1998 Annual Report - Kian Joo Can

9 8(3186-P)(Incorporated in Malaysia)

cOntents234568101337394041Notice Of Annual General MeetingCorporate StructureCorporate InformationBoard of DirectorsFive Year Financial HighlightsTerms of Reference of the Audit CommitteeChairman’s StatementFinancial StatementsList of PropertiesAnalysis of ShareholdingsTwenty Largest ShareholdersProxy Form

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8CORPORATEstructureFEDERAL METAL PRINTINGFACTORY SDN. BHD. 100%19%BINTANG SERIBUSDN. BHD.100%METAL PAK (M)SDN. BHD. 100%81%KJ CAN (JOHORE)SDN. BHD. 100%KIAN JOO CAN FACTORY(S) PTE. LTD. 45.8%KIAN JOO PACKAGINGSDN. BHD. 100%GREAT ASIA TINCANS FACTORYCO. SDN. BHD.100%KJM ALUMINIUM CANSDN. BHD. 60%BOX-PAK (MALAYSIA)BERHAD 54.8%MULTI-PET SDN. BHD. 100%KIAN JOO-SOUTHCORPSDN. BHD. 50%INDASTRI KIAN JOOSDN. BHD. 100%CANCO ENGINEERING &MACHINERY SDN. BHD. 100%KIAN JOO SERVICESSDN. BHD. 100%3

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8CORPORATEinformationDIRECTORSY.A.M. Tunku Nadzaruddin Ibni DYMM Tuanku Ja'afarY.A.M. Raja Dato' Seri Ashman Shah Ibni Sultan Azlan ShahSee Teow ChuanDato' Anthony See Teow GuanSee Teow KoonSee Tiau KeeSee Ean SengDato' Gnanalingam s/o Gunanath Lingam(Chairman)(Managing Director)(Executive Director)(Executive Director)(Executive Director)(Alternate director to Y.A.M.Raja Dato' Seri Ashman ShahIbni Sultan Azlan Shah)AUDIT COMMITTEEY.A.M. Tunku Nadzaruddin Ibni DYMM Tuanku Ja'afarY.A.M. Raja Dato' Seri Ashman Shah Ibni Sultan Azlan ShahSee Ean Seng(Chairman and IndependentNon-Executive Director)(Independent Non-Executive Director)(Independent Non-Executive Director)SECRETARYChia Kwok WhyAUDITORSErnst & YoungPublic AccountantsSOLICITORSShearn Delamore & Co.16th Floor, Wisma Hamzah Kwong Hing50100 Kuala LumpurBANKERSHSBC Bank Malaysia BerhadBank of Commerce (M) BerhadCitibank BerhadDeutsche Bank (M) BerhadPublic Bank BerhadOCBC (Malaysia) BerhadSime Bank BerhadRHB Bank BerhadBank of Nova Scotia BerhadMulti-Purpose Bank BerhadBank of Tokyo - Mitsubishi (Malaysia) BerhadREGISTRARSKian Joo Services Sdn. Bhd.Lot 2, Jalan Perusahaan Empat68100 Batu CavesSelangor Darul EhsanTel : 03-6896322Fax : 03-6898185REGISTERED OFFICELot 10, Jalan Perusahaan Satu68100 Batu CavesSelangor Darul EhsanTel : 03-6896322Fax : 03-68981854

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8BOARDof directors123 45 6 7• 1. Y.A.M. Tunku Nadzaruddin Ibni DYMM Tuanku Ja’afar (Chairman)• 2. Dato’ Anthony See Teow Guan (Executive Director)• 3. See Teow Chuan (Managing Director)• 4. See Teow Koon (Executive Director)• 5. See Tiau Kee (Executive Director)• 6. See Ean Seng• 7. Y.A.M. Raja Dato’ Seri Ashman Shah Ibni Sultan Azlan Shah5

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8FIVE YEARfinancial highlights1998 1997 1996 1995 1994RM’000 RM’000 RM’000 RM’000 RM’000Turnover 425,012 438,151 445,397 461,409 397,225Profit Before Taxation 76,345 85,357 95,192 99,665 66,225Profit After Taxation AndMinority Interest 52,060 55,392 70,303 71,282 60,770Dividend Rate 40% 40% 40% 10% 10%Dividend Net 23,144 23,144 23,142 5,784 3,856Paid-up Capital 57,860 57,860 57,860 57,840 57,838Shareholders’ Equity 429,930 401,014 368,766 314,642 249,120Total Tangible Assets 704,282 619,659 562,183 476,405 438,378Total Bank Borrowings 8,721 11,107 13,345 20,648 64,487Earnings Per Share 44.99 sen 47.87 sen 60.75 sen 61.6 sen 52.5 senNet Assets Backing Per Share RM3.72 RM3.47 RM3.19 RM2.72 RM2.15Borrowings/Shareholders’ Equity 2% 3% 4% 7% 26%Turnover500450400RM’000397,225461,409445,397438,151425,0123503002502001501005001994 1995 1996 1997 1998Year6

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Profit Before Taxation100908070RM’00066,22599,66595,19285,35776,34560504030201001994 1995 1996 1997 1998YearProfit After TaxationAnd Minority InterestRM’00080706060,77071,28270,30355,39252,060504030201001994 1995 1996 1997 1998YearTotal Tangible AssetsRM’000800700600500438,378476,405562,183619,659704,28240030020010001994 1995 1996 1997 1998YearFIVE YEARfinancial highlights7

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8The Audit Committee shall be governed by the following terms of reference.TERMSOFREFERENCEOFtheauditcommitteeComposition Of Audit CommitteeThe Committee shall be appointed by the Board from its members and shall consist of not less than3 members of whom a majority shall not:-a) be executive directors of the company or any related corporation;b) comprise a spouse, parent, brother, sister, son or adopted son, daughter or adopted daughterof an executive director of the company or of any related corporation; orc) comprise persons having a relationship which, in the opinion of the Board, would interferewith the exercise of independent judgment in carrying out the functions of the Committee.The Committee shall elect a chairperson from among its members who is not an executive directoror employee of the company or any related corporation.In the event that a member of the Committee resigns, dies or for any other reason ceases to be amember with the result that the number of members is reduced below 3, the Board of Directorsshall, within 3 months of that event, appoint such number of new members as may be required tomake up the minimum number of 3 members.Terms Of MembershipMembers of the Committee shall be appointed for an initial term of 3 years after which they will beeligible for reappointment.MeetingsThe Committee shall meet at least three times a year. In addition, the chairperson shall convene ameeting of the Committee if requested to do so by any member, the management or the internalor external auditors to consider any matter within the scope and responsibilities of the Committee.The minutes of the meetings of the Audit Committee shall be tabled at Board Meetings to informthe Board of the activities of the Audit Committee.Attendance At MeetingsThe group financial controller, the head of internal audit, and a representative of the externalauditors shall normally attend meetings. However, the Committee may invite any person to be inattendance to assist in its deliberations.Secretary To Audit CommitteeAny one of the company secretaries shall be the secretary of the Committee and shall be responsiblefor drawing up the agenda in consultation with the chairperson. The agenda together withrelevant explanatory papers and documents shall be circulated to committee members prior toeach meeting.The secretary shall be responsible for keeping the minutes of the meeting of the Committee,circulating them to committee members and for ensuring compliance with KLSE requirements.QuorumA quorum shall consist of a majority of committee members who are non-executive directors.AuthorityThe committee is authorized by the Board to investigate any activity within its terms of reference. Ithas free access to all information and documents it requires for the purpose of discharging itsfunctions and responsibilities. The audit committee is also authorized to obtain outside legal orother independent professional advice as it considers necessary.8

