SIG GASES BERHAD - Malaysiastock.biz Park in Bintulu, Sarawak, for a total purchase consideration of...

www.siggases.com

(Company No. 875083-W)(Incorporated in Malaysia under the Companies Act, 1965)

2010Annual Report

SIG GASES BERHAD(Company No. 875083-W)(A Wholly Owned Subsidiary of SIG Gases Berhad)

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

w w w . s i g g a s e s . c o m

SIG G

ASES BERH

AD

(Company N

o. 875083-W)

ANN

UAL REPO

RT 2010

CON

TEN

TS

Corporate Information • 2

Corporate Structure • 3

Chairman's Statement • 4

Financial Highlights • 7

Profile of Directors • 8

Statement of Corporate Governance • 11

Audit Committee Report • 16

Statement on Internal Control • 19

Additional Compliance Information • 21

Financial Statements • 23

List of Properties • 74

Analysis of Shareholdings • 75

Notice of Annual General Meeting • 78

Statement Accompanying Notice of Annual General Meeting • 80

Form of Proxy

2 SIG GASES BERHAD (875083-W)

BOARD OF DIRECTORS

Peh Lam Hoh (Executive Chairman)

Lau Cheng Ming (Executive Director)

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

Diong Tai Pew(Independent Non-Executive Director)

Michael Ong Kee Tuan (Independent Non-Executive Director) (Resigned on 1 April 2011)

Lee Ting Kiat (Independent Non-Executive Director) (Appointed on 15 March 2011)

AUDIT COMMITTEE

Diong Tai Pew (Chairman)Datuk Syed Ahmad Bin

Alwee Alsree (Member)Michael Ong Kee Tuan (Member)

(Resigned on 1 April 2011)Lee Ting Kiat (Member)

(Appointed on 1 April 2011)

REMUNERATION COMMITTEE

Peh Lam Hoh (Chairman)Diong Tai Pew (Member)Michael Ong Kee Tuan (Member)

(Ceased on 1 April 2011)Lee Ting Kiat (Member)


NOMINATION COMMITTEE

Diong Tai Pew (Chairman)Datuk Syed Ahmad Bin

Alwee Alsree (Member)Michael Ong Kee Tuan (Member)

(Ceased on 1 April 2011)Lee Ting Kiat (Member)


ESOS COMMITTEE

Peh Lam Hoh (Chairman)Lau Cheng Ming (Member)Diong Tai Pew (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 BahruJohorTel: 07-334 1740Fax: 07-334 1749

REGISTRAR

Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra 59200 Kuala LumpurTel: 03-2264 3883Fax: 03-2282 1886

REGISTERED OFFICE

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

PRINCIPAL BANKERS

AmBank (M) BerhadCIMB Bank BerhadRHB Bank Berhad

STOCK EXCHANGE LISTING

Bursa Malaysia Securities BerhadMain Market

CORPORATE INFORMATION

ANNUAL REPORT 2010 3

100%

Southern

Industrial Gas Sdn. Bhd.

(Company No. 380462-X)

Southern

Oxygen Sdn. Bhd.

(Company No. 788562-U)

Southern

Carbon Dioxide Sdn. Bhd.

(Company No. 789834-H)

(Company No. 875083-W)

100%

100%

CORPORATE STRUCTURE(“The Group”)


Dear Shareholders,

On behalf of the Board of Directors of SIG Gases Berhad (“SIGGAS” or “the Company”), I am pleased to present to you the Company’s Annual Report and financial statements for the financial year ended 31 December 2010 (“FY2010”).

FY2010 marked a significant milestone in the Group’s 15-year corporate history, as we were successfully listed on the Main Market of Bursa Malaysia Securities Berhad on 9 August 2010. This achievement affirmed our position as one of the leading manufacturers, refillers, and distributors of industrial gases in Malaysia.

