2014 and Grandmet Industrial Estate in Bintulu, Sarawak. F Inanc al rev ew SIGGAS increased its...

www.siggases.com

SIG GASES BERHAD(Company No. 875083-W)

PLO 137, Kawasan Perindustrian Senai III81400 Senai, Johor, Malaysia.T : 07-598 3863 (5 Lines) F : 07-598 3869E : [email protected]

SIG G

ASES BERH

AD

(Com

pany No. 875083-W

)A

NN

UA

L REPORT 2013

www.siggases.com

(Company No. 875083-W)

SIG GASES BERHAD(Company No. 875083-W)

PLO 137, Kawasan Perindustrian Senai III81400 Senai, Johor, Malaysia.T : 07-598 3863 (5 Lines) F : 07-598 3869E : [email protected]

SIG G

ASES BERH

AD

(Com

pa

ny No. 875083-W

)A

NN

UAL REPO

RT 2014

Annual Report

2014

2

3

4

5

8

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94

97

100

ContentsCorporate Information

Corporate Milestone

Corporate Structure

Chairman’s Statement

Financial Highlights

Profile of Directors

Statement of Corporate Governance

Audit Committee Report

Statement on Risk Management andInternal Control

Additional Compliance Information

Financial Statements

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Statement Accompanying Notice ofAnnual General Meeting

Form of Proxy

SIG GASES BERHAD (875083-W)2

AUDIT COMMITTEE

Diong Tai Pew(Chairman)

Datuk Syed Ahmad Bin Alwee Alsree(Member)

Lee Ting Kiat(Member)

Lim Tin Teng @ Lim Jit Teng(Member)

REMUNERATION COMMITTEE

Peh Lam Hoh(Chairman)

Diong Tai Pew(Member)



REGISTRAR

Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel : 03-22643883Fax : 03-22821886

REGISTERED OFFICE

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

Incorporation of Southern Industrial Gas Sdn Bhd

1996

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

1997

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

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

2001

Commissioned Air Separation Unit (ASU) in Senai toproduce liquid oxygen and liquid nitrogen

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

2003

Obtained ISO 9001:2000 in quality management ofindustrial gases production

2004

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

2008

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

2009

Listed on Main Market of Bursa Securities

2010

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

Started production and supply of Hydrogen gases in Nilai

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

Set up Oxygen Re�lling facility in Gebeng, Kuantan

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

Set up oxygen re�lling facility in Ipoh

2013

Centralisation of production from Puchong to Nilai

Develop 8 units of Semi-Detached Industrial Buildings

2014

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

2015

BOARD OF DIRECTORS

Peh Lam HohExecutive Chairman

Diong Tai PewSenior Independent Non-Executive Director

Lau Cheng MingExecutive Director

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

Lee Ting KiatIndependent Non-Executive Director

Lim Tin Teng @ Lim Jit TengIndependent Non-Executive Director

NOMINATING COMMITTEE




ESOS COMMITTEE


Lau Cheng Ming(Member)


Koh Beng San(Member)

SECRETARIES

Yong May Li (f) (LS 0000295)

Irene Juay Yee Luan (f) (MAICSA 7057249)

AUDITORS

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

PRINCIPAL BANKERS

Malayan Banking BerhadAmBank (M) BerhadHong Leong Bank Berhad

STOCK EXCHANGE LISTING

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

WEBSITE

http://www.siggases.com

CorporateInformation

ANNUAL REPORT 2014 3

AUDIT COMMITTEE





REMUNERATION COMMITTEE





REGISTRAR

Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel : 03-22643883Fax : 03-22821886

REGISTERED OFFICE

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

Incorporation of Southern Industrial Gas Sdn Bhd

1996

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

1997

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

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

2001

Commissioned Air Separation Unit (ASU) in Senai toproduce liquid oxygen and liquid nitrogen

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

2003

Obtained ISO 9001:2000 in quality management ofindustrial gases production

2004

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

2008

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

2009

Listed on Main Market of Bursa Securities

2010

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

Started production and supply of Hydrogen gases in Nilai

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

Set up Oxygen Re�lling facility in Gebeng, Kuantan

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

Set up oxygen re�lling facility in Ipoh

2013

Centralisation of production from Puchong to Nilai

Develop 8 units of Semi-Detached Industrial Buildings

2014

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

2015

BOARD OF DIRECTORS

Peh Lam HohExecutive Chairman

Diong Tai PewSenior Independent Non-Executive Director

Lau Cheng MingExecutive Director

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

Lee Ting KiatIndependent Non-Executive Director

Lim Tin Teng @ Lim Jit TengIndependent Non-Executive Director

NOMINATING COMMITTEE




ESOS COMMITTEE


Lau Cheng Ming(Member)


Koh Beng San(Member)

SECRETARIES

Yong May Li (f) (LS 0000295)

Irene Juay Yee Luan (f) (MAICSA 7057249)

AUDITORS

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

PRINCIPAL BANKERS

Malayan Banking BerhadAmBank (M) BerhadHong Leong Bank Berhad

STOCK EXCHANGE LISTING

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

WEBSITE

http://www.siggases.com

CorporateMilestone


Chairman’sStatement(Company No. 875083-W)

Dear Shareholders,

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

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

SOUTHERNINDUSTRIAL GAS

SDN BHD(380462-X)

100%

SOUTHERNOXYGENSDN BHD(788562-U)

100%

SOUTHERNCARBON DIOXIDE

SDN BHD(789834-H)

100%

SIGPROPERTIES

SDN BHD(1043951-K)

100%

IWATANI-SIGINDUSTRIAL GASES

SDN BHD(975110-V)

40%

CorporateStructure(“The Group”)

Chairman’sStatement(Company No. 875083-W)

Dear Shareholders,

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

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

SOUTHERNINDUSTRIAL GAS

SDN BHD(380462-X)

100%

SOUTHERNOXYGENSDN BHD(788562-U)

100%

SOUTHERNCARBON DIOXIDE

SDN BHD(789834-H)

100%

SIGPROPERTIES

SDN BHD(1043951-K)

100%

IWATANI-SIGINDUSTRIAL GASES

SDN BHD(975110-V)

40%


OperaTIOnS revIew

I am pleased to report that SIGGAS continued its organic growth and enhanced its operational productivity and cost-efficiency.

Among the key measures implemented in FY2014 was the realignment of the production and distribution centre from Puchong, Selangor to Nilai, Negeri Sembilan. This resulted in the Group effectively consolidating the operations as well as focusing our resources to provide quality services to our customers in Central Peninsular.

In East Malaysia, following the successful commissioning of the Air Separation Unit (ASU) in Bintulu, Sarawak in 2013, our associate company Iwatani-SIG Industrial Gases Sdn Bhd (Iwatani-SIG) further invested into and commenced construction of a second ASU plan in Samalaju Industrial Park, Sarawak, with a view towards meeting the growing demand from manufacturers operating in the Sarawak Corridor of Renewable Energy (SCORE).

Altogether, SIGGAS boasts of strategically located production plants in Johor, Negeri Sembilan and Sarawak, which are supported by our comprehensive network of refilling and distribution stations nationwide, from Krubong in Melaka, and Gebeng in Kuantan, to Ipoh in Perak, Bukit Minyak in Penang, and Grandmet Industrial Estate in Bintulu, Sarawak.

FInancIal revIew

SIGGAS increased its group revenue by 3.6% to RM65.4 million in FY2014, against RM63.1 million in the previous financial year.

Of this, the manufacturing segment was the Group’s largest revenue generator, which registered a 6.0% sales growth to RM32.2 million for FY2014 compared to RM30.4 million a year ago. In addition to seeing higher output, this division noted a favourable sales mix, stable wages as well as an optimised cost structure in the year, which improved its overall profitability.


Chairman’sStatementcont’d

Our refilling and distribution operations also had a commendable year, as it increasingly catered to the requirements of existing customers and successfully expanded its market segments, particularly from the fabrication sector to engineering, and oil and gas sectors. Hence, revenue from this division rose to RM32.1 million in the year under review, from RM31.3 million previously.

Meanwhile, the most competitive environment of welding products, resulted in the other products and services segment noting marginally lower revenue of RM1.1 million in the year under review, compared to RM1.4 million a year ago.

It must also be highlighted that SIGGAS saw its share of associate profit improved to RM0.5 million in FY2014 from RM0.2 million previously, indicating the steady progress of Iwatani-SIG in Sarawak.

Cumulatively, the higher topline, favourable product mix and stable cost structure led to SIGGAS achieving RM2.1 million in profit before tax, which increased by a commendable 6.6% compared to RM1.7 million a year ago. The profit before tax is also nett of an exceptional item, namely the one-off impairment of property, plant and equipment of RM1.6 million in the year under review. This is indeed a remarkable achievement.

SIGGAS ended FY2014 on a positive note with RM9.9 million in net profit, aided by reversal of deferred tax of RM7.8 million arising from the recognition of reinvestment allowance on capital expenditures. In comparison, group net profit amounted to RM2.7 million previously.

Basic earnings per share improved to 6.4 sen in FY2014, from 1.8 sen a year ago.

SIGGAS’ balance sheet remained sturdy, with increased shareholders’ equity to RM114.1 million in end-FY2014 from RM92.1 million in the previous year-end, due to higher retained earnings as well as increased share capital base resulting from the Rights Issue exercise.

While total borrowings were largely sustained at RM36.1 million in end-2014 against RM37.0 million a year ago, the Group had achieved a higher cash and bank balances of RM20.3 million from RM7.7 million previously, due to the proceeds from the corporate exercise. Therefore, SIGGAS’ net gearing ratio was reduced to 0.1 time from 0.3 time a year ago.

DIvIDenD

The Board is pleased to propose a final (single-tier) dividend of 0.7 sen per share in respect of FY2014, which is subject to shareholders’ approval at the upcoming Annual General Meeting. The proposed dividend payout of RM1.31 million represents 13% of the Group’s net profit attributable to shareholders.

cOrpOraTe DevelOpMenTS

l Additional Investment in Iwatani-SIG

SIGGAS’ wholly owned subsidiary Southern Industrial Gas Sdn. Bhd. (SIGSB) had, on 5 May 2014, subscribed to an additional 2,080,000 ordinary shares of RM1.00 each in the share capital of Iwatani-SIG for a total cash consideration of RM2.08 million.

After the additional subscription, SIGSB holds 6,560,000 ordinary shares of RM1.00 each representing 40% of the equity share capital of Iwatani-SIG.

l Renounceable Two-Call Rights Issue of 37.5 million new ordinary shares of RM0.50 each

On 5 September 2014, SIGGAS proposed a renounceable Two-Call Rights Issue of 37.5 million new ordinary shares of RM0.50 each in SIG shares on the basis of one Rights Share for every four existing SIG shares, at an issue price of RM0.50 per share, of which the first call of RM0.36 per rights share was payable in cash and the second call of RM0.14 per rights share was to be capitalised from the retained earnings reserve of SIGGAS.

Proceeds from the Two-Call Rights Issue based on the first call of RM0.36 raised RM13.5 million for the Group, in order to repay bank borrowings, to utilise as capital expenditure and working capital, as well as defray the expenses related to the corporate exercise.

The purpose of the Two-Call Rights Issue was primarily

to raise funds cost-effectively for better overall cash flow management, strengthen its capital base, reduce debt levels, and provide existing SIGGAS shareholders the opportunity to further participate in SIGGAS’ equity and growth opportunity without diluting their ultimate interest.

The Two-Call Rights Issue was completed with the listing of and quotation for the Rights Shares on the Main Market of Bursa Malaysia Securities Berhad on 30 December 2014.

With this, SIGGAS enlarged its issued and paid-up share capital to RM93.8 million comprising 187.5 million shares of RM0.50 each, from RM75.0 million comprising 150.0 million shares of RM0.50 each.

l Proposed acquisition of 100% equity interest in Piasau

Gas Sdn Bhd (“PGSB”)

On 22 September 2014, SIGGAS entered into a Memorandum of Understanding (“MOU”) with Shin Yang Corporation Sdn Bhd, Tan Sri Datuk Ling Chiong Ho, Ling Chiong Sing, Geo Sepadu Sdn Bhd, Pui Voon Poh and Ken Choon (collectively referred to as “Vendors”) to acquire 100% equity interest in PGSB, which is involved in the manufacturing, distribution and marketing of industrial gases, provision of services and maintenance, as well as trading in welding equipment and machinery.


Chairman’sStatement

cont’d

On 20 November 2014, the Board announced that SIGGAS and the vendors were unable to reach an agreement on terms and conditions acceptable to both parties, and hence did not wish to continue the negotiations for the proposed acquisition. Accordingly, the MOU ceased to have effect, with each party having no claim under it against the other.

The termination of the proposed acquisition is not expected to affect the Company’s financial performance.

l Proposed disposal of freehold land and building in Puchong, Selangor

On 30 March 2015, the Group announced the proposed disposal of the Puchong land and building to Reca Development (M) Sdn Bhd for a total cash consideration of RM11.0 million. The said land and building had previously housed the Group’s refilling and distribution plant, which had been relocated to Nilai and had since been rented out to a third party.

The proposed disposal provides SIGGAS the opportunity to realise the appreciation in market value of the property. Based on the net book value of the said property of RM6.4 million as at 31 December 2014, the cash consideration for the proposed disposal is expected to result in net gain after tax of approximately RM4.2 million to the Group.

The RM11.0 million in proceeds from the proposed disposal are intended to be utilised to repay bank borrowings, defray expenses relating to the disposal and as working capital.

The proposed disposal is not subject to approvals of SIGGAS’ shareholders or any government authorities, and is expected to be completed by the third quarter of 2015 subject to the fulfilment of stipulated terms and conditions.

InDuSTry OuTlOOk anD GrOwTh STraTeGIeS

The Malaysian economy is expected to continue its stable growth in 2015, with Bank Negara Malaysia forecasting GDP growth of approximately 4% to 5% anchored by stronger domestic demand and increased activity in the manufacturing sector. This positive outlook certainly paints a bright future ahead for the industrial gases sector.

SIGGAS intends to leverage on our strong foundation thus far to tap into this vast potential. Specifically, we are focusing our attention on making a significant mark in East Malaysia, given the vast investments into the manufacturing sector in SCORE in the coming years.

