CAN-ONE BERHAD The Can Company CAN-ONE BERHAD (638899-K) annUaL RepoRT 2OIO

The Can Company

CAN-ONE BERHAD(638899-K)

annUaL RepoRT 2OIO

CONTENTS2 Corporate Information

3 Corporate Structure

4 Profile of Directors

6 Chairman’s Statement

8 Group Financial Highlights

9 Statement on Corporate Governance

13 Other Information

14 Audit Committee Report

18 Statement on Internal Control

20 Directors’ Responsibility Statement

21 Directors’ Report and Financial Statements

22 Directors’ Report

25 Statement by Directors

25 Statutory Declaration

26 Independent Auditors’ Report

28 Consolidated Statement of Financial Position

29 Consolidated Statement of Comprehensive Income

30 Consolidated Statement of Changes in Equity

31 Consolidated Statement of Cash Flows

33 Statement of Financial Position

34 Statement of Comprehensive Income

35 Statement of Changes in Equity

36 Statement of Cash Flows

37 Notes to the Financial Statements

84 Summary of Landed Properties and Buildings

86 Analysis of Shareholdings

88 Notice of Annual General Meeting

92 Statement Accompanying Notice of Annual

General Meeting

93 Appendix I: Proposed Amendments to the

Articles of Association of the Company

Form of Proxy

“Success Comes in Cans”

The CAN Company

ANNUAL REPORT 2010 1

CORPORATE INFORMATION

AUDIT COMMITTEE

William Maurice SamsonIndependent Non-Executive Chairman

See Ewe LinIndependent Non-Executive Director

Razmi Bin AliasNon-Independent Non-Executive Director

COMPANY SECRETARY

Tan Bee Keng MAICSA 0856474

AUDITORS

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

PRINCIPAL PLACE OF BUSINESS

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

REGISTERED AND CORPORATE OFFICE

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

SHARE REGISTRAR

Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City Lingkaran Syed Putra59200 Kuala Lumpur, MalaysiaTelephone No. : 603-2264 3883Fax No. : 603-2282 1886Email Address : [email protected]

PRINCIPAL BANKERS

Bank Kerjasama Rakyat Malaysia BerhadHSBC Bank Malaysia Berhad

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities BerhadStock Name : CANONEStock Code : 5105Sector : Industrial Products

William Maurice SamsonIndependentNon-Executive Chairman

See Ewe LinIndependentNon-Executive Director

Yeoh Jin BengNon-IndependentNon-Executive Director

Razmi Bin AliasNon-IndependentNon-Executive Director

Yeoh Jin HoeManaging Director

Chee Khay LeongChief Operating Officer cum Executive Director

Ooi Teik HuatExecutive Director

BOARD OF DIRECTORS

CAN-ONE BERHAD (638899-K) 2

CORPORATE STRUCTURE


Aik Joo Can Factory Sdn Bhd (003106-A)

Manufacture of metal and lithographed cans, and plastic jerry cans

Canzo Sdn Bhd (630828-H)

Manufacture and trading of plastic jerry cans and related products

Ajcan Sdn Bhd (096632-P)

Property letting and property investment

Sanjung Nuri Sdn Bhd (226569-M)

Property investment

Newmarq Sdn Bhd (503696-U) (formerly known as Newmarq Land Sdn Bhd)

Investment holding

Can-One International Sdn Bhd (729929-K)

Investment holding

Amber Alliance Sdn Bhd (708551-V)

Investment holding

F & B Nutrition Sdn Bhd (227627-T)

Manufacture, packaging and distribution of dairy and non-dairy products


100%

100%

100%

100%

100%

100%

100%

80%

PROFILE OF DIRECTORS


WILLIAM MAURICE SAMSONIndependent Non-Executive Chairman, Malaysian. Aged 85

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

His experience is extensive covering management, marketing, insurance, finance and also shipping, having been the Managing Director of Sandilands Buttery & Company Ltd (“Sandilands”) prior to his retirement in 1980. He was working for Sandilands for twenty-five years. Currently, he is actively involved in his own trading company which he started after his retirement.

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

He has no family relationship with any Director and/or major shareholder of Can-One and has no conflict of interest with Can-One. He has no conviction for any offence within the past ten years.

YEOH JIN HOEManaging Director, Malaysian. Aged 64

Mr. Yeoh Jin Hoe was appointed to the Board of Can-One as Managing Director on 8 April 2005.

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

Under his leadership and guidance, Can-One Group has expanded its core business as a tin can manufacturer to include the manufacture of plastic jerry cans, bag-in-boxes, dairy and non-dairy products. He continues to be responsible for the development of the corporate goals and objectives of Can-One Group and the setting of strategies to achieve them.

He is a major shareholder of Can-One and is related to Mr. Yeoh Jin Beng, a Director and shareholder of the Company. Mr. Yeoh Jin Hoe has no conflict of interest with Can-One and has no conviction for any offence within the past ten years.

CHEE KHAY LEONGChief Operating Officer cum Executive Director, Malaysian. Aged 50

Mr. Chee Khay Leong was appointed to the Board of Can-One as Chief Operating Officer cum Executive Director on 8 April 2005.

Having been one of the longest serving staff members of Aik Joo Can Factory Sdn Bhd, a wholly-owned subsidiary of Can-One, since 1977, Mr. Chee has extensive experience in the management of manufacturing facilities, sales and marketing and the development of new businesses. Being an integral part of the management team, Mr. Chee is responsible for implementation of the Group’s broad operational strategies and policies. He also oversees the day-to-day operations and performance of the Group.



OOI TEIK HUATExecutive Director, Malaysian. Aged 41

Mr. Ooi Teik Huat was appointed to the Board of Can-One as Executive Director on 30 August 2005. He is responsible for the financial affairs of the Group.

He is a member of the Malaysian Institute of Certified Public Accountants and the Malaysian Institute of Accountants. His experience covers finance, accounting and corporate functions. Prior to joining Can-One, he was actively involved in his own consultancy and secretarial firms which provide financial management, accounting and secretarial services to several private limited companies and public listed companies which are in the manufacturing, trading and construction industries. He previously worked for Messrs KPMG, Penang for eight years.

He also sits on the Board of JMR Conglomeration Bhd, a company listed on the Main Market of Bursa Malaysia Securities Berhad, as Independent Non-Executive Director.


RAZMI BIN ALIASNon-Independent Non-Executive Director, Malaysian. Aged 54

Encik Razmi Bin Alias joined the Board of Can-One as Non-Independent Non-Executive Director on 8 April 2005. He is also a member of the Audit Committee, Remuneration Committee and Nominating Committee.

He holds a diploma in Business Studies from Universiti Teknologi Mara, Malaysia, a Degree in Business Administration from Western Michigan University, United States of America (“USA”) and a Masters in Business Administration from Central Michigan University, Michigan, USA.

His experience covers finance and corporate functions, business development and trading. He owns several companies which are mainly into financial consultancy, poultry farming, trading, transport, logistics, property and investment holding. Previously, he was a senior management staff in a local financial institution for fifteen years.


YEOH JIN BENGNon-Independent Non-Executive Director, Malaysian. Aged 59

Mr. Yeoh Jin Beng was appointed as Non-Independent Non-Executive Director on the Board of Can-One on 8 April 2005.

One of the co-founders of the Kaiserkorp Sdn Bhd group of companies which manufacture and distribute “KingKoil” and other branded mattresses in Malaysia, Mr. Yeoh Jin Beng has extensive experience in manufacturing and trading of consumer products. Prior to that, he was working for an international pharmaceutical company which deals in pharmaceutical and other specialty medical products. He is currently managing a group of companies which are involved in the manufacture and distribution of instant noodles and other consumer food products.

He is related to Mr. Yeoh Jin Hoe, the Managing Director and a major shareholder of Can-One. He has no conflict of interest with Can-One and has no conviction for any offence within the past ten years.

SEE EWE LINIndependent Non-Executive Director, Malaysian. Aged 56

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

He graduated from West London University (formerly known as Ealing College) United Kingdom with a degree in Law (LLB) (Honours). He practiced law at Messrs Lim Cheng Poh, Lim & Rahim after passing the Local Certificate of Legal Practice in University Malaya in 1986. In 1991, he joined Messrs Ooi Lee & Company as partner, where he still practices.


CHAIRMAN’S STATEMENT

FINANCIAL REVIEw

In 2010, Can-One Group (“the Group”) achieved another milestone by achieving a record turnover of RM449.1 million as compared to RM405.9 million in the previous financial year. The expansion plan in the food division in the previous financial years is the main catalyst behind the strong growth in revenue.

Pre-tax profit and post tax profit have however, declined to RM26.4 million and RM20.8 million respectively from RM37.1 million and RM31.3 million respectively in the financial year 2009. This is attributable mainly to the change in sales mix and the overall increase in the costs of raw materials.

DIVIDEND

The Board of Directors (“the Board”) has proposed a first and final tax exempt dividend of 6% (3.0 sen) per share, totalling RM4.572 million for the financial year ended 31 December 2010 for the approval by the shareholders at the forthcoming Seventh Annual General Meeting of the Company.

Dear Shareholders

On behalf of the Board of Directors, I have pleasure in presenting the Annual Report and Audited Financial Statements of Can-One Berhad (“Can-One” or “the Company”) for the financial year ended 31 December 2010.

CORPORATE DEVELOPMENT

In 2009, Can-One International Sdn Bhd (“CISB”), a wholly-owned subsidiary of the Company, entered into a conditional share sale agreement to acquire 146,131,500 ordinary shares of RM0.25 each, representing 32.9% equity interest in Kian Joo Can Factory Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad, at a total purchase consideration of RM241,116,975 (“Proposed Acquisition”).

The Proposed Acquisition was approved by the shareholders of the Company on 3 June 2009 and the Ministry of Trade and Industry on 11 June 2009. The Securities Commission approved the Proposed Acquisition on 7 September 2009.

On 18 February 2011, Can-One submitted to the Securities Commission an application for extension of time to complete the Proposed Acquisition.

The Proposed Acquisition has yet to be completed pending the satisfactory resolution of the matters in the Courts.


THE INDUSTRY – TREND AND DEVELOPMENT

General Cans Division

The general cans division contributed a revenue and pre-tax profit of RM281.4 million and RM26.9 million in 2010.

The continuous strengthening of Ringgit Malaysia against the US Dollars and the increase in the price of food and beverage products have affected the price competitiveness of Malaysian exports in the international market. This in turn poses a challenge to the Group as it continues to supply tin cans and jerry cans to support the food and beverage industry.

Food Division

The food division contributed a revenue and pre-tax profit of RM220.0 million and RM10.9 million in 2010. The Group has expanded the capacity in the food division to cater for the increase in demand for its food products.

However, the main challenges faced by the food division are the continuous strengthening of Ringgit Malaysia against the US Dollars and the increase in the prices of key ingredients.

FUTURE PROSPECTS

Despite the challenges posed by factors discussed above, the Group has undertaken various measures to ensure it remains competitive and relevant in the industry. The Board is cautiously optimistic that it will remain resilient in the challenging operating environment.

Barring unforeseen circumstances, the Board expects the Group’s performance for the year ending 31 December 2011 to be satisfactory.

CORPORATE SOCIAL RESPONSIBILITY

The Group recognises its responsibility as a corporate citizen and will continue to play an important role in the society.

The Group has conducted the following activities during the year:

• Create health and safety awareness amongst theemployees by conducting training on fire hazards and fire drills.

• Provideappropriatefirstaidtrainingtoemployees.• Continue to provide employment opportunities to

Malaysians.• Provide on the job training opportunities for

undergraduates of local universities.

The Group also donates cash and goods to local charitable organisations.

APPRECIATION

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

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

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

“Success Comes in Cans”

william Maurice SamsonChairman21 April 2011


GROUP FINANCIAL HIGHLIGHTS


Revenue RM’Million

Earnings Per Share Sen

Net Assets RM’Million

Profit Before and After Tax RM’Million

Profit Before Tax

449.05405.93413.71

260.49

201.20

12.76

190.0020.37

175.22

11.36

143.83

7.92

131.09

10.17123.47

26.39/20.79

500

400

300

200

100

0

25

20

15

10

5

0

250

200

150

100

50

0

50

40

30

20

10

0

Financial Year Ended 31 December 2006 2007 2008 2009 2010 (Restated)

Revenue (RM’Million) 201.20 260.49 413.71 405.93 449.05

Profit Before Tax (RM’Million) 18.04 15.03 19.36 37.11 26.39

Profit After Tax (RM’Million) 15.84 12.11 17.45 31.34 20.79

Earnings Per Share (Sen) 10.17 7.92 11.36 20.37 12.76

Net Assets (RM’Million) 123.47 131.09 143.83 175.22 190.00

06 07 08 09 2010

06 07 08 09 2010 06 07 08 09 2010

06 07 08 09 2010

37.11/31.34

19.36/17.45

15.03/12.11

18.04/15.84

Profit After Tax

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

The Board is pleased to report on the manner in which Can-One has applied the Principles set out in the Malaysian Code on Corporate Governance (“the Code”) and the extent of compliance with the Best Practices in Corporate Governance set out in the Code.

A. BOARD OF DIRECTORS

Role of the Board

The Board’s main roles are to create value for shareholders and provide leadership to the Group. It is primarily responsible for determining the Group’s strategic plans and directions, overseeing the conduct of the business, risk management, succession planning of senior management, implementing investor relations programme and ensuring the system of internal controls and management information system are adequate and effective.

Board Composition and Balance

The Board currently has seven members comprising a Managing Director, two Executive Directors and four Non-Executive Directors, two of whom are Independent. The current Board composition complies with Bursa Malaysia Securities Berhad Main Market Listing Requirements which require a minimum of two Directors or one-third of the Board to be independent members. The Board believes that the current Board composition fairly represents the interest of shareholders other than the significant shareholder.