The industrial gases sector continued to enjoy stable demand during the year under review, as Malaysia’s economy outperformed expectations and chalked up commendable Gross Domestic Product (“GDP”) growth of 7.2% in 2010, compared with a contraction of 1.7% in 2009, due to the rebound in export-driven manufacturing activities and increased demand for services.

CHAIRMAN’SSTATEMENT

CHAIRMAN’S STATEMENTcont’d

FINANCIAL AND OPERATION REVIEW

Group revenues were sustained at RM55.3 million in FY2010, compared to the proforma revenues of RM54.6 million in the previous year. Whilst the Group’s refilling and distribution segment continued to post impressive growth for the year, the manufacturing segment however saw a dip during the year, resulting in a flat top-line performance.

For FY2010, the manufacturing segment remained the largest revenue contributor at RM27.6 million, or 49.9% of the Group’s revenues; the segment however saw 6.6% lower sales than that of FY2009 due to the decrease in sales volume from shipbuilding industry in FY2010 in view of declining crude oil prices and the weaker US Dollar. Notwithstanding, the refilling and distribution segment recorded a 8.6% increase in revenues to RM26 million, about 47.0% of the Group’s revenues, due to increase in sales volume from refrigerant products. Lastly, the other products and services segment managed sales of RM1.7 million, up from RM1.10 million previously, as a result of increased sales of welding products.

At pre-tax profit level, the Group recorded a profit of RM7.9 million, registering a 15.4% drop compared to RM9.4 million previously. The lower profitability was largely due to an increase in operating expenses during the year, which included higher depreciation costs as a result of the increased investment in production facilities during the year.

Net profit in FY2010 consequently slid 15.5% to RM6.0 million, from net profit of RM7.1 million in the previous year.

From a wider perspective, the Group has charted robust compounded annual growth rates (“CAGR”) with group revenues rising 10.2% from FY2005 to FY2010, and group net profits showing CAGR of 10.2% in the same period.

The Group also ended the year with a strong balance sheet; shareholders equity stood at RM84.3 million, while cash and cash equivalents of RM15.9 million was more than the total long and short term borrowings of approximately RM13.0 million. The improved balance sheet was not only due to the retained earnings but also a result of the Group’s Initial Public Offering (“IPO”) in the year under review.

All in all, the Board views positively the financial performance in FY2010, given the increasingly challenging operating environment of our customers from the shipbuilding, metal fabrication, iron and steel, and chemical sectors.

OPERATIONS REVIEW

SIGGAS continued to expand our operations in various ways in the year under review

• Upgrading of refilling facilities in Krubong (Melaka) and Kuantan (Pahang)

The Group relocated our existing refining plants in Krubong and Kuantan to larger sites, in order to increase

our production capacity to meet increased demand from existing and potential customers. We also equipped the plants with new refilling technologies to enhance our operations and service delivery.

The Group invested RM5.0 million into the upgrading exercise, which was funded by our IPO proceeds.

• Expansion into the production of hydrogen The year under review also saw the Group investing RM3.7

million for the purchase of a hydrogen generation system. The new machinery, to be placed at our plant in Nilai, Negeri Sembilan is targeted for commissioning in FY2011.

This venture effectively expands our range of in-house produced industrial gases to encompass oxygen, acetylene, fuming gas and hydrogen.

The Group believes that this product expansion would contribute positively to its financial performance from FY2011 and onwards.

• Acquisition of land in Kemena Land District, Bintulu, Sarawak

The Group had announced the acquisition of a piece of land measuring 8,938 square metres in Kemena Industrial Park in Bintulu, Sarawak, for a total purchase consideration of RM3.25 million. The land purchase was funded by internally-generated funds and IPO proceeds.

We plan to build a refilling facility and acetylene production plant in Kemena, which would mark the Group’s first direct presence in East Malaysia. The new facility would aptly position the Group to meet the demand for industrial gases from the food and beverage, electric and electronics, shipbuilding, metal fabrication and construction sectors in the vicinity.