For one thing, the associated company is on track to complete the construction of the second ASU plant in Samalaju, Bintulu, by the first quarter of 2015. This would be the first step towards increasing production of industrial gases for the vicinity.

Furthermore, we plan to build a new production and refiling plant in Samalaju Industrial Park, and have purchased a 60-year lease land of approximately 12.14 hectares (about 30 acres) in February 2015 for this purpose.

Also, we intend to continue introducing new products comprising special gases, so that we have a comprehensive range of products for our expanding customer base.

Of course, these growth plans would be accompanied by the Group’s continued stance on improving productivity and cost-efficiency as a sustainable means of enhancing our profitability.

In the meantime, the Group has made commendable progress in developing eight units of semi-detached factories in Bintulu. SIGGAS intends to retain two units for our own usage, and sell the remaining six units. Construction of the factories have commenced, and are targeted for completion in 2015.

We believe that these strategies would reiterate our position as the provider of choice for industrial gases.

cOrpOraTe SOcIal reSpOnSIbIlITy

SIGGAS believes in upholding the wellbeing of the overall environment, our employees, business partners and the community.

To this end, we adhere strictly to measures to carry out our operations in a manner that safeguards the environment. We strive to discover and implement new and improved measures to ensure that we comply with safety standards. We have invested in our people, procedures, systems and equipment to improve our overall standards with respect to our assets and the safe behavior of our employees.

In addition, we continued the practice of rewarding the children of SIGGAS employees who had done well in major public examinations such as the Ujian Penilaian Sekolah Rendah (UPSR) to Sijil Tinggi Persekolahan Malaysia (STPM), A-level and Matriculation studies via our ‘SIG Award for Academic Excellence 2014.

cOrpOraTe GOvernance

We at SIGGAS will carry on advocating best practices in corporate governance to the best of our abilities. We believe that it is our responsibility to preserve shareholder value, protect the interest of our employees and provide the best services to our customers.

We believe that these practices will sustain the Group’s growth going forward.

acknOwleDGeMenTS

I would like to express my gratitude to my fellow Directors, management team and employees of SIGGAS for showing a deep sense of dedication and hard work towards ensuring the SIGGAS’ continued growth. I would like to also thank all of our valued shareholders, business associates, suppliers, bankers, regulatory authorities and customers for their continued support. We consider it a privilege to continue partnering you towards a brighter future together

Mr. peh laM hOhExecutive Chairman


RM’000PROFIT BEFORE TAX

‘14

2,08

8

‘10 ‘11 ‘12 ‘13

1,95

6

7,94

1

3,51

2

2,18

7

RM’000PROFIT AFTER TAX

‘14

9,92

2

‘10 ‘11 ‘12 ‘13

2,65

3

6,00

5

2,43

4 3,28

7

RM’000REVENUE

‘14

65,3

64

‘10 ‘11 ‘12 ‘13

63,1

09

55,2

61

54,3

61 62,1

31

RM’000GROSS PROFIT

‘14‘10 ‘11 ‘12 ‘13

RM’000

EARNING BEFOREINTEREST, TAX, DEPRECIATION

& AMORTISATION

‘14

9,79

4

‘10 ‘11 ‘12 ‘13

9,55

812,4

07

8,12

8

8,31

3

Profile ofDirectors

18,8

63

15,5

93

16,9

94

18,6

09

20,8

62

RM’000

PROFIT BEFORE EXCEPTIONALITEM AND TAX

‘14

3,63

9

‘10 ‘11 ‘12 ‘13

1,95

6

7,94

1

3,51

2

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7

audited2010

audited2011

audited2012

audited2013

audited2014

rM’000 rM’000 rM’000 rM’000 rM’000

Revenue 55,261 54,361 62,131 63,109 65,364

Gross Profit 18,863 15,593 16,994 18,609 20,862

Earning Before Interest, Tax, Depreciation & Amortisation 12,407 8,128 8,313 9,558 9,794

Profit Before Exceptional Item and Tax 7,941 3,512 2,187 1,956 3,639

Profit Before Tax 7,941 3,512 2,187 1,956 2,088

Profit After Tax 6,005 2,434 3,287 2,653 9,922

Financialhighlights


Financialhighlights

cont’d

STaTeMenT OF FInancIal pOSITIOn

audited2010

audited2011

audited 2012

audited 2013

audited 2014

rM’000 rM’000 rM’000 rM’000 rM’000

Total Assets 114,906 131,465 152,109 155,875 168,523

Total Borrowings 12,952 20,790 33,848 36,959 36,057

Shareholders Equity 84,306 88,232 90,619 92,072 114,066

FInancIal InDIcaTOr

audited2010

audited2011

audited 2012

audited 2013

audited2014

ROE % 7 3 4 3 9

Return On Total Assets % 5.07 1.85 2.16 1.70 5.89

Gearing Ratio % 14.76 23.56 37.35 40.14 31.61

Interest Cover Times 8.03 5.19 2.44 1.91 1.95

EPS Sen 5.12 1.62 2.19 1.77 6.61

Net Asset Per Share RM 0.75 0.59 0.60 0.61 0.61

Gross Dividend Per Share Sen - 1.30 0.60 0.80 0.60

PE Ratio 20 44 30 34 7

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

Share Price As At FYE 31 December 1.02 0.71 0.65 0.60 0.46

RM’000PROFIT BEFORE TAX

‘14

2,08

8

‘10 ‘11 ‘12 ‘13

1,95

6

7,94

1

3,51

2

2,18

7

RM’000PROFIT AFTER TAX

‘14

9,92

2

‘10 ‘11 ‘12 ‘13

2,65

3

6,00

5

2,43

4 3,28

7

RM’000REVENUE

‘14

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64

‘10 ‘11 ‘12 ‘13

63,1

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55,2

61

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RM’000GROSS PROFIT

‘14‘10 ‘11 ‘12 ‘13

RM’000

EARNING BEFOREINTEREST, TAX, DEPRECIATION

& AMORTISATION

‘14

9,79

4

‘10 ‘11 ‘12 ‘13

9,55

812,4

07

8,12

8

8,31

3

Profile ofDirectors

18,8

63

15,5

93

16,9

94

18,6

09

20,8

62

RM’000

PROFIT BEFORE EXCEPTIONALITEM AND TAX

‘14

3,63

9

‘10 ‘11 ‘12 ‘13

1,95

6

7,94

1

3,51

2

2,18

7

peh laM hOhExecutive Chairman

Mr Peh Lam Hoh, a Singaporean aged 65, is an Executive Chairman of the Company. He was appointed to the Board on 14 October 2009 and is responsible for overseeing the management of the Group. He is the Chairman of Remuneration Committee and the ESOS Committee of the Company.

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

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

Mr Peh attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.



lau chenG MInGExecutive Director

Mr Lau Cheng Ming, a Malaysian aged 61, is an Executive Director of the Company. He was appointed to the Board on 14 October 2009 and is responsible for strategic planning and for the overall management of the Group. He is a member of ESOS Committee of the Company.

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

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

Mr Lau attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.

DaTuk SyeD ahMaD bIn alwee alSreeNon-Independent Non-Executive Director

Datuk Syed Ahmad Bin Alwee Alsree, a Singaporean aged 49, is a Non-Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009. He is a member of Audit Committee and Nominating Committee of the Company.

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

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

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

Datuk Syed Ahmad attended four (4) out of five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.

DIOnG TaI pewSenior Independent Non-Executive Director

Mr Diong Tai Pew, a Malaysian aged 63, is the Senior Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009 and was appointed as Senior Independent Non-Executive Director of the Company with effect from 19 February 2013. He is the Chairman of Audit Committee and Nominating Committee and a member of Remuneration Committee and ESOS Committee of the Company.

Mr Diong obtained his Diploma in Commerce from Tunku Abdul Rahman College, Malaysia in 1976. He is currently a Fellow Member of the Institute of Singapore Chartered Accountants, a Member of the Malaysian Institute of Accountants and a Fellow Member of the Chartered Tax Institute of Malaysia. He began his career in 1976 with a chartered accountants company in Singapore. He left the chartered accountants company in 1980 and has since been practising as a public accountant in Singapore under UHY Diong, an independent member of Urbach Hacker Young International. He is currently an Independent Non-Executive Director of VS International Group Ltd, a public listed company in Hong Kong and an Independent Non-Executive Director of Hengyang Petrochemical Logistics Ltd and Eastern Holdings Ltd, both, public listed companies in Singapore. He is the Chairman of the Audit Committee of all the above-mentioned 3 public listed Companies.

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

Mr Diong attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.

Profile ofDirectors

cont’d


lee TInG kIaTIndependent Non-Executive Director

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

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

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

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

Mr Lee attended all the five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.

lIM TIn TenG @ lIM JIT TenGIndependent Non-Executive Director

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

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

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

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

Mr Lim attended one (1) out of five (5) Board of Directors’ Meetings held during the financial year ended 31 December 2014.

Profile ofDirectorscont’d


Statement ofcorporate Governance

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

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

This statement sets out how the Group has applied the principles set out in the MCCG 2012 and except where stated otherwise, its compliance with the best practices of the MCCG 2012 for the year ended 31 December 2014.

a. The bOarD OF DIrecTOrS

a) board composition, board balance and board responsibilities

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

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

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

Recommendation 3.4 of the MCCG 2012 states that the position of the Chairman and Chief Executive Officer should

be held by different individuals, and the Chairman must be a non-executive member of the Board. The Chairman/ Managing Director of the Company is currently held by Mr Peh Lam Hoh. Mr Peh is responsible for overseeing the management of the Company. The Board is aware that it is not in compliance with the best practices on the separation of the roles of the Chairman and Managing Director. However, the Board is satisfied with the dual role held by Mr Peh in view of his extensive experience and skill in industrial gas industry and with appropriate knowledge and competencies to address key risks and major issues concerning the Group’s policies and strategies with full co-operation of the Board and Management to provide the necessary check and balances. Mr Peh plays an important role in developing the business of the Group and provides the Group with strong leadership, vision and able to discharge his duties effectively.

Recommendation 3.1 of the MCCG 2012 states that the Board should undertake an assessment of its independent Directors annually. The Board has conducted an assessment of independence of the Independent Non-Executive Directors and has determined that all the three (3) Independent Non-Executive Directors remain objective and independent.

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


Statement ofcorporate Governancecont’d

a. The bOarD OF DIrecTOrS cont’d

a) board composition, board balance and board responsibilities cont’d

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

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

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

b) Strategies promoting Sustainability

The Group is committed to build a sustainable business by taking into consideration the impact on the environment, social and governance aspect of business operations.

c) corporate Social responsibility

The Company’s activities on Corporate Social Responsibilities for the financial year under review are disclosed on page 7 of this Annual Report.

d) board Meetings

The Board meets at least once every quarter and additional meetings are convened as and when necessary. Five (5) Board Meetings were held during the financial year ended 31 December 2014. All proceedings of the Board Meetings are duly minuted and signed by the Chairman of the meetings. Record of Directors’ attendance of Board Meeting held in the financial year ended 31 December 2014 is as follows:-

name of Directors attendance

Peh Lam HohLau Cheng MingDatuk Syed Ahmad Bin Alwee AlsreeDiong Tai PewLee Ting Kiat Lim Tin Teng @ Lim Jit Teng (Appointed on 23 May 2014)

5 / 55 / 54 / 55 / 55 / 51 / 2

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

enable them to effectively discharge their responsibilities.



cont’d


e) Supply of information

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

f) board charter

The Board has adopted a Board Charter to promote the standards of Corporate Governance and defines among others the roles and responsibilities of the Board. The Board Charter is subject to review by the Board annually to ensure that it remains consistent with the Board’s objectives and responsibilities. The Board Charter is also available on the Company’s website www.siggases.com.

g) re-election and re-appointment

In accordance with the Company’s Articles of Association, one-third (1/3) of the Directors shall retire from office, at least once in every three (3) years by rotation. Retiring Directors shall be eligible to offer themselves for re-election at the Annual General Meeting (“AGM”).

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

The Directors who are standing for re-election at the forthcoming AGM of the Company to be held on 8 May 2015

are as stated in the Notice of the 6th AGM.

h) procedure of appointment of Director

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

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

The number of directorships in listed corporations held by any Board Member at any one time shall comply with the listing requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

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

i) board committee

The Board delegates certain responsibilities to the Board Committees, namely Audit Committee, the Nominating Committee, the Remuneration Committee and the ESOS Committee, all of which have written Terms of Reference clearly setting out their authority and duties.



i) board committee cont’d

i) audit committee

The composition and Terms of Reference of this Committee together with its report are presented on pages 22 to 25 of this Annual Report.

ii) nominating committee

The Nominating Committee is primarily responsible for the proposing of new nominees for the Board and for assessing the performance of the members of the Board on an on-going basis. The Nominating Committee comprises the following Directors during the financial year and as at the date of this Annual Report. The attendance details of each member at the Nominating Committee meeting are as follows:-

composition of committee number of meeting attended

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

2/2

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

2/2

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

2/2

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

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

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

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

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

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

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

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





ii) nominating committee cont’d

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

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

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

iii) remuneration committee

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


Peh Lam Hoh (Chairman / Executive Chairman)

2 / 2

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

2 / 2


2 / 2

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

Not applicable

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

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

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

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

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

iv) employees’ Share Option Scheme (“eSOS”) committee

The ESOS Committee is granted the authority to supervise and administer the implementation of the ESOS at its discretion with such powers and duties as are conferred upon it. The ESOS Committee comprise of the following members during the financial year:


cont’d




iv) employees’ Share Option Scheme (“eSOS”) committee cont’d

chairman: Peh Lam Hoh (Executive Chairman)

Member: Lau Cheng Ming (Executive Director) Diong Tai Pew (Senior Independent Non-Executive Director) Koh Beng San (Senior Finance Manager)

The ESOS Committee may meet together for the dispatch of business, adjourn or otherwise regulate its meeting as it thinks fit and to do all act and things necessary for the allocation, exercise, transactions, arrangements as may be necessary or expedient in order to give full effect to the ESOS in accordance with the ESOS By-Laws.

b. DIrecTOrS’ reMuneraTIOn The fees of Directors, including non-executive directors, are determined by the Board with the approval from shareholders

at the AGM.