To ensure effective supervision and accountability of each of the Board members and the Management, the positions of the Chairman and the Managing Director are held by separate persons to ensure balance of power and authority. The Chairman is primarily responsible for the effective running and orderly conduct of the Board whilst the Managing Director provides entrepreneurial leadership of the Company. The Managing Director is also responsible for developing the Group’s broad strategies and plans to meet such strategies, the making of operational decisions, in addition to advancing relationships with regulators and all other stakeholders.

The Executive Directors have responsibilities over the operating units, organizational effectiveness and implementation of the Board’s policies and decisions as well as implementing business and corporate strategies. The Independent Non-Executive Directors play a key role by providing unbiased and independent views, advice and judgment which take into account the interests of the Group as well as shareholders and investors.

The current composition of the Board reflects the wide range of business, commercial, financial and legal experience which are essential in the management and direction of the Group. A brief description of the background of each Director is presented in the Profile of Directors in this Annual Report.

Appointments and Re-election of Directors

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

In accordance with the Company’s Articles of Association, all Directors are required to retire from office once at least in each two years but shall be eligible for re-election. The Articles also provide that all newly appointed Directors shall hold office until the next Annual General Meeting after their appointment and shall be eligible for re-election.

Directors of or over the age of seventy years are required to retire pursuant to Section 129(6) of the Companies Act, 1965 at the forthcoming Annual General Meeting of the Company. Independent Non-Executive Chairman, Mr. William Maurice Samson, who is over the age of seventy is seeking re-appointment accordingly as shown in the Notice of Annual General Meeting on page 88 of this Annual Report.

Board Committees

The Board has delegated certain responsibilities to the Board Committees, all of which operate within defined terms of reference to assist the Board in the execution of its duties and responsibilities. The Board Committees are namely, the Audit Committee, Nominating Committee and Remuneration Committee. These Committees which comprise a majority of Independent Non-Executive Directors, deliberate on matters delegated to them and report to the Board with their recommendations. The ultimate responsibility for the final decision on all matters, however, lies with the Board.


STATEMENT ON CORPORATE GOVERNANCE

The membership of these three Committees, which has not changed since the last Annual Report are as follows:

William Maurice Samson – Chairman(Independent Non-Executive Chairman)

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

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

The Nominating Committee which was formed on 15 September 2005, is responsible for making recommendations for appointments to the Board and Board Committees. In making these recommendations, the Nominating Committee reviews the composition and size of the Board and determines the board balance. It also reviews the required mix of skills, experience, qualification and other core competencies required of a Director.

The Remuneration Committee which was formed on 15 September 2005, is responsible for reviewing succession planning as well as the remuneration policies and practices of the Group.

Both the Nominating Committee and the Remuneration Committee held one meeting during the financial year ended 31 December 2010.

The terms of reference and the activities of the Audit Committee are presented on pages 14 to 17 of this Annual Report.

Board Meetings and Supply of Information

Board meetings are scheduled in advance prior to the beginning of a new financial year so as to enable the Directors to plan accordingly and fit the year’s Board meetings into their respective schedules. Prior to each Board meeting, all Directors will receive the agenda together with a comprehensive set of Board papers encompassing reports on the Group’s financial performance, industry trends, future development, the draft interim or annual financial results, the minutes of preceding meetings of the Board and Board Committees, and relevant proposal papers (if any) to allow them sufficient time to review, consider and deliberate knowledgeably on the matters to be tabled.

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

During the financial year ended 31 December 2010, the Board held five meetings where it deliberated on the interim and annual financial results, budget and strategy, corporate proposals, risk management and strategic issues pertaining to the Group’s business operations or affairs. Details of each of the Directors’ attendance for the five Board meetings are as follows:

Director

Number of Board Meetings Attended/Held

Percentage (%) of Attendance

William Maurice Samson 5/5 100

Yeoh Jin Hoe 5/5 100

Chee Khay Leong 5/5 100

Ooi Teik Huat 5/5 100

Yeoh Jin Beng 5/5 100

See Ewe Lin 5/5 100

Razmi Bin Alias 5/5 100



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

The Board also perused the decisions deliberated by the Board Committees through minutes of these Committees. The Chairman of the Board Committees is responsible to inform the Directors at Board meetings of any salient matters noted by the Committees and which require the Board’s notice or direction.

The Directors have full access to all information pertaining to the Group’s businesses and affairs to enable them to discharge their duties. They have direct access to the services of the Senior Management employees and the Company Secretary who are responsible to the Board for ensuring that all Board procedures are followed and that applicable laws and regulations are complied with. In addition, Directors may seek external independent professional advice at the Company’s expense on matters pertaining to the Group’s operations or undertakings, as and when necessary, in fulfillment of their duties and responsibilities as Directors of the Company.

Directors’ Training and Education

All Directors have attended the Mandatory Accreditation Programme prescribed by Bursa Malaysia Securities Berhad. The Directors are encouraged to evaluate their own training needs on a continuous basis and determine the relevant programmes, forum or conference to update and improve their knowledge and skills to keep abreast with regulatory requirements and business development.

Throughout the financial year under review, the Directors attended various briefings and conferences covering areas that included relevant industry updates, global business developments and financial updates which they have, collectively or individually, considered as useful in discharging their stewardship responsibilities.

Directors’ Remuneration

The Remuneration Committee is entrusted with the role of recommending to the Board suitable policies in respect of remuneration packages for the Managing Director and Executive Directors. The current remuneration packages for the Managing Director and Executive Directors comprise a combination of basic salary and a variable performance incentive. There has been no change in the remuneration policies and practices during the financial year under review.

The remuneration of the Non-Executive Directors is based on a standard fee determined by the Board and approved by the Company’s shareholders at the Annual General Meeting.

The Directors do not participate in decisions regarding their own remuneration packages. Meeting allowance is paid to Directors and the Board Committee members in accordance with the number of Board meetings and Board Committee meetings attended by each of them during the financial year. The Directors are also reimbursed reasonable expenses incurred by them in the course of carrying out their duties on behalf of the Company.

Details of the remuneration of the Directors categorised into appropriate components for the financial year ended 31 December 2010 are as follows:

Category

Managing Director/ Executive Directors

RM

Non-Executive Directors

RM

Fees 75,000 169,000Salaries 776,000 –Bonuses 350,000 –Other remuneration 135,120 –Benefits-in-kind 19,960 –

Total 1,356,080 169,000


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

Remuneration Range Number of Directors

Executive Directors

RM100,001 – RM150,000 1RM350,001 – RM400,000 1RM800,001 – RM850,000 1

Non-Executive Directors

Less than RM50,000 3RM50,001 – RM100,000 1

B. SHAREHOLDERS

Communication with Shareholders and Investors

The Company is fully aware of the importance of effective and timely communication with shareholders and investors to keep them informed on the Group’s latest financial performance, business or corporate developments. Such information is communicated through the Annual Report, the various disclosures and announcements to Bursa Malaysia Securities Berhad and the Company’s corporate website.

Throughout the year, briefings and open discussions with analysts, institutional investors and fund managers were also held by the Managing Director and/or the Executive Directors to provide updates on the Group’s financial results, operations and activities.

The Annual General Meeting (“AGM”) remains the principal forum for dialogue and interaction with shareholders. At the AGM, shareholders are given opportunity to raise questions and seek clarification on the agenda items and on the performance of the Group.

The Company’s website at www.canone.com.my also provides an easy and convenient avenue for shareholders and investors to gain access to more information on the Group such as its history, corporate structure, corporate information, corporate governance matters as well as the products offered by the Group.

The Independent Non-Executive Chairman, Mr. William Maurice Samson, is the designated Senior Independent Non-Executive Director to whom concerns relating to the Group may be conveyed by shareholders and other stakeholders.

C. ACCOUNTABILITY AND AUDIT

Financial Reporting

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

Internal Control

The Board recognizes the importance of maintaining a sound system of internal controls to safeguard the shareholders’ investment and the Group’s assets. An overview of the state of internal controls within the Group is set out in the Statement on Internal Control on pages 18 to 19 of this Annual Report.

Relationship with the External Auditors

The Board via the Audit Committee maintains a formal and transparent arrangement with the Group’s External Auditors in seeking professional advice and ensuring compliance with applicable Financial Reporting Standards and statutory requirements. The role of the External Auditors and their participation during the year are elaborated on pages 14 to 17 of this Annual Report.

This Statement is made in accordance with a resolution of the Board dated 21 April 2011.



SHARE BUYBACKS

During the financial year ended 31 December 2010, there were no share buybacks by the Company.

OPTIONS OR CONVERTIBLE SECURITIES

The Company’s Employees’ Share Option Scheme was established in conjunction with the Company’s listing on the Main Board of Bursa Malaysia Securities Berhad on 29 July 2005. However, as at 31 December 2010, the Company has not granted any option.

No convertible securities were issued by the Company and/or exercised during the financial year ended 31 December 2010.

DEPOSITORY RECEIPT PROGRAMME

The Company did not sponsor any depository receipt programme during the financial year ended 31 December 2010.

IMPOSITION OF SANCTIONS/PENALTIES

There were no public sanctions and/or penalties imposed on the Company and its subsidiary companies, Directors or Management by the relevant regulatory bodies during the financial year ended 31 December 2010.

NON-AUDIT FEES

During the financial year ended 31 December 2010, the Company paid non-audit fees of RM24,000 to the External Auditors.

PROFIT GUARANTEES

The Company did not receive any profit guarantee during the financial year ended 31 December 2010.

MATERIAL CONTRACTS

There were no material contracts (not being contracts entered into the ordinary course of business) entered into by the Company and/or its subsidiaries involving Directors’ and major shareholders’ interests which subsisted at the end of the financial year ended 31 December 2010 or, if not then subsisting, were entered into since the end of the previous financial year.

REVALUATION POLICY

The revaluation policy on landed properties of the Group in respect of the financial year ended 31 December 2010 is as disclosed in the notes to the financial statements.


OTHER INFORMATION

COMPOSITION

The Audit Committee comprises the following:

Members

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

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

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

Secretary

Tan Bee Keng

TERMS OF REFERENCE

1. Membership

1.1 The Audit Committee shall be appointed by the Board from amongst its members (excluding alternate directors) which shall fulfill the following requirements:

(a) the Audit Committee must be composed of not fewer than three members;

(b) a majority of the Audit Committee must be Independent Directors;

(c) all members of the Audit Committee must be Non-Executive Directors; and

(d) at least one member of the Audit Committee:

(i) must be a member of the Malaysian Institute of Accountants (“MIA”); or

(ii) if he is not a member of the MIA, he must have at least three years’ working experience and:

(aa) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

(bb) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or

(iii) if he is not a member of the MIA, he must have:

(aa) a degree/masters/doctorate in accounting or finance and at least three years’ post qualification experience in accounting or finance; or

(bb) at least seven years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation; or

(iv) fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

1.2 In the event of any vacancy arising in the Audit Committee resulting in non-compliance in its composition, such vacancy must be filled within three months.

1.3 The term of office and performance of the Audit Committee and each of its members must be reviewed by the Board of Directors at least once every two years.


AUDIT COMMITTEE REPORT

2. Chairman

2.1 The members of the Audit Committee shall elect a Chairman from amongst their number who must be an Independent Director.

3. Secretary

3.1 The Company Secretary(s) of the Company shall be the Secretary(s) of the Audit Committee.

4. Meetings

4.1 Meetings shall be held not less than four times a year, although additional meeting may be called at any time at the discretion of the Chairman of the Audit Committee. An agenda shall be sent to all members of the Audit Committee and any person who may be required/invited to attend. All meetings to review the quarterly results and annual financial statements, shall be held prior to such quarterly results and annual financial statements being presented to the Board for approval.

4.2 A quorum in respect of a meeting of the Audit Committee shall not be less than two members, the majority of whom must be Independent Directors.

4.3 Notwithstanding paragraph 4.1 above, any member of the Audit Committee, the External Auditors or the Internal Auditors may request and the Chairman of the Audit Committee shall convene a meeting of the Committee to consider the matters brought to its attention.

4.4 Other Directors and employees may attend any particular Audit Committee meeting only at the invitation of the Audit Committee, specific to the relevant meeting.

4.5 The Audit Committee may establish any regulations from time to time to govern its administration.

5. Authority

5.1 All employees are directed to cooperate with any request by the Audit Committee and the Audit Committee shall:

(a) have authority to investigate any matter within its Terms of Reference;

(b) have the resources which are required to perform its duties;

(c) have full and unrestricted access to any information pertaining to the Company and the Group;

(d) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity (if any);

(e) be able to obtain independent external professional or other advice; and

(f) be able to convene meetings with the External Auditors, the Internal Auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary.

6. Duties and Responsibilities

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

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

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

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

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

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


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

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

(ii) significant adjustment arising from the audit;

(iii) significant and unusual events;

(iv) the going concern assumption; and

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

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

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

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

(j) to do the following, in relation to the internal audit function:

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

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

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

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

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

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

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

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

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

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

7. Minutes

7.1 The Audit Committee shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the Committee. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and if so signed, shall be conclusive evidence without any further proof of the facts thereon stated.

7.2 Minutes of each meeting shall be distributed to all attendees at the meetings and members of the Audit Committee.

7.3 The Secretary(s) shall circulate the minutes of the Audit Committee meetings to all members of the Board. A summary of significant matters and resolutions will be reported to the Board by the Audit Committee.

7.4 The books containing the minutes of proceedings of any meeting of the Audit Committee shall be kept by the Company at the registered office of the Company, and shall be open to the inspection of any member of the Audit Committee and the Board.


AUDIT COMMITTEE REPORT

NUMBER OF MEETINGS AND ATTENDANCE

The Audit Committee held five meetings during the financial year ended 31 December 2010 (“FYE 2010”), which were attended by all its members.