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Duties and ResponsibilitiesThe duties and responsibilities of the committee shall be:• to review the company’s and the group’s half-yearly and annual financial statements beforesubmission to the Board. The review shall focus on:-– any changes in accounting policies and practices– major judgmental areas– significant audit adjustments from the external auditors– the going-concern assumption– compliance with accounting standards– compliance with stock exchange and legal requirements.• to review with the external auditors their plan, scope and nature of audit for the company andthe group.• to assess the adequacy and effectiveness of the systems of internal control and accountingcontrol procedures of the company and the group by reviewing the external auditors’management letters and management response.• to hear from the external auditors problems and reservations arising from their interim andfinal audits.• to review the internal audit plan, consider the major findings of internal audit, fraudinvestigations and actions and steps taken by management in response to audit findings.• to review any related party transactions that may arise within the company or the group.• to consider the appointment of the external auditors, the terms of reference of theirappointment, and any question of resignation or dismissal.• to undertake such other responsibilities as may be agreed to by the Committee and the Board.• to report to the Board its activities, significant results and findings.TERMS OF REFERENCE OFthe audit committee9

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8CHAIRMAN’SstatementOn behalf of the Board of Directors, I am pleasedto present the Annual Report andAudited Accounts for the Group and Companyfor financial year ended 31 December 1998.FINANCIAL RESULTSThe Group achieved a lower turnover of RM425.012 million for the financial year under review, adecline of 3% compared with RM438.151 million achieved in 1997. The lower turnover was mainlydue to decline in demand.Group operating profit before taxation declined 11% from RM85.357 million for financial year 1997to RM76.345 million for the financial year 1998. The lower profit was attributable mainly to declinein volume of aluminium cans and PET bottles as a result of the general economic slowdown in theregion.The Associated companies profit contribution was down at RM2.434 million for the financial year1998 compared with RM7.517 million in 1997. The lower profit was mainly due to the significantdecline in demand for PET bottles and lower margin as a result of higher raw material cost. Theassociated company in Singapore reported a loss of RM0.971 million for the year under review.After providing RM22.485 million for taxation and RM1.8 million for minority interest, the Group’sProfit attributable to Shareholders of RM52.060 million was 6% lower than 1997.Shareholder’s Fund increased by 7% from RM401.014 million to RM429.93 million. Earning pershare after tax for 1998 was 45 sen compared with 48 sen in 1997.10KIM Aluminium Can Sdn Bhd’s new plant at Nilai - a joint venture between KJCF and Mitsubishi Corp andMitsubishi Materials Corp for the manufacture of 2 pc aluminium retortable slim cans.

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8CHAIRMAN’SstatementGROUP HIGHLIGHTSThe factory building for the 2-piece Aluminium Slim cans project, under KJM Aluminium Can SdnBhd, was completed in end 1998. Installation of machinery was fully completed in April 1999 andcommercial production has been targeted in May 1999.The new factory building for its subsidiary company, Metal-Pak (M) Sdn Bhd, was completed onschedule in June 1998 and the relocation of its operation to the new premise was successfullycarried out by the end of 1998.The Johore operation under KJ Can (Johore) Sdn Bhd commenced operation in August 1998.DIVIDENDThe Directors recommend a second and final tax exempt dividend of 10% (5 sen per share) and aspecial tax exempt dividend of 20% to be paid on 1 July 1999 in respect of the year ended31 December 1998. Together with the interim 10% tax exempt dividend paid on 9 November1998, the total dividend paid and proposed for 1998 will amount to 40% (1997 : 40%).11

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8YEAR 2000 READYCHAIRMAN’SstatementThe Group has taken all necessary steps to ensure that the Group’s business activities are notmaterially affected by the Y2K problem. A fully integrated computer software for the financial andmanufacturing reporting system was implemented during the year. All internal hardware andsoftware systems are now Y2K ready.CURRENT YEAR’S PROSPECTBarring unforeseen circumstances, the Directors expect the performance of the Group in 1999 tobe in line with the gradual recovery of the industry.On behalf of the Board of Directors and management, I wish to thank all our customers for theircontinued support and co-operation.I also wish to express the Board’s appreciation and gratitude to all management and employees ofthe Group for their contributions and commitment to the Group’s performance.Y.A.M TUNKU NADZARUDDIN IBNI DYMM TUANKU JA’AFARCHAIRMAN12

financialstatements1418181920212224Directors’ ReportStatement by DirectorsStatutory DeclarationReport of the Auditors to the MembersBalance SheetsProfit and Loss AccountsCash Flow StatementNotes to the Accounts

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8DIRECTORS' REPORTThe Directors have pleasure in presenting their report together with the audited accounts of theGroup and of the Company for the year ended 31 December 1998.DIRECTORS’reportPRINCIPAL ACTIVITIESThe principal activities of the Company are that of manufacturing and distribution of tin cans.The principal activities of the Group include the manufacturing and distribution of tin cans,2 piece aluminium beverage cans, polyethelene terephalate products and corrugatedfibreboard cartons, provision of engineering services, letting of property and provision of shareregistration and management services.There have been no significant changes in the nature of these activities during the year.RESULTSGroupRM'000CompanyRM'000Profit before taxation 76,345 49,206Taxation (22,485) (8,307)Profit after taxation 53,860 40,899Minority interest (1,800) -52,060 40,899Less :Dividends- Interim dividend paid (5,786) (5,786)- Proposed final and special dividends (17,358) (17,358)Retained profit for the year 28,916 17,755There were no material transfers to or from reserves or provisions during the year.In the opinion of the Directors, the results of the operations of the Group and of the Companyduring the financial year have not been substantially affected by any item, transaction or eventof a material and unusual nature.DIVIDENDSThe dividends paid or declared by the Company since the date of the last report were asfollows:-In respect of the financial year ended 31 December 1997as shown in the Directors' Report of that financial year:-RM'000Final dividend of 10% and a special dividend of 20%,both tax exempt 17,358In respect of the financial year ended 31 December 1998:-Interim dividend of 10%, tax exempt 5,786The Directors now recommend a final dividend of 10%, tax exempt, amounting toRM5,786,000 and a special dividend of 20%, tax exempt, amounting to RM11,572,000 inrespect of the current financial year.SIGNIFICANT EVENT DURING THE FINANCIAL YEARSignificant event during the financial year is disclosed in Note 23 to the accounts.14

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8DIRECTORSThe names of the Directors of the Company in office since the date of the last report and at thedate of this report are:-Y.A.M. Tunku Nadzaruddin Ibni DYMM Tuanku Ja'afarY.A.M. Raja Dato' Seri Ashman Shah Ibni Sultan Azlan ShahSee Teow ChuanDato' Anthony See Teow GuanSee Teow KoonSee Tiau KeeSee Ean SengDato' Gnanalingam s/o Gunanath Lingam(Alternate director to Y.A.M. Raja Dato' Seri Ashman Shah Ibni Sultan Azlan Shah)DIRECTORS’report (cont’d)In accordance with Article 95 of the Company's Articles of Association, See Teow Koon and SeeTiau Kee retire by rotation and, being eligible, offer themselves for re-election.DIRECTORS' BENEFITSNeither at the end of the financial year, nor at any time during that year, did there subsist anyarrangement to which the Company is a party, whereby Directors might acquire benefits bymeans of the acquisition of shares in, or debentures of, the Company or any other bodycorporate.Since the end of the previous financial year, no Director has received or become entitled toreceive any benefits (other than a benefit included in the aggregate amount of emolumentsreceived or due and receivable by the Directors shown in the accounts or the fixed salary of afull-time employee of the Company) by reason of a contract made by the Company or a relatedcorporation with any Director or with a firm of which the Director is a member or with acompany in which the Director has a substantial financial interest required to be disclosed bySection 169(8) of the Companies Act 1965.DIRECTORS' INTEREST IN SHARESThe following Directors who held office at the end of the financial year had, according to theregister required to be kept under Section 134 of the Companies Act 1965, an interest in sharesand debentures of the Company and its related corporations, as stated below:-Number of ordinary shares of RM0.50 eachAtAtThe Company 1.1.98 Bought Sold 31.12.98Mr. See Teow Chuan 95,309 - - 95,309* 42,741,276 - - * 42,741,276Dato' Anthony See Teow Guan 50,470 - - 50,470* 42,741,276 * 200,000 - * 42,941,276Mr. See Teow Koon - 15,744 - 15,744* 42,851,746 - - * 42,851,746Mr. See Ean Seng 52,605 - 10,000 42,605* 1,453 - - * 1,453Mr. See Tiau Kee * 42,741,276 - - * 42,741,276Y.A.M. Raja Dato' Seri Ashman ShahIbni Sultan Azlan Shah 498,750 5 - 498,755Dato' Gnanalingam s/o GunanathLingam (alternate to Y.A.M. RajaDato' Seri Ashman ShahIbni Sultan Azlan Shah) 6,000 430,000 - 436,000- * 1,100,285 - * 1,100,28515