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

The details of the Directors’ remuneration for the financial year are disclosed under Note 9 of the Audited Financial Statements on pages 66 and 67 of this Annual Report.



c. DIrecTOrS’ TraInInG Directors’ training is an ongoing process as Directors recognise the need to continually develop and to update themselves

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

During the financial year ended 31 December 2014, the Directors have attended their respective training programmes. The following are a list of training programmes attended by the Directors:-

Directors Seminars and briefings attended

Peh Lam Hoh • Briefing Session on Corporate Governance Guide: TowardsBoardroom Excellence (2nd Edition) - An Update by BursaMalaysiaBerhad

Lau Cheng Ming • Briefing Session on Corporate Governance Guide: TowardsBoardroom Excellence (2nd Edition) - An Update by BursaMalaysiaBerhad

• GST Training and Implementation Planning (GTiP) Workshopon4December2014

Datuk Syed Ahmad Bin Alwee Alsree • KIBB ICAAP Training at Kenanga International on 23 January 2014 • International Manganese Institute, 40th Annual Conference at Table

Bay Hotel, Cape Town, South Africa on 28 May 2014 to 30 May 2014 – Africa: The Last Frontier for Economic Development

Diong Tai Pew • Anti-avoidance–WhatliesaheadbyKhattarWongLLPon22April2014

• Development on Regulatory Requirements of ListedCompaniesandDutiesandResponsibilitiesofDirectorsbyQiu&Partnerson20June2014

• SMEsConference2014byChineseChamberofCommerceon21August2014

• Public Accountants Conference 2014 – Accounting andCorporate Regulatory Authority Financial Reporting : StrikingaNewBalanceon27August2014

Lee Ting Kiat • Briefing Session on Corporate Governance Guide: TowardsBoardroom Excellence (2nd Edition) – An Update by BursaMalaysiaBerhad

• The Companies Bill 2013: Key Changes to the CorporateLandscape in Malaysia organised by the Malaysian CurrentLawJournalSdnBhdon2October2014atConcordeHotel,KualaLumpur

Lim Tin Teng @ Lim Jit Teng • Mandatory Accreditation Programme on 4 June 2015 to 5June2014

D. SharehOlDerS’ relaTIOn

The Board recognises the importance of maintaining an effective communications policy that enables both the Board and the Management to communicate effectively with investors, stakeholders and general public. The Board endeavours to provide timely and accurate disclosure of all material information of the Group to the shareholders and investors. Shareholders and investors are kept informed of all major developments within the Group by way of announcements via the Bursa Link, the Company’s Annual Reports, website and other circulars to shareholders with an overview of the SIGGAS Group’s financial and operational performance.

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


cont’d


D. SharehOlDerS’ relaTIOn cont’d

Notice of AGM and Annual Report are sent out to shareholders at least 21 days before the date of the meeting. In the case of re-election of Directors, the Board will ensure that full information is disclosed through the notice of meeting regarding Directors who are retiring and who are willing to serve if re-elected.

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

In line with recommendations 8.2 of the MCCG 2012, which recommends that the Board should encourage poll voting for substantive resolutions. The voting for Resolutions 6, 7 and 8 at the 5th AGM held on 23 May 2014 was conducted on a poll, rather than on a show of hands to give a fair and more accurate reflection of the views of shareholders.

e. accOunTabIlITy anD auDIT

a) Financial reporting

In presenting the annual financial statements and quarterly announcement of its results, the Board aims to present a fair assessment of the Group’s position and prospects. The quarterly results and annual financial statements are reviewed by the Audit Committee to ensure accuracy and adequacy of information disclosed and to recommend to the Board for approval before releasing to the public via the Bursalink.

The details of the financial statements of the Group and the Company are set out on pages 31 to 92 of this Annual Report.

b) Internal controls

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

The Statement on Risk Management and Internal Control set out on pages 26 to 28 of this Annual Report provides an overview of the state of internal controls within the Group and the Company.

c) whistle-blowing policy

Employees of the Group are expected to be vigilant about any wrongdoings, malpractices or irregularities at the workplace and report promptly such instances through designated channel for immediate rectification or other necessary measures in minimising potential financial or reputational loss.

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

d) relation with the external auditors

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

The External Auditors are required to declare their independence annually to the Audit Committee and have provided the declaration in their annual audit plan presented to the Audit Committee of the Company.




cont’d

F. DIrecTOrS’ reSpOnSIbIlITy STaTeMenT In reSpecT OF The preparaTIOn OF The auDITeD FInancIal STaTeMenTS

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

In preparation of the financial statements for the year ended 31 December 2014, the Board is also responsible for the adoption of appropriate accounting policies and have applied them consistently in the financial statement with reasonable and prudent judgments and estimates. The Board is also satisfied that all relevant approved accounting standards have been followed in the preparation of the financial statements.

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

This Statement is made in accordance with the resolution of the Board dated 2 April 2015.


Auditcommittee report

MeMberShIp anD MeeTInGS

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


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

5 / 5

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

4 / 5


5 / 5

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

Not Applicable

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

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

TerMS OF reFerence

1. composition

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

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

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

2. Secretary

The Secretary to the Audit Committee is the Company Secretary.

3. Frequency of Meetings

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

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

4. Quorum of Meetings

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

5. authority

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


TerMS OF reFerence cont’d

5. authority cont’d

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

6. The Duties of the audit committee shall be:

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

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

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

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

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

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

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

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

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

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

shall have access to the Chairman of the Committee.

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

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

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

7. reporting procedures

The Audit Committee shall report to the Board of Directors.


cont’d


SuMMary OF acTIvITIeS OF auDIT cOMMITTee

During the financial year ended 31 December 2014, the Audit Committee held a total of five (5) meetings. The principal activities undertaken by the Audit Committee were summarised as follows:- a) Overseeing SIGGAS financial reporting, the Audit Committee reviewed the quarterly unaudited financial results for the

4th quarter of 2013, 1st, 2nd, 3rd, 4th quarters of 2014 at its meeting held on 21 February 2014, 23 May 2014, 14 August 2014,13 November 2014 and 12 February 2015 respectively before recommending them for the Board’s consideration and approval for announcement to the public;

b) On 3 April 2014, the Audit Committee had reviewed and discussed with the External Auditors on the audited financial statements of the Group for the year ended 31 December 2013. On 2 April 2015 the Audit Committee had reviewed with the External Auditors the audited financial statements of the Group for the year ended 31 December 2014 prior to submission to the Board for their consideration and approval respectively. The review was to ensure that the audited financial statements were drawn up in accordance with the provision of the Companies Act 1965 and applicable Malaysian Financial Reporting Standards (“MFRS”) in Malaysia;

c) On 14 August 2014, the Audit Committee reviewed the External Auditors’ scope of work and the audit plans for year 2014 prior to the commencement of audit. The External Auditors had also declared their independence in relation to their audit for the financial year ended 31 December 2014 to the Audit Committee.

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

e) Discussed with the Internal Auditors on the conduct of the audit activities as per the Proposed Internal Audit Plan for year 2014 approved by the Audit Committee on 14 November 2013. The Internal Auditors had presented their reports to the Audit Committee on 23 May 2014, 14 August 2014 and 13 November 2014 respectively. The reports contained:-

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

f ) The Audit Committee had reviewed the internal audit reports, which highlighted the risk profiles and assessments, recommendations and management response. The following identified business processes/areas were covered by the Internal Auditors in 2014:-

• Sales and Collection • Credit Control • Treasury Management • Procurement • Production • Refilling Process • Fire, Safety and Environment Regulations • Inventory Management • Distribution Management

g) Reviewed the related party transactions entered into by the Company and the Group.

h) The Audit Committee had also conducted meetings with the External Auditors without the presence of the Executive Directors and employees of the Company.

Auditcommittee reportcont’d


InTernal auDIT anD rISk ManaGeMenT FuncTIOnS

The Company has outsourced its internal audit and risk management functions to Audex Governance Sdn. Bhd., which is tasked with the aim of providing assurance and assisting the Audit Committee and the Board in reviewing the adequacy and effectiveness of the risk management and internal control systems in the Company.

The internal audit function also acts as a source to assist the Audit Committee and the Board to strengthen and improve current management and operating style in pursuit of best practices.

eMplOyeeS’ Share OpTIOnS ScheMe

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


cont’d


Statement onrisk Management and Internal control

InTrODucTIOn

The Board of Directors (“the Board”) of SIG Gases Berhad (“SIGGAS”) is pleased to present its Statement on Risk Management and Internal Control for the financial year ended 31 December 2014. This Statement is prepared pursuant to paragraph 15.26 (b) of Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements and as guided by the latest Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”), in this annual report. This statement outlines the nature and state of the risk management and internal controls of SIGGAS and its group of companies (“the Group”) during the financial year under review and up to the date of approval of this statement by the Board.

bOarD’S reSpOnSIbIlITIeS

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

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

key FeaTureS OF The GrOup’S rISk ManaGeMenT anD InTernal cOnTrOl SySTeM

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

1. risk Management System

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

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

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

2. Internal control System

l The Board of Director and the Audit Committee

The Board and Audit Committee meet at least four times during the financial year to ensure that the Directors maintain full and effective control on all significant and operational areas of the Group.

l Organisation Structure & Authorisation Procedures

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


Statement onrisk Management and Internal control

cont’d

key FeaTureS OF The GrOup’S rISk ManaGeMenT anD InTernal cOnTrOl SySTeM cont’d

2. Internal control System cont’d

l Periodical and/or Annual Budget

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

l Group Policies and Procedures

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

l Human Resource Policy

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

l Information and Communication

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

l Monitoring and Review

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

3. Internal audit Function

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

During the financial year ended 31 December 2014, internal audit reviews were carried out in accordance with the approved risk based internal audit plan. Findings from the internal audit reviews, including the recommended corrective actions, were presented to the Audit Committee at their scheduled meetings. In addition, follow up reviews were also conducted to ensure that corrective actions have been implemented on a timely manner.

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

The total cost incurred for outsourcing the internal audit function for the financial year ended 31 December 2014 was RM94,113.

The Group’s system of risk management and internal control applies principally to SIGGAS and its subsidiaries. Associate company and joint venture has been excluded because the Group does not have full management control in the joint venture.


Statement onrisk Management and Internal controlcont’d

revIew OF STaTeMenT

The External Auditors have reviewed this Statement for inclusion in the Annual Report 2014, and reported to the Board that nothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the system of risk management and internal controls.

cOncluSIOn

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

This statement was approved by the Board of Directors on 2 April 2015.


Additional ComplianceInformation

1. uTIlISaTIOn OF prOceeDS

TwO-call rIGhTS ISSue On 5 September 2014, the Company had announced to undertake a renounceable Two-Call Rights Issue of 37,500,000

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

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

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

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

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

no.

Description

estimatedtimeframe for

utilisations upon listing

proposed utilisations

actual utilisations

balances to be utilised

(rM’000) (rM’000) (rM’000) %

1 purchase of equipment within 18 months

1.1 1 Hydrogen compressor 370 (370) - 0%

1.2 Cylinders & valves 3,680 (205) 3,475 94%

1.3 Upgrade computer system 150 - 150 100%

2 repayment of bank borrowings

within 6 months

6,500 (6500) - 0%

3 working capital within 6 months

2,000 (2000) - 0%

4 expenses in relation to the Two-call rights Issue

within 3 months

800 (713) 87 11%

Total 13,500 (9,788) 3,712 27%


2. Share buy-backS

The Company did not engage in any share buy-backs arrangement during the financial year ended 31 December 2014.

3. OpTIOnS Or cOnverTIble SecurITIeS

The Company has not issued any options, warrants or convertible securities during the financial year ended 31 December 2014.

4. DepOSITOry receIpT prOGraM

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

5. SancTIOnS anD/Or penalTIeS

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

6. nOn-auDIT FeeS

The amount of non-audit fees paid to the External Auditors by the Group and by the Company for the financial year ended 31 December 2014 amounted to RM22,215.

7. varIaTIOn In reSulTS

No variances of 10% or more between the audited results for the financial year ended 31 December 2014 and the unaudited results previously announced.

8. prOFIT GuaranTee

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

9. MaTerIal cOnTracT

There were no material contracts entered into or subsisting between the Company and its subsidiaries involving Directors’ and Major Shareholders’ interest during the financial year ended 31 December 2014.

10. recurrenT relaTeD parTy TranSacTIOnS (“rrpT”) OF revenue naTure

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

Additional ComplianceInformationcont’d


32

35

35

36

38

39

41

43

45

Financial Statements

Directors’ Report

Statement by Directors

Statutory Declaration

Independant Auditors’ Report

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flow

Notes to the Financial Statements


The Directors have the pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2014.

PrinciPal activities

The principal activity of the Company is investment holding.

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

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

results

Group company

rM rM

Profit net of tax 9,922,277 6,107,164

Profit attributable to:

Owners of the parent 9,922,277 6,107,164 There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

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

DiviDenD The amounts of dividend paid by the Company since 31 December 2013 were as follows:

rM

In respect of the financial year ended 31 December 2013:

Final (single-tier) dividend of 0.6 sen on 150,000,000 ordinary shares declared on 23 May 2014 and paid on 18 June 2014 900,000

At the forthcoming Annual General Meeting, a final (single-tier) dividend in respect of the financial year ended 31 December 2014, of 0.7 sen on 187,500,000 ordinary shares, amounting to a dividend payable of RM1,312,500 will be proposed for shareholders' approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2015.

Directors

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

Peh Lam Hoh Lau Cheng Ming Datuk Syed Ahmad Bin Alwee AlsreeDiong Tai Pew Lee Ting Kiat Lim Tin Teng @ Lim Jit Teng (appointed on 23 May 2014)

Directors’ report


Directors' benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in Note 9 to the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 29 to the financial statements.