SUMMARY OF ACTIVITIES

The main activities undertaken by the Audit Committee in discharging their responsibility during the FYE 2010 were as follows:

(i) Reviewed and approved the Internal Audit Plan for the FYE 2010 for the Group presented by the Internal Auditors;

(ii) Reviewed and discussed the observations and recommendations made by the Internal Auditors and External Auditors and the Management’s response thereto from the evaluation of the system of internal control and annual audit;

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

(iv) Reviewed the Audit Committee Report and Statement on Internal Control for inclusion in the Annual Report 2010;

(v) Reviewed and approved the External Audit Plan and the scope for the annual audit for the Group presented by the External Auditors;

(vi) Discussed with the Management and the External Auditors on new developments on the Financial Reporting Standards applicable to the financial statements of the Group and of the Company and their judgment of the items that may affect the financial statements;

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

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

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

INTERNAL AUDIT FUNCTION

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

A summary of activities of the internal audit function during the financial year ended 31 December 2010 is presented in the Statement on Internal Control. The Group paid a total fee of RM22,000 for services rendered in respect of internal audit for the financial year ended 31 December 2010.

This Statement is made in accordance with a resolution of the Board dated 21 April 2011.


The Board recognizes the importance of a sound system of internal control to meet the Group’s business objectives, safeguard shareholders’ interest and the Group’s assets. It affirms its overall responsibility for the Group’s system of internal control which includes the establishment of an appropriate control environment and framework as well as reviewing the adequacy and integrity of the system. However due to the inherent limitations in any system of internal controls, such a system is designed to identify and manage the Group’s risk within the acceptable risk profile, rather than eliminate the risk of failure to achieve business objectives. Thus, the system can only provide reasonable but not absolute assurance against material misstatement, loss or fraud. The significant areas covered by the Group’s system of internal controls are financial, organizational, operational and compliance controls.

The Group’s internal control mechanism is embedded in the various work processes and procedures at appropriate levels in the Group. The Board maintains an organizational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The Board meets regularly and has a Schedule of Matters that are brought to it for decision in order that effective control over strategic, financial, operational and compliance issues can be maintained.

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

The Audit Committee is responsible for reviewing and monitoring the adequacy, integrity and effectiveness of the Group’s system of internal controls. In this respect, the Group outsourced the internal audit function to an independent external consulting firm, Messrs Tan Yen Yeow & Company (“Internal Auditors”), to provide independent assurance on the adequacy of risk management, internal control and governance systems. The annual Internal Audit Plan is reviewed and approved by the Audit Committee prior to each financial year.

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

• RevenueandSales

• Production

• QualityControl

• FixedAssetsManagement

• Purchasing

• Inventory

• TradeReceivablesandCreditcontrols

• TreasuryManagement

• Safety,healthandenvironment

• Payroll

• Humanresourcemanagementandtraining


STATEMENT ON INTERNAL CONTROL

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

Subsidiary companies were accredited ISO 9001:2000, ISO 9001:2008 and ISO:22000. Documented internal procedures and standard operating procedures (“SOPs”) have been put in place since their accreditation. The SOPs covered major functional aspects such as product quality, productivity benchmarks, cost control, asset security and occupational safety procedures, human capital management, compliance with regulatory standards, among other matters. Surveillance audits are conducted periodically by assessors of the ISO certification body to ensure that the systems are adequately implemented.

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

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

The Board is of the view that the system of internal controls in place for the year under review is sound and sufficient to safeguard the shareholders’ interests and the Group’s assets. There were no material internal control weaknesses which had resulted in material losses, uncertainties or contingencies that would require disclosure in this Annual Report.

The External Auditors have reviewed this Statement on Internal Control for inclusion in this Annual Report and reported that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of internal controls system within the Group.

This Statement on Internal Control is made in accordance with a resolution of the Board dated 21 April 2011.


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

The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2010 as set on pages 28 to 83 of this Annual Report, the Group has used appropriate Financial Reporting Standards, applied them consistently and made judgments and estimates that are reasonable and prudent. The Directors also consider that all applicable Financial Reporting Standards have been followed and confirm that the financial statements have been prepared on going concern basis.

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

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


DIRECTORS’ RESPONSIBILITY STATEMENT

DIRECTORS’ REPORT AND FINANCIAL STATEMENTS

22 Directors’ Report

25 Statement by Directors

25 Statutory Declaration

26 Independent Auditors’ Report

28 Consolidated Statement of Financial Position

29 Consolidated Statement of Comprehensive Income

30 Consolidated Statement of Changes in Equity

31 Consolidated Statement of Cash Flows

33 Statement of Financial Position

34 Statement of Comprehensive Income

35 Statement of Changes in Equity

36 Statement of Cash Flows

37 Notes to the Financial Statements


The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2010.

Principal activities

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

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

Results

Group Company RM’000 RM’000

Profit for the year attributable to: Owners of the Company 19,442 5,477 Minority interest 1,348 –

20,790 5,477

Reserves and provisions

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

Dividends

Since the end of the previous financial year, the Company paid a first and final tax exempt dividend of 6% (3.00 sen per share), totalling RM4,572,000 for the financial year ended 31 December 2009 on 30 July 2010.

The Board of Directors has proposed a first and final tax exempt dividend of 6% (3.00 sen per share), totalling RM4,572,000 for the financial year ended 31 December 2010, subject to shareholders’ approval at the forthcoming Annual General Meeting.

Directors of the Company

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

William Maurice Samson

Yeoh Jin Hoe

Yeoh Jin Beng

Chee Khay Leong

Razmi Bin Alias

See Ewe Lin

Ooi Teik Huat

DIRECTORS’ REPORTFOR THE yEAR ENDED 31 DECEMBER 2010


Directors’ interests

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

Balance at Balance at 1.1.2010 Bought (Sold) 31.12.2010

The Company

Direct interest in ordinary shares of RM0.50 each

William Maurice Samson 80,000 – – 80,000Yeoh Jin Hoe 6,690,000 – – 6,690,000Yeoh Jin Beng 300,000 – – 300,000Chee Khay Leong 300,100 150,000 – 450,100See Ewe Lin 300,100 – – 300,100Ooi Teik Huat 150,000 – – 150,000

Indirect interest in ordinary shares of RM0.50 each

Yeoh Jin Hoe 43,840,881 – – 43,840,881Razmi Bin Alias 911,119 – – 911,119

Subsidiary

Deemed interest in ordinary shares of RM1.00 each in F & B Nutrition Sdn. Bhd.

Yeoh Jin Hoe – own 12,000,000 – – 12,000,000

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

Directors’ benefits

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

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

Issue of shares and debentures

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


Options granted over unissued shares

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

Other statutory information

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

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

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

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

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

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

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

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

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

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

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

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

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December 2010 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Auditors

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

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

yeoh Jin Hoe

Chee Khay Leong

Penang Date: 21 April 2011

DIRECTORS’ REPORT


In the opinion of the Directors, the financial statements set out on pages 28 to 83 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company at 31 December 2010 and of their financial performance and cash flows for the year ended on that date.

In the opinion of the Directors, the information set out in Note 33 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

yeoh Jin Hoe

Chee Khay Leong

Penang Date: 21 April 2011

I, Ooi Teik Huat, the Director primarily responsible for the financial management of Can-One Berhad, do solemnly and sincerely declare that the financial statements set out on pages 28 to 83 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed at Georgetown in the State of Penang on 21 April 2011.

Ooi Teik Huat

Before me:

Cheah Beng Sun, DJN, AMN, PKT, PJK, PJM, PK (No: P.103) Commissioner for Oaths Penang

STATEMENT By DIRECTORS PuRSuANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATuTORy DECLARATION PuRSuANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965


Report on the Financial Statements

We have audited the financial statements of Can-One Berhad, which comprise the statements of financial position as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, changes in equity and statement 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 information, as set out on pages 28 to 83.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are 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 judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

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

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

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

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

INDEPENDENT AuDITORS’ REPORTTO THE MEMBERS OF CAN-ONE BERHAD


Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in note 33 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not part of the financial statements. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other 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.

KPMG AF 0758 Chartered Accountants

Ooi Kok Seng 2432/05/11 (J) Chartered Accountant

Date: 21 April 2011 Penang


Note 2010 2009 RM’000 RM’000 Restated

AssetsProperty, plant and equipment 3 195,040 194,272Other investments, including derivatives 5 116 17Goodwill on consolidation 6 1,712 1,712

Total non-current assets 196,868 196,001

Other investments, including derivatives 5 197 –Inventories 7 117,557 97,237Trade and other receivables 8 123,280 123,712Current tax assets 701 654Cash and cash equivalents 9 22,808 27,283

Total current assets 264,543 248,886

Total assets 461,411 444,887

EquityShare capital 10 76,200 76,200Reserves 11 113,800 99,024

Total equity attributable to owners of the Company 190,000 175,224Minority interest 4,797 3,449

Total equity 194,797 178,673

LiabilitiesBorrowings 12 70,731 83,635Deferred tax liabilities 13 18,494 16,310

Total non-current liabilities 89,225 99,945

Trade and other payables, including derivatives 14 56,876 50,835Current tax liabilities 1,200 1,654Borrowings 12 119,313 113,780

Total current liabilities 177,389 166,269

Total liabilities 266,614 266,214

Total equity and liabilities 461,411 444,887

The notes on pages 37 to 83 are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2010



Continuing operationsRevenue 15 449,051 405,926Cost of sales (397,812) (336,465)

Gross profit 51,239 69,461

Administrative expenses (13,227) (10,835)Selling and distribution expenses (7,042) (4,523)Other operating expenses (402) (5,708)

(20,671) (21,066)Other operating income 5,056 –

Results from operating activities 35,624 48,395Interest income 88 84Finance costs 16 (9,321) (11,372)

Profit before tax 17 26,391 37,107Income tax expense 20 (5,601) (5,764)

Profit for the year 20,790 31,343

Other comprehensive income, net of taxSurplus on revaluation of properties – 4,919Fair value of available-for-sale financial assets 10 –

Total comprehensive income for the year 20,800 36,262

Profit attributable to: Owners of the Company 19,442 31,047 Minority interest 1,348 296


Total comprehensive income attributable to: Owners of the Company 19,452 35,965 Minority interest 1,348 297


Basic earnings per ordinary share – sen 21 12.76 20.37


CONSOLIDATED STATEMENT OF COMPREHENSIvE INCOME

FOR THE yEAR ENDED 31 DECEMBER 2010


Attributable to the owners of the Company Non-distributable Distributable Share Share Fair value Capital Retained Minority Total Capital premium reserve reserve earnings Total interest equity RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 76,200 8,560 – – 59,071 143,831 3,152 146,983Total comprehensive income

for the year – as previously stated – – – 4,467 31,180 35,647 297 35,944

– Effect of adopting Amendment to FRS 117, surplus/(deficit) in revaluation of properties – – – 451 (133) 318 – 318

– as restated – – – 4,918 31,047 35,965 297 36,262Dividends (Note 22) – – – – (4,572) (4,572) – (4,572)

At 31 December 2009, restated 76,200 8,560 – 4,918 85,546 175,224 3,449 178,673

Effect of adopting FRS139 – – – – (104) (104) – (104)

At 1 January 2010, restated 76,200 8,560 – 4,918 85,442 175,120 3,449 178,569

Total comprehensive income for the year – – 10 – 19,442 19,452 1,348 20,800

Dividends (Note 22) – – – – (4,572) (4,572) – (4,572)

At 31 December 2010 76,200 8,560 10 4,918 100,312 190,000 4,797 194,797


CONSOLIDATED STATEMENT OF CHANGES IN EQuITyFOR THE yEAR ENDED 31 DECEMBER 2010



Cash flows from operating activitiesProfit before tax 26,391 37,107Adjustments for:

Deficit on revaluation of properties 3 – 145 Depreciation 3 14,563 10,857 (Gain)/loss on disposal of plant and equipment (2) 1 Impairment loss on investment 5 3 4,000 Interest expense 16 8,623 10,997 Interest income (88) (84) Leasehold building written off – 40 Unrealised gain on forward exchange contracts (112) –

Operating profit before changes in working capital 49,378 63,063Changes in working capital: Inventories (20,320) 18,206 Trade and other receivables 432 (547) Trade and other payables 5,860 7,428

Cash generated from operations 35,350 88,150 Tax paid (3,918) (1,400)

Net cash from operating activities 31,432 86,750

Cash flows from investing activitiesDeposit paid in connection with an investment – (24,112)Proceeds from disposal of plant and equipment 128 1Acquisition of property, plant and equipment A (14,493) (34,554)Acquisition of quoted investment (100) –Interest received 88 84

Net cash used in investing activities (14,377) (58,581)

Cash flows from financing activitiesDrawdown of term loans 6,120 57,049Repayment of term loans (15,143) (50,800)Dividend paid (4,572) (4,572)Revolving credits, net (3,000) 11,000Bankers’ acceptances, net (64,970) (4,579)Foreign currency trade loans, net 70,593 (18,727)Repayment of finance lease liabilities (1,935) (1,672)Interest paid (8,623) (10,997)

Net cash used in financing activities (21,530) (23,298)

Net (decrease)/increase in cash and cash equivalents (4,475) 4,871Cash and cash equivalents at 1 January 27,283 22,412

Cash and cash equivalents at 31 December B 22,808 27,283

CONSOLIDATED STATEMENT OF CASH FLOwSFOR THE yEAR ENDED 31 DECEMBER 2010


NOTE:

A. Acquisition of property, plant and equipment

During the year, the Group acquired property, plant and equipment with an aggregate cost of RM15,457,000 (2009: RM36,058,000) of which RM964,000 (2009: RM1,504,000) was acquired by means of finance lease. The balance of RM14,493,000 (2009: RM34,554,000) was made by cash payments.

