUANG BING 683,000 0.364

25 PROMSERV ENGINEERING SDN BHD 675,000 0.360

26 YIM WHY MENG @ ZEN WHY MENG 675,000 0.360

27 AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR CHIENG ING MUI

656,000 0.349

28 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KOH BENG SAN (8077850)

581,000 0.309

29 LUCAS LIM TEE KIAT 543,750 0.290

30 REWI HAMID BUGO 535,000 0.285

TOTal 144,566,680 77.102


NOTICE IS HEREBY GIVEN THAT the 7th Annual General Meeting of SIG Gases Berhad will be held at Diamond 5, Level 10, Holiday Villa Johor Bahru City Centre, No. 260, Jalan Dato’ Sulaiman, Taman Abad, 80250 Johor Bahru, Johor on Thursday, 19 May 2016 at 12.00 p.m. to transact the following businesses:-

aGEnDa

as ORDinaRy businEss:

Resolution on Proxy form

1. To receive the Audited Financial Statements of the Company and of the Group for the financial year ended 31 December 2015 and the Reports of the Directors and Auditors thereon.

(Please refer Explanatory

note 1)

2. To approve the payment of a first and final (single-tier) dividend of 1.2 sen per share in respect of the financial year ended 31 December 2015.

(Resolution 1)

3. To approve the Directors’ fees of RM287,800 for the year ending 31 December 2016.

(Resolution 2)

4. To re-elect the following Directors who retire by rotation in accordance with Article 103 of the Company’s Articles of Association:-

4.1 Mr Peh Lam Hoh (Resolution 3)

4.2 Mr Lee Ting Kiat (Resolution 4)

5. To consider and if thought fit, to pass the following Ordinary Resolution in accordance with Section 129 of the Companies Act, 1965:

“THAT Mr Lim Tin Teng @ Lim Jit Teng, retiring pursuant to Section 129 of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold office until the next Annual General Meeting.”

(Resolution 5)

6. To re-appoint Messrs. Ernst & Young as the Company’s Auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration.

(Resolution 6)

as sPEcial businEss:

To consider and if thought fit, to pass the following Resolutions with or without modifications:-

7. ORDinaRy REsOluTiOn 1auThORiTy TO DiREcTORs TO issuE anD allOT shaREs PuRsuanT TO sEcTiOn 132D Of ThE cOMPaniEs acT, 1965

“THAT subject always to the Companies Act, 1965, Articles of Association of the Company and approvals from Bursa Malaysia Securities Berhad and any other governmental/regulatory bodies, where such approval is necessary, authority be and is hereby given to the Directors pursuant to Section 132D of the Companies Act, 1965 to issue and allot not more than ten percent (10%) of the issued capital of the Company at any time upon any such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit or in pursuance of offers, agreements or options to be made or granted by the Directors while this approval is in force until the conclusion of the next Annual General Meeting of the Company and that the Directors be and are hereby further authorised to make or grant offers, agreements or options which would or might require shares to be issued after the expiration of the approval hereof.”

(Resolution 7)

NOTICE OF annual GEnERal MEETinG


8. ORDinaRy REsOluTiOn 2PROPOsED REnEWal Of shaREhOlDERs’ ManDaTE fOR REcuRREnT RElaTED PaRTy TRansacTiOns (“RRPT”) Of a REvEnuE OR TRaDinG naTuRE (“PROPOsED REnEWal Of RRPT ManDaTE”)

“THAT subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be hereby given to the Company and/or its subsidiary companies (“the Group”) to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.1 of the Circular to Shareholders dated 26 April 2016, provided that such transactions are necessary for the day-to-day operations; and undertaken in the ordinary course of business, on arms-length basis, on normal commercial terms that are not more favorable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

AND THAT such approval shall continue to be in force until:-

(Resolution 8)

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this AGM at which the Proposed Renewal of RRPT Mandate is passed, at which time it will lapse, unless by a resolution passed at the next AGM, the authority is renewed;

(b) the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by shareholders in a general meeting, whichever is earlier;

AND THAT the Directors of the Company be hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of RRPT Mandate.”

9. sPEcial REsOluTiOnPROPOsED aMEnDMEnTs TO ThE aRTiclEs Of assOciaTiOn Of ThE cOMPany

“THAT the proposed amendments to the Articles of Association of the Company as contained in Appendix 1 of the Annual Report be hereby approved and adopted.