Directors' interests

According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

number of ordinary shares of rM0.50 each

the company 1 January

2014 acquired sold 31 December

2014

Direct interest:

Peh Lam Hoh 6,209,744 1,552,436 - 7,762,180

Lau Cheng Ming 2,067,664 691,136 - 2,758,800

Diong Tai Pew 400,000 380,000 - 780,000

indirect interest:

Peh Lam Hoh 63,211,858 15,802,964 - 79,014,822

Datuk Syed Ahmad Bin Alwee Alsree 57,527,393 14,381,848 - 71,909,241

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

issue of shares

During the financial year, the Company increased its issued and paid up ordinary share capital from RM75,000,000 to RM93,750,000 by way of a Two-Call Rights Issue, of which the first call of RM0.36 per rights share was payable in cash and the second call of RM0.14 per rights share was to be capitalised from the retained earnings reserve. The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

other statutory inforMation

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

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

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

Directors’ report

cont’d


other statutory inforMation cont’d

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

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

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

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

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

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

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

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

(f ) In the opinion of the Directors:

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

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

subseQuent event

Details of subsequent event are disclosed in Note 36 to the financial statements.

auDitors

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

Signed on behalf of the Board in accordance with a resolution of the Directors dated 2 April 2015.

Peh laM hoh lau chenG MinG

Directors’ reportcont’d


We, Peh Lam Hoh and Lau Cheng Ming, being two of the Directors of SIG Gases Berhad., do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 38 to 91 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended.

The supplementary information set out in Note 38 on page 92 to the financial statements have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 2 April 2015.

Peh laM hoh lau chenG MinG

I, Peh Lam Hoh, being the Director primarily responsible for the financial management of SIG Gases Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 38 to 92 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared ) by the abovenamed Peh Lam Hoh ) at Johor Bahru in the State of Johor ) Darul Ta’zim on 2 April 2015 ) Peh laM hoh Before me,harcharan singh a/l chanchel singh (No. J210)Commissioner for Oaths

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


Independent auditors’ reportto the Members of SIG Gases Berhad (Incorporated in Malaysia)

rePort on the financial stateMents

We have audited the financial statements of SIG Gases Berhad, which comprise the statements of financial position as at 31 December 2014 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 38 to 91.

Directors’ responsibility for the financial statements

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

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

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

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

opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

rePort of other leGal anD reGulatory reQuireMent

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

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

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

(c) The Auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.


other rePortinG resPonsibilities

The supplementary information set out in Note 38 on page 92 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. ernst & younG Wun MoW sanG AF 0039 1821/12/16(J)Chartered Accountants Chartered Accountant

Johor Bahru, Malaysia Date: 2 April 2015

Independent auditors’ report

to the Members of SIG Gases Berhad (Incorporated in Malaysia)

cont’d


Statements of comprehensive incomefor the financial year ended 31 December 2014

Group company

note 2014 2013 2014 2013

rM rM rM rM

revenue 4 65,363,614 63,109,348 7,130,000 1,840,000

Cost of sales 5 (44,501,884) (44,500,754) - -

Gross profit 20,861,730 18,608,594 7,130,000 1,840,000

other items of income 6 1,325,279 1,151,248 20,538 13,887

other items of expenses

Administration expenses (16,702,537) (15,680,573) (1,056,043) (556,966)

Finance cost (2,362,505) (2,292,587) (47) (47)

Other operating expenses (1,551,029) - - -

Share of profit of an associate 15 517,009 169,682 - -

Profit before tax 7 2,087,947 1,956,364 6,094,448 1,296,874

Income tax benefit/(expense) 10 7,834,330 697,000 12,716 (41,157)

Profit net of tax and total comprehensive income for the year 9,922,277 2,653,364 6,107,164 1,255,717

Profit attributable to:

Owners of the parent 9,922,277 2,653,364 6,107,164 1,255,717

total comprehensive income attributable to:

Owners of the parent 9,922,277 2,653,364 6,107,164 1,255,717

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

Basic 11 6.61 1.77

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


Statements of financial Position

as at 31 December 2014

Group company

note 2014 2013 2014 2013

rM rM rM rM

assets

non-current assets

Property, plant and equipment 12 106,021,159 109,636,202 7,512 8,804

Intangible assets 13 361,043 301,847 - -

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

Investment in an associate 15 7,216,257 4,623,748 - -

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

114,598,459 114,561,797 50,407,516 50,408,808

current assets

Inventories 16 3,621,769 4,085,985 - -

Inventory property 17 3,475,715 2,353,178 - -

Trade and other receivables 18 18,264,324 19,350,642 19,590 -

Amount due from subsidiaries 18 - - 31,694,330 26,402,670

Tax recoverable 33,592 32,616 22,683 10,026

Other current assets 19 1,831,981 1,405,094 12,105 31,434

Cash and bank balances 20 20,323,130 7,711,212 15,677,677 55,811

47,550,511 34,938,727 47,426,385 26,499,941

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

53,924,777 41,312,993 47,426,385 26,499,941

total assets 168,523,236 155,874,790 97,833,901 76,908,749

equity and liabilities

current liabilities

Short term borrowings 22 25,288,390 24,130,921 - -

Trade and other payables 23 18,400,848 19,893,939 2,864,744 117,752

43,689,238 44,024,860 2,864,744 117,752

net current assets/(liabilities) 10,235,539 (2,711,867) 44,561,641 26,382,189

non-current liabilities

Long term borrowings 22 10,768,316 12,828,521 - -

Deferred tax liabilities 24 - 6,949,000 - -

10,768,316 19,777,521 - -

total liabilities 54,457,554 63,802,381 2,864,744 117,752

net assets 114,065,682 92,072,409 94,969,157 76,790,997


Group company

note 2014 2013 2014 2013

rM rM rM rM

equity attributable to equity holders of the company

Share capital 25 93,750,000 75,000,000 93,750,000 75,000,000

Reserves 26 20,315,682 17,072,409 1,219,157 1,790,997

total equity 114,065,682 92,072,409 94,969,157 76,790,997

total equity and liabilities 168,523,236 155,874,790 97,833,901 76,908,749

Statements of financial Positionas at 31 December 2014cont’d




Statements of changes in equity

for the financial year ended 31 December 2014

total equity

share capital

non- Distributable

share premium

Distributable retained

profits

Group note rM rM rM rM

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

Total comprehensive income 9,922,277 - - 9,922,277

transactions with owners

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

total transactions with owners (900,000) - - (900,000)

Issuance of ordinary shares:

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

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

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

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

at 1 January 2013, as previously stated 90,619,045 75,000,000 6,074,866 9,544,179

Reclassification - - (4,526,000) 4,526,000

at 1 January 2013, as restated 90,619,045 75,000,000 1,548,866 14,070,179



Dividend on ordinary shares 34 (1,200,000) - - (1,200,000)

total transactions with owners (1,200,000) - - (1,200,000)

closing balance at 31 December 2013 92,072,409 75,000,000 1,548,866 15,523,543


Statements of changes in equityfor the financial year ended 31 December 2014cont’d

total equity

share capital

non- Distributable

share premium

Distributable retained

profits

company note rM rM rM rM

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



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

total transactions with owners (900,000) - - (900,000)

Issuance of ordinary shares:

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

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

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

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

opening balance at 1 January 2013 76,735,280 75,000,000 1,548,866 186,414



Dividend on ordinary shares 34 (1,200,000) - - (1,200,000)

total transactions with owners (1,200,000) - - (1,200,000)

closing balance at 31 December 2013 76,790,997 75,000,000 1,548,866 242,131



Statements of cash flow

for the financial year ended 31 December 2014

Group company

2014 2013 2014 2013

rM rM rM rM

operating activities

Profit before tax 2,087,947 1,956,364 6,094,448 1,296,874

Adjustments for:

Amortisation of intangible assets 64,458 80,549 - -

Bad debts recovered (176,642) - - -

Depreciation of property, plant and equipment 5,428,099 5,363,316 1,292 1,292

Gain on disposal of property, plant and equipment (279,543) (506,415) - -

Property, plant and equipment written off 256,654 36,708 - -

Intangible assets written off - 6,790 - -

Interest expense 2,189,110 2,157,780 - -

Interest income (933) - (933) -

Reversal of allowance for impairment loss on trade receivables (347,279) (72,014) - -

Allowance for impairment loss on trade receivables 714,726 317,415 - -

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

Unrealised foreign exchange (gain)/loss (11,021) 164,479 - -

Shares of results of associate (517,009) (169,682) - -

Total adjustments 8,871,649 7,378,926 359 1,292

operating cash flows before changes in working capital 10,959,596 9,335,290 6,094,807 1,298,166

Changes in working capital

Inventories 464,216 (121,654) - -

Receivables 2,317,989 (866,704) (5,291,920) (1,669,585)

Payables (3,326,932) 171,438 2,746,991 (1,188)

Total changes in working capital (544,727) (816,920) (2,544,929) (1,670,773)

cash flows from/(used in) operating activities 10,414,869 8,518,370 3,549,878 (372,607)

Income taxes paid (138,355) (105,093) (12,657) (15,750)

Income taxes refunded 22,708 130,149 12,716 16,268

Interest paid (2,189,110) (2,157,780) - -

net cash flows generated from/(used in) operating activities 8,110,112 6,385,646 3,549,937 (372,089)


Group company

2014 2013 2014 2013

rM rM rM rM

investing activities

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

Purchase of property, plant and equipment (3,715,304) (5,996,480) - -

Purchase of intangible assets (122,656) (7,770) - -

Proceeds from disposal of property, plant and equipment 373,110 666,532 - -

Interest income 933 - 933 -

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

Investment in subsidiary - - - (10)

net cash flows (used in)/generated from investing activities (6,666,454) (5,337,718) 933 (10)

financing activities

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

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

Repayment of obligations under finance leases (1,480,835) (1,724,060) - -

Repayment of borrowings (762,901) (20,608,161) - -

Proceeds from trade facilities/term loans 1,341,000 23,723,809 - -

Dividends paid (900,000) (1,200,000) (900,000) (1,200,000)

net cash flows generated from/(used in) financing activities 11,168,260 191,588 12,070,996 (1,200,000)

net increase/(decrease) in cash and cash equivalents 12,611,918 1,239,516 15,621,866 (1,572,099)

cash and cash equivalents at beginning of the year 7,711,212 6,471,696 55,811 1,627,910

cash and cash equivalents at end of the year (note 20) 20,323,130 7,711,212 15,677,677 55,811

Statements of cash flowfor the financial year ended 31 December 2014cont’d



Notes to the Financial Statementsfor the financial year ended 31 December 2014

1. corPorate inforMation

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

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

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

2. suMMary of siGnificant accountinG Policies

2.1 basis of preparation

These financial statements for the year ended 31 December 2014 have been prepared on the historical cost basis and in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.

At the beginning of the financial year, the Group and the Company adopted New and Revised MFRS which are mandatory for financial year begining on or after 1 January 2014 as described fully in Note 2.2.

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

2.2 changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2014, the Group and the Company adopted the following new and amended MFRS and Issues Committee (“IC”) Interpretations mandatory for annual financial periods beginning on or after 1 January 2014.

Description

Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting IC Interpretation 21 Levies

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the Group and the Company as discussed below:

amendments to Mfrs 132: offsetting financial assets and financial liabilities

The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and “simultaneous realisation and settlement”. These amendments are to be applied retrospectively. These amendments have no impact on the Group, since none of the entities in the Group has any offsetting arrangements.

amendments to Mfrs 10, Mfrs 12 and Mfrs 127: investment entities

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under MFRS 10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no impact on the Group.


Notes to the Financial Statementsfor the financial year ended 31 December 2014cont’d

2. suMMary of siGnificant accountinG Policies cont’d

2.2 changes in accounting policies cont’d

amendments to Mfrs 136: recoverable amount Disclosures for non-financial assets

The amendments to MFRS 136 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives has been allocated when there has been no impairment or reversal of impairment of the related CGU. In addition, the amendments introduce additional disclosure requirements when the recoverable amount is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by MFRS 13 Fair Value Measurements.

The application of these amendments has had no impact on the disclosures in the Group’s and the Company’s financial statements.

amendments to Mfrs 139: novation of Derivatives and continuation of hedge accounting

These amendments provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measure of hedge effectiveness. Retrospective application is required.

These amendments have no impact on the Group as the Group does not have any derivatives that are subject to novation.

ic interpretation 21 levies

IC 21 defines a levy and clarifies that the obligating event which gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. For a levy which is triggered upon reaching a minimum threshold, IC 21 clarifies that no liability should be recognised before the specified minimum threshold is reached. Retrospective application is required. The application of IC 21 has had no material impact on the disclosures or on the amounts recognised in the Group’s and the Company’s financial statements.

2.3 standards issued but not yet effective

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

Description

effective for annualperiods beginning

on or after

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

Annual Improvements to MFRSs 2010–2012 Cycle 1 July 2014

Annual Improvements to MFRSs 2011–2013 Cycle 1 July 2014

Annual Improvements to MFRSs 2012-2014 Cycle 1 January 2016

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

1 January 2016

Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint operations 1 January 2016

Amendments to MFRS 10, MFRS 12 and MFRS 128: Investment Entities: Applying the Consolidation Exception

1 January 2016

Amendments to MFRS 101: Disclosure Initiatives 1 January 2016



cont’d


2.3 standards issued but not yet effective cont’d

Description

effective for annualperiods beginning

on or after

Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation

1 January 2016

Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants 1 January 2016

Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016

MFRS 14 Regulatory Deferral Accounts 1 January 2016

MFRS 15 Revenue from Contracts with Customers 1 January 2017

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014) 1 January 2018 amendments to Mfrs 119 Defined benefit Plans: employee contributions

The amendments to MFRS 119 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. For contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service.

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

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

The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted.

amendments to Mfrs 116 and Mfrs 141 agriculture: bearer Plants

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

The amendments are effective for annual periods beginning on or after 1 January 2016 and are to be applied retrospectively, with early adoption permitted.





amendments to Mfrs 10 and Mfrs 128: sale or contribution of assets between an investor and its associate or Joint venture

The amendments clarify that:

- gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture; and

- gains and losses resulting from transactions involving the sale or contribution to an associate of a joint venture of assets that constitute a business is recognised in full.