B. Cash and cash equivalents

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

Note 2010 2009 RM’000 RM’000

Cash and bank balances 9 22,808 24,133 Short term deposit with a licensed bank 9 – 3,150

22,808 27,283


CONSOLIDATED STATEMENT OF CASH FLOwS


Note 2010 2009 RM’000 RM’000

AssetsProperty, plant and equipment 3 4 5Investment in subsidiaries 4 69,486 67,586

Total non-current assets 69,490 67,591

Trade and other receivables 8 50,337 50,080Current tax assets 643 643Cash and cash equivalents 9 68 88

Total current assets 51,048 50,811

Total assets 120,538 118,402

EquityShare capital 10 76,200 76,200Reserves 11 28,850 27,945

Total equity 105,050 104,145

Current liabilitiesTrade and other payables 14 15,488 14,257

Total liabilities 15,488 14,257

Total equity and liabilities 120,538 118,402


STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010


Note 2010 2009 RM’000 RM’000

Continuing operations

Revenue 15 6,000 10,000Administrative expenses (525) (743)

Results from operating activities 5,475 9,257

Interest income 2 –Finance costs 16 – –

Profit before tax 17 5,477 9,257

Income tax expense 20 – (146)


Other comprehensive income, net of tax – –



STATEMENT OF COMPREHENSIvE INCOME FOR THE yEAR ENDED 31 DECEMBER 2010


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

At 1 January 2009 76,200 8,560 14,846 99,606

Total comprehensive income for the year – – 9,111 9,111Dividends (Note 22) – – (4,572) (4,572)

At 31 December 2009 76,200 8,560 19,385 104,145

Total comprehensive income for the year – – 5,477 5,477Dividends (Note 22) – – (4,572) (4,572)

At 31 December 2010 76,200 8,560 20,290 105,050


STATEMENT OF CHANGES IN EQuITy

FOR THE yEAR ENDED 31 DECEMBER 2010


Note 2010 2009 RM’000 RM’000

Cash flows from operating activitiesProfit before tax 5,477 9,257Adjustments for: Depreciation 3 1 1 Dividend income (6,000) (10,000) Interest income (2) –

Operating loss before changes in working capital (524) (742)

Changes in working capital: Trade and other receivables (257) (18,462) Trade and other payables 1,231 14,088

Cash generated from/(used in) operations 450 (5,116)

Dividend received 6,000 9,700

Net cash from operating activities 6,450 4,584

Cash flows from investing activitiesAcquisition of equipment – (3)Interest received 2 –Increase in investment in a subsidiary (1,900) –

Net cash used in investing activities (1,898) (3)

Cash flows from financing activityDividends paid 22 (4,572) (4,572)

Net cash used in financing activity (4,572) (4,572)

Net (decrease)/increase in cash and cash equivalents (20) 9

Cash and cash equivalents at 1 January 88 79

Cash and cash equivalents at 31 December 9 68 88


STATEMENT OF CASH FLOwS FOR THE yEAR ENDED 31 DECEMBER 2010


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

Registered office

2B-4 Level 4 Jalan SS 6/6 Kelana Jaya 47301 Petaling Jaya Selangor Darul Ehsan

Principal place of business

Lot 2244, Jalan Rajawali Batu 9, Kampung Kebun Baru 42500 Teluk Panglima Garang Kuala Langat Selangor Darul Ehsan

The consolidated financial statements of the Company as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as “Group entities”). The financial statements of the Company as at and for the year ended 31 December 2010 do not include other entities.

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

The financial statements were authorised for issue by the Board of Directors on 21 April 2011.

1. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standards (“FRS”), generally accepted accounting principles and the Companies Act, 1965 in Malaysia.

The Group has not applied the following accounting standards, amendments and interpretations that have been issued by Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the Group:

Amendments effective for annual periods beginning on or after 1 March 2010

• AmendmentstoFRS132,Financial Instruments: Presentation – Classification of Rights Issues

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010

• FRS1,First-time Adoption of Financial Reporting Standards (revised)

• FRS3,Business Combinations (revised)

• FRS127,Consolidated and Separate Financial Statements (revised)

• AmendmentstoFRS2,Share-based Payment *

• AmendmentstoFRS5,Non-current Assets Held for Sale and Discontinued Operations *

• AmendmentstoFRS138,Intangible Assets

• ICInterpretation12,Service Concession Agreements *

• ICInterpretation16,Hedges of a Net Investment in a Foreign Operation *

• ICInterpretation17,Distributions of Non-cash Assets to Owners *

• AmendmentstoICInterpretation9,Reassessment of Embedded Derivatives

NOTES TO THE FINANCIAL STATEMENTS


1. Basis of preparation (cont’d)

(a) Statement of compliance (cont’d)

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2011

• AmendmentstoFRS1,First-time Adoption of Financial Reporting Standards– Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters– Additional Exemptions for First-time Adopters

• AmendmentstoFRS2,Group Cash-settled Share Based Payment Transactions *

• Amendments toFRS7,Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments

• ICInterpretation4,Determining whether an Arrangement contains a Lease

• ICInterpretation18,Transfers of Assets from Customers *

• ImprovementstoFRSs(2010)

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011

• ICInterpretation19,Extinguishing Financial Liabilities with Equity Instruments

• AmendmentstoICInterpretation14,Prepayments of a Minimum Funding Requirement #

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012

• FRS124,Related Party Disclosures (revised)

• ICInterpretation15,Agreements for the Construction of Real Estate #

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

• fromtheannualperiodbeginning1January2011forthosestandards,amendmentsorinterpretationsthat will be effective for annual periods beginning on or after 1 March 2010, 1 July 2010 and 1 January 2011, except for “ * ” which are not applicable to the Group and the Company; and

• fromtheannualperiodbeginning1January2012forthosestandards,amendmentsorinterpretationsthat will be effective for annual periods beginning on or after 1 July 2011 or 1 January 2012, except for “ # ” which are not applicable to the Group and the Company.

The initial application of a standard, an amendment or an interpretation, which will be applied prospectively, is not expected to have any financial impacts to the current and prior periods financial statements upon their first adoption.

Material impacts of initial application of a standard, an amendment or an interpretation, which will be applied retrospectively, are disclosed below:

(i) IC Interpretation 4, Determining whether an Arrangement contains a Lease

IC Interpretation 4 provides guidance on determining whether certain arrangements are, or contain, leases that are required to be accounted for in accordance with FRS 117, Leases. Where an arrangement is within the scope of FRS 117, the Group applies FRS 117 in determining whether the arrangement is a finance or an operating lease.

The adoption of IC Interpretation 4 will result in a change in accounting policy which will be applied retrospectively in accordance with FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors in which certain arrangements are to be accounted for as a finance lease.

Following the announcement by the MASB on 1 August 2008, the Group’s financial statements will be prepared in accordance with the International Financial Reporting Standards (IFRS) framework for annual periods beginning on 1 January 2012. The change of the financial reporting framework is not expected to have any significant impact on the financial position and performance of the Group and the Company.



1. Basis of preparation (cont’d)

(b) Basis of measurement

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

(c) Functional and presentation currency

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

(d) use of estimates and judgements

The preparation of the financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

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

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by Group entities, other than those disclosed in the following notes:

Note 2(c) – Financial instruments Note 2(f) – Leased assets Note 2(t) – Operating segments

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting except for Aik Joo Can Factory Sdn. Bhd. which was consolidated using the pooling-of-interests method of accounting.

Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Under the pooling-of-interests method of accounting, the results of entities or businesses under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. The assets and liabilities acquired were recognised at the carrying amounts recognised previously in the Group’s controlling shareholder’s consolidated financial statements. The difference between the cost of acquisition and the nominal value of the shares acquired together with the share premium are taken to merger reserve (or adjusted against any suitable reserve in the case of debit differences). The other components of equity of the acquired entities are added to the same components within Group equity.

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


2. Significant accounting policies (cont’d)

(a) Basis of consolidation (cont’d)

(ii) Changes in Group composition

Where a subsidiary issues new equity shares to minority interest for cash consideration and the issue price has been established at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equity interest with the corresponding gain or loss recognised in profit or loss.

When a group purchases a subsidiary’s equity shares from minority interest for cash consideration and the purchase price has been established at fair value, the accretion of the Group’s interest in the subsidiary is accounted for as a purchase of equity interest for which the purchase method of accounting is applied.

The Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

(iii) Transactions eliminated on consolidation

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

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(iv) Minority interest

Minority interests at the end of the reporting period, being the portion of the net identifiable assets of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Minority interests in the results of the Group are presented in the consolidated statement of comprehensive income as an allocation of the comprehensive income for the year between minority interests and the owners of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

(b) Foreign currency

Foreign currency transactions

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

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

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

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




(c) Financial instruments

Arising from the adoption of FRS 139, Financial Instruments: Recognition and Measurement, with effect from 1 January 2010, financial instruments are categorised and measured using accounting policies as mentioned below. Before 1 January 2010, different accounting policies were applied. Significant changes to the accounting policies are discussed in Note 30.

(i) Initial recognition and measurement

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

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

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

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

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

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

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

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

(b) Held-to-maturity investments

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

Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method.

(c) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market, trade and other receivables and cash and cash equivalents.

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



(c) Financial instruments (cont’d)

(ii) Financial instrument categories and subsequent measurement (cont’d)

(d) Available-for-sale financial assets

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

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

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

Financial liabilities

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

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

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

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

(iii) Financial guarantee contracts

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

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

(iv) Regular way purchase or sale of financial assets

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

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.




(c) Financial instruments (cont’d)

(v) Derecognition

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

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

(d) Goodwill

Goodwill arises on business combinations is measured at cost less any accumulated impairment losses.

For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair values of the net identifiable assets and liabilities.

For business acquisitions beginning from 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.

Any excess of the Group’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit or loss.

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

(e) Property, plant and equipment

(i) Recognition and measurement

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

The Group revalues its property comprising land and building every 5 years and at shorter intervals whenever the fair value of the revalued assets is expected to differ materially from their carrying value.

Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is recognised in profit or loss.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

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



(e) Property, plant and equipment (cont’d)

(i) Recognition and measurement (cont’d)

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

The gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other operating income” or “other operating expenses” respectively in profit or loss. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in profit or loss on a straight-line method over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.

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

The depreciation rates for the comparative periods are as follows: % Buildings 2 Plant and machinery 5 – 20 Furniture, fittings and office equipment 10 – 20 Motor vehicles 20

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

(iv) Changes in estimates

During the year, the Group changed its depreciation method from diminishing balance method to straight-line method to reflect the expected pattern of consumption of the future economic benefits embodied in the assets.

The change in the depreciation method does not have a significant impact on the financial results of the current and subsequent periods.




(f) Leased assets

(i) Finance lease

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

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

(ii) Operating lease

Leases where the Group does not assume substantially all the risks and rewards of the ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised in the statement of financial position of the Group.

In the previous years, a leasehold land that normally had an indefinite economic life and title was not expected to pass to the lessee by the end of the lease term was treated as an operating lease. The payment made on entering into or acquiring a leasehold land that was accounted for as an operating lease represents prepaid lease payments, except for leasehold land classified as investment property.

The Group has adopted the amendment made to FRS 117, Leases in 2010 in relation to the classification of lease of land. Leasehold land which in substance is a finance lease has been reclassified and measured as such retrospectively.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

(g) Impairment

(i) Financial assets

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

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

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



(g) Impairment (cont’d)

(i) Financial assets (cont’d)

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

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

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

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax asset, assets arising from employee benefits, investment property that is measured at fair value and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

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

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

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

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




(h) Inventories

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

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

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

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

(i) Receivables

Prior to 1 January 2010, receivables were initially recognised at their costs and subsequently cost less allowance for doubtful debts.

Following the adoption of FRS 139, trade and other receivables are categorised and measured as loans and receivables in accordance with Note 2(c).

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans and receivables in accordance with policy Note 2(c).

(k) Equity instruments

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

Issue expenses

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

(l) Provisions

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

(m) Contingent liabilities

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



(n) Income tax

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

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

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

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

A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

Unutilised reinvestment allowance and investment tax allowance are treated as tax base of assets and are recognised as a reduction of tax expense as and when they are utilised.

(o) Revenue and other income

(i) Goods sold

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Dividend income

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

(iii) Interest income

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




(p) Borrowing costs

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

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

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

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

(q) Employee benefits

Short-tem employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

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

The Group’s contributions to statutory pension funds are charged to profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(r) Earnings per ordinary share

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing profit or loss attributable to the owners of the Company by the weighted average number of ordinary shares outstanding during the period.

(s) Operating segments

In the previous years, a segment was a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments.

Following the adoption of FRS 8, Operating Segments, an operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Managing Director of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.