AND THAT the Directors and Secretaries of the Company be hereby authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendments to the Company’s Articles of Association.”

(Resolution 9)

10. To transact any other business of which due notice shall have been given.

nOTicE Of DiviDEnD EnTiTlEMEnT anD PayMEnT DaTEs

NOTICE IS ALSO HEREBY GIVEN THAT a first and final (single-tier) dividend of 1.2 sen per share in respect of the financial year ended 31 December 2015, if approved by the shareholders at the 7th Annual General Meeting, will be payable on 17 June 2016 to shareholders whose names appear in the Record of Depositors on 31 May 2016.

A Depositor shall qualify for entitlement to the dividend only in respect of:

(a) Shares transferred into the Depositor’s securities account before 4.00 p.m. on 31 May 2016 in respect of transfer; and

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

NOTICE OF annual GEnERal MEETinGCont’d


By Order of the BoardsiG GasEs bERhaD

YONG MAY LI (f ) (LS0000295)IRENE JUAY YEE LUAN (f ) (MAICSA 7057249)Company Secretaries

Johor Bahru26 April 2016

NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy, in the case of an individual shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

6. The instrument appointing a proxy, shall be deposited at the registered office of the Company at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.

7. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to Article 69(2) of the Articles of Association of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 12 May 2016 and only a Depositor whose name appears on such Record of Depositors shall be entitled to attend this meeting.

ExPlanaTORy nOTEs: Ordinary Business:- 1. item 1 of the agenda This Agenda item 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 Agenda item is not put forward for voting. Special Business:- 2. Ordinary Resolution 1 - item 7 of the agenda The purpose of this Ordinary Resolution 1 proposed under item 7, is for the renewal of the general mandate obtained from the members

at the last AGM and if passed, will give flexibility to the Directors to issue new ordinary shares up to an amount not exceeding 10% of the issued share capital of the Company without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration. This authority will commence from the date of this AGM and, unless earlier revoked or varied by the shareholders of the Company at a subsequent general meeting, shall expire at the next AGM of the Company.

As at the date of this Notice, no new shares of the Company have been issued pursuant to the general mandate obtained at the 6th AGM of the Company held on 8 May 2015, and which will lapse at the conclusion of the 7th AGM.



3. Ordinary Resolution 2 – item 8 of the agenda The purpose of this Ordinary Resolution 2 proposed under item 8, if passed, will allow the Group to continue to enter into recurrent

related party transactions made on an arm’s length basis and on normal commercial terms that are not more favorable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

Please refer to the Circular to Shareholders dated 26 April 2016 for further information. 4. special Resolution – item 9 of the agenda The proposed Special Resolution if passed, will enable the Company to comply with the recent amendments to the Main Market Listing

Requirements of Bursa Malaysia Securities Berhad as well as for better clarity and enhancement.



STATEMENT ACCOMPANYING nOTicE Of annual GEnERal MEETinG

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

1. Further details of individuals who are standing for election as directors (excluding directors standing for a re-election):

There is no person seeking election as Director of the Company at this Annual General Meeting.

2. A statement relating to general mandate for issue of securities in accordance with paragraph 6.03(3) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:

The general mandate for issue of shares is for the renewal of the general mandate obtained from the members at the 6th Annual General Meeting held on 8 May 2015.

No new shares of the Company have been issued pursuant to the general mandate obtained at the 6th Annual General Meeting of the Company held on 8 May 2015.

The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration.


APPENDIX I

PROPOsED aMEnDMEnTs TO ThE aRTiclEs Of assOciaTiOn Of ThE cOMPany

In conjunction with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Company proposes to implement the following amendment to the Articles of Association of the Company to comply with the amended provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:-