The amendments are to be applied prospectively to the sale or contribution of assets occurring in annual periods beginning on or after 1 January 2016. Earlier application is permitted.

amendments to Mfrs 11 Joint arrangements: accounting for acquisitions of interests in Joint operations

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

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

amendments to Mfrs 127: equity Method in separate financial statements

The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associate in their separate financial statements. Entities already applying MFRS and electing to change to the equity method in its separate financial statements will have to apply this change retrospectively. For first-time adopters of MFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to MFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted.

amendments to Mfrs 101: Disclosure initiatives

The amendments to MFRS 101 include narrow-focus improvements in the following five areas:

- Materiality - Disaggregation and subtotals - Notes structure - Disclosure of accounting policies - Presentation of items of other comprehensive income arising from equity accounted investments



cont’d



amendments to Mfrs 10, Mfrs 12 and Mfrs 128: investment entities: applying the consolidation exception

The amendments clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. The amendments further clarify that only a subsidiary that is not an investment entity itself and provides support services to the investment entity is consolidated. In addition, the amendments also provides that if an entity that is not itself an investment entity has an interest in an associate or joint venture that is an investment entity, the entity may, when applying the equity method, retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate’s or joint venture’s interests in subsidiaries.

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

Mfrs 14 regulatory Deferral accounts

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

Mfrs 15 revenue from contracts with customers

MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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

Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2017 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date.

Mfrs 9 financial instruments

In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory.





annual improvements to Mfrss 2010–2012 cycle

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

(a) Mfrs 2 share-based Payment

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

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

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

service condition is not satisfied.

This improvement is effective for share-based payment transactions for which the grant date is on or after 1 July 2014.

(b) Mfrs 3 business combinations

The amendments to MFRS 3 clarifies that contingent consideration classified as liabilities (or assets) should be measured at fair value through profit or loss at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of MFRS 9 or MFRS 139. The amendments are effective for business combinations for which the acquisition date is on or after 1 July 2014.

(c) Mfrs 8 operating segments

The amendments are to be applied retrospectively and clarify that:

- an entity must disclose the judgements made by management in applying the aggregation criteria in MFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics used to assess whether the segments are similar; and

- the reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker.

(d) Mfrs 116 Property, Plant and equipment and Mfrs 138 intangible assets

The amendments remove inconsistencies in the accounting for accumulated depreciation or amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amendments clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses.

(e) Mfrs 124 related Party Disclosures

The amendments clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. The reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services.



cont’d





(a) Mfrs 3 business combinations

The amendments to MFRS 3 clarify that the standard does not apply to the accounting for formation of all types of joint arrangement in the financial statements of the joint arrangement itself. This amendment is to be applied prospectively.

(b) Mfrs 13 fair value Measurement

The amendments to MFRS 13 clarify that the portfolio exception in MFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of MFRS 9 (or MFRS 139 as applicable).

(c) Mfrs 140 investment Property

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

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

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

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



(a) Mfrs 5 non-current assets held for sale and Discontinued operations

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

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

(b) Mfrs 7 financial instruments: Disclosures

The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required.

In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report.





annual improvements to Mfrss 2012–2014 cycle cont’d

(c) Mfrs 119 employee benefits

The amendment to MFRS 119 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.

(d) Mfrs 134 interim financial reporting

MFRS 134 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time.

2.4 basis of consolidation

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

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

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

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

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

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

(ii) Rights arising from other contractual arrangements; and

(iii) The Group’s voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are

changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

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



cont’d


2.4 basis of consolidation cont’d

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

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

2.5 business combinations

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

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

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

2.6 current versus non-current classification

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

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

months after the reporting period.




2.6 current versus non-current classification cont’d

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

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

reporting period.

All other liabilities are classified as non-current.

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

2.7 Property, plant and equipment and depreciation

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

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

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

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

Assets under construction included in plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

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

2.8 intangible assets

All items of intangible assets are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses.



cont’d


2.8 intangible assets cont’d

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

2.9 subsidiaries

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

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

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

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

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

2.10 associates

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

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

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

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

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

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

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




2.10 associates cont’d

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

2.11 non-current asset classified as held for sale

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

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the sale will be withdrawn. Management must be committed to the sale expected within one year from the date of the classification.

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

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

2.12 inventories

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

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

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

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

2.13 inventory property

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

Cost includes:

- Freehold and leasehold rights for land - Amounts paid to contractors for construction - Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal services,

property transfer taxes, construction overheads and other related costs

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

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



cont’d


2.13 inventory property cont’d

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

2.14 financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

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

loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

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

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

2.15 impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred,

the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.




2.15 impairment of financial assets cont’d

trade and other receivables and other financial assets carried at amortised cost cont’d

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

2.16 cash and cash equivalents

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

2.17 borrowing costs

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

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

2.18 income tax

(i) current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(ii) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between

the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.



cont’d


2.18 income tax cont’d

(ii) Deferred tax cont’d

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

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

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

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

2.19 Provisions

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

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

2.20 financial liabilities

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

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

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group and the Company have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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




2.20 financial liabilities cont’d

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

2.21 fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability; or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

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

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

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

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

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

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

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

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



cont’d


2.22 employee benefits

(i) Defined contribution plan

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

(ii) short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

2.23 foreign currencies

(i) functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) functional currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

2.24 revenue recognition

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

(i) sale of goods Revenue from sale of goods is recognised upon transfer of significant risks and rewards of ownership of the

goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.




2.24 revenue recognition cont’d

(ii) cylinder rental income

Cylinder rental is recognised based on the accrual basis.

(iii) cryogenic storage tank rental income

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

(iv) interest income

Interest income is recognised using the effective interest method.

(v) Dividend income

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

2.25 impairment of non-financial assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset’s recoverable amount.

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

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

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

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

2.26 leases

(a) as lessee

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



cont’d


2.26 leases cont’d

(a) as lessee cont’d

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

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

(b) as lessor

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

2.27 segment reporting

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

2.28 share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.29 contingencies

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

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

3. siGnificant accountinG JuDGeMents anD estiMates

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

3.1 Key sources of estimation uncertainty

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



3. siGnificant accountinG JuDGeMents anD estiMates cont’d 3.1 Key sources of estimation uncertainty cont’d

(a) impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the reporting date is disclosed in Note 18.

(b) useful lives of plant and equipment

The cost of plant and equipment for the manufacture of industrial gases is depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these plant and machinery to be within 10 to 25 years. These are common life expectancies applied in the industrial gases industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A 3% difference in the average useful lives of these assets from management’s estimates would result in approximately 2.4% variance in profit for the year.

(c) Deferred tax assets

Deferred tax assets are recognised for all unabsorbed capital allowances, unabsorbed reinvestment allowances and unrealised foreign exchange loss to the extent that it is probable that taxable profit will be available against which the deferred tax assets can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying value of deferred tax assets of the Group at 31 December 2014 was RM13,297,000 (2013: RM6,671,000).

4. revenue

Group company

2014 2013 2014 2013

rM rM rM rM

Sales of goods 62,009,712 59,665,678 - -

Cylinder rental income 3,028,324 3,126,723 - -

Rental income from cryogenic storage tank 325,578 316,947 - -

Dividend income - - 7,130,000 1,840,000

65,363,614 63,109,348 7,130,000 1,840,000

5. cost of sales

Cost of sales represents cost of inventories sold.



cont’d

6. other iteMs of incoMe

Group company

2014 2013 2014 2013

rM rM rM rM

Bad debts recovered 176,642 - - -

Interest income 20,522 13,870 20,522 13,870

Gain on disposal of property, plant and equipment 279,542 506,415 - -

Reversal of allowance for impairment loss on trade receivables 347,279 72,014 - -

Foreign exchange gain

- realised 35,321 17 16 17

Rental income 195,619 135,619 - -

Other income 270,354 423,313 - -

1,325,279 1,151,248 20,538 13,887

7. Profit before tax

The following items have been included in arriving at profit/(loss) before tax:

Group company

2014 2013 2014 2013

rM rM rM rM

Auditors’ remuneration- statutory audits - current year 85,000 76,000 30,000 28,000 - underprovision in prior year (4,670) - (4,670) - - other services 22,215 44,815 15,830 16,000

Employee benefits expense (Note 8) 9,968,191 9,881,664 280,482 240,485 Non-executive directors’ remuneration (Note 9) 198,322 145,595 198,322 140,595 Amortisation of intangible assets (Note 13) 64,458 80,549 - - Depreciation of property, plant and equipment

(Note 12) 5,428,099 5,363,316 1,292 1,292 Gain on disposal of property, plant and

equipment (279,543) (506,415) - - Rental expenses 476,059 655,994 12 198 Property, plant and equipment written off 256,654 36,708 - - Intangible assets written off - 6,790 - - Allowance for impairment loss on trade

receivables 714,726 317,415 - - Impairment loss on property, plant and

equipment (Note 12) 1,551,029 - - - Reversal of allowance for impairment loss on

trade receivables (347,279) (72,014) - - Foreign exchange (gain)/loss

- realised (35,321) 44,615 (16) (17)- unrealised (11,021) 164,479 - -

Interest expense 2,189,110 2,157,780 - -



8. eMPloyee benefits exPenses

Group company

2014 2013 2014 2013

rM rM rM rM

Wages and salaries 9,196,174 8,986,452 280,482 240,485

Contributions to defined contribution plan 692,329 811,252 - -

Social security contributions 79,688 83,960 - -

9,968,191 9,881,664 280,482 240,485

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting to RM2,143,869 (2013: RM2,098,699) and RM82,160 (2013: RM78,890) respectively.

9. Directors’ reMuneration

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

Group company

2014 2013 2014 2013

rM rM rM rM

Directors of the company

Executive:

Salaries and other emoluments 1,853,106 1,736,994 14,000 14,000

Fees 92,160 88,890 68,160 64,890

Defined contribution plan 52,769 161,794 - -

1,998,035 1,987,678 82,160 78,890

Non-Executive:

Fees 175,322 140,595 175,322 140,595

Other emoluments 23,000 21,000 23,000 21,000

198,322 161,595 198,322 161,595

Total 2,196,357 2,149,273 280,482 240,485

other directors of subsidiaries

Executive:

Salaries and other emoluments 119,470 88,370

Fees 12,000 12,000

Defined contribution plan 14,364 10,651

145,834 111,021

Non-Executive:

Fees - 5,000

Total 145,834 116,021



cont’d

9. Directors’ reMuneration cont’d

Group company

2014 2013 2014 2013

rM rM rM rM

Total executive directors’ remuneration 2,143,869 2,098,699 82,160 78,890

Total non-executive directors’ remuneration 198,322 166,595 198,322 161,595

Grand total directors’ remuneration 2,342,191 2,265,294 280,482 240,485

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

number of directors

2014 2013

Executive Directors:

RM150,001 - RM200,000 1 -

RM250,001 - RM300,000 - 1

RM1,700,001 - RM1,750,000 1 1

Non-Executive Directors:

Below RM50,000 1 -

RM50,001 - RM100,000 3 3

10. incoMe tax (benefit)/exPense

The major components of income tax (benefit)/expense for the years ended 31 December 2014 and 2013 are:

Group company

2014 2013 2014 2013

rM rM rM rM

statement of comprehensive income:

Current income tax

- Malaysian income tax 114,000 111,221 - 2,724

- Under/(over) provision in respect of prior years 670 37,099 (12,716) 38,433

114,670 148,320 (12,716) 41,157

Real property gain tax - 126,000 - -

Deferred income tax (Note 24)

- Origination and reversal of temporary differences (7,949,000) (480,699) - -

- Overprovision in respect of prior years - (490,621) - -

(7,949,000) (971,320) - -

Income tax (7,834,330) (697,000) (12,716) 41,157



10. incoMe tax (benefit)/exPense cont’d

reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2014 and 2013 are as follows:

Group company

2014 2013 2014 2013

rM rM rM rM

Profit before tax 2,087,947 1,956,364 6,094,448 1,296,874

Taxation at Malaysian statutory tax rate of 25% (2013: 25%) 521,987 489,091 1,523,612 324,219

Expenses not deductible for tax purposes 2,488,573 322,750 258,888 138,505

Real property gain tax - 126,000 - -

Income not subject to tax (1,782,500) - (1,782,500) (460,000)

Deferred tax assets recognised on reinvestment allowances (9,063,060) (1,181,319) - -

Under/(over) provision of income tax in respect of prior years 670 37,099 (12,716) 38,433

Overprovision of deferred tax in respect of prior years - (490,621) - -

Tax expense for the year (7,834,330) (697,000) (12,716) 41,157

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective year of assessment 2016. The change in corporate tax rate in year of assessment 2016 does not have material impact to the Group.

11. earninGs Per share

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

Group

2014 2013

Profit net of tax attributable to owners of the parent (RM) 9,922,277 2,653,364

Weighted average number of ordinary shares in issue 150,205,479 150,000,000

Basic earnings per share (sen) 6.61 1.77

The comparative basic earnings per share have been restated for the increase in weighted average number of ordinary shares in issue as a result of the Two-Call Rights Issue of 37,500,000 new ordinary shares issued during the financial year.



cont’d

12. ProPerty, Plant anD eQuiPMent

freehold land and

buildings

long term leasehold

land Plant and

machinery cylinders construction

in progress other assets total

Group rM rM rM rM rM rM rM

cost: at 1 January 2013 25,449,603 8,329,682 41,819,999 56,126,553 4,993,570 10,325,451 147,044,858

Additions 1,835,817 3,600 2,020,566 653,754 1,272,935 1,930,095 7,716,767

Written off - - (14,894) (6,588) - (110,080) (131,562)

Disposals - - - (320,414) - (186,984) (507,398)

Reclassification 4,727,568 - 266,002 - (4,993,570) - -

Reclassification to non-current assets held for sale (Note 21) (6,783,627) - - - - - (6,783,627)

Reclassification to inventory property (Note 17) - (2,455,144) - - - - (2,455,144)

at 31 December 2013 25,229,361 5,878,138 44,091,673 56,453,305 1,272,935 11,958,482 144,883,894

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

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

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

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

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

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

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

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



12. ProPerty, Plant anD eQuiPMent cont’d

freehold land and

buildings

long term leasehold

land Plant and

machinery cylinders construction

in progress other assets total

Group rM rM rM rM rM rM rM

accumulated depreciation:

at 1 January 2013 2,069,877 830,602 9,920,295 13,845,636 - 4,171,428 30,837,838

Charge for the year (Note 7) 474,903 126,216 1,729,509 2,179,665 - 853,023 5,363,316

Written off - - (4,360) (4,803) - (85,691) (94,854)

Disposals - - - (173,162) - (174,119) (347,281)

Reclassification to non-current assets held for sale (Note 21) (409,361) - - - - - (409,361)

Reclassification to inventory property (Note 17) - (101,966) - - - - (101,966)

at 31 December 2013 2,135,419 854,852 11,645,444 15,847,336 - 4,764,641 35,247,692

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

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

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

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

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

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

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

net carrying amount:

at 31 December 2013 23,093,942 5,023,286 32,446,229 40,605,969 1,272,935 7,193,841 109,636,202

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



cont’d


computer, furniture and fitting

2014 2013

company rM rM

cost:

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

accumulated depreciation:

at 1 January 4,121 2,829

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

at 31 December 5,413 4,121

net carrying amount:

At 31 December 7,512 8,804

Assets held under finance leases

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM Nil (2013 : RM1,720,287) by means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to RM3,715,304 (2013 : RM5,996,480).