3. Property, plant and equipment

At 1 At 31 January December 2010 Additions Reclassification Disposal 2010 Restated RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost/Valuation

At Valuation Freehold land 12,703 – – – 12,703 Freehold building 22,152 – – – 22,152 Long term leasehold land 11,326 – – – 11,326 Short term leasehold land 2,709 – – – 2,709 Leasehold building 25,695 – – – 25,695

74,585 – – – 74,585 At Cost Freehold land – 499 – – 499 Freehold building – 332 9,514 – 9,846 Leasehold building – 80 – – 80 Plant & machinery 165,781 12,341 – – 178,122 Furniture, fittings and office equipment 4,605 398 – (8) 4,995 Motor vehicles 7,257 1,345 – (517) 8,085 Capital expenditure-in-progress 10,048 462 (9,514) – 996

187,691 15,457 – (525) 202,623

262,276 15,457 – (525) 277,208

At 1 At 31 January Charge for December 2010 the year Disposal 2010 Restated RM’000 RM’000 RM’000 RM’000

Group

Depreciation

At Valuation Freehold building – 442 – 442 Long term leasehold land – 191 – 191 Short term leasehold land – 70 – 70 Leasehold building – 489 – 489

– 1,192 – 1,192 At Cost Freehold building – 192 – 192 Leasehold building – 1 – 1 Plant and machinery 61,182 11,973 – 73,155 Furniture, fittings and office equipment 2,397 611 (2) 3,006 Motor vehicles 4,425 594 (397) 4,622

68,004 13,371 (399) 80,976

68,004 14,563 (399) 82,168



3. Property, plant and equipment (cont’d)

At 1 At 31 January December 2009 Additions Reclassification Revaluation Disposal Written-off 2009 Restated Restated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost/Valuation

At ValuationFreehold land 2,107 – 8,877 1,719 – – 12,703Freehold building 8,693 – 12,148 1,311 – – 22,152Long term leasehold land 1,740 – 9,859 (273) – – 11,326Short term leasehold land 1,500 – 1,431 (222) – – 2,709Leasehold building 5,480 – 20,788 (573) – – 25,695

19,520 – 53,103 1,962 – – 74,585At CostFreehold land 8,877 – (8,877) – – – –Freehold building 8,583 48 (8,631) – – – –Long term leasehold land 9,859 – (9,859) – – – –Short term leasehold land 1,431 – (1,431) – – – –Leasehold building 20,747 155 (20,788) – – (114) –Plant & machinery 133,771 22,709 9,301 – – – 165,781Furniture, fittings and

office equipment 4,006 599 – – – – 4,605Motor vehicles 6,567 841 – – (151) – 7,257Capital expenditure-

in-progress 11,160 11,706 (12,818) – – – 10,048

205,001 36,058 (53,103) – (151) (114) 187,691

224,521 36,058 – 1,962 (151) (114) 262,276



At 1 At 31 January Charge for December 2009 the year Reclassification Revaluation Disposal Written-off 2009 Restated Restated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Depreciation

At ValuationFreehold building 534 117 707 (1,358) – – –Long term leasehold land 120 24 505 (649) – – –Short term leasehold land 196 39 33 (268) – – –Leasehold building 428 75 1,169 (1,672) – – –

1,278 255 2,414 (3,947) – – –At CostFreehold building 487 220 (707) – – – –Long term leasehold land 358 147 (505) – – – –Short term leasehold land 14 19 (33) – – – –Leasehold building 911 332 (1,169) – – (74) –Plant and machinery 52,328 8,854 – – – – 61,182Furniture, fittings and

office equipment 2,080 317 – – – – 2,397Motor vehicles 3,861 713 – – (149) – 4,425

60,039 10,602 (2,414) – (149) (74) 68,004

61,317 10,857 – (3,947) (149) (74) 68,004




Carrying Carrying Carrying amounts amounts amounts At 31 At 31 At 1 December December January 2010 2009 2009 Restated Restated RM’000 RM’000 RM’000

At ValuationFreehold land 12,703 12,703 2,107Freehold building 21,710 22,152 8,159Long term leasehold land 11,135 11,326 1,620Short term leasehold land 2,639 2,709 1,304Leasehold building 25,206 25,695 5,052

At CostFreehold land 499 – 8,877Freehold building 9,654 – 8,096Long term leasehold land – – 9,501Short term leasehold land – – 1,417Leasehold building 79 – 19,836Plant and machinery 104,967 104,599 81,443Furniture, fittings and office equipment 1,989 2,208 1,926Motor vehicles 3,463 2,832 2,706Capital expenditure-in-progress 996 10,048 11,160

195,040 194,272 163,204

Included in property, plant and equipment of the Group is an amount of RM918,000 (2009: RM950,000) representing the carrying amount of buildings erected on land belonging to third parties.

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

2010 2009 RM’000 RM’000

Plant and machinery 5,061 5,454Motor vehicles 1,998 1,318

7,059 6,772

The revalued properties of the Group were revalued in 2009 by KGV-Lambert Smith Hampton (M) Sdn Bhd, an independent professional qualified valuers using an open market value method.

The carrying amounts of land at 1 January 2009 and 31 December 2009 have been adjusted following the adoption of the amendments to FRS 117, Leases, where leasehold land, in substance is a finance lease, has been reclassified from prepaid lease payments to property, plant and equipment.

During the year, the Group has changed its depreciation method from diminishing balance method to straight-line method. The change in the depreciation method does not have a significant impact on the financial results of the current and subsequent periods.

Subsequent additions are shown at cost while disposals are at valuation or cost, as appropriate.



Had the land and buildings been carried under the cost model, their carrying amounts would have been included in the financial statements at the end of the year are as follows:

Accumulated Carrying Cost depreciation amounts RM’000 RM’000 RM’000

2010

Freehold land 10,126 – 10,126Freehold building 21,353 2,526 18,827Long term leasehold land 9,987 723 9,264Short term leasehold land 1,842 142 1,700Leasehold building 25,088 2,592 22,496

68,396 5,983 62,413

2009, restated

Freehold land 10,126 – 10,126Freehold building 21,353 2,099 19,254Long term leasehold land 9,987 566 9,421Short term leasehold land 1,842 98 1,744Leasehold building 25,088 2,111 22,977

68,396 4,874 63,522

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

2010 2009 RM’000 RM’000

Freehold land 6,285 5,786Factory building 20,590 11,159Plant and machinery 7,812 8,234Capital expenditure-in-progress – 9,514

34,687 34,693




At 1 At 31 January December 2010 Additions 2010 RM’000 RM’000 RM’000

Company

2010

At cost

Furniture, fittings and office equipment 7 – 7

Accumulated depreciation

Furniture, fittings and office equipment 2 1 3

At 1 At 31 January December 2009 Additions 2009 RM’000 RM’000 RM’000

Company

2009

At cost


Accumulated depreciation


At 31 At 31 At 1 December December January 2010 2009 2009 RM’000 RM’000 RM’000

Carrying amounts



4. Investment in subsidiaries – Company

2010 2009 RM’000 RM’000

Unquoted shares, at cost 69,486 67,586

Details of the subsidiaries, all of which are incorporated in Malaysia are as follows:

Name of Company Effective ownership interest Principal Activity 2010 2009 % %

Aik Joo Can Factory Sdn. Bhd. 100 100 Manufacture of lithographed tin cans and plastic jerry cans

Ajcan Sdn. Bhd. 100 100 Letting of landed property and property investment

Canzo Sdn. Bhd. 100 100 Manufacture and trading of plastic jerry cans

Newmarq Sdn. Bhd. (formerly known as Newmarq Land Sdn. Bhd.) 100 100 Investment holding

Sanjung Nuri Sdn. Bhd. 100 100 Property investment

Can-One International Sdn. Bhd. 100 100 Investment holding

Amber Alliance Sdn. Bhd. 100 100 Investment holding

Subsidiary of Amber Alliance Sdn. Bhd.

F&B Nutrition Sdn. Bhd. 80 80 Manufacture of dairy and non-dairy products



5. Other investments, including derivatives – Group

Quoted unquoted shares in Total bonds Malaysia Derivatives Note RM’000 RM’000 RM’000 RM’000

2010 Non-current

Available-for-sale 4,127 4,000 127 – Less: Impairment loss (4,011) (4,000) (11) –

116 – 116 –

Current

Financial asset at fair value through profit or loss– Held for trading 5.1 197 – – 197

313 – 116 197

Representing items: At fair value 313 – 116 197

Market value on quoted shares 116 – 116 –

2009 Non-current

At cost 4,017 4,000 17 – Less: Impairment loss (4,000) (4,000) – –

17 – 17 –

Representing items: At cost 17 – 17 –

Market value on quoted shares 9 – 9 –

5.1 Derivatives

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

The comparative figures as at 31 December 2009 have not been presented based on the new categorisation of financial assets resulting from the adopting of FRS 139 by virtue of the exemption given in FRS 7.44AA.


6. Goodwill on consolidation – Group

2010 2009 RM’000 RM’000

At CostAt 1 January/31 December 1,712 1,712

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

(a) Key sources of estimation uncertainty

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units (“CGU”) to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from cash-generating unit and also to apply a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill as at 31 December 2010 was approximately RM1,712,000 (2009: RM1,712,000).

(b) Recoverable amount based on value in use

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

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

(ii) Discount rate used for cash flows discounting purposes are the management’s estimate of average cost of capital required in the respective segments. The discount rate applied for cash flow projections is at 6%.

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

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

7. Inventories – Group

2010 2009 RM’000 RM’000

At CostRaw materials 75,072 48,123Work-in-progress 33,398 40,539Manufactured inventories 9,087 8,575

117,557 97,237



8. Trade and other receivables

Group Company Note 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Trade Trade receivables 8.1 92,157 88,899 – –

Less: Allowance for impairment loss (1,740) (1,075) – –

90,417 87,824 – –

Non-tradeAmount due from subsidiaries 8.2 – – 50,337 50,079Other receivables 315 154 – –Deposits 8.3 25,097 24,474 – 1Prepayments 7,451 11,260 – –

32,863 35,888 50,337 50,080

123,280 123,712 50,337 50,080

8.1 Analysis of foreign currency exposure for significant receivables

Significant receivables outstanding at year end that are not in the functional currencies of the Group entities are as follows:

Functional Foreign 2010 2009 currency currency RM’000 RM’000

RM USD 21,613 25,175RM SGD 3,447 1,646

8.2 Amount due from subsidiaries

The non-trade receivables due from subsidiaries are unsecured, interest free and repayable on demand.

8.3 Deposits

This includes a refundable deposit of RM24,111,000 (2009: RM24,111,000) paid by the Group when the Group entered into a conditional shares sale agreement to acquire 146,131,500 ordinary shares of RM0.25 each, representing a 32.9% equity interest in Kian Joo Can Factory Berhad, a company listed on the Main Market of Bursa Malaysia Securities Berhad, for a total consideration of RM241,117,000.

9. Cash and cash equivalents

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 22,808 24,133 68 88 Short term deposit with licensed bank – 3,150 – –

22,808 27,283 68 88

Cash and bank balances of the Group denominated in currencies other than functional currency comprise RM8,821,000 (2009: RM9,543,000) and RM2,301,000 (2009: Nil) denominated in US Dollar and Singapore Dollar respectively.


10. Share capital – Group/Company

2010 2009 No. of No. of 2010 2009 shares shares RM’000 RM’000

Ordinary shares of RM0.50 each Authorised 200,000,000 200,000,000 100,000 100,000

Issued and fully paid 152,400,000 152,400,000 76,200 76,200

11. Reserves

Group Company 2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000 Restated

Non-distributable Share premium 11.1 8,560 8,560 8,560 8,560 Capital reserves 11.2 4,918 4,918 – – Fair value reserve 11.3 10 – – –

Distributable Retained earnings 100,312 85,546 20,290 19,385

113,800 99,024 28,850 27,945

11.1 Share premium

The share premium arose from the public issue in prior year.

11.2 Capital reserves

This represents surplus on revaluation of leasehold land, leasehold building, freehold land and freehold building, net of tax and is not distributable.

11.3 Fair value reserve

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



12. Borrowings – Group

2010 2009 RM’000 RM’000

Current

Secured Term loans 2,885 2,757 Bankers’ acceptances – 19,690 Foreign currency trade loans 19,495 4,470 Finance lease liabilities 1,971 1,705

24,351 28,622

Unsecured Term loans 14,444 11,928 Bankers’ acceptances 8,506 53,786 Foreign currency trade loans 57,012 1,444 Revolving credits 15,000 18,000

119,313 113,780

Non-current

Secured Term loans 16,465 17,199 Finance lease liabilities 3,489 4,726

19,954 21,925

Unsecured Term loans 50,777 61,710

70,731 83,635

Security

The secured borrowings are secured against a legal charge over the freehold land, factory building and plant and machinery of a subsidiary and corporate guarantee from the Company.

Interest

The secured term loans bear interest at 0.00% to 0.75% (2009: 0.00% to 0.75%) per annum above the bankers’ prevailing base lending rates while the unsecured term loans bear interest at rates ranging from 4.45% to 7.25% (2009: 3.55% to 7.25%) per annum.

The foreign currency trade loans which are denominated in US Dollar are subject to interest rates ranging from 0.04% to 1.75% (2009: 1.19% to 3.30%) per annum. The bankers’ acceptances and revolving credits are subject to interest rates ranging from 3.13% to 3.47% (2009: 2.15% to 3.30%) and 3.87% to 4.43% (2009: 3.12% to 4.00%) per annum respectively. The finance lease liabilities are subject to fixed interest rates of 4.37% to 6.57% (2009: 2.16% to 5.38%) per annum.


12. Borrowings – Group (cont’d)

Interest (cont’d)

Finance lease liabilities are payable as follows:

2010 2009 Present Present

Future value of Future value of minimum minimum minimum minimum lease lease lease lease payments Interest payments payments Interest payments RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than 1 year 2,242 271 1,971 2,031 326 1,705 Between 1 and 5 years 3,724 235 3,489 5,112 386 4,726

5,966 506 5,460 7,143 712 6,431

13. Deferred tax liabilities – Group

2010 2009 RM’000 RM’000 Restated

At 1 January 16,310 12,783 Recognised in equity – 1,136 Recognised in profit or loss 2,184 2,391

At 31 December 18,494 16,310

The recognised deferred tax liabilities are as follows:

Capital Provisions allowance Revaluation & others Total RM’000 RM’000 RM’000 RM’000

At 1 January 2009 11,098 1,643 42 12,783 Recognised in equity – 1,136 – 1,136 Recognised in profit or loss 2,405 (14) – 2,391

At 31 December 2009, restated 13,503 2,765 42 16,310 Recognised in profit or loss 2,227 (1) (42) 2,184

At 31 December 2010 15,730 2,764 – 18,494



14. Trade and other payables, including derivatives

Group Company 2010 2009 2010 2009

Note RM’000 RM’000 RM’000 RM’000

Trade Trade payables 14.1 40,387 29,784 – –

Non-trade Amount due to a subsidiary 14.2 – – 15,318 14,095 Other payables 13,335 15,236 – – Accrued expenses 2,973 5,815 170 162

Financial liabilities at fair value through profit or loss:– Held for trading 14.3 181 – – –

16,489 21,051 15,488 14,257

56,876 50,835 15,488 14,257

14.1 Analysis of foreign currency exposure for significant payables

Significant payables outstanding at year end that are not in the functional currencies of the Group entities are as follows:

Functional Foreign 2010 2009 Currency Currency RM’000 RM’000

RM USD 10,941 18,706

14.2 Amount due to a subsidiary

The amount due to a subsidiary is unsecured, interest free and repayable on demand.

14.3 Derivatives

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

15. Revenue

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

Revenue for the Company represents dividend income.