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Number of ordinary shares of RM1.00 eachAtAtSubsidiary 1.1.98 Bought Sold 31.12.98Box-Pak (Malaysia) BerhadDIRECTORS’(cont’d) reportY.A.M. Tunku NadzaruddinIbni DYMM Tuanku Ja'afar 2,073,000 - 500,000 1,573,000Mr. See Teow Chuan 3,000 8,000 - 11,000Dato' Anthony See Teow Guan 7,000 - - 7,000Mr. Tan Kim Seng 8,000 - - 8,000Mr. See Leong Chye @ Sze Leong Chai - 5,000 - 5,000No. of warrantsAtAtThe Company 1.1.98 Bought Sold 31.12.98Mr. See Teow Chuan 37,374 - 374 37,000* 5,698,835 - - * 5,698,835Dato' Anthony See Teow Guan 25,353 - - 25,353* 5,698,835 - - * 5,698,835Mr. See Teow Koon 15,353 - - 15,353* 5,698,835 - - * 5,698,835Mr. See Ean Seng 26,500 - - 26,500* 200 - * 200 -Mr. See Tiau Kee * 5,698,835 - - * 5,698,835Y.A.M. Raja Dato' Seri Ashman ShahIbni Sultan Azlan Shah 66,500 - - 66,500* Denotes indirect interestSee Teow Chuan, Dato' Anthony See Teow Guan, See Teow Koon and See Tiau Kee are deemedto have an interest in the shares of the subsidiary companies to the extent Kian Joo Can FactoryBerhad has an interest by virtue of their interests in the Company as disclosed above.OTHER STATUTORY INFORMATION(a) Before the profit and loss accounts and balance sheets of the Group and of the Companywere made out, the Directors took reasonable steps:-(i)to ascertain that proper action had been taken in relation to the writing off of bad debtsand the making of provision for doubtful debts and satisfied themselves that all knownbad debts had been written off and that adequate provision had been made fordoubtful debts; and(ii) to ensure that any current assets which were unlikely to realise their value as shown inthe accounting records in the ordinary course of business have been written down toan amount which they might be expected so to realise.(b) At the date of this report, the Directors are not aware of any circumstances which wouldrender:-(i)the amount written off for bad debts or the amount of the provision for doubtful debtsin the Group and the Company inadequate to any substantial extent; and(ii) the values attributed to current assets in the accounts of the Group and of the Companymisleading.16

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8(c) At the date of this report, the Directors are not aware of any circumstances which havearisen which render adherence to the existing method of valuation of assets or liabilities ofthe Group and of the Company misleading or inappropriate.(d) At the date of this report, the Directors are not aware of any circumstances not otherwisedealt with in this report or accounts of the Group and of the Company which would renderany amount stated in the accounts misleading.(e) As at the date of this report, there does not exist:-(i)any charge on the assets of the Group and of the Company which has arisen since theend of the financial year which secures the liabilities of any other person; orDIRECTORS’report (cont’d)(ii) any contingent liabilities in respect of the Group and of the Company which has arisensince the end of the financial year.(f) In the opinion of the Directors:-(i)no contingent liability or other liability has become enforceable or is likely to becomeenforceable within the period of twelve months after the end of the financial year whichwill or may affect the ability of the Group or of the Company to meet its obligations asand when they fall due;(ii) no item, transaction or event of a material and unusual nature has arisen in the intervalbetween the end of the financial year and the date of this report which is likely to affectsubstantially the results of the operations of the Group or of the Company for thefinancial year in which this report is made.AUDITORSThe auditors, Ernst & Young, have expressed their willingness to continue in office.On behalf of the Board,Y.A.M. TUNKU NADZARUDDIN IBNI )DYMM TUANKU JA'AFAR ))) DIRECTORS))SEE TEOW CHUAN )Batu Caves, Selangor Darul Ehsan31 March 199917

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT 1965STATEMENTBYdirectorsWe, Y.A.M. TUNKU NADZARUDDIN IBNI DYMM TUANKU JA'AFAR and SEE TEOW CHUAN, beingtwo of the Directors of KIAN JOO CAN FACTORY BERHAD, do hereby state that in the opinionof the Directors, the accounts set out on pages 20 to 36 are drawn up in accordance withapproved accounting standards so as to give a true and fair view of:-(i) the state of affairs of the Group and of the Company as at 31 December 1998 and of theresults of the business of the Group and of the Company for the year ended on that date;and(ii) the cash flows of the Group for the year ended 31 December 1998.On behalf of the Board,Y.A.M. TUNKU NADZARUDDIN IBNI )DYMM TUANKU JA'AFAR ))) DIRECTORS))SEE TEOW CHUAN )Batu Caves, Selangor Darul Ehsan31 March 1999STATUTORYdeclarationPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT 1965I, SEE SIEW CHOO, being the officer primarily responsible for the financial management of KIANJOO CAN FACTORY BERHAD, do solemnly and sincerely declare that the accounts set out onpages 20 to 36 are in my opinion correct and I make this solemn declaration conscientiouslybelieving the same to be true, and by virtue of the provisions of the Statutory Declarations Act,1960.Subscribed and solemnly declared bythe abovenamed SEE SIEW CHOOat Batu Caves in the state of SelangorDarul Ehsan on 31 March 1999SEE SIEW CHOOBefore me,Commissioner For Oaths18

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8We have audited the accounts set out on pages 20 to 36 in accordance with approved auditingstandards.In our opinion:-(a) the accounts are properly drawn up in accordance with the provisions of the Companies Act1965 and approved accounting standards so as to give a true and fair view of:-(i)the state of affairs of the Group and of the Company as at 31 December 1998 and ofthe results of the Group and of the Company and the cash flows of the Group for theyear then ended; and(ii) the matters required by Section 169 of the Companies Act 1965 to be dealt with in theaccounts.REPORT OFTHE AUDITORSTO THEMEMBERS OFKIAN JOOcan factoryberhad(b) the accounting and other records and the registers required by the Act to be kept by theCompany and by its subsidiary companies have been properly kept in accordance with theprovisions of the Act.We are satisfied that the accounts of the subsidiary companies that have been consolidatedwith the Company's accounts are in form and content appropriate and proper for the purposesof the preparation of the consolidated accounts and we have received satisfactory informationand explanations required by us for those purposes.The Auditors' Reports on the accounts of the subsidiary companies were not subject to anyqualification and did not include any comment required to be made under Section 174(3) ofthe Companies Act 1965.ERNST & YOUNG AF: 0039Public AccountantsOng Seng Pheow 1021/3/99(J/PH)PartnerKuala Lumpur, Malaysia31 March 199919