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

Group

2014 2013

rM rM

Plant and machinery 4,155,875 4,351,649

Other assets - motor vehicles 4,048,031 4,438,290

8,203,906 8,789,939

Assets pledged as security

Certain property, plant and equipment of the Group with carrying amount of RM2,400,000 (2013 : RM2,400,000) are pledged to secure bank facilities as stated in Note 22 to the financial statements.




Analysis of land and buildings

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

Group

2014 2013

rM rM

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

Long term leasehold land 4,989,851 5,023,286

Factory buildings 21,765,602 20,693,942

29,155,453 28,117,228

13. intanGible assets

Group

2014 2013

rM rM

cost

At 1 January 662,735 706,591

Adjustment (22,934) -

Additions 122,656 7,770

Written off - (51,626)

At 31 December 762,457 662,735

accumulated amortisation

At 1 January 360,888 325,175

Adjustment (23,932) -

Amortisation (Note 7) 64,458 80,549

Written off - (44,836)

At 31 December 401,414 360,888

net carrying amount 361,043 301,847

Amortisation expense

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



cont’d

14. investMent in subsiDiaries

company

2014 2013

rM rM

Unquoted shares, at cost 50,400,004 50,400,004 The subsidiaries, all of which were incorporated in Malaysia, are as follows:

name of subsidiaries equity interest held Principal activities

2014 2013

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

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

- yet to commence operations

Southern Carbon Dioxide Sdn Bhd

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

- yet to commence operations

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

15. investMent in an associate

Group

2014 2013

rM rM

Unquoted shares, at cost 6,560,000 4,480,000

Share of post-acquisition reserves 656,257 143,748

7,216,257 4,623,748 During the financial year, the Group acquired additional 2,080,000 ordinary shares of RM1.00 each in Iwatani-SIG Industrial

Gases Sdn. Bhd.

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

held through southern industrial Gas sdn bhd:

name of associate equity interest held Principal activities

2014 2013

Iwatani-SIG Industrial GasesSdn. Bhd.*

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

* Audited by a firm other than Ernst & Young



15. investMent in an associate cont’d

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

2014 2013

rM rM

Current assets 1,710,982 1,628,419

Non-current assets 37,361,711 24,734,869

Current liabilities (4,184,573) (1,363,415)

Non-current liabilities (16,847,477) (13,440,502)

equity 18,040,643 11,559,371

Proportion of the Group’s ownership 40% 40%

carrying amount of the investment 7,216,257 4,623,748

Revenue 7,985,406 1,000,000

Cost of good sold (4,125,138) -

Other income 186,731 376,699

Administrative expenses (2,265,278) (749,749)

Profit before tax 1,781,721 626,950

Income tax expense (489,199) (202,744)

Profit for the year 1,292,522 424,206

Group’s share of profit for the year 517,009 169,682

The associate had no contingent liabilities or capital commitments as at 31 December 2013 or 2014.

16. inventories

Group

2014 2013

rM rM

At cost:

Raw materials 596,240 645,562

Consumables 2,429,686 2,605,220

Finished goods 595,843 749,043

3,621,769 3,999,825

At net realisable value:

Finished goods - 86,160

3,621,769 4,085,985



cont’d

17. inventory ProPerty

2014 2013

rM rM

cost

At 1 January 2,353,178 -

Additions 131,957 -

Reclassification from property, plant and equipment (Note 12) 990,580 2,353,178

At 31 December 3,475,715 2,353,178

The Group has applied and received approval from the relevant authority to develop its industrial land at Bintulu into 8 units of semi-detached industrial factories. The Group intends to retain 2 units for its own use and the remaining 6 units shall be for sale. The carrying amount of the industrial land in respect of the 6 units of proposed industrial units is RM3,475,715 (2013 : RM2,353,178).

18. traDe anD other receivables

Group company

2014 2013 2014 2013

rM rM rM rM

trade receivables

Third parties 20,636,282 22,652,436 - -

Amounts due from director-related companies 228,298 144,149 - -

20,864,580 22,796,585 - -

Less: Allowance for impairment

Third parties (2,619,846) (3,445,943) - -

Trade receivables, net 18,244,734 19,350,642 - -

other receivables

Amount due from subsidiaries - - 31,694,330 26,402,670

Interest receivable 19,590 - 19,590 -

19,590 - 31,713,920 26,402,670

Total trade and other receivables 18,264,324 19,350,642 31,713,920 26,402,670

Add: Cash and bank balances (Note 20) 20,323,130 7,711,212 15,677,677 55,811

Total loans and receivables 38,587,454 27,061,854 47,391,597 26,458,481

trade receivables

The amounts due from director-related companies are unsecured, non-interest bearing and are repayable upon demand. The Group’s normal trade credit term ranges from 90 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. Trade receivables are recognised at their original invoice amounts which represent their fair values on initial recognition.

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



18. traDe anD other receivables cont’d

Ageing analysis of trade receivables

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

2014 2013

rM rM

Neither past due nor impaired 16,170,506 16,171,775

1 to 30 days past due not impaired 523,248 914,155




More than 121 days past due not impaired 654,735 779,293

1,901,940 2,539,927

Impaired 2,792,134 4,084,883

20,864,580 22,796,585

Receivables that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. More than 78% (2013: 71%) of the Group’s trade receivables arose from customers with more than 5 years of experience with the Group and losses have occurred infrequently.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM1,901,942 (2013: RM2,539,927) that are past due at the reporting date but not impaired.

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

Receivables that are impaired

The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

individually impaired

2014 2013

rM rM

Trade receivables - nominal amounts 2,792,134 4,084,883

Less: Allowance for impairment (2,619,846) (3,445,943)

172,288 638,940



cont’d

18. traDe anD other receivables cont’d

Movement in allowance accounts:

2014 2013

rM rM

At 1 January 3,445,943 3,200,542

Bad debt recovered (176,642) -

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

Charge for the year 714,726 317,415

Reversal of allowance for impairment losses (347,279) (72,014)

At 31 December 2,619,846 3,445,943

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

other receivables

Amount due from subsidiaries are unsecured, interest free and repayable on demand.

19. other current assets

Group company

2014 2013 2014 2013

rM rM rM rM

Prepayment 1,447,091 543,630 3,625 4,084

Non refundable deposits paid for purchase of property, plant and equipment 384,890 861,464 8,480 27,350

1,831,981 1,405,094 12,105 31,434

20. cash anD banK balances

Group company

2014 2013 2014 2013

rM rM rM rM

Cash on hand and at banks 20,275,327 7,664,826 15,677,677 55,811

Short term deposits with licensed bank 47,803 46,386 - -

Cash and bank balances (Note 18) 20,323,130 7,711,212 15,677,677 55,811

The weighted average effective interest rates and average maturity days for short term deposits of the Group as at 31 December 2014 was 3.15% (2013 : 2.95%) and 31 days (2013 : 31 days).



21. non current asset classifieD as helD for sale

2014 2013

rM rM

Freehold land and building 6,374,266 6,374,266

The assets held for sale as at the reporting date is presented as follows:

carrying amount

immediately before

classification re-

measurement

carrying amount as at

reporting date

rM rM rM

Freehold land and building (Note 12) 6,374,266 - 6,374,266

The Group has consolidated its operations in Puchong and Nilai by ceasing its gas distribution and refilling station in Puchong. The Group has engaged a registered property agent for the disposal of its freehold land and property in Puchong. On 30 March 2015, the Company has entered into Sale and Purchase Agreement for the sale of this freehold land and building for a total consideration of RM11,000,000.

As at 31 December 2014, the property have been presented on the statements of financial position as non-current assets classified as held for sale.

22. borroWinGs

interest rates per annum Maturity

Group

2014 2013

rM rM

current

Secured:

Bankers’ acceptances (3.69% - 4.22%) 2014 6,127,000 5,286,000

Term loans (5.05% - 5.41%) 2014 6,633,300 5,497,543

Obligations under finance leases (Note 28) (3.30% - 3.85%) 2014 1,028,090 1,485,315

Revolving credit (3.35% - 4.51%) 2014 11,500,000 11,000,000

Flexi financing ( - ) 2014 - 862,063

25,288,390 24,130,921

non-current

Secured:

Term loans (5.05% - 5.41%) 2015 - 2017 10,492,597 11,529,192

Obligations under finance leases (Note 28) (3.30% - 3.85%) 2015 - 2016 275,719 1,299,329

10,768,316 12,828,521



cont’d

22. borroWinGs cont’d

interest rates per annum Maturity

Group

2014 2013 rM rM

total borrowings

Bankers’ acceptances 2014 6,127,000 5,286,000

Term loans 2014 to 2017 17,125,897 17,026,735

Obligations under finance leases 2014 to 2016 1,303,809 2,784,644

Revolving credit 2014 11,500,000 11,000,000

Flexi financing 2014 - 862,063

36,056,706 36,959,442

The remaining maturities of the loan and borrowings are as follows:

On demand or within one year 25,288,390 24,130,921

More than 1 year and less than 2 years 5,418,807 6,615,689

More than 2 years and less than 5 years 5,349,509 6,212,832

36,056,706 36,959,442

The above banking facilities are secured by way of corporate guarantee from the Company and specified debenture on certain property, plant and equipment of the Group, both present and future as disclosed in Note 12.

The term loans are repayable over a period of 4 years to 7 years.

The bankers’ acceptances and revolving credit are repayable upon maturity.

23. traDe anD other Payables

Group company 2014 2013 2014 2013

rM rM rM rM

trade payables

Third parties 3,995,535 3,860,992 - -

Amounts due to director-related companies 5,893,753 9,291,934 - -

9,889,288 13,152,926 - -

other payables

Cylinder deposits refundable 1,084,769 1,202,311 - -

Accruals 1,569,287 2,834,865 82,290 87,051

Sundry payables 5,857,504 2,703,837 2,782,454 30,701

8,511,560 6,741,013 2,864,744 117,752

Total trade and other payables 18,400,848 19,893,939 2,864,744 117,752

Add: Borrowings (Note 22) 36,056,706 36,959,442 - -

Total financial liabilities carried at amortised cost 54,457,554 56,853,381 2,864,744 117,752



23. traDe anD other Payables cont’d

trade payables

These amounts owing are unsecured and interest free except for balances of RM5,860,443 (2013 : RM8,354,754) due to certain director-related companies which carried interest at 7.50% (2013: 7.50%) per annum on late payment of overdue invoices.

The normal trade credit term granted to the Group ranges from 60 to 90 days.

other payables

Sundry payables are non-interest bearing and have no fixed term of repayment. Sundry payables are normally settled on an average term of two months (2013 : average term of two months).

24. DeferreD taxation

Group

2014 2013

rM rM

At 1 January 6,949,000 7,920,320

Recognised in the profit or loss (Note 10) (7,949,000) (971,320)

At 31 December (1,000,000) 6,949,000

Presented after appropriate offsetting as follows:

Deferred tax assets (13,297,000) (6,671,000)

Deferred tax liabilities 12,297,000 13,620,000

(1,000,000) 6,949,000

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities of the Group:

accelerated capital

allowances total

rM rM

At 1 January 2014 13,620,000 13,620,000

Recognised in profit or loss (1,323,000) (1,323,000)

At 31 December 2014 12,297,000 12,297,000

At 1 January 2013 13,166,000 13,166,000

Recognised in profit or loss 454,000 454,000

At 31 December 2013 13,620,000 13,620,000



cont’d

24. DeferreD taxation cont’d

Deferred tax assets of the Group:

unabsorbed reinvestment

allowances

unrealised foreign

exchange loss

unabsorbed capital

allowance total

rM rM rM rM

At 1 January 2014 (4,801,960) (41,120) (1,827,920) (6,671,000)

Recognised in profit or loss (6,820,490) 38,300 156,190 (6,626,000)

At 31 December 2014 (11,622,450) (2,820) (1,671,730) (13,297,000)

At 1 January 2013 (3,772,800) (29,400) (1,443,480) (5,245,680)

Recognised in profit or loss (1,029,160) (11,720) (384,440) (1,425,320)

At 31 December 2013 (4,801,960) (41,120) (1,827,920) (6,671,000)

25. share caPital

number of ordinary shares of rM0.50 each amount

2014 2013 2014 2013

rM rM

Authorised

At 1 January/At 31 December 400,000,000 400,000,000 200,000,000 200,000,000

Issued and fully paid

At 1 January 150,000,000 150,000,000 75,000,000 75,000,000

Issued during the year:

- Payable in cash 27,000,000 - 13,500,000 -

- capitalised from retained profits 10,500,000 - 5,250,000 -

37,500,000 - 18,750,000 -

At 31 December 187,500,000 150,000,000 93,750,000 75,000,000

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

During the financial year, the Company increased its issued and paid up ordinary share capital from RM75,000,000 to RM93,750,000 by way of a Two-Call Rights Issue, of which the first call of RM0.36 per rights share was payable in cash and the second call of RM0.14 per rights share was to be capitalised from the retained earnings reserve, on the basis of one rights share for every four existing shares held. The enlarged issued and paid up share capital of the Company were listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 30 December 2014.



26. reserves

Group company 2014 2013 2014 2013

rM rM rM rM

non-distributable

Share premium 1,019,862 6,074,866 1,019,862 1,548,866

Reclassification - (4,526,000) - -

Total 1,019,862 1,548,866 1,019,862 1,548,866

Distributable

Retained earnings 19,295,820 10,997,543 199,295 242,131

Reclassification - 4,526,000 - -

Total 20,315,682 17,072,409 1,219,157 1,790,997

The movements in the reserves are shown in the statements of changes in equity.