We also opine that the new plant would enable the Group to grow alongside the rapid industrialization in Sarawak from the implementation of Sarawak Corridor of Renewable Energy (SCORE) and other Government-led initiatives.

We anticipate to invest an additional RM10.0 million in CAPEX for this new facility, and target for its commencement in FY2011.

The Group is optimistic that these measures would enable us to enhance our market share in the industrial gases sector.



UTILISATION OF INITIAL PUBLIC OFFERING (“IPO”) PROCEEDS

SIGGAS’s IPO on Bursa Malaysia Securities Berhad raised RM28.6 million in proceeds for the Group. The status of utilisation of the proceeds as at 31 December 2010 is as below:

Proposed Utilisation

Actual Utilisation Amendment

Re-classifiction

Balance to be utilised

(RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) (RM ‘000) %

Purchase of land and building its facilities

• Sarawak – Samalaju Industrial Park 9,736 - (2,500) 667 7,903 100%

• Sarawak – Kemena Industrial Park, Bintulu - (325) 2,500 - 2,175 87%

• Kuantan 2,500 (965) - - 1,535 61%

• Melaka 2,500 (843) - - 1,657 66%

14,736 (2,133) - 667 13,270 86%

Purchase of property, plant, & equipment

• Cylinders 5,400 (5,056) - - 344 6%

• Hydrogen long tube 1,000 (752) - - 248 25%

6,400 (5,808) - - 592 9%

Repayment of term loan 4,200 (4,200) - - - 0%

Listing expenses 3,200 (2,533) - (667) - 0%

Total 28,536 (14,674) - - 13,862 49%

* Notes:

i) The unutilised balance of RM667,000 from the listing expenses was transferred to purchase of land and building its facilities.

ii) On 23 November 2010, SIG announced its intention to redeploy RM2.5 million of the RM9.7 million allocated for land purchase and building its facilities in Samalaju to be utilised instead for proposed acquisition of land in Kemena Land District, Bintulu, Sarawak.

INDUSTRY OUTLOOK AND GROWTH STRATEGIES

The industrial gases sector is a direct beneficiary of increased manufacturing activity in line with economic recovery. In fact, according to industry statistics, global demand for industrial gases is forecasted to rise 8% annually, with Asia Pacific remaining the fastest-growing region due to its rapidly-expanding base.

With the various initiatives announced by the Malaysian Government, such as the Economic Transformation Programme and the 10th Malaysian Plan , it provides vast potential for SIG to tap into.

We are keen to continue growing the company further, by broadening our customer base, expanding our product range, increasing our plant utilization rate, and venturing into new-geographical markets within Malaysia.

We believe that these measures would help us to continue our track record and build a strong platform to sustain the Group’s performance in the future.

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Company recognizes the importance of giving back to the employees, business partners and the community, as a crucial part of the business feasibility. The Group endeavours to undertake a regular and sustainable CSR programme towards this objective in the near future.

CORPORATE GOVERNANCE

The Board is committed in maintaining high standards of practice of corporate governance in preserving shareholder value, protecting the interests of employees, and providing high quality services to our customers. We believe that adhering to this principle would impact positively on our company’s performance and assist in business development in the long run.

A review of the Group’s corporate governance policies is highlighted in this Annual Report.

ACKNOWLEDGEMENTS

As we celebrate our first year as a listed entity, I wish to express my deepest gratitude to the members of the Board of Directors, the management and team of employees for their utmost dedication to making our listing exercise a reality.

I would also like to acknowledge our valued shareholders, business partners, bankers and clients who have supported the Group in various ways.

We look forward to another fruitful year, as we strive to bring SIG to greater heights.