16. Finance costs

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Interest payables Bank overdrafts 6 39 – – Term loans 6,362 6,491 – – Other short term borrowings 1,916 4,104 – –

Finance lease liabilities 339 363 – –

8,623 10,997 – – Bank charges 698 375 – –

9,321 11,372 – –


17. Profit before tax

Group Company Note 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Profit before tax is arrived at after charging:

Auditors’ remuneration: Statutory audit

– current year 80 70 20 18– prior years – 8 – 1

Other services 24 22 8 6Impairment loss on receivables 1,700 4 – –Leasehold building written off 3 – 40 – –Deficit on revaluation of properties 3 – 145 – –Depreciation 3 14,563 10,857 1 1Directors’ emoluments: – Fees 244 244 144 144 – Others 1,261 1,217 344 289Impairment loss on investments 6 3 4,000 – –Loss on disposal of plant

and equipment – 1 – –Loss on foreign exchange – realised – 1,781 – – – unrealised 749 – – –Rental of land and building 943 360 – –

and after crediting:

Dividend income (Gross) – subsidiary – – 6,000 10,000

Interest income 88 84 2 –Gain on disposal of plant

and equipment 2 – – –Allowance for inventory

obsolescence written back – 649 – –Unrealised gain on forward

exchange contracts 112 – – –Gain on foreign exchange

– realised 5,269 – – –Rental income – 4 – –



18. Key management personnel compensation

The key management personnel compensations are as follows:

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Recognised in profit or loss

Directors – Fee 244 244 144 144 – Remuneration 1,261 1,217 344 289 – Benefits-in-kind 20 12 – –

Others – Fee 25 25 – – – Remuneration 728 532 – – – Benefits-in-kind 28 12 – –

2,306 2,042 488 433

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

19. Employee information

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Staff costs 27,520 23,088 459 413

Staff costs of the Group and of the Company include contributions to the Employees’ Provident Fund and other defined contribution plans of RM1,426,000 (2009: RM1,225,000) and RM49,000 (2009: RM45,000) respectively.

20. Income tax expense

Recognised in profit or loss

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Current tax expense – current year 3,417 3,360 – 133 – prior years – 13 – 13

3,417 3,373 – 146

Deferred tax expense – current year 2,159 2,654 – – – prior years 25 (263) – –

2,184 2,391 – –

Total income tax expense 5,601 5,764 – 146


20. Income tax expense (cont’d)

Reconciliation of effective tax expense

Group Company 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Profit for the year 20,790 31,343 5,477 9,111 Total tax expense 5,601 5,764 – 146

Profit excluding tax 26,391 37,107 5,477 9,257

Income tax using Malaysian tax rate of 25% 6,598 9,277 1,369 2,314

Non-deductible expenses 208 1,342 131 19 Tax exempt income – – (1,500) (2,200) Tax incentives (1,229) (4,591) – –

Reversal of deferred tax on revaluation of property (1) (14) – –

5,576 6,014 – 133 Under/(Over) provision in prior years 25 (250) – 13

Total income tax expense 5,601 5,764 – 146

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and exempt income to frank/distribute approximately RM10,411,000 and RM10,884,000 respectively from its retained earnings at 31 December 2010 if paid out as dividends.

The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As such, the Section 108 tax credit as at 31 December 2010 will be available to the Company until such time the credit is fully utilised or upon expiry of the transitional period on 31 December 2013, whichever is earlier.

The unutilised reinvestment allowance of RM14.2 million (2009: RM13.5 million) as at 31 December will be available to the Group to utilise against future profits of the Group.

21. Earnings per ordinary share

The calculation of basic earnings per ordinary share was based on the Group’s profit attributable to the owners of the Company of RM19,442,000 (2009: RM31,047,000) and on the weighted average number of ordinary shares outstanding during the year of 152,400,000 (2009: 152,400,000).



22. Dividends

Dividends recognised in the current year by the Company is:

2010 2009 RM’000 RM’000

In respect of financial year ended 31 December 2009 – A first and final tax exempt dividend of 6% paid on 30 July 2010 4,572 –

In respect of financial year ended 31 December 2008 – A first and final tax exempt dividend of 6% paid on 31 July 2009 – 4,572

4,572 4,572

Dividend per ordinary share – Gross (sen) 3.00 3.00

A first and final tax exempt dividend of 6%, totalling RM4,572,000 for the financial year ended 31 December 2010 has been proposed for shareholders’ approval at the forthcoming annual general meeting. These financial statements do not reflect the above dividend which will be accounted for as an appropriation of retained earnings in the financial year ending 31 December 2011 when approved by the shareholders.

The gross dividends per ordinary share as disclosed above takes into account the proposed first and final tax exempt dividend of 6% for the financial year ended 31 December 2010.

23. Operating segments

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

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

• Segment1–Generalcans–manufactureanddistributionoflithographedtincansandplasticjerrycans

• Segment2–Foodproducts–manufactureanddistributionoffoodproducts

• Segment3–Propertyandinvestmentholding

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

Segment assets

The total of segment asset is measured based on all assets of a segment (excluding current tax assets), as included in the internal management reports that are reviewed by the Group’s Managing Director. Segment total asset is used to measure the return of assets of each segment.

Segment liabilities

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

Segment capital expenditure

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


23. Operating segments (cont’d)

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

31 December 2010

Segment profit/(loss) 25,241 10,932 (549) 35,624 (9,233) A 26,391

Included in the measure of segment profit/(loss) are:Revenue from external

customers 229,019 220,032 – 449,051 – 449,051Inter-segments sales 52,383 – 6,060 58,443 (58,443) –Depreciation and

amortisation (11,762) (2,800) (1) (14,563) – (14,563)Other non-cash items (1,703) – – (1,703) – B (1,703)

Not included in the measure of segment profit/(loss) but provided to Group Managing Director:Finance costs (7,023) (2,298) – (9,321) – (9,321)Interest income 67 19 2 88 – 88Income tax expense (3,559) (2,042) – (5,601) – (5,601)

Segment assets 302,193 128,536 29,981 460,710 701 C 461,411

Included in the measure of segment assets are:Addition to non-current

assets other than financial instruments 8,743 6,714 – 15,457 – 15,457




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

31 December 2009, restated

Segment profit/(loss) 44,851 4,295 (751) 48,395 (11,288) A 37,107

Included in the measure of segment profit/(loss) are:Revenue from external

customers 268,357 137,569 – 405,926 – 405,926Inter-segments sales 37,122 – 10,060 47,182 (47,182) –Depreciation

and amortisation (8,827) (2,029) (1) (10,857) – (10,857)Other non-cash items (4,189) – – (4,189) – B (4,189)

Not included in the measure of segment profit/(loss) but provided to Group Managing Director:Finance costs (9,310) (2,061) (1) (11,372) – (11,372)Interest income 75 9 – 84 – 84Income tax expense (5,127) (791) (146) (6,064) 300 (5,764)

Segment assets 303,479 111,006 29,748 444,233 654 C 444,887

Included in the measure of segment assets are:Addition to non-current

assets other than financial instruments 23,401 13,187 4 36,592 (534) 36,058

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

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

2010 2009 RM’000 RM’000

Finance costs (9,321) (11,372) Interest income 88 84

(9,233) (11,288)



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

2010 2009 RM’000 RM’000

Impairment of financial assets (1,703) (4,004) Property, plant and equipment written off – (185)

(1,703) (4,189)

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

2010 2009 RM’000 RM’000

Current tax assets 701 654

701 654

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

Geographical information

Revenue Non-current assets 2010 2009 2010 2009

RM’000 RM’000 RM’000 RM’000

Malaysia 373,112 357,555 196,752 195,984 Asia (excluding Malaysia) 72,567 34,061 – – Others 3,372 14,310 – –

Consolidated 449,051 405,926 196,752 195,984

Major customers

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

Revenue General Food cans products Total RM’000 RM’000 RM’000

2010

All common control companies of:

– Customer A 38,702 30,636 69,338

– Customer B 43,237 15,502 58,739

The Group did not have any major customers with revenue equal or more than 10% of the Group’s total revenue for the year ended 31 December 2009.



24. Financial instruments

Certain comparative figures have not been presented for 31 December 2009 by virtue of the exemption given in paragraph 44AA of FRS 7.

24.1 Categories of financial instruments

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

(a) Loans and receivables (L&R);

(b) Fair value through profit or loss (FVTPL):

– Held for trading (HFT);

(c) Available-for-sale financial assets (AFS); and

(d) Other financial liabilities measured at amortised cost (OL).

Carrying FvTPL amount L&R/OL -HFT AFS RM’000 RM’000 RM’000 RM’000

2010

Group

Financial assets

Other investments, including derivatives 313 – 197 116Trade and other receivables 90,732 90,732 – –Cash and cash equivalents 22,808 22,808 – –

113,853 113,540 197 116


Loans and borrowings 190,044 190,044 – –Trade and other payables,

including derivatives 56,876 56,695 181 –

246,920 246,739 181 –

Company

Financial assets

Trade and other receivables 50,337 50,337 – –Cash and cash equivalents 68 68 – –

50,405 50,405 – –


Trade and other payables 15,488 15,488 – –


24. Financial instruments (cont’d)

24.2 Net gains and losses arising from financial instruments

2010 Group RM’000

Net gains/(losses) arising on: Fair value through profit or loss:– HFT 112

Available-for-sale financial assets– recognised in equity 10– recognised in profit or loss (3)

119

24.3 Financial risk management

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

• Creditrisk

• Liquidityrisk

• Marketrisk

24.4 Credit risk

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

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally financial guarantees of banks, shareholders or directors of customers are obtained, and credit evaluations are performed on customers requiring credit over a certain amount.

Exposure to credit risk, credit quality and collateral

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

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




24.4 Credit risk (cont’d)

Receivables (cont’d)

Risk management objectives, policies and processes for managing the risk (cont’d)

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

Group 2010 2009 RM’000 RM’000

Domestic 80,095 80,287Asia, other than Malaysia 11,875 8,612Others 187 –

92,157 88,899

Impairment losses

The ageing of receivables as at the end of the reporting period was:

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

Group2010Not past due 67,875 – 67,875Past due 1–30 days 11,797 – 11,797Past due 31–120 days 10,514 – 10,514Past due more than 120 days 1,971 (1,740) 231

92,157 (1,740) 90,417

2009Not past due 52,201 – 52,201Past due 1–30 days 15,942 – 15,942Past due 31–120 days 17,708 – 17,708Past due more than 120 days 3,048 (1,075) 1,973

88,899 (1,075) 87,824

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

2010 RM’000

At 1 January 1,075Impairment loss recognised 1,700Impairment loss written off (1,035)

At 31 December 1,740

At 31 December 2010, a significant individual impairment loss of RM895,000 relates to a customer that ceased business operations during the financial year.

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



24.4 Credit risk (cont’d)

Financial guarantees


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


The maximum exposure to credit risk amounts to RM177 (2009: RM193) million representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period.

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

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

Inter company balances


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


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

Advances are only provided to subsidiaries of the Company.

Impairment losses

As at the end of the reporting period, there was no indication that the advances to subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries. Nevertheless, these advances have been overdue for less than a year.




24.5 Liquidity risk

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

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to finance the Group’s and the Company’s operations and to mitigate any adverse effects of fluctuations in cash flows.

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments:

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

Group2010

Non-derivative financial liabilities

Secured term loans 19,350 6.30% to 7.25% 24,504 4,102 4,102 10,081 6,219Unsecured term loans 65,221 4.45% to 7.25% 77,109 18,267 16,143 33,334 9,365Finance lease liabilities 5,460 4.37% to 6.57% 5,966 2,242 2,096 1,628 –Bankers’ acceptances 8,506 3.13% to 3.47% 8,506 8,506 – – –Foreign currency

trade loan 76,507 1.04% to 1.75% 76,507 76,507 – – –Revolving credit 15,000 3.87% to 4.43% 15,000 15,000 – – –Trade and other payables,

excluding derivatives 56,695 – 56,695 56,695 – – –

246,739 264,287 181,319 22,341 45,043 15,584

Derivative financial (assets)/liabilities

Forward exchange contracts (gross settled):

Outflow – – 23,254 23,254 – – –Inflow (16) – (23,270) (23,270) – – –

246,723 264,271 181,303 22,341 45,043 15,584

Company2010

Non-derivative financial liabilities

Trade and other payables 15,488 – 15,488 15,488 – – –


24. Financial instrument (cont’d)

24.6 Market risk

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

24.6.1 Currency risk

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

Exposure to foreign currency risk

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

Denominated in uSD SGD EuRO RM’000 RM’000 RM’000

Group2010

Trade receivables 21,613 3,447 –Cash and bank balances 8,821 2,301 –Trade payables (10,941) – –Foreign currency loan (76,507) – –Forward exchange contracts (4,054) – 1,702

Net exposure (61,068) 5,748 1,702

Currency risk sensitivity analysis

A 10% strengthening of the Ringgit Malaysia (RM) against the following currencies at the end of the reporting period would have increased (decreased) post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

Profit or loss RM’000

Group2010

USD 4,580SGD (431)EURO 128

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



24. Financial instrument (cont’d)

24.6.2 Interest rate risk

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


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

Exposure to interest rate risk

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

2010 2009 RM’000 RM’000

Fixed rate instrumentsFinancial assets – 3,150Financial liabilities (20,214) (22,501)

(20,214) (19,351)

Floating rate instrumentsFinancial liabilities (169,830) (174,914)

(a) Fair value sensitivity analysis for fixed rate instruments

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

(b) Cash flow sensitivity analysis for variable rate instruments

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

Profit or loss 100 bp 100 bp Increase Decrease RM’000 RM’000

Group2010

Floating rate instruments (1,274) 1,274



24.7 Fair value of financial instruments

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

The fair value of the Group’s investment in quoted shares is shown in Note 5.

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

2010 2009 Carrying Fair Carrying Fair

amount value amount value RM’000 RM’000 RM’000 RM’000

Group

Forward exchange contract – Assets 197 197 – – – Liabilities 181 181 – –Fixed rated term loans 14,754 *14,754 16,070 *16,070Finance lease liabilities 5,460 *5,460 6,431 *6,431

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

The fair values of financial assets that are quoted in an active market are determined by reference to their quoted closing bid price at the end of the reporting period.