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8GroupCompanyNote 1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000BALANCEsheetsas at31 December 1998FIXED ASSETS 2 342,735 219,767 63,931 59,929SUBSIDIARY COMPANIES 3 - - 46,860 25,295ASSOCIATED COMPANIES 4 17,000 19,074 12,515 12,742INVESTMENT 5 750 750 750 750CURRENT ASSETSStocks 6 106,279 94,288 30,655 30,672Trade debtors 7 113,943 133,775 24,677 31,048Other debtors, deposits andprepayments 11,995 18,360 31,607 30,127Fixed deposits with licensedbanks 104,926 127,200 83,646 85,006Cash and bank balances 6,654 6,445 357 3,749343,797 380,068 170,942 180,602CURRENT LIABILITIESTrade creditors 14,546 22,395 5,902 10,754Bank overdrafts 8 8,721 11,107 1,399 3,045Other creditors and accruals 13,698 12,504 2,268 2,661Bonds 9 80,000 - 80,000 -Taxation 22,769 22,264 9,112 4,296Proposed dividends 17,358 17,358 17,358 17,358157,092 85,628 116,039 38,114NET CURRENT ASSETS 186,705 294,440 54,903 142,488547,190 534,031 178,959 241,204FINANCED BY:-SHARE CAPITAL 10 57,860 57,860 57,860 57,860SHARE PREMIUM 266 266 266 266RESERVES 11 371,804 342,888 118,324 100,569SHAREHOLDERS' FUNDS 429,930 401,014 176,450 158,695MINORITY INTEREST 44,687 44,837 - -BONDS 9 - 80,000 - 80,000LONG TERM LOAN 12 64,906 - - -DEFERRED TAXATION 13 7,667 8,180 2,509 2,509547,190 534,031 178,959 241,204The annexed notes form an integral part of the accounts.20

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8GroupCompany1998 1997 1998 1997Note RM'000 RM'000 RM'000 RM'000TURNOVER 14 425,012 438,151 140,385 133,483COST OF SALES 339,470 353,618 116,697 117,832OPERATING PROFIT 15 73,911 77,840 49,206 45,828SHARE OF PROFITS FROMASSOCIATED COMPANIES 2,434 7,517 - -PROFIT BEFORE TAXATION 76,345 85,357 49,206 45,828PROFITANDLOSSaccountsfor the year ended31 December 1998TAXATION 16 (22,485) (26,135) (8,307) (7,007)PROFIT AFTER TAXATION 53,860 59,222 40,899 38,821MINORITY INTEREST (1,800) (3,830) - -PROFIT ATTRIBUTABLETO SHAREHOLDERS 52,060 55,392 40,899 38,821DIVIDENDS 17 (23,144) (23,144) (23,144) (23,144)RETAINED PROFITFOR THE YEAR 11 28,916 32,248 17,755 15,677EARNINGS PER SHARE 18- Basic 45 sen 48 sen- Fully diluted 42 sen 44 senThe annexed notes form an integral part of the accounts.21

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 81998 1997RM'000 RM'000CASH FLOWS FROM OPERATING ACTIVITIESCASHFLOWstatementfor the year ended31 December 1998Cash receipts from customers 443,666 421,622Payment to suppliers (276,001) (279,294)Payment of operating expenses (86,838) (83,985)Other receipts 16,915 5,861Cash generated from operations 97,742 64,204Interest paid (3,250) (3,171)Income tax paid (21,600) (25,676)Net cash generated from operating activities 72,892 35,357CASH FLOWS FROM INVESTING ACTIVITIESDividend received from an associated company - 2,650Purchase of fixed assets (143,811) (27,097)Proceeds from disposal of fixed assets 437 394Cash flow from acquisition of subsidiarynet of cash acquired 8 -Interest received 9,473 10,347Net cash used in investing activities (133,893) (13,706)22

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 81998 1997RM'000 RM'000CASH FLOWS FROM FINANCING ACTIVITIESProceeds from subscription of shares by minorityshareholders in a subsidiary company - 16,000Repayment of hire purchase and lease obligations - (69)Repayment of bank borrowings - (1,635)Term loan obtained 64,906 -Dividends paid (23,144) (23,144)Dividends paid to minority shareholders of a subsidiary company (1,302) (1,264)Net change in associated companies' balances 862 4,014CASHFLOWstatement (cont’d)for the year ended31 December 1998Net cash generated from/(used in) financing activities 41,322 (6,098)NET (DECREASE)/INCREASE IN CASH AND (19,679) 15,553CASH EQUIVALENTSCASH AND CASH EQUIVALENTS BROUGHT FORWARD 122,538 106,985CASH AND CASH EQUIVALENTS CARRIED FORWARD 102,859 122,538CASH AND CASH EQUIVALENTS COMPRISE THE FOLLOWING:-Cash and bank balances 6,654 6,445Bank overdrafts (8,721) (11,107)Fixed deposits with licensed banks 104,926 127,200102,859 122,538ACQUISITION OF SUBSIDIARIESThe fair values of assets acquired or liabilities assumed were as follows:-1998RM'000Cash and bank balances 8Fixed assets 1Other debtors 55Other creditors (64)Purchase consideration -Less : Cash acquired (8)Cash flow on acquisition, net of cash acquired (8)23

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 81. SIGNIFICANT ACCOUNTING POLICIES(a) Accounting ConventionNOTESTOTHEaccounts31 December 1998The accounts are prepared under the historical cost convention and modified by therevaluation of certain shares in subsidiary companies and comply with approvedaccounting standards issued by the Malaysian Accounting Standards Board. In thecurrent financial year, the Company and the Group applied certain transitionalprovisions in International Accounting Standard 16 (Revised), Property, Plant andEquipment, by virtue of which a reporting enterprise which does not adopt a policy ofrevaluation is allowed to retain revalued amounts on the basis of their previousrevaluations (subject to continuity in depreciation policy and the requirement to writean asset down to its recoverable amount).(b) Basis of ConsolidationThe consolidated accounts incorporate the accounts of the Company and all itssubsidiaries. All the subsidiaries are consolidated using the acquisition method ofaccounting except those acquisitions of subsidiary companies which meet the criteriafor merger accounting under Malaysian Accounting Standard No. 2, Accounting forAcquisitions and Mergers, are accounted under that method.(i) Under the acquisition method of accounting, the results of subsidiaries acquired ordisposed during the year are included from the date of acquisition or up to the dateof disposal. At the date of acquisition, the fair values of the subsidiary companies'net assets are determined and these values are reflected in the consolidatedaccounts.The difference between the acquisition cost and the fair value of assets acquired isreflected as goodwill or reserve on consolidation as appropriate.Goodwill on consolidation is written off against reserve.(ii) Under the merger method of accounting, the results of the subsidiary companiesare presented as if the companies had been combined through the current andprevious financial years.All significant intra-group transactions are eliminated in the consolidated accounts.(c) Associated CompaniesAssociated company is a company in which the Company has a long term equityinterest of between 20 and 50 percent and where it exercises significant influencethrough Board representation.The Group equity-accounts for its share of post-acquisition results and reserves ofassociated companies based on the latest audited or management accounts of thecompanies concerned.The Group's share of results and reserves of associated companies acquired or disposedis included in the consolidated accounts from the date of acquisition and up to thedate of disposal.24