PEH LAM HOHExecutive Chairman

CHAIRMAN’S STATEMENTcont’d

FINANCIAL HIGHLIGHTS

2006RM’000

2007RM’000

2008RM’000

2009RM’000

2010RM’000

REVENUE 40,459 48,992 55,400 54,568 55,261

GROSS PROFIT 14,116 18,462 20,114 19,276 18,863

PROFIT BEFORE TAXATION 5,111 8,208 8,962 9,392 7,941

PROFIT AFTER TAXATION 3,622 5,836 8,435 7,112 6,005


2006 40,459

2007 48,992

2008 55,400

2009 54,568

2010 55,261

2006 14,116

2007 18,462

2008 20,114

2009 19,276

2010 18,863

2006 5,111

2007 8,208

2008 8,962

2009 9,392

2010 7,941

2006 3,622

2007 5,836

2008 8,435

2009 7,112

2010 6,005

REVENUE(RM’000)

PROFIT BEFORE TAXATION(RM’000)

GROSS PROFIT(RM’000)

PROFIT AFTER TAXATION(RM’000)


PEH LAM HOHExecutive Chairman

Peh Lam Hoh, a Singaporean aged 61, is the 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, 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 Investment 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 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 offences within the past 10 years.

Subsequent to being listed on 9 August 2010, two (2) Board of Directors’ Meetings were held during the financial year ended 31 December 2010 and Mr Peh attended all the two (2) Board of Directors’ Meetings.

LAU CHENG MINGExecutive Director

Lau Cheng Ming, a Malaysian aged 57, 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 of the New Zealand Society of Accountants 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/or 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 offences within the past 10 years.

Subsequent to being listed on 9 August 2010, two (2) Board of Directors’ Meetings were held during the financial year ended 31 December 2010 and Mr. Lau attended all the two (2) Board of Directors’ Meetings.

PROFILE OF DIRECTORS


DATUK SYED AHMAD BIN ALWEE ALSREENon-Independent Non-Executive Director

Datuk Syed Ahmad bin Alwee Alsree, a Singaporean aged 45, 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 Nomination Committee of the Company.

Datuk Syed Ahmad graduated with a Bachelor of Law (LL.B) Honours from the National University of Singapore in 1993 and began his career with Billy Ng Chua & Partners, Advocates & Solicitors, Singapore, as a Partner. He subsequently joined Alsree Rudy & Chan, Advocates & Solicitors, Singapore as a Partner in 1997. In 1999, he joined Billy & Alsree, Advocates & Solicitors, Singapore as a Partner. He is currently an indirect shareholder and the Group Executive Director of Cahya Mata Sarawak Berhad and a Director of KKB Engineering Berhad and K&N Kenanga Holdings Berhad. He is also a Director of several private companies.

Datuk Syed Ahmad is the husband of Datin 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 offences within the past 10 years. Subsequent to being listed on 9 August 2010, two (2) Board of Directors’ Meetings were held during the financial year ended 31 December 2010 and Datuk Syed Ahmad attended all the two (2) Board of Directors’ Meetings.

DIONG TAI PEWIndependent Non-Executive Director

Diong Tai Pew, a Malaysian aged 59, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009. He is the Chairman of Audit Committee and Nomination 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 Association of Chartered Certified Accountants, a Fellow Member of the Institute of Certified Public Accountants, Singapore, 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 practicing as a public accountant in Singapore under UHY Diong, an independent member of Urbach Hacker Young International. He is also a founder of UHY, Chartered Accountants Malaysia. He is currently an Independent Non-Executive Director of VS International Group Ltd, a public listed company in Hong Kong and an Independent Non-Executive Director of Hengyang Petrochemical Logistics Ltd, a public listed company in Singapore. He is the Chairman of the Audit Committee of VS International Group Ltd and Hengyang Petrochemical Logistics Ltd.

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 offences within the past 10 years.

Subsequent to being listed on 9 August 2010, two (2) Board of Directors’ Meetings were held during the financial year ended 31 December 2010 and Mr. Diong attended all the two (2) Board of Directors’ Meetings.