Share premium represents the premium arising from the issue of shares.

27. retaineD Profits

The Company may distribute dividends out of its entire retained earnings as at 31 December 2014 and 31 December 2013 under the single tier system.

28. coMMitMents

(a) capital commitments

Group

2014 2013

rM rM

Capital expenditure:

Approved and contracted for:

Property, plant and equipment 4,550,962 4,523,966

Approved but not contracted for:

Property, plant and equipment 3,380,000 -

7,930,962 4,523,966 (b) finance lease commitments

The Group has finance leases for certain items of plant and equipment (Note 12). These leases do not have terms of renewal, but have purchase options at nominal value at the end of the lease terms.



cont’d

28. coMMitMents cont’d

(b) finance lease commitments cont’d

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

2014 2013 rM rM

Minimum lease payments:

Not later than 1 year 1,077,897 1,620,361

Later than 1 year and not later than 2 years 280,957 1,073,417

Later than 2 years and not later than 5 years - 280,958

Total minimum lease payments 1,358,854 2,974,736

Less: Amounts representing finance charges (55,045) (190,092)

Present value of minimum lease payments 1,303,809 2,784,644

Present value of payments:

Not later than 1 year 1,028,090 1,485,315

Later than 1 year and not later than 2 years 275,719 1,023,607

Later than 2 years and not later than 5 years - 275,722

Present value of minimum lease payments 1,303,809 2,784,644

Less: Amount due within 12 months (Note 22) (1,028,090) (1,485,315)

Amount due after 12 months (Note 22) 275,719 1,299,329

29. siGnificant relateD Party transactions

(a) sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year:

Group 2014 2013

rM rM

To/from director-related companies:

Sales of finished goods 733,404 185,942

Transport income 81,418 70,264

Purchases 6,560,744 8,211,337

Purchase of property, plant and equipment 526,995 945,032

Purchase of spare parts 480,151 488,774

Rental paid 351,686 299,257

Interest paid 561,474 548,513

Travelling expenses paid on behalf 5,757 18,822

Transport charges paid 75,122 176,371



29. siGnificant relateD Party transactions cont’d

(a) sale and purchase of goods and services cont’d

Director-related companies are those companies which are able to exercise significant influence over the Company or which are subject to significant influence from the same source as the Company.

A Director of the Company, namely Mr. Peh Lam Hoh is a Director of Sing Swee Bee Sdn. Bhd., Sing Swee Bee Enterprise Pte. Ltd. and SSB Cryogenic Equipment Pte. Ltd., being related parties which the Group has transacted with during the year.

(b) compensation of key management personnel

Group company 2014 2013 2014 2013

rM rM rM rM

Short-term employee benefits 3,123,808 3,041,904 280,482 240,485

Post-employment benefits:

Defined contribution 173,183 246,931 - -

3,296,991 3,288,835 280,482 240,485

Included in the total key management personnel are:

Directors’ remuneration 2,143,869 2,018,809 280,482 240,485

30. fair value of financial instruMents

(a) fair value of financial instruments by classes that are carried at fair value and whose carrying amounts are reasonable approximation of fair value

Trade receivables, other receivables, amount due from subsidiaries, cash and bank balances, trade payables, other payables and accruals and bank borrowings.

The carrying amount of these financial assets and liabilities are reasonable approximation of fair values due to their short term nature.

The carrying amounts of the current portion of floating rate loans and borrowings are reasonable approximation of fair values due to the insignificant impact of discounts.

The carrying amounts of non-current portion of floating rate loans and borrowings are reasonable approximation of fair values as the interest charged on these loan and borrowings are pegged to or close to market interest rates near or at reporting date.



cont’d

30. fair value of financial instruMents cont’d

(b) fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

The fair values of financial assets and liabilities by classes that are not carried at fair values and whose carrying amounts are not reasonable approximation of fair values are as follows:

2014 2013

carrying value fair value

carrying value fair value

Group rM rM rM rM

financial liabilites

Obligation under finance lease 1,299,330 1,296,493 2,784,644 2,778,175 Fair value hierarchy

The Group uses the following hierachy for determining and disclosing the fair value of assets and liabilities by valuation technique:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

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

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

As at 31 December 2014, the Group held the following liabilities disclosed at fair value:

total level 1 level 2 level 3

rM rM rM rM

at 31 December 2014

Obligation under finance lease 1,296,493 - 1,296,493 -

at 31 December 2013

Obligation under finance lease 2,778,175 - 2,778,175 - There were no transfers between the various fair value measurement levels during the financial year.

31. financial risK ManaGeMent obJectives anD Policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Management. The audit committee provides independent oversight to the effectiveness of the risk management process.



31. financial risK ManaGeMent obJectives anD Policies cont’d

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2014 2013

rM % of total rM % of total

by country:

Malaysia 20,137,770 96.52% 21,927,531 95.51%

Singapore 583,408 2.80% 653,497 3.38%

Vietnam 101,715 0.49% 165,480 0.86%

China 41,687 0.20% 42,569 0.22%

Sri Lanka - 0.00% 7,508 0.04%

20,864,580 100.00% 22,796,585 100.00%

by industry sectors:

Dealers 7,866,143 37.70% 8,495,549 37.27%

Construction and engineering 2,302,915 11.04% 2,598,899 11.40%

Fabrication work 1,940,887 9.30% 2,008,791 8.81%

Refrigerant 1,038,371 4.98% 1,069,284 4.69%

Shipbuilding 1,100,805 5.28% 840,607 3.69%

Others 6,615,459 31.71% 7,783,455 34.14%

20,864,580 100.00% 22,796,585 100.00%

At the reporting date, approximately 37.70% (2013 : 37.27%) of the Group’s trade receivables were due from dealers who are located in Malaysia.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired as disclosed in Note 18. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable banks with high credit ratings and no history of default.



cont’d


(a) credit risk cont’d

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 18.

(b) liquidity risk

Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group and the Company actively manage its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

2014

on demand or within one year

one to five years total

Group rM rM rM

financial liabilities:

Trade and other payables 18,400,849 - 18,400,849

Loans and borrowings 25,338,199 10,773,552 36,111,751

Total undiscounted financial liabilities 43,739,048 10,773,552 54,512,600

company



Total undiscounted financial liabilities 2,864,744 - 2,864,744




(b) liquidity risk cont’d

2013

on demand or within one year

one to five years total

Group rM rM rM



Loans and borrowings 24,265,967 17,273,685 41,539,652

Total undiscounted financial liabilities 44,159,906 17,273,685 61,433,591

company


Trade and other payables 117,752 - 117,752

Total undiscounted financial liabilities 117,752 - 117,752

(c) interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and Company’s exposure to interest rate risk arises primarily from their loans and borrowings.

Sensitivity analysis for interest rate risk

During the financial year, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM17,376 (2013: RM17,081) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assured movement in basis points for interest rate sensitivity analysis is based on the current market environment.

(d) foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of the Group. The foreign currencies in which these transactions are denominated are mainly United States Dollars (“USD”) and Singapore Dollars (“SGD”).

The Group does not hedge currency risk.



cont’d


(d) foreign currency risk cont’d

Sensitivity analysis of foreign exchange rate changes

as at 2014 as at 2013

MYR/SGD exchange rate +/- 3.00% +/- 3.00%

SGD denominated accounts receivable (RM) 529,913 568,167

Net income (RM) +/- 15,897 -/+ 17,045

MYR/SGD exchange rate +/- 3.00% +/- 3.00%

SGD denominated accounts payable (RM) 5,832,746 8,332,383

Net income (RM) +/- 174,982 +/- 249,971

MYR/USD exchange rate +/- 3.00% +/- 3.00%

USD denominated accounts payable (RM) 371,444 764,583

Net income (RM) +/- 11,143 +/- 22,937

32. caPital ManaGeMent

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes during the years ended 31 December 2014 and 31 December 2013.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio below 50%. The Group includes within net debt, loans and borrowings, trade and other payables, less cash and bank balances. Equity includes share capital, share premium and reserve.

Group company

note 2014 2013 2014 2013

rM rM rM rM

Borrowings 22 36,056,706 36,959,442 - -

Trade and other payables 23 18,400,848 19,893,939 2,864,744 117,752

Less:

Cash and bank balances 20 (20,323,130) (7,711,212) (15,677,677) (55,811)

Net debt 34,134,424 49,142,169 (12,812,933) 61,941

Equity 114,065,682 92,072,409 94,969,157 76,790,997

Total capital 114,065,682 92,072,409 94,969,157 76,790,997

capital and net debt 148,200,106 141,214,578 82,156,224 76,852,938

Gearing ratio 23% 35% N/A 0.1%



33. seGMent inforMation

the Group is organized into the following operating segments:

(1) Manufacturing (2) Refilling and distribution (3) Other products and services

Group

2014

Manufacturing

refilling and Distribution

other Products and

services total

rM rM rM rM

Revenue 32,202,401 32,088,131 1,073,082 65,363,614

results

Profit for reportable segment 9,318,145 11,384,874 158,711 20,861,730

Other income 1,325,279

Administrative expenses (16,702,537)

Finance costs (2,362,505)

Other operating expense (1,551,029)

Share of results of associate 517,009

Profit before tax 2,087,947

Income tax expense 7,834,330

total comprehensive income 9,922,277

2013

Manufacturing

refilling and distribution

other Products and

services total

rM rM rM rM

Revenue 30,368,206 31,332,175 1,408,967 63,109,348

results

Profit for reportable segment 6,673,304 11,701,493 233,797 18,608,594

Other income 1,151,248

Selling and administrative expenses (15,680,573)

Finance costs (2,292,587)

Share of results of associate 169,682

Profit before tax 1,956,364

Income tax expense 697,000

Total comprehensive income 2,653,364

Segmental assets and liabilities information is neither included in the internal management reports nor provided regularly to the Managing Director. Hence, no disclosure is made on segment assets and liabilities.



cont’d

34. DiviDenDs

Dividends in respect of year Dividends recognised in year

2014 2013 2012 2014 2013

rM rM rM rM rM

Recognised during the year:

Final (single-tier) dividend: 0.8 sen on 150,000,000 ordinary shares - - 1,200,000 - 1,200,000

0.6 sen on 150,000,000 ordinary shares - 900,000 - 900,000 -

- 900,000 1,200,000 900,000 1,200,000

At the forthcoming Annual General Meeting, a final (single-tier) dividend in respect of the financial year ended 31 December 2014, of 0.7 sen on 187,500,000 ordinary shares, amounting to a dividend payable of RM1,312,500 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2015.

35. reclassification

Certain comparative figures have been reclassified to be consistent with current year’s presentation.

36. subseQuent event

On 30 March 2015, the Group has entered into Sale and Purchase Agreement for the sale of freehold land and building which has been classified as non current asset held for sale as at 31 December 2014, for a cash consideration of RM11,000,000.

The disposal of freehold land and building has not been completed as at the date of this report as certain conditions

precedent have not been fulfilled.

37. authorisation of financial stateMents for issue

The financial statements for the year ended 31 December 2014 were authorised for issue in accordance with a resolution of the Directors on 2 April 2015.



38. suPPleMentary inforMation - breaKDoWn of retaineD Profits into realiseD anD unrealiseD

The breakdown of the retained profits of the Group and of the Company as at 31 December 2014 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group company

2014 2013 2014 2013

rM rM rM rM

Total retained profits

- Realised 14,337,089 18,861,139 199,295 242,131

- Unrealised 4,441,722 (3,507,278) - -

18,778,811 15,353,861 199,295 242,131

Associated company

- Realised 517,009 169,682 - -

Retained profits as per financial statements 19,295,820 15,523,543 199,295 242,131


As at the 31 December 2014, we own the following properties:-

no. locationDescription/existing use

Date of acquisition

Date of revaluation

approximate land area/

built-up area

approximate age of

building/ tenure

audited nbv as at

31 December 2014(rM) encumbrances

1. PLO 137, Kawasan Perindustrian Senai III, 81400 Senai, Johor

Double storey detached office and factory/ Manufacturing of liquid oxygen, liquid nitrogen and Acetylene gas, and refilling of industrial gas such as oxygen, nitrogen, Argon, carbon dioxide and Gas Mixture

05/12/1996 - 14,516square meter/

4,359 square meter

17 years/60 years lease

expiring on 13.02.2060

4,351,956.74 Nil

2. Plot 235, Taman Perindustrian Bukit Minyak, Penang

Single storey detached office and refilling plant/Refilling of industrial gases such as oxygen, Nitogen and carbon dioxide

20/11/2006 - 5,192square meter/

943square meter

7 years/60 years lease

expiring on 08.08.2067

2,432,250.01 Nil

3. GRN 128880, Lot 10688, Jalan Permata ¼ (previously known as Lot 114 HS(D) 110941, PT 16767), Kawasan Perindustrian Arab Malaysian, Mukim Setul Daerah Seremban, Negeri Sembilan

Single storey detached office and factory/Manufacturing of dissolved Acetylene gas and Fuming Gas

18/07/2008 1 January 2011

12,536square meter/

5,886square meter

5 years/Freehold 13,331,755.55 Charged to RHB Bank Bhd

4. Lot 8392 & 8393 (PN 49651 & 49648), Mukim Krubong, Daerah Melaka Tengah, Melaka

Single storey detached office and factory Refilling of industrial gases such as oxygen and carbon dioxide

29/05/2010 - 4,218square meter/

1,229square meter

2 years/99 years 3,905,775.83 Nil

5. Lot 41/129 & 42/129, Lot 129, Kawasan Perindustrian Gebeng Fasa II, Kuantan, Pahang

Single storey detached office and factory Refilling of industrial gases such as oxygen