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8(d) Depreciation of Fixed AssetsFreehold land and capital work-in-progress are not depreciated. Leasehold land isamortised evenly over the unexpired lease terms ranging from 24 to 91 years. Otherfixed assets are depreciated over the estimated useful lives on a straight line basis. Theprincipal annual rates of depreciation used are as follows:-%Buildings 2Motor vehicles 20Furniture, fittings and equipment 10 - 33 1/3Plant, machinery and equipment 10NOTESTOTHEaccounts (cont’d)31 December 1998(e) InvestmentInvestment in subsidiary companies is stated at valuation or at cost and other long terminvestment is stated at cost. They are written down only when the Directors are of theopinion that there is a permanent diminution in value.(f) StocksTrading stocks are stated at the lower of cost and net realisable value after adequateprovision has been made for damaged, obsolete and slow moving items. Cost isdetermined on a first-in first-out basis. Work-in-progress and finished goods compriseraw materials, labour and manufacturing overheads.(g) Transactions in Foreign CurrenciesTransactions in foreign currencies are recorded in Ringgit Malaysia at the exchange rateruling at the time of the transaction or at contracted rates where applicable. Foreigncurrency assets and liabilities are reported in Ringgit Malaysia at the exchange ratesruling at the balance sheet date. All gains and losses are included in the profit and lossaccount.(h) Deferred TaxationDeferred taxation is provided on timing differences using the liability method exceptwhere it can be demonstrated with reasonable probability that the tax deferrals willcontinue in the foreseeable future.(i)Year 2000 Compliance CostsThe Year 2000 compliance costs are costs specifically associated with modifyingexisting internal-use software for the Year 2000. Year 2000 compliance costs areexpensed to the profit and loss account as and when it is incurred except that costswhich represent an enhancement of the existing software and related hardwarebeyond its originally assessed standard of performance are capitalised as part of therelated asset if it can be measured reliably.25

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 82. FIXED ASSETSNOTESTOTHE(cont’d) accounts31 December 1998GROUPCOSTAt Valuation1990 1996LeaseholdLeasehold land & buildings land and FreeholdFreehold Long Short buildings land andland term term Long term buildingsRM'000 RM'000 RM'000 RM'000 RM'000At 1 January 740 40,871 1,100 23,705 22,481Acquisition of subsidiary - - - - -Additions - - - 41,104Disposals - - - - -Reclassification - - - - -At 31 December 740 40,871 1,100 23,705 63,585ACCUMULATED DEPRECIATIONAt 1 January - 4,487 167 1,829 374Acquisition of subsidiary - - - - -Charge for the year - 643 24 379 216Disposal - - - - -At 31 December - 5,130 191 2,208 590NET BOOK VALUEAt 31 December 1998 740 35,741 909 21,497 62,995At 31 December 1997 740 36,384 933 21,876 22,107At Valuation in 1990COMPANYLeasehold Freehold Leasehold landFreehold land and land and Long Shortland buildings buildings term termRM'000 RM'000 RM'000 RM'000 RM'000COST/VALUATIONAt 1 January 740 20,060 16,453 229 1,058Additions - - 6,232 - -Disposals - - - - -Reclassification - - - - -At 31 December 740 20,060 22,685 229 1,058ACCUMULATED DEPRECIATIONAt 1 January - 2,142 375 19 182Depreciation charge - 306 133 4 36Disposals - - - - -At 31 December - 2,448 508 23 218NET BOOK VALUEAt 31 December 1998 740 17,612 22,177 206 840At 31 December 1997 740 17,918 16,078 210 87626

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8At CostTotalPlant Furniture CapitalLeasehold land and buildings and and Motor work inLong term Short term machinery fittings vehicles progress 1998 1997RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000NOTESTOTHEaccounts (cont’d)7,901 1,354 266,416 13,714 6,004 2,073 386,359 360,081- - - 7 - - 7 -138 671 96,525 2,481 881 10,257 152,057 27,468(2) - (497) (12) (707) - (1,218) (1,190)- 166 375 265 - (806) - -31 December 19988,037 2,191 362,819 16,455 6,178 11,524 537,205 386,359797 214 149,114 6,294 3,316 - 166,592 140,648- - - 6 - - 6 -159 59 24,371 1,999 917 - 28,767 27,084- - (492) (4) (399) - (895) (1,140)956 273 172,993 8,295 3,834 - 194,470 166,5927,081 1,918 189,826 8,160 2,344 11,524 342,735 -7,104 1,140 117,302 7,420 2,688 2,073 - 219,767At CostTotalPlant, Furniture,machinery fittings Capitaland and Motor work inBuildings equipment equipment vehicles progress 1998 1997RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000296 52,615 5,657 3,204 203 100,515 95,275671 1,289 1,125 154 - 9,471 5,688(363) - (105) - (468) (448)166 - - - (166) - -1,133 53,541 6,782 3,253 37 109,518 100,51531 33,570 2,593 1,674 - 40,586 35,90223 3,755 704 497 - 5,458 5,130- (363) - (94) - (457) (446)54 36,962 3,297 2,077 - 45,587 40,5861,079 16,579 3,485 1,176 37 63,931 -265 19,045 3,064 1,530 203 - 59,92927

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 82. FIXED ASSETS (Cont’d)NOTESTOTHE(cont’d) accounts31 December 1998Land and buildings of the Group and of the Company stated at valuation in 1990were revalued in September 1990 by the Directors based on valuation carried out byindependent professional firms of valuers on an open market value basis modified by therelevant authorities. Land and buildings of the Group stated at valuation in 1996 wererevalued by an independent professional firm of valuers on an open market value basis.The valuation was modified by the relevant authorities and adopted by the Directors inMay 1996. As allowed by the transitional provisions of International Accounting Standard16 (Revised), Property, Plant and Equipment, issued by the Malaysian AccountingStandards Board, these assets have continued to be stated at their prior years' valuations.Included in the assets capitalised during the year of the Group and of the Company areamounts of RM1,514,844 and RM486,547 respectively which relate to the acquisition ofhardware and software to meet Year 2000 compliance requirements.3. SUBSIDIARY COMPANIESCompany1998 1997RM'000 RM'000Quoted shares, at cost 16,729 16,729Quoted shares, at valuation 6,854 6,854Unquoted shares, at cost 26,000 24,000Unquoted shares, at valuation 29,134 29,134Amount owing by subsidiary companies 59,073 25,658Amount owing to subsidiary companies (90,930) (77,080)46,860 25,295Market value of quoted shares 50,462 30,716The amount owing by/(to) subsidiary companies are unsecured and non-interest bearing.The details of the subsidiary companies are set out in Note 24 to the accounts.The quoted and unquoted shares at valuation were revalued in September 1990 by theDirectors based on the net tangible assets of the subsidiaries as a result of revaluation ofcertain landed properties of the subsidiaries concerned. The revaluation was carried out byan independent professional firm of valuers.4. ASSOCIATED COMPANIESGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Unquoted shares, at cost 11,135 11,135 11,135 11,135Share of post acquisitionreserves (a) 4,464 5,676 - -(b) 15,599 16,811 11,135 11,135Amount owing by associatedcompanies 1,401 2,263 1,380 1,60717,000 19,074 12,515 12,742The amounts owing by/(to) associated companies are trade related and non interestbearing.28

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 84. ASSOCIATED COMPANIES (Cont’d)(a) Share of post-acquisitionreservesGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000As at 1 January 5,676 4,868 - -For the year (1,212) 808 - -As at 31 December 4,464 5,676 - -NOTESTOTHEaccounts (cont’d)(b) Group's interest in associated companies:-Group1998 1997RM'000 RM'00031 December 1998Group's share of net tangible assets (NTA) 18,424 19,710Less : Exchange reserve on translation of NTA of anassociated company not accounted for (2,825) (2,899)15,599 16,811The details of the associated companies are set out in Note 24 to the accounts.5. INVESTMENTGroup/Company1998 1997RM'000 RM'000Debentures at cost (unquoted) 750 7506. STOCKSGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Raw materials- on hand 71,505 62,149 18,473 19,858- in transit - 4,626 - -Work-in-progress 10,882 12,201 5,299 6,531Finished goods 24,437 16,360 6,883 4,283Sundry stocks 474 436 - -107,298 95,772 30,655 30,672Provision for obsolete stocks (1,019) (1,484) - -106,279 94,288 30,655 30,6727. TRADE DEBTORSGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Amounts receivable 115,179 133,828 25,022 31,048Provision for doubtful debts (1,236) (53) (345) -113,943 133,775 24,677 31,04829