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

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



25. Capital management

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

During 2010, the Group’s strategy, which was unchanged from 2009, was to maintain the debt-to-equity ratio at below 1.5:1. The debt-to-equity ratios at 31 December 2010 and at 31 December 2009 were as follows:

Group 2010 2009 RM’000 RM’000

Total borrowings (Note 12) 190,044 197,415Less: Cash and cash equivalents (Note 9) (22,808) (27,283)

Net debt 167,236 170,132

Total equity 194,797 178,673

Debt-to-equity ratios 0.86 0.95

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

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

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

26. Related parties

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

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

The significant related party transactions of the Group and of the Company, other than key management personnel compensation, are as follows:

Company 2010 2009 RM’000 RM’000

Dividend income from a subsidiary 6,000 10,000

Non-trade balances with subsidiaries are disclosed in Note 8 and Note 14 to the financial statements.


27. Capital and other commitments – Group

2010 2009 RM’000 RM’000

Property, plant and equipment

Contracted but not provided for 15,394 2,215

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

Note A

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

The Proposed Acquisition has been approved by the shareholders of the Company, the Ministry of International Trade and Industry and the Securities Commission in 2009. Pending the satisfactory resolution of the litigation as mentioned in Note 32, the Proposed Acquisition has yet to be completed at the date of this report.

28. Contingent liabilities – Company

Corporate guarantees

The Company has provided corporate guarantees amounting to RM463,670,000 (2009: RM365,120,000) to secure banking facilities granted to its certain subsidiaries. As at 31 December 2010, the amount of facilities utilised amounted to RM176,675,000 (2009: RM192,981,000).

Continuing financial support

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

29. Operating leases – Group

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

2010 2009 RM’000 RM’000

Less than 1 year 300 240Between 1 and 5 years 40 240

340 480

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



30. Significant changes in accounting policies

30.1 FRS 139, Financial Instruments: Recognition and Measurement

The adoption of FRS 139 has resulted in several changes to accounting policies relating to recognition and measurement of financial instruments. Significant changes in accounting policies are as follows:

Investments in equity securities

Prior to the adoption of FRS 139, investments in non-current equity securities, other than investments in subsidiaries were measured at cost less allowance for diminution in value which is other than temporary. With the adoption of FRS 139, quoted investments in non-current equity securities, other than investments in subsidiaries are now categorised and measured as fair value through profit or loss, or as available-for-sale as detailed in note 2(c).

Derivatives

Prior to the adoption of FRS 139, derivative contracts were recognised in the financial statements on settlement date. With the adoption of FRS 139, derivative contracts are now categorised as fair value through profit or loss and measured at their fair values with the gain or loss recognised in profit or loss.

Financial guarantee contracts

Prior to the adoption of FRS 139, financial guarantee contracts were not recognised in the statement of financial position unless it becomes probable that the guarantee may be called upon. With the adoption of FRS 139, financial guarantee contracts are now recognised initially at their fair values and subsequently measured at their initially measured amount less cumulative amortisation. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made.

Impairment of trade and other receivables

Prior to the adoption of FRS 139, an allowance for doubtful debts was made when a receivable is considered irrecoverable by the management. With the adoption of FRS 139, an impairment loss is recognised for trade and other receivables and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.

These changes in accounting policies have been made in accordance with the transitional provisions of FRS 139. In accordance to the transitional provisions of FRS 139 for first-time adoption, adjustments arising from remeasuring the financial instruments at the beginning of the financial year were recognised as adjustments of the opening balance of retained earnings or another appropriate reserve. Comparatives are not adjusted.

30.2 FRS 123, Borrowing Costs (revised)

Before 1 January 2010, borrowing costs were all expensed to profit or loss as and when they were incurred. With the adoption of FRS 123, the Group capitalises borrowing costs that are directly attributable to the acquisition, construction and production of a qualifying asset as part of the cost of the asset for which the commencement date of capitalisation is on or after 1 January 2010.

The change in accounting policy has been applied prospectively in accordance with the transitional provisions of the revised FRS 123.

30.3 FRS 8, Operating Segments

As of 1 January 2010, the Group determines and presents operating segments based on the information that internally is provided to the Chief Executive Officer, who is the Group’s chief operating decision maker. This change in accounting policy is due to the adoption of FRS 8. Previously operating segments were determined and presented in accordance with FRS 1142004, Segment Reporting.

Comparative segment information has been re-presented. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.


30. Significant changes in accounting policies (cont’d)

30.4 FRS 101, Presentation of Financial Statements (revised)

The Group applies FRS 101 (revised) which became effective as of 1 January 2010. As a result, the Group presents all non-owner changes in equity in the consolidated statement of comprehensive income.

Comparative information has been re-presented so that it is in conformity with the revised standard.

30.5 FRS 117, Leases

The Group has adopted the amendment to FRS 117. The Group has reassessed and determined that all leasehold land of the Group which is in substance a finance lease has been reclassified the leasehold land to property, plant and equipment. The change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendment.

31. Comparative figures

31.1 FRS 101, Presentation of Financial Statements (revised)

Arising from the adoption of FRS 101 (revised), income statements for the year ended 31 December 2009 have been re-presented as statement of comprehensive income. All non-owner changes in equity that were presented in the statement of changes in equity are now included in the statement of comprehensive income as other comprehensive income. Consequently, components of comprehensive income are not presented in the statement of changes in equity.

31.2 FRS 117, Leases, Financial Instruments: Recognition and Measurement

Following the adoption of the amendment to FRS 117, certain comparatives have been re-presented as follows:

Group 31.12.2009

As As previously stated stated RM’000 RM’000

Group

Property, plant and equipment 194,272 180,238Prepaid lease payments – 13,612Retained earnings 85,546 85,679Capital reserve 4,918 4,467Deferred tax liabilities 16,310 16,204Comprehensive income attributable to

owners of the company 31,047 31,180Other operating expenses 5,708 5,575



32. Material litigation

On 23 March 2009, CISB together with 4 other defendants were served a writ of summons and a statement of claims pertaining to the Proposed Acquisition (as mentioned in Note 27).

The plaintiffs are claiming:

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

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

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

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

The CISB has applied to the Kuala Lumpur High Court to set aside and/or strike out the Plaintiffs’ Writ and Statement of Claim. The case has now been fixed for mention on 23 May 2011.

33. Supplementary information on the breakdown of realised and unrealised profits or losses

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraph 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010, into realised and unrealised profits, pursuant to the directive, is as follows:

2010 Group Company RM RM

Total retained earnings of the Company and its subsidiaries: – Realised 165,222 20,290 – Unrealised (14,568) –

150,654 20,290Less: Consolidation adjustments (50,342) –

Total retained earnings 100,312 20,290

The determination of realised and unrealised profits is based on the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by Malaysian Institute of Accountants on 20 December 2010.

Location

Tenure

Area

(square ft)

Description & Existing Use

Approximate

Age of Buildings

Net Book Value as at 31.12.2010

RM’000

Year of Last Revaluation/ Acquisition

4829, Tingkat Mak Mandin 5 Mak Mandin Industrial Estate 13400 Butterworth Pulau Pinang Malaysia

99 years leasehold expiring on 23.09.2070

Land 68,678

Built-up 32,310

Office and Factory Buildings/

Industrial

Office Block – 44 years

Factory – 22 years

4,131 2009



Land 45,954

Built-up 23,270

Office, Warehouse and Factory Buildings/ Industrial

40 years 2,947 2009



Land 31,273

Built-up 36,300

Office and Factory Buildings/ Industrial

40 years 2,165 2009

5888, Lorong Mak Mandin 7 Mak Mandin Industrial Estate 13400 Butterworth Pulau Pinang Malaysia


Land 53,718

Built-up 35,090

Factory Building/Industrial

40 years 3,046 2009

Lot No. 1983, Mukim 14 Seberang Prai Utara Mak Mandin Industrial Estate 13400 Butterworth Pulau Pinang Malaysia


Land 55,206

Vacant Land Not Applicable 1,415 2009

5102, Jalan Permatang Pauh Mak Mandin Industrial Estate 13400 Butterworth Pulau Pinang Malaysia


Land 97,955

Built-up 57,829

Office, Warehouse and Factory

Buildings/Industrial

40 years 5,310 2009

Lot 2244, Jalan Rajawali Batu 9, Kampung Kebun Baru 42500 Teluk Panglima Garang Kuala Langat Selangor Darul Ehsan Malaysia

Freehold Land 174,371

Built-up 118,619


Industrial

13 years 13,556 2009


SUMMARY OF LANDED PROPERTIES AND BUILDINGS

Location

Tenure

Area

(square ft)

Description & Existing Use

Approximate

Age of Buildings

Net Book Value as at 31.12.2010

RM’000

Year of Last Revaluation/ Acquisition



Built-up 104,745

Warehouse and Factory Buildings/

Industrial

Less than 1 year 4,135 2009



Built-up 77,052


Industrial

Office Block and Factory

– 14 years

New Factory – 3 years

13,003 2009

Lot 2223, Jalan Kasawari Batu 9, Kampung Kebun Baru 42500 Teluk Panglima Garang Kuala Langat Selangor Darul Ehsan Malaysia


Built-up 104,745

Factory Building 1 year 13,873 2009

Lot 1, Persiaran Raja Lumu Pandamaran Industrial Estate 42000 Port Klang Selangor Darul Ehsan Malaysia

Land under tenancy with renewable

option

Built-up 20,000


Industrial

15 years 918 2009

PLO 324, Jalan Suasa Kawasan Perindustrian Pasir Gudang 81700 Pasir Gudang Johor Darul Takzim Malaysia


Land 87,120

Built-up 70,364


Industrial

Office Block and Factory

– approximately 18 years

Factory 2 – approximately

15 years

Factory 3 – approximately

7 years

4,308 2009

PLO 718, Jalan Keluli 8 Kawasan Perindustrian Pasir Gudang 81700 Pasir Gudang Johor Darul Takzim Malaysia


Land 309,779

Built-up 141,235


Industrial

5 years 14,817 2009


Authorised share capital : RM100,000,000

Issued and paid-up share capital : RM76,200,000

Class of shares : Ordinary shares of RM0.50 each

Voting rights : One (1) vote per ordinary share held

ANALYSIS BY SIZE OF SHAREHOLDINGS

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

Less than 100 shares 3 0.19 54 0.00100 – 1,000 shares 257 16.11 226,516 0.151,001 – 10,000 shares 862 54.04 4,354,230 2.8610,001 – 100,000 shares 369 23.14 12,213,600 8.01100,001 – 7,619,999 shares 102 6.39 71,123,319 46.677,620,000 shares and above 2 0.13 64,482,281 42.31

Total 1,595 100.00 152,400,000 100.00

SUBSTANTIAL SHAREHOLDERS(According to the Register of Substantial Shareholders)

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

Eller Axis Sdn Bhd (“EASB”) 43,840,881 28.77 – – 43,840,881 28.77Koperasi Permodalan Felda Malaysia Berhad 20,641,400 13.54 – – 20,641,400 13.54Yeoh Jin Hoe 6,690,000 4.39 43,840,881(a) 28.77(a) 50,530,881 33.16

(a) Deemed interest by virtue that he has more than 15% voting shares in EASB

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

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

William Maurice Samson 80,000 0.05 – – 80,000 0.05Yeoh Jin Hoe 6,690,000 4.39 43,840,881(a) 28.77(a) 50,530,881 33.16Chee Khay Leong 450,100 0.30 – – 450,100 0.30Ooi Teik Huat 150,000 0.10 – – 150,000 0.10Yeoh Jin Beng 300,000 0.20 – – 300,000 0.20Razmi Bin Alias – – 911,119(b) 0.60(b) 911,119 0.60See Ewe Lin 300,100 0.20 – – 300,100 0.20

(a) Deemed interest by virtue that he has more than 15% voting shares in EASB(b) Deemed interest by virtue that he has more than 15% voting shares in Iska Tenaga Sdn Bhd


ANALYSIS OF SHAREHOLDINGSAS AT 4 MAY 2011

LIST OF THIRTY (30) LARGEST SHAREHOLDERS(According to the Register of Depositors)

No. of % of issued No. Name shares held shares held

1. Eller Axis Sdn Bhd 43,840,881 28.77

2. Koperasi Permodalan Felda Malaysia Berhad 20,641,400 13.54

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

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

5. M.I.T Nominees (Tempatan) Sdn Bhd 4,390,000 2.88 Pledged Securities Account for Yeoh Jin Hoe

6. M.I.T Nominees (Tempatan) Sdn Bhd 3,951,300 2.59 Pledged Securities Account for Exosoft Sdn Bhd

7. M.I.T Nominees (Tempatan) Sdn Bhd 3,564,300 2.34 Pledged Securities Account for Taipanmatics Sdn Bhd

8. Winchem (Malaysia) Sdn Bhd 3,124,000 2.05

9. Kumpulan Wang Simpanan Guru-Guru 3,000,000 1.97

10. M.I.T Nominees (Tempatan) Sdn Bhd 2,563,000 1.68 Pledged Securities Account for Lew Nam Fong @ Liew Yoke Fatt

11. See Seok Yong 2,200,000 1.44

12. EB Nominees (Tempatan) Sendirian Berhad 2,000,000 1.31 Pledged Securities Account for Patricia Woon Lai Ching @ Lee Yah Seng

13. Yeoh Jin Aik 2,000,000 1.31

14. Yeoh Jin Hoe 2,000,000 1.31

15. M.I.T Nominees (Tempatan) Sdn Bhd 1,760,700 1.16 Pledged Securities Account for Cheong Pooi Leong

16. Winnie Suppiah 1,628,200 1.07

17. Cheong Pooi Leong 1,316,400 0.86

18. Boi Tek Kuan 1,195,800 0.78

19. Kok Mee Lee 1,010,000 0.66

20. Zainuddin Bin Din 1,000,000 0.66

21. Ibufood Corporation Sdn Bhd 954,000 0.63

22. Iska Tenaga Sdn Bhd 911,119 0.60

23. Low Kam Fatt 873,000 0.57

24. HSBC Nominees (Asing) Sdn Bhd 867,200 0.57 AA Noms SG for Sovereign Global Partners Ltd

25. Lew Nam Fong @ Liew Yoke Fatt 864,600 0.57

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

27 Malaysia Nominees (Tempatan) Sendirian Berhad 800,000 0.52 Malaysian Trustees Berhad for Alliance Vision Fund

28 Mayban Securities Nominees (Tempatan) Sdn Bhd 750,000 0.49 UOB-Kay Hian Pte Ltd for Ong Aik Lin

29 RHB Capital Nominees (Tempatan) Sdn Bhd 644,900 0.42 Pledged Securities Account for Choong Foong Ming

30 Chin Kok Tian 632,100 0.41

118,798,600 77.95



NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Seventh Annual General Meeting of Can-One Berhad (“Can-One” or “the Company”) will be held at Greens III (Sport Wing), Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 23 June 2011 at 10.00 a.m. for the following purposes:

AGENDA

AS ORDINARY BUSINESS

1. To receive the audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2010 and the Reports of the Directors and Auditors thereon.