aRTiclE nO. ExisTinG aRTiclEs aMEnDED aRTiclEs

To amend Article 167 under Accounts

The directors shall from time to time in accordance with Section 169 of the Act cause to be prepared and laid before the Company in General Meeting such profit and loss account, balance sheet and reports as are referred to in that Section provided always that the interval between the close of the financial year of the company and the issue of the annual audited accounts, the directors’ and auditors’ reports shall not exceed four months. The Company must issue to its members an annual report relating to it within six (6) months after the expiry of its financial year end in printed form or in CD-ROM, DVD-ROM or such other form of electronic media, not less than twenty-one (21) days before the date of the meeting (or such shorter period as may be agreed in any year of the receipt of notice of the meeting pursuant to the articles), and be sent to every member of, every holder of debenture of and trustees for every debenture holder of the company and to every other person who is entitled to receive notices from the company under the provision of the act or of these articles. The requisite copies of each such document shall at the same time be forwarded to each stock Exchange, upon which the company is listed. Provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware but any member to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the office of the Company. In the event that the annual report is sent in CD-ROM or DVD-ROM form or such form of electronic media and a member requires a printed form of such documents, the Company shall send such documents to the member within four (4) market days from the date of receipt of the member’s request.

The directors shall from time to time in accordance with Section 169 of the Act and the listing Requirements cause to be prepared and laid before the Company in General Meeting such profit and loss account, balance sheet and reports as are referred to in that Section and the listing Requirements. The Company must issue to the Exchange and its members an annual report that includes annual audited financial statements together with the auditors’ and directors’ reports in printed form or in CD-ROM, DVD-ROM or such other form of electronic media, within four (4) months from the close of its financial year. This Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware but any member to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the office of the Company. In the event that the annual report is sent in CD-ROM or DVD-ROM form or such form of electronic media and a member requires a printed form of such documents, the Company shall send such documents to the member within four (4) market days from the date of receipt of the member’s request.

SIG GASES BERHAD (875083-W)

fORM Of PROxy

CDS Account No.

No. of shares held

I/We (FULL NAME IN BLOCK LETTERS)

NRIC No/Passport No./Company No. of

(FULL ADDRESS)

being a member of SIG GASES BERHAD (“the Company”), hereby appoint:

Full Name NRIC No./Passport No. Proportion of Shareholdings

No. of Shares %

Address

*and/ * or failing him/ her

Full Name NRIC No./Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing him/her/them, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the 7th Annual General Meeting (“AGM”) of the Company to be held at Diamond 5, Level 10, Holiday Villa Johor Bahru City Centre, No. 260, Jalan Dato’ Sulaiman, Taman Abad, 80250 Johor Bahru, Johor on Thursday, 19 May 2016 at 12.00 p.m. or at any adjournment thereof and my/our proxy is to vote as indicated below:-

Item Agenda1. To receive the Audited Financial Statements for the financial year ended 31

December 2015 and the Reports of the Directors and Auditors thereon:-Ordinary Business: Resolution for against2. To approve the payment of a first and final (single-tier) dividend of 1.2 sen

per share in respect of the financial year ended 31 December 2015.1

3. To approve the Directors’ fees of RM287,800 for the year ending 31 December 2016.

2

4. To re-elect the following Directors who retire by rotation in accordance with Article 103 of the Company’s Articles of Association.4.1 Mr Peh Lam Hoh 34.2 Mr Lee Ting Kiat 4

5. To re-appoint Mr Lim Tin Teng @ Lim Jit Teng as Director of the Company pursuant to Section 129 of the Companies Act, 1965.

5

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

6

Special Business:7. Authority to Directors to Issue and Allot Shares Pursuant to Section 132D of

the Companies Act, 1965.7

8. Proposed Renewal of RRPT Mandate 89. Proposed Amendments to the Articles of Association of the Company 9

Please indicate with an “X” in the space provided how you wish your votes to be cast on the resolutions specified in the notice of meeting. If you do not do so, the *proxy/proxies will vote, or abstain from voting on the resolutions as he/she/they may think fit.

Dated this day of 2016

*Signature/Common Seal of Shareholder

* Strike out whichever is inapplicable

Affix Stamp

THE COMPANY SECRETARYsiG GasEs bERhaD(Company No. 875083-W)

suite 1301, 13th floorcity Plaza, Jalan Tebrau

80300 Johor bahru, Johor

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

nOTEs:

1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy, in the case of an individual shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

6. The instrument appointing a proxy, shall be deposited at the registered office of the Company at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.

7. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to Article 69(2) of the Articles of Association of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 12 May 2016 and only a Depositor whose name appears on such Record of Depositors shall be entitled to attend this meeting.

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