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 88. BANK OVERDRAFTS (UNSECURED)NOTESTOTHE(cont’d) accounts31 December 1998The bank overdrafts of the Group are secured by a negative pledge on the assets of certainsubsidiary companies and bear interest at rates ranging from 8.55% to 12.80% (1997 :9.65% to 10.95%) per annum.9. BONDSGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'0003% RedeemableNon-Convertible Bonds1994/1999 with DetachableWarrants 80,000 80,000 80,000 80,000Redeemable within one year 80,000 - 80,000 -Redeemable after one year - 80,000 - 80,00080,000 80,000 80,000 80,000The 3% Redeemable Non-Convertible Bonds 1994/1999 ("Bonds") at nominal value ofRM1.00 each are constituted by a Trust Deed dated 16 November 1994 made by theCompany and the Trustee for the holders of the Bonds. Interest on the Bonds is payableannually in arrears.The Detachable Warrants ("Warrants") are constituted by a Deed Poll dated 16 November1994 made by the Company and the Trustee for the holders of the Warrants. Each Warrantwill entitle its registered holder to subscribe for one ordinary share of RM0.50 each in theCompany at a subscription price of RM6.50 per share. As at the balance sheet date, thenumber of Warrants remaining unexercised is 15,379,029 (1997 : 15,379,029).The expiry date of the Warrants was previously 22 May 1999. However, approval forextension has been obtained from the Securities Commission to extend the expiry date to22 May 2002. An extraordinary general meeting (EGM) will be convened to obtainapproval from the shareholders with regard to the said extension.10. SHARE CAPITALNUMBER OFORDINARY SHARESOF RM0.50 EACH Group/Company1998 1997 1998 1997RM'000 RM'000Authorised:-Ordinary shares of RM0.50 each 200,000,000 200,000,000 100,000 100,000Issued and fully paid:-Ordinary shares of RM0.50 eachAt 1 January 115,720,117 115,720,017 57,860 57,860Exercise of warrants - 100 - -At 31 December 115,720,117 115,720,117 57,860 57,86030

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 811. RESERVESNon-distributable reserves:-GroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Reserves arising fromrevaluation of land andbuildings and quotedand unquoted shares insubsidiary companies 12,357 12,357 24,092 24,092Capital reserve 4,480 4,480 - -Reserve on consolidation 4,814 4,814 - -NOTESTOTHEaccounts (cont’d)31 December 1998Distributable reserves:-Profit and loss account (Note a) 350,153 321,237 94,232 76,477At 31 December 371,804 342,888 118,324 100,569(a) Profit and Loss Account:-At 1 January 321,237 288,989 76,477 60,800Retained profit for the year 28,916 32,248 17,755 15,677At 31 December 350,153 321,237 94,232 76,477The Company has approximately RM13,832,000 (1997 : RM32,510,000) tax exemptincome available for distribution as tax exempt dividend. Based on estimated tax creditsavailable, the entire retained profits of the Company is available for distribution by way ofcash dividends without incurring additional tax liability. However, the ability of theCompany to distribute its retained earnings is subject to restrictions contained in Section365 of the Companies Act 1965. In general, a company is allowed to declare dividends fora financial year of an amount not exceeding the after-tax profit of that financial year or notexceeding the average dividends declared in respect of the two financial years immediatelypreceding that financial year, whichever is the greater. Any after-tax profit not declared asdividends for any financial year commencing on or after 1 July 1997 may be accumulatedand paid out as dividends in any subsequent financial year.12. LONG TERM LOAN (SECURED)The term loan facility is secured by a memorandum of deposit of titles to the freehold landowned by a subsidiary company.The term loan bears interest at rates varying from 8.55% to 12.80% (1997 : Nil) perannum.The principal repayment of the term loan shall be by 60 monthly instalments with the firstinstalment to commence in March 2000.13. DEFERRED TAXATIONGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000As at 1 January 8,180 7,617 2,509 2,509Transferred (to)/from profitand loss account (513) 563 - -At 31 December 7,667 8,180 2,509 2,50931

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 814. TURNOVERNOTESTOTHETurnover of the Company represents the invoiced value of goods sold less trade discountsand returns.Turnover of the Group represents the invoiced value of goods sold and services renderedless trade discounts and returns.(cont’d) accounts31 December 199815. OPERATING PROFITOperating profit is arrivedat after charging:-GroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Directors' remunerationpayable to directors of- holding company 2,210 2,207 958 947- subsidiary companies whoare not directors of theholding company 744 1,539 - -Directors' fees payableto directors of- holding company 150 150 85 85- subsidiary companies whoare not directors of theholding company 48 48 - -Auditors' remuneration- current year 123 110 32 30- underprovision in prior year 2 29 2 10Rent- buildings 1,208 1,024 73 84- machinery 696 431 300 261Interest- leases - 1 - -- hire purchase - 3 - -- overdrafts 630 738 122 182- bonds 2,400 2,400 2,400 2,400- other bank borrowings 163 46 80 10Depreciation of fixed assets 28,767 27,084 5,458 5,130Bad and doubtful debts 1,195 39 - -and crediting:-Gain on sale of fixed assets 114 344 67 166Dividend income- from quoted subsidiary company - - 3,291 2,194- from unquoted subsidiarycompanies - - 21,146 21,146- from associated company - - 3,411 6,167Interest income 10,875 11,181 8,034 9,420Rental receivable 2,256 2,059 813 81532

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 816. TAXATIONGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Taxation based on results for the year:-Malaysian taxation- current year 22,580 23,882 8,307 7,632- deferred taxation (513) 563 - -22,067 24,445 8,307 7,632Share of taxation ofassociated companies- in Malaysia 870 1,233 - -- outside Malaysia 26 476 - -22,963 26,154 8,307 7,632Overprovision in prior year (478) (19) - (625)22,485 26,135 8,307 7,007NOTESTOTHEaccounts (cont’d)31 December 1998The taxation on the profit of the Group is higher than the statutory tax rate due to certainexpenses being disallowed for taxation purposes.The taxation on the profit of the Company is lower than the statutory tax rate due tocertain tax exempt dividend receivable from a subsidiary company.As at 31 December 1998, unabsorbed capital allowances, unutilised tax losses and taxexempt income of the Group amounted to approximately RM6,827,000 (1997:RM3,321,000), RM1,193,000 (1997 : Nil) and RM80,005,000 (1997 : RM95,024.000)respectively. These amounts are subject to agreement of the Inland Revenue Board.17. DIVIDENDSGroup/Company1998 1997RM'000 RM'000Interim dividend of 10%, tax exempt 5,786 5,786Proposed dividends:-- final dividend of 10%, tax exempt 5,786 5,786- special dividend of 20%, tax exempt 11,572 11,57223,144 23,14418. EARNINGS PER SHARE(a) The basic earnings per share is calculated by dividing the Group's profit after taxationand minority interest of RM52,060,000 (1997 : RM55,392,000) by the weightedaverage number of ordinary shares in issue during the year of 115,720,117(1997: 115,720,117).(b) The fully diluted earnings per ordinary share is calculated by dividing the Group'sadjusted earnings of RM55,006,000 (1997 : RM58,322,180) by the enlarged weightedaverage number of shares issued and issuable of 131,099,146 (1997 : 131,099,146).The Group's adjusted earnings of RM55,006,000 (1997 : RM58,322,180) has beenadjusted to take into account the notional interest savings after tax on theRM80,000,000 3% Bonds, the notional interest savings after tax deemed to be derivedfrom repayment of interest-bearing borrowings and the notional interest income aftertax deemed to be derived from fixed deposits at 8% on the cash receivable ofRM99,963,689 (1997 : RM99,963,689) arising from the exercise of the balance of15,379,029 (1997 : 15,379,029) Warrants. The enlarged weighted average number ofshares issued and issuable of 131,099,146 is calculated based on the assumption thatthe balance of the Warrants were fully exercised at a subscription price of RM6.50 pershare into ordinary shares of RM0.50 each on 1 January 1998.33