PROFILE OF DIRECTORScont’d


MICHAEL ONG KEE TUANIndependent Non-Executive Director

Michael Ong Kee Tuan, a Malaysian aged 65, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 14 December 2009. He is a member of Audit Committee, Nomination Committee and Remuneration Committee of the Company.

Mr. Michael Ong is a practicing lawyer. He graduated with a Bachelor of Economics (Honours) degree from the University of Malaya in 1971 and was admitted as a Barrister of the Honourable Society of Middle Temple London in 1977. He is a member of the Malaysian Institute of Accountants (Chartered Accountant), the Chartered Institute of Arbitrators (United Kingdom) and the Chartered Management Institute (United Kingdom) and a fellow member of the Association of Chartered Certified Accountants (United Kingdom), Malaysian Association of Company Secretaries and Chartered Tax Institute of Malaysia. He joined Standard Chartered Bank after his graduation as Officer Trainee and subsequently worked for the Audit Department as Auditor. Prior to commencement of his legal practice, he was the Branch Manager of an audit firm. In 2009, he was appointed to represent The Advocates Association of Sarawak to the Technical Committee of the Corporate Practice Consultative Forum (CPCF) under the Suruhanjaya Syarikat Malaysia (SSM). He is currently an Independent Non-Executive Director of Quality Concrete Holdings Bhd.

Mr. Michael Ong 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 Michael Ong has no conviction for any offences within the past 10 years.

Subsequent to being listed on 9 August 2010, two (2) Board of Directors’ Meetings were held during the financial year ended 31 December 2010 and Mr Michael Ong attended all the two (2) Board of Directors’ Meetings.

LEE TING KIATIndependent Non-Executive Director

Lee Ting Kiat, a Malaysian aged 43, 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, Nomination 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 practicing 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. 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 offences within the past 10 years.

PROFILE OF DIRECTORScont’d


STATEMENT OF CORPORATE GOVERNANCE

The Board of Directors (“the Board”) of SIG Gases Berhad (“SIGGAS”) recognises the importance of adopting high standards of corporate governance and fully supports the Malaysian Code on Corporate Governance (“the Code”) which sets out the basic principles and best practices on structures and processes that companies may adopt in their operations towards achieving the effective governance framework.

The Board is pleased to present herewith its statement on how it has applied the principles of the Code and the extent of compliance with its Best Practices.

A. THE BOARD OF DIRECTORS

a) Board Composition, Board Balance and Board Responsibilities

The Board is led and managed by an experienced and dynamic Board who is responsible for the stewardship of the business and affairs of the Company with a view of enhancing shareholders value.

Presently, the Board consists of five (5) members comprising the Executive Chairman, one (1) executive Director, one (1) Non-Independent Non-Executive Director and two (2) Independent Non-Executive Directors. The Board membership meets the requirement of one-third being Independent Non-Executive Directors.

A brief description on the profile of each Director is presented on pages 8 to 10 of this Annual Report.

b) Board Meetings

The Board meets at least once every quarter and additional meetings are convened as and when necessary. Subsequent to being listed, two (2) Board Meetings were held during the financial year ended 31 December 2010 and the attendance for each Director is as follows:-

Name of Directors Attendance

Peh Lam Hoh 2/2

Lau Cheng Ming 2/2

Datuk Syed Ahmad Bin Alwee Alsree 2/2

Diong Tai Pew 2/2

Michael Ong Kee Tuan (Resigned on 1 April 2011) 2/2

Lee Ting Kiat (Appointed on 15 March 2011) Not Applicable

c) 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.

d) Re-election

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. Retiring Directors shall be eligible to offer themselves for re-election at the Annual General Meeting (“AGM”). Any Director appointed by the Board during the financial year is to retire at the next AGM held following their appointments.

The Directors who are standing for re-election at the upcoming AGM of the Company to be held on 19 May 2011 are as stated in the Notice of the 2nd AGM.