Resolution 1

2. To declare a first and final tax exempt dividend of 6% (3 sen) per share for the financial year ended 31 December 2010.

Resolution 2

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

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

Resolution 3

4. To approve the payment of Directors’ Fees amounting to RM144,000.00 in respect of the financial year ended 31 December 2010.

Resolution 4

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

Resolution 5

AS SPECIAL BUSINESS

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

AUTHORITY TO DIRECTORS TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“THAT subject to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the Securities Commission, Bursa Malaysia Securities Berhad and other relevant governmental and/or regulatory authorities, if applicable, the Directors of the Company be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965 to issue shares in the Company at any time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued share capital of the Company for the time being; AND THAT such authority shall continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it shall lapse, unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever occurs first.”

Resolution 6

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

RENEWAL OF AUTHORITY FOR PROPOSED SHARE BUY-BACK

“THAT subject to compliance with the Companies Act, 1965, the Companies Regulations 1966, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), provisions of the Company’s Memorandum and Articles of Association and the regulations of any other relevant authorities, the Company be and is hereby authorised to purchase such number of ordinary shares of RM0.50 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Malaysia upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company, provided that the aggregate number of shares to be purchased pursuant to this resolution shall not exceed ten per centum (10%) of the issued and paid-up share capital of the Company as at the date of the share buy-back (“Proposed Share Buy-Back”) AND THAT an amount of the funds not exceeding the retained profits and share premium reserve of the Company as at the date of the share buy-back, be utilized for the Proposed Share Buy-Back AND THAT the shares of the Company to be purchased may be cancelled, retained as treasury shares, distributed as dividends or resold on Bursa Malaysia, or a combination of any of the above, at the absolute discretion of the Directors;

AND THAT the authority conferred by this resolution will commence immediately upon the passing of this resolution and will continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at which time it shall lapse, unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or



whichever occurs first but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the Main Market Listing Requirements of Bursa Malaysia or any other relevant authorities;

AND FURTHER THAT the Directors of the Company be and are hereby authorised to do all such acts and things and to take all such steps as they deem fit, necessary, expedient and/or appropriate in order to complete and give full effect to the Proposed Share Buy-Back with full powers to assent to any condition, modification, variation and/or amendment as may be required or imposed by the relevant authorities.”

Resolution 7

8. To consider and, if thought fit, to pass the following resolution as a Special Resolution:

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

“THAT the proposed deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix I of the Annual Report 2010 of the Company be and are hereby approved AND THAT the Proposed Amended Articles as set out therein be and are hereby adopted.”

Resolution 8

9. To transact any other business of which due notice shall have been given in accordance with the Company’s Articles of Association and/or the Companies Act, 1965.


NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE

NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Seventh Annual General Meeting of the Company to be held on Thursday, 23 June 2011, a first and final tax exempt dividend of 6% (3 sen) per share for the financial year ended 31 December 2010 will be paid on Friday, 29 July 2011 to depositors whose names appear in the Record of Depositors on Monday, 18 July 2011.

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 Monday, 18 July 2011, in respect of ordinary transfers; and

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

By Order of the Board

TAN BEE KENG MAICSA 0856474Company Secretary

Petaling Jaya1 June 2011

Notes:

(A) PROXY

(i) A member of the Company entitled to attend and vote at this Meeting is entitled to appoint not more than two (2) proxies of his own choice to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

(ii) If a member appoints two (2) proxies, the member must specify the proportion of his shareholding to be represented by each proxy, failing which the appointment shall be invalid.

(iii) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, under its common seal or under the hand of an officer or its attorney duly authorised in that behalf.

(iv) To be valid, the instrument appointing a proxy must be completed and deposited at the Registered Office of the Company at 2B-4, Level 4, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll).

(v) Any alteration in the form of proxy must be initialled.

(B) EXPLANATORY NOTES ON SPECIAL BUSINESS

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

The Company had, at the Sixth Annual General Meeting (“AGM”) held on 23 June 2010, obtained its shareholders’ approval for the general mandate for issuance of shares pursuant to Section 132D of the Companies Act, 1965 (“the Act”). The Company did not issue any new shares since obtaining the mandate up to the date of this notice.

The Ordinary Resolution proposed is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Act. The Ordinary Resolution proposed, if passed, will empower the Directors of the Company, from the date of the forthcoming Seventh AGM, to issue and allot ordinary shares from unissued share capital of the Company up to an aggregate amount not exceeding ten per centum (10%) of the total issued share capital of the Company for such purposes as the Directors in their absolute discretion consider to be in the interest of the Company, without having to convene a general meeting. The renewed authority from the shareholders will be effective immediately upon passing of the Ordinary Resolution and shall continue to be in force until:

(a) the conclusion of the next AGM; or



whichever occurs first.

The renewed general mandate will provide flexibility to the Company to raise capital for purpose of funding future investment, working capital and/or acquisitions.


NOTICE OF ANNUAL GENERAL MEETING

Resolution pertaining to Renewal of Authority for Proposed Share Buy-Back

The Ordinary Resolution proposed, if passed, will renew the authority for the Company to purchase through Bursa Malaysia Securities Berhad such number of ordinary shares in the Company up to an aggregate amount not exceeding ten per centum (10%) of the issued and paid-up share capital of the Company. The renewed authority from the shareholders will be effective immediately upon passing of the Ordinary Resolution and shall continue to be in force until:

(i) the conclusion of the next AGM; or

(ii) the expiration of the period within which the next AGM of the Company is required by law to be held; or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting,

whichever occurs first.

For further information, please refer to the Share Buy-Back Statement dated 1 June 2011 which is despatched together with the Company’s Annual Report 2010.

Resolution pertaining to Proposed Amendments to the Articles of Association of the Company

The Special Resolution proposed, if passed, will allow the Company to credit dividends, interest or other money payable in cash in respect of shares of the Company directly into the shareholders’ bank accounts in line with the implementation of Electronic Dividend Payment by Bursa Malaysia Securities Berhad and will render the Articles of Association of the Company to be consistent and compliant with the relevant provisions of Bursa Malaysia Securities Berhad’s Main Market Listing Requirements and the Companies Act, 1965.

(The rest of this page is intentionally left blank.)


DIRECTOR WHO IS STANDING FOR RE-APPOINTMENT

The Director who is over the age of seventy years and seeking re-appointment at the Seventh Annual General Meeting is William Maurice Samson.

The profile of William Maurice Samson is set out on page 4 of this Annual Report whereas details of his interests in the securities of the Company and its subsidiaries are disclosed on Page 86.

(The rest of this page is intentionally left blank.)


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGPURSUANT TO PARAGRAPH 8.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD

Proposed Amendments to the Articles of Association of the Company

The existing Articles of Association of the Company which are to be amended are reproduced below with the Proposed Articles after Amendments.

Article No.

Existing Articles (words underlined to be deleted)

Article No.

Proposed Amended Articles (words in bold to be inserted)

2 WORDS MEANINGS

Listing Requirements

The Listing Requirements of Bursa Malaysia Securities Berhad (635998-W) (formerly known as Malaysia Securities Exchange Berhad) and including any modification or amendment thereof that may be made from time to time.

2 WORDS MEANINGS

Listing Requirements

The Main Market Listing Requirements of Bursa Malaysia Securities Berhad (635998-W) (formerly known as Malaysia Securities Exchange Berhad) and including any modification or amendment thereof that may be made from time to time.

48 The Directors may whenever they think fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened on any requisition made in accordance with the provisions of the Act, or if the Company makes default in convening a meeting in compliance with a requisition received pursuant to Section 144 of the Act a meeting may be convened by such requisitionists in the manner provided in Section 144 of the Act. Any meeting convened by requisitionists shall be convened in the same manner as nearly as possible, as that in which meetings are to be convened by the Directors. The time and place of any general meeting shall be determined by the Directors and such meeting (including the adjourned meeting) shall be held in the state where the office is for the time being situated.

48 The Directors may whenever they think fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened on any requisition made in accordance with the provisions of the Act, or if the Company makes default in convening a meeting in compliance with a requisition received pursuant to Section 144 of the Act a meeting may be convened by such requisitionists in the manner provided in Section 144 of the Act. Any meeting convened by requisitionists shall be convened in the same manner as nearly as possible, as that in which meetings are to be convened by the Directors. The time and place of any general meeting shall be determined by the Directors and such meeting (including the adjourned meeting) shall be held within Malaysia. The Company may hold a meeting of its members within Malaysia at more than one (1) venue using any technology that allows all members a reasonable opportunity to participate.


APPENDIX I

Article No.

Existing Articles (words underlined to be deleted)

Article No.

Proposed Amended Articles (words in bold to be inserted)

142 Any dividend or other moneys payable in cash on or in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the Member or person entitled thereto, or are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such persons and such address as such persons may by writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and payment of the cheque if purporting to be endorsed or the receipt of any such person shall be a good discharge to the Company. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby.

142 Any dividend, interest or other money payable in cash on or in respect of shares may be paid by cheque or warrant sent through the post to the last registered address of the Member or person entitled thereto, or if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such persons and such address as such entitled persons may by writing direct or paid by way of direct transfer, electronic transfer or other methods of remittance to the bank account provided by the Member whose name appear in the Record of Depositors. Every such cheque or warrant or payment by direct transfer, electronic transfer or other methods of remittance shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitled to the shares in consequence of the death or bankruptcy of the holder may direct and the payment of any such cheque or warrant or by direct transfer, electronic transfer or other methods of remittance shall operate as a good discharge of the Company’s obligations in respect of the dividend, interest, or other money payable in cash represented thereby, notwithstanding that it may subsequently appear that the cheque has been stolen or that the endorsement thereon or the instruction for the payment by direct transfer, electronic transfer or other methods of remittance has been forged. Every such cheque or warrant or payment by direct transfer, electronic transfer or other methods of remittance shall be sent at the risk of the person entitled to the money represented thereby.

169(7) For the purpose of this Article, unless the context otherwise requires, “Listing Requirements” means the Listing Requirements of the Exchange including any amendment to the Listing Requirements that may be made from time to time.

169(7) For the purpose of this Article, unless the context otherwise requires, “Listing Requirements” means the Main Market Listing Requirements of the Exchange including any amendment to the Listing Requirements that may be made from time to time.


APPENDIX I

Number of shares held

CDS Account No.

I/We (NRIC/Co. No ) (Full Name in Block Letters)

of Tel No (Address)

being a member/members of Can-One Berhad hereby appoint (Full Name in Block Letters)

(NRIC/Passport No )

and/or (NRIC/Passport No ) (Full Name in Block Letters)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Seventh Annual General Meeting of the Company to be held at Greens III (Sport Wing), Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan, Malaysia on Thursday, 23 June 2011 at 10.00 a.m. and at any adjournment thereof.

My/our proxy/proxies will vote on the resolutions as indicated by an ‘X’ in the spaces provided below. In the absence of specific direction as to voting, my/our proxy/proxies will vote or abstain from voting at his/their discretion.

RESOLUTION ORDINARY BUSINESS FOR AGAINST1 To receive the audited Financial Statements of the Group and

of the Company for the financial year ended 31 December 2010 and the Report of the Directors and Auditors thereon.

2 To declare a first and final tax exempt dividend of 6% (3 sen) per share for the financial year ended 31 December 2010.

3 To re-appoint William Maurice Samson as Director pursuant to Section 129(6) of the Companies Act, 1965.

4 To approve the payment of Directors’ Fees amounting to RM144,000.00 in respect of the financial year ended 31 December 2010.

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

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

7 Renewal of Authority for Proposed Share Buy-Back. 8 Proposed Amendments to the Articles of Association of the

Company.

Dated this day of 2011.

For appointment of two (2) proxies, percentage of shareholdings to be represented by the proxies:

First proxy %

Second proxy %

Notes:

(i) A member of the Company entitled to attend and vote at this Meeting is entitled to appoint not more than two (2) proxies of his own choice to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

(ii) If a member appoints two (2) proxies, the member must specify the proportion of his shareholding to be represented by each proxy, failing which the appointment shall be invalid.

(iii) The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or if the appointor is a corporation, under its common seal or under the hand of an officer or its attorney duly authorised in that behalf.

(iv) To be valid, the instrument appointing a proxy must be completed and deposited at the Registered Office of the Company at 2B-4, Level 4, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time appointed for the holding of the Meeting or adjourned Meeting (or in the case of a poll before the time appointed for the taking of the poll).

(v) Any alteration in this form must be initialled.

FORM OF PROXY


Signature/Seal of Shareholders

The Company Secretary

Can-One Berhad2B-4, Level 4, Jalan SS 6/6 Kelana Jaya 47301 Petaling Jaya Selangor Darul Ehsan Malaysia

First fold here

Then fold here

Affix

Stamp

Documents

CAN-ONE BERHAD The Can Company CAN-ONE BERHAD (638899-K) annUaL RepoRT 2OIO