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8NOTESTOTHE(cont’d) accounts31 December 199819. SIGNIFICANT INTER-COMPANY TRANSACTIONSCompany1998 1997RM'000 RM'000Sales to subsidiary companies 39,113 30,327Rental receivable from subsidiary companies 792 792Purchases from subsidiary companies 18,090 16,766Rent payable to subsidiary company 12 1220. CONTINGENT LIABILITIESCompany1998 1997RM'000 RM'000Guarantees given to financial institutionsfor credit facilities granted to subsidiary companies 7,320 8,06321. COMMITMENTSGroupCompany1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000Capital expenditure- approved and contracted for:-Commitments in respectof contracts placed 29,192 15,289 520 5,797Commitments in respectof contracts placed forYear 2000 compliance 346 - 346 -29,538 15,289 866 5,79722. SEGMENTAL REPORTINGProfit/(loss) Total tangibleTurnover before taxation assets employed1998 1997 1998 1997 1998 1997RM'000 RM'000 RM'000 RM'000 RM'000 RM'000Manufacturing- Cans 432,628 431,935 93,710 98,539 759,053 638,550- Corrugated carton 44,217 51,535 6,775 11,633 78,930 79,410- Polyetheleneterephalate products 42,370 39,995 2,240 4,588 23,183 22,696Property 154 168 105 125 1,005 1,105Others 2,394 2,232 371 (5) 4,654 4,735521,763 525,865 103,201 114,880 866,825 746,496Share of turnover ofassociated companies (32,400) (37,306) - - - -Consolidationadjustment (64,351) (50,408) (26,856) (29,523) (162,543) (126,837)425,012 438,151 76,345 85,357 704,282 619,65934

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 823. SIGNIFICANT EVENT DURING THE FINANCIAL YEAROn 6 February 1998, the Company entered into a sale and purchase agreement withCarnaudmetalbox Packaging Sdn. Bhd. to acquire freehold land and building and plantand machinery amounting to RM17.5 million from the latter.The fixed assets acquired were subsequently transferred to a newly acquired wholly-ownedsubsidiary, KJ Can (Johore) Sdn. Bhd. (formerly known as Smorgan Multi-Pet Sdn. Bhd.).NOTESTOTHE24. SUBSIDIARY AND ASSOCIATED COMPANIESDetails of the Company's subsidiary and associated companies are listed below:-accounts (cont’d)31 December 1998Country of Nature ofCompany Incorporation Business Equity Interest Held1998 1997% %Metal-Pak (Malaysia) Malaysia Can 100 100Sdn. Bhd.manufacturerBox-Pak (Malaysia) Malaysia Corrugated fibre 54.85 54.85Berhadboard cartonmanufacturerCanco Engineering & Malaysia Industrial and 100 100Machinery Sdn. Bhd.mechanicalengineering servicesIndastri Kian Joo Malaysia Letting out of 100 100Sdn. Bhd.factory buildingGreat Asia Tin Cans Malaysia Can 100 100Factory Co. Sdn. Bhd.manufacturerBintang Seribu Sdn. Bhd. Malaysia Tinplate cutting 100 100operationsMulti-Pet Sdn. Bhd. Malaysia Polyethelene 100 100terephalateproductsmanufacturerKian Joo Packaging Malaysia 2-piece 100 100Sdn. Bhd.aluminiumbeverage canmanufacturer35

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 824. SUBSIDIARY AND ASSOCIATED COMPANIES (Cont’d)Details of the Company's subsidiary and associated companies are listed below:-NOTESTOTHE(cont’d) accounts31 December 1998Country of Nature ofCompany Incorporation Business Equity Interest Held1998 1997% %Federal Metal Printing Malaysia Metal printing 100 100Factory Sdn. Bhd.and canmanufacturerKJM Aluminium Can Malaysia 2-piece 60 60Sdn. Bhd. (Formerlyaluminiumknown as Highestretortable canProsper Sdn. Bhd.)manufacturerKJ Can (Johore) Sdn. Bhd. Malaysia Can 100 -(Formerly known asmanufacturerSmorgon Multi-PetSdn. Bhd.)Kian Joo Services Sdn. Bhd. Malaysia Share 100 -registrationandmanagementservices* Kian Joo Can Factory Singapore Can 46 46(S) Pte. Ltd.manufacturer* Kian Joo - South Corp. Malaysia Polyethelene 50 50Sdn. Bhd.terephalateproductsmanufacturer* Associated companies not audited by Ernst & Young25. COMPARATIVE FIGURESCertain comparative figures have been reclassified to conform with current year'spresentation.36

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Age of NBV as at 31.12.0998Area Expiry Buildings Land BuildingLocation Description (sq.m.) Tenure Date (Years) RM'000 RM'000Lot PT 2 Factory 11,713 Leasehold 05.09.2074 18 3,325 2.864Jalan Perusahan 4BuildingBatu CavesLot No. 28833 To 28836 Factory 9,919 Freehold – 04 2,801 1,614Batu Caves, Selangor BuildingLot No. 28829 To 28832 Factory 16,895 Freehold – 03 4,771 4,544Batu Caves, Selangor BuildingLISTOFpropertiesas at31 December 1998Lot 6 Factory 8,514 Leasehold 05.09.2074 10 2,367 2,936Jalan Perusahan 1BuildingBatu Caves, SelangorLot 8 Factory 8,452 Leasehold 05.09.2074 22 2,386 1,949Jalan Perusahan 1BuildingBatu Caves, SelangorLot 10 Factory 9,919 Leasehold 05.09.2074 22 2,738 3,062Jalan Perusahan 1BuildingBatu Caves, SelangorLot PT 765, Land for 1,963 Freehold – – 740 -Mukim of Kuala Lumpur DevelopmentWilayah PersekutuanLot No. 3846, Land for 4,249 Leasehold 27.06.2049 – 260 -Chembong, Rembau DevelopmentNegeri SembilanPLO 456 Land for 12,140 Leasehold 04.09.2021 – 839 -Pasir Gudang Ind Estate DevelopmentJohorLot 123, Phase 3 Land for 12,553 Freehold – – 2,254 -Arab-Malaysian Ind Park DevelopmentNilai, Negeri SembilanLot 146 Land for 9,007 Freehold - - 1,803 -Arab-Malaysian Ind Park DevelopmentNilai, Negeri SembilanLot 147 Land for 9,007 Freehold - - 1,925 -Arab-Malaysian Ind Park DevelopmentNilai, Negeri SembilanLot 107 Land for 11,785 Freehold - - 2,465 -Arab-Malaysian Ind Park DevelopmentNilai, Negeri SembilanLot 22 & 24, Sec 16 Factory 3,902 Leasehold 31.10.2070 26 1,040 668Town of Shah Alam BuildingSelangorLot 21, Sec 16 Factory 1,951 Leasehold 31.10.2070 14 527 265Town of Shah Alam BuildingSelangor37