31/05/2010 - 8,094square meter/

1,218square meter

2 years/99 years 4,178,166.79 Nil

6. Lot 4033 in block no. 26, Kemena Land district, Bintulu, Sarawak

Under development 01/07/2011 - 8,938 square meter

N/A/60 years 3,200,594.62

7. No. 17, Jalan BP 4/1, Bandar Bukit Puchong, 47100 Puchong, Selangor

Double storey detached office and refilling plant

12/05/2000 1 January 2011

4,679square meter/

1,427square meter

15 years/Freehold

6,374,265.53 Charged to AMIslamic Bank

Bhd

total 37,774,765.07

List of Properties


Analysis ofshareholdingsas at 31 March 2015

Authorised Share Capital : RM200,000,000.00 Issued and Fully Paid-Up Capital : RM93,750,000.00 Class of Shares : Ordinary Shares of RM0.50 each Voting Rights : One vote per ordinary share

analysis by size of holDinGs

size of holdingsno. of

holders %no. of

shares %

1 – 99 1 0.05 2 0.00

100 – 1,000 204 9.94 121,173 0.06

1,001 – 10,000 1,022 49.80 5,651,200 3.01

10,001 – 100,000 711 34.65 21,122,332 11.27

100,001 – 9,374,999 (*) 112 5.46 82,023,471 43.75

9,375,000 and above (**) 2 0.10 78,581,822 41.91

total 2,052 100.00 187,500,000 100.00

Remark:* Less than 5% of Issued Shares** 5% and above of Issued Shares

Directors shareholDinGs

Direct indirect

no. of shares held %


Peh Lam Hoh 7,762,180 4.14 79,014,822(a) 42.14

Lau Cheng Ming 2,758,800 1.47 - -

Datuk Syed Ahmad Bin Alwee Alsree - - 71,909,241(b) 38.35

Diong Tai Pew 820,000 0.44 - -

Lee Ting Kiat - - - -

Lim Tin Teng @ Lim Jit Teng - - - -

Notes:-(a) Deemed interest/Indirect interest:- By virtue of his interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965: 65,625,000 shares By virtue of his interest in SSB Cryogenic Equipment Pte Ltd pursuant to Section 6A of the Companies Act, 1965: 12,956,822 shares By virtue of his spouse, Mdm Ng Swee Gek’s interest: 370,500 shares By virtue of his daughter-in-law, Ms Lee Si Yun’s interest: 62,500 shares

(b) Deemed interest/Indirect interest:- By virtue of his spouse, Datin Hanifah Hajar Taib interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965:

65,625,000 shares By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib’s interest: 6,284,241 shares


Analysis ofshareholdings

as at 31 March 2015cont’d

list of substantial shareholDers

Direct indirect



Phoenix SIG Holdings Sdn. Bhd. 65,625,000 35.00 - -

SSB Cryogenic Equipment Pte Ltd 12,956,822 6.91 - -

Peh Lam Hoh 7,762,180 4.14 79,014,822(a) 42.14

Datuk Syed Ahmad Bin Alwee Alsree - - 71,909,241(b) 38.35

Dato Hajjah Hanifah Hajar Taib 6,284,241 3.35 65,625,000(c) 35.00

Notes:-(a) Deemed interest/Indirect interest:- By virtue of his interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965: 65,625,000 shares By virtue of his interest in SSB Cryogenic Equipment Pte Ltd pursuant to Section 6A of the Companies Act, 1965: 12,956,822 shares By virtue of his spouse, Mdm Ng Swee Gek’s interest: 370,500 shares By virtue of his daughter-in-law, Ms Lee Si Yun’s interest: 62,500 shares

(b) Deemed interest/Indirect interest:- By virtue of his spouse, Datin Hanifah Hajar Taib interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965:

65,625,000 shares By virtue of his spouse, Dato Hajjah Hanifah Hajar Taib’s interest: 6,284,241 shares

(c) Deemed interest by virtue of her interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965.


list of toP 30 holDers as at 31 March 2015

no. naMe holDinGs %

1 PHOENIX SIG HOLDINGS SDN BHD 65,625,000 35.00

2 SSB CRYOGENIC EQUIPMENT PTE LTD 12,956,822 6.91

3 PEH LAM HOH 7,762,180 4.14

4 LOH PEI YON 6,855,705 3.66

5 HANIFAH HAJAR TAIB 6,284,241 3.35

6 KONG KHIM TUCK 4,782,865 2.55

7 NELTY AGUSTINA SUSANTO 4,412,500 2.35

8 FAHAD MOHD F S BUZWAIR 4,332,000 2.31

9 SYED ZAFILEN BIN SYED ALWEE 3,462,500 1.85

10 ADINAMAJU SDN BHD 3,110,625 1.66

11 LAU CHENG MING 2,758,800 1.47

12 KWA LI DA, ALEX (KE LIDA) 2,556,525 1.36

13 KHONG KAR YOW 2,071,505 1.10

14 CHEN CHIN PENG 1,950,000 1.04

15 CITIGROUP NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED (CLIENT A/C-R ES)

1,869,000 1.00

16 VOON CHEE KEEN 1,515,977 0.81

17 PEH HOCK SOON 958,802 0.51

18 PROMSERV SDN BHD 915,000 0.49

19 NG CHENG GUAN 816,508 0.44

20 TAN CHIN PENG 762,700 0.41

21 PROMSERV SDN BHD 700,000 0.37

22 HUANG BING 683,000 0.36

23 PROMSERV ENGINEERING SDN BHD 675,000 0.36

24 YIM WHY MENG @ ZEN WHY MENG 675,000 0.36

25 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR WEE INN KOON

587,500 0.31

26 AFFIN HWANG NOMINEES (ASING) SDN BHD UOB KAY HIAN PTE LTD FOR WEE SOH JOON

562,500 0.30

27 SEGO HOLDINGS SDN BHD 550,000 0.29

28 LUCAS LIM TEE KIAT 543,750 0.29

29 AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIENG ING MUI

537,500 0.29

30 PEH AH KAM 516,375 0.28

total 141,789,880 75.62

Analysis ofshareholdingsas at 31 March 2015cont’d


Notice of annual General Meeting

notice is hereby Given that the 6th Annual General Meeting of SIG Gases Berhad will be held at Grand Paragon hotel Johor bahru, level 1, D’Paragon 3, 18 Jalan harimau, taman century, 80250 Johor bahru, Johor on friday, 8 May 2015 at 12.00 p.m. to transact the following business:-

aGenDa

as orDinary business: 1. To receive the Audited Financial Statements of the Company and of the Group for the financial

year ended 31 December 2014 and the Reports of the Directors and Auditors thereon. 2. To approve the payment of a first and final dividend of 0.7 sen per share under single-tier system

in respect of the financial year ended 31 December 2014. 3. To approve the Directors’ fees of RM274,440 for the year ending 31 December 2015.

4. To re-elect the following Directors who retire by rotation in accordance with Article 103 of the Company’s Articles of Association:-

4.1 Mr Lau Cheng Ming 4.2 Datuk Syed Ahmad Bin Alwee Alsree 5. To consider and if thought fit, to pass the following Ordinary Resolution in accordance with

Section 129 of the Companies Act, 1965:

“THAT Mr Lim Tin Teng @ Lim Jit Teng, retiring pursuant to Section 129 of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold office until the next Annual General Meeting.”

6. To re-appoint Messrs. Ernst & Young as the Company’s Auditors for the ensuing year and to

authorise the Board of Directors to fix their remuneration. as sPecial business:

To consider and if thought fit, to pass the following Resolutions with or without modifications:- 7. orDinary resolution 1 authority to issue shares

“THAT subject always to the Companies Act, 1965, Articles of Association of the Company and approvals from Bursa Malaysia Securities Berhad and any other governmental/regulatory bodies, where such approval is necessary, authority be and is hereby given to the Directors pursuant to Section 132D of the Companies Act, 1965 to issue and allot not more than ten percent (10%) of the issued capital of the Company at any time upon any such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit or in pursuance of offers, agreements or options to be made or granted by the Directors while this approval is in force until the conclusion of the next Annual General Meeting of the Company and that the Directors be and are hereby further authorised to make or grant offers, agreements or options which would or might require shares to be issued after the expiration of the approval hereof.”

8. orDinary resolution 2 ProPoseD reneWal of shareholDers’ ManDate for recurrent relateD Party

transactions (“rrPt”) of a revenue or traDinG nature (“ProPoseD reneWal of rrPt ManDate”)

resolution on Proxy form

(Please refer explanatory note 1)

(resolution 1)

(resolution 2)

(resolution 3)

(resolution 4)

(resolution 5)

(resolution 6)

(resolution 7)

(resolution 8)


“THAT subject to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, approval be hereby given to the Company and/or its subsidiary companies (“the Group”) to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.1 of the Circular to Shareholders dated 16 April 2015, provided that such transactions are necessary for the day-to-day operations; and undertaken in the ordinary course of business, on arms-length basis, on normal commercial terms that are not more favorable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

AND THAT such approval shall continue to be in force until:- (a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following this

AGM at which the Proposed Renewal of RRPT Mandate is passed, at which time it will lapse, unless by a resolution passed at the next AGM, the authority is renewed;

(b) the expiration of the period within which the next AGM is required to be held pursuant

to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by shareholders in a general meeting, whichever is

earlier; AND THAT the Directors of the Company be hereby authorised to complete and do all such acts

and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of RRPT Mandate.”

9. To transact any other business of which due notice shall have been given. notice of DiviDenD entitleMent anD PayMent Dates

NOTICE IS ALSO HEREBY GIVEN THAT the first and final dividend of 0.7 sen per share under single-tier system in respect of the financial year ended 31 December 2014, if approved by the shareholders at the 6th Annual General Meeting, will be payable on 18 June 2015 to shareholders whose names appear in the Record of Depositors on 29 May 2015.

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 29 May 2015 in respect of transfer; and (b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia

Securities Berhad.

By Order of the BoardsiG Gases berhaD

yonG May li (f) (ls0000295)irene Juay yee luan (f) (Maicsa 7057249)Company Secretaries

Johor Bahru16 April 2015

Notice of annual General Meetingcont’d


notes: 1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his/

her stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy, in the case of an individual shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

6. The instrument appointing a proxy, shall be deposited at the registered office of the Company at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.

7. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to Article 69(2) of the Articles of Association of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 30 April 2015 and only a Depositor whose name appear on such Record of Depositors shall be entitled to attend this meeting.

exPlanatory notes: Ordinary Business:- 1. item 1 of the agenda This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal

approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

Special Business:-

2. ordinary resolution 1 - item 7 of the agenda The purpose of this Ordinary Resolution 1 proposed under item 7, is for the renewal of the general mandate obtained from the members

at the last Annual General Meeting and if passed, will give flexibility to the Directors to issue new ordinary shares up to an amount not exceeding 10% of the issued share capital of the Company without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration. This authority will commence from the date of this Annual General Meeting and, unless earlier revoked or varied by the shareholders of the Company at a subsequent general meeting, expire at the next Annual General Meeting of the Company.

As at the date of this Notice, no new shares of the Company have been issued pursuant to the general mandate obtained at the 5th Annual General Meeting of the Company held on 23 May 2014, and which will lapse at the conclusion of the 6th AGM.

3. ordinary resolution 2 – item 8 of the agenda The purpose of this Ordinary Resolution 2 proposed under item 8, if passed, will allow the Group to continue to enter into recurrent

related party transactions made on an arm’s length basis and on normal commercial terms that are not more favorable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company.

Please refer to the Circular to Shareholders dated 16 April 2015 for further information.

Notice of annual General Meeting

cont’d


Statement Accompanyingnotice of annual General Meeting

Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:

There is no person seeking election as Director of the Company at this Annual General Meeting.

SIG GASES BERHAD (875083-W)

forM of Proxy

cDs account no.

no. of shares held

I/We (FULL NAME IN BLOCK LETTERS)

NRIC No/Passport No./Company No. of

(FULL ADDRESS)

being a member of siG Gases berhaD (“the company”), hereby appoint:

full name nric no./Passport no. Proportion of shareholdings

no. of shares %

Address

*and/ * or failing him/ her

full name nric no./Passport no. Proportion of shareholdings

no. of shares %

Address

or failing him/her/them, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the 6th Annual General Meeting (“AGM”) of the Company to be held at Grand Paragon Hotel Johor Bahru, Level 1, D’Paragon 3, 18 Jalan Harimau, Taman Century, 80250 Johor Bahru, Johor on Friday, 8 May 2015 at 12.00 p.m or at any adjournment thereof and my/our proxy is to vote as indicated below:-

item agenda1. To receive the Audited Financial Statements for the financial year ended 31

December 2014 and the Reports of the Directors and Auditors thereon:-ordinary business: resolution for against2. To approve the payment of a first and final dividend of 0.7 sen per share

under single-tier system in respect of the financial year ended 31 December 2014.

1

3. To approve the Directors’ fees of RM274,440 for the year ending 31 December 2015.

2

4. To re-elect the following Directors who retire by rotation in accordance with Article 103 of the Company’s Articles of Association.4.1 Mr Lau Cheng Ming 34.2 Datuk Syed Ahmad Bin Alwee Alsree 4

5. To re-appoint Mr Lim Tin Teng @ Lim Jit Teng as Director of the Company pursuant to Section 129 of the Companies Act, 1965.

5

6. To re-appoint Messrs Ernst & Young as Auditors of the Company for the ensuing year and to authorise the Board of Directors to fix their remuneration.

6

special business:7. Authority to Issue Shares. 78. Proposed Renewal of RRPT Mandate. 8

Please indicate with an “X” in the space provided how you wish your votes to be cast on the resolutions specified in the notice of meeting. If you do not do so, the *proxy/proxies will vote, or abstain from voting on the resolutions as he/she/they may think fit.

Dated this day of 2015

*Signature/Common Seal of Shareholder

* Strike out whichever is inapplicable

Affix Stamp

THE COMPANY SECRETARYsiG Gases berhaD(Company No. 875083-W)

suite 1301, 13th floorcity Plaza, Jalan tebrau

80300 Johor bahru, Johor

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. There shall be no restriction as to the qualification of the proxy. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.

2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

3. Where a member of the Company is an exempt authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. Where a member or the authorised nominee appoints two (2) proxies, or where an exempt authorised nominee appoints two (2) or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy, in the case of an individual shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under the corporation’s seal or under the hand of an officer or attorney duly authorised. If no name is inserted in the space for the name of your proxy, the Chairman of the Meeting will act as your proxy.

6. The instrument appointing a proxy, shall be deposited at the registered office of the Company at Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll and in default the instrument of proxy shall not be treated as valid.

7. For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn. Bhd. to make available to the Company pursuant to Article 69(2) of the Articles of Association of the Company and Paragraph 7.16(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 30 April 2015 and only a Depositor whose name appear on such Record of Depositors shall be entitled to attend this meeting.

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