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Age of NBV as at 31.12.0998Area Expiry Buildings Land BuildingLocation Description (sq.m.) Tenure Date (Years) RM'000 RM'000LISTOF(cont’d) propertiesas at31 December 1998PT No. 14350 Land for 19,777 Freehold – – 4,258 -Mukim of Damansara DevelopmentShah Alam, SelangorLot 10, Lorong 2A Factory 6,028 Leasehold 14.05.2088 21 842 1,128Cheras Jaya Ind Estate BuildingBalakong, SelangorLot 196, Factory 11,427 Leasehold 12.06.2073 07 2,258 4,104Jalan Kawat 15/18 BuildingTapak PerusahaanShah AlamTown of Shah AlamSelangorLot No. 3, Factory 12,140 Leasehold 16.07.2074 07 2,444 2,364Jalan Kawat 15/18 BuildingTapak PerusahaanShah AlamTown of Shah AlamSelangorLot 18, Factory 7,641 Leasehold 04.11.2080 07 1,563 2,055Jalan Pengapit 15/1 BuildingShah Alam, SelangorLot 4 Factory 18,848 Leasehold 05.09.2074 06 6,811 4,215Jalan Perusahaan 2 BuildingBatu Caves, SelangorLot 7 Factory 12,840 Leasehold 05.09.2074 14 4,625 8,658Jalan Perusahaan 2 BuildingBatu Caves, Selangor2736 & 2737 Factory 5,344 Leasehold 13.07.2036 20 273 636Mukim of Ulu Kinta BuildingDistrict of Kinta, Perak733 Jalan Tampoi Factory81200 Johor Bahru Building 16,709 Freehold - 30 8,000 4,07223 Jalan Dewani, Shophouse 180 Freehold - 18 - 524Lorong 1, Johor BaruLot 104, 105 & 106 Factory 39,603 Freehold - 01 8,559 15,405Arab-Malaysian Ind Park BuildingNilai, Negeri Sembilan38

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8Authorised Share Capital : RM100,000,000Issued & Fully Paid-Up Capital : RM57,860,058.50 senClass of Shares : Ordinary Shares of RM0.50 sen eachVoting Rights : One vote per ordinary sharesNumber of Shareholders : 2,723DISTRIBUTION OF SHAREHOLDINGSSize of No of % of No of % of IssuedShareholdings Holders Holders Shares Held CapitalANALYSISOFshareholdingsas at3 May 1999Less than 500 38 1.40 8,060 -500 to 5,000 2,036 74.77 3,801,744 3.295,001 to 10,000 182 6.68 1,459,235 1.2610,001 to 100,000 336 12.34 12,101,597 10.46100,001 to 1,000,000 122 4.48 32,977,205 28.50More than 1,000,000 9 0.33 65,372,276 56.492,723 100.00 115,720,117 100.0039

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8No of % of IssuedName Shares Held Capital1. Kian Joo Holdings Sdn. Bhd. – In Liquidation 42,741,276 36.94TWENTYLARGESTshareholdersas at3 May 19992. Employees Provident Fund Board 10,047,000 8.683. Lembaga Tabung Haji 2,230,000 1.934. Malaysia Nominees (Tempatan) Sdn. Bhd.SSCM for Seacorp-Schroder Smallcap Fund Bhd. 1,986,000 1.725. Amanah Raya Nominees (Tempatan) Sdn. Bhd.Sekim Amanah Saham Nasional 1,920,000 1.666. Arab-Malaysian Nominees (Tempatan) Sdn. Bhd.Arab-Malaysian Trustee Bhd. for Pacific Pearl Fund 1,883,000 1.637. Chase Malaysia Nominees (Asing) Sdn. Bhd.Templeton Developing Markets Trust 1,803,000 1.568. Datuk Gnanalingam A/L Gunanathlingam 1,536,000 1.339. Malaysia National Insurance Berhad 1,226,000 1.0610. Chase Malaysia Nominees (Asing) Sdn. Bhd.TIFI Emerging Market Series 934,000 0.8111. Mr See Leong Chye @ Sze Leong Chye 904,593 0.7812. Cartaban Nominees (Asing) Sdn. Bhd.State Street Bank & Trust Co. Fund Du 19A/c Caisse De Depot Et Placement Du Que 903,075 0.7813. HSBC Nominees (Tempatan) Sdn. Bhd.A/c H. N. Holdings Sdn. Bhd. 809,500 0.7014. Overseas Assurance Corporation (Malaysia) Bhd. 731,000 0.6315. Chase Malaysia Nominees (Asing) Sdn. Bhd.Knight Bain Seath & Holbrook Emerging MarketEquity Fund 682,000 0.5916. Universal Trustee (Malaysia) BerhadSBB Premium Capital Fund 639,000 0.5517. Citicorp Nominees (Asing) Sdn. Bhd.CB LDN for Staff Pension Scheme 630,000 0.5418. HLG Nominees (Tempatan) Sdn. Bhd.PB Trustee Services Bhd. - HLB Growth Fund 580,000 0.5019. BBMB Securities Nominees (Tempatan) Sdn. Bhd.Petroliam Nasional Berhad 569,000 0.4920. Cartaban Nominees (Asing) Sdn. Bhd.State Street Bank & Trust Co. Fund ZV10A/c Street Bank & Trust Funds for Employee Trusts 548,350 0.47SUBSTANTIAL SHAREHOLDERSNo ofShares Held% of IssuedCapital1. Kian Joo Holdings Sdn. Bhd. – In Liquidation 42,741,276 36.942. Employees Provident Fund Board 10,047,000 8.6840

A N N U A L R E P O R T • L A P O R A N T A H U N A N 1 9 9 8I/We ________________________________________________________________________________(Full Name In Capital Letters)of ___________________________________________________________________________________(Address)being a member of Kian Joo Can Factory Berhad hereby appoint *The Chairman of the meetingor_____________________________________________________________________________________(Full Name)of _________________________________________________________________________ of failing(Address)him _________________________________________________________________________________(Full Name)of ___________________________________________________________________________________(Address)as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of theCompany to be held at the conference room, Lot 6, Jalan Perusahaan Satu, 68100 Batu Caves,Selangor, Malaysia on Tuesday, 15 June 1999 at 11.30 a.m. and at any adjournment thereof.PROXYformPlease indicate with an “X” in the space provided below how you wish your votes to be cast onthe resolutions specified in the Notice of Meeting.RESOLUTIONS FOR AGAINST1. Adoption of Accounts and Reports (Resolution 1)2. Declaration of Final Dividend (Resolution 2)3. Election of Directors:See Teow Koon (Resolution 3)See Tiau Kee (Resolution 4)4. Approval of Directors’ Fees (Resolution 5)5. Re-Appointment of Ernst & Young asAuditors and authorising Directors tofix their remuneration (Resolution 6)Subject to any voting instruction so given, the proxy/proxies will vote, or abstain from voting onthe resolution as he may think fit.Signed this ____________ day of ___________, 1999__________________________Signature of Member(s)* Delete if not applicableNotes:1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and voteinstead of him. A proxy need not be a member of the Company.2. If the member is a corporation this Proxy Form must be executed under its common seal or under thehand of an officer or attorney duly authorised in writing.3. All Proxy Forms should be deposited at the Registered Office, Lot 10, Jalan Perusahaan Satu, 68100Batu Caves, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time fixed for holdingthe meeting.

foldAffixstamphereThe SecretaryKIAN JOO CAN FACTORY BERHAD (3186-P)Lot 10, Jalan Perusahaan Satu68100 Batu CavesSelangor Darul Ehsanfold