A. THE BOARD OF DIRECTORS cont’d

e) Board Committee

The Board has a number of standing committees, all of which have written terms of reference clearly setting out their authority and duties, namely the Audit Committee, the Nomination Committee, the Remuneration Committee and the ESOS Committee. All Board Committees report to the Board.

i) Audit Committee

The composition and terms of reference of this Committee together with its report are presented on pages 16 to 18 of this Annual Report.

ii) Nomination Committee

The Nomination 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 Nomination Committee comprises the following Directors during the financial year and as at the date of this Annual Report:

• DiongTaiPew (Chairman, Independent Non-Executive Director)• DatukSyedAhmadBinAlweeAlsree (Member, Non-Independent Non-Executive Director)• MichaelOngKeeTuan (Member, Independent Non-Executive Director) (Ceased on 1 April 2011)• LeeTingKiat (Member, Independent Non-Executive Director) (Appointed on 1 April 2011)

The duties and responsibilities of the Nomination 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,expertiseandexperience;• professionalism;• integrity;and• inthecaseofcandidatesforthepositionofindependentnon-executivedirectors,thenominating

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 Nomination Committee in the discharge of all its functions should be properly documented.

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 comprises the following Directors during the financial year and as at the date of this Annual Report:

• PehLamHoh (Chairman, Executive Chairman)• DiongTaiPew (Member, Independent Non-Executive Director)• MichaelOngKeeTuan (Member, Independent Non-Executive Director) (Ceased on 1 April 2011)• LeeTingKiat (Member, Independent Non-Executive Director) (Appointed on 1 April 2011)

STATEMENT OF CORPORATE GOVERNANCEcont’d


A. THE BOARD OF DIRECTORS cont’d

e) Board Committee cont’d

iii) Remuneration Committee cont’d

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 Code 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 comprises the following members during the financial year:

• PehLamHoh (Chairman, Executive Chairman)• LauChengMing (Member, Executive Director)• DiongTaiPew (Member, Independent Non-Executive Director)• KohBengSan (Member, 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 needed to run the Group successfully. 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 assumed.

The details of the Directors’ remuneration for the financial year are disclosed under Note 8 of the Audited Financial Statements on pages 51 and 52 of this Annual Report.

C. DIRECTORS’ TRAINING The Board recognises the need for Directors to attend trainings from time to time to keep them abreast with the current

developments of the industry as well as statutory and regulatory requirements to enable them to discharge their duties effectively.

As the admission to the official list and the listing of and quotation of the entire and paid up share capital of the Company on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) was on 9 August 2010, all the Directors had completed the Mandatory Accreditation Programme as specified by Bursa Securities. The Directors will continue to participate in appropriate training or education to fulfill the Main Market Listing Requirements in the next financial year.



D. SHAREHOLDERS

The Board recognises the importance of good communication with all shareholders and 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. Shareholders are notified of the meeting and provided with a copy of the Company’s Annual Report before the meeting. The Board encourages shareholders to participate in the question and answer session. Members of the Board as well as Auditors of the company are available to answer and provide explanations on queries raised during the meetings.

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.

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 and recommended 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 23 to 73 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 Group’s assets.

The Statement on Internal Control set out on page 19 and 20 of this Annual Report provides an overview of the state of internal controls within the Group and the Company.

c) 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.

d) Statement of Compliance with the Best Practices of the Code

The Board believes that all material aspects of the Best Practices set out in Part 2 of the Code have been complied with during the financial year.




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 2010, 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 1 April 2011.


AUDIT COMMITTEE REPORT

1. COMPOSITION OF MEMBERS

The Committee comprises the following members and details of attendance of each member at Committee Meeting held during the year are as follows:-

Composition of Committee Number of meeting attended

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

2/2

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

2/2

Michael Ong Kee Tuan (Resigned on 1 April 2011)(Member/Independent Non-Executive Director)

2/2

Lee Ting Kiat (Appointed on 1 April 2011)(Member/Independent Non-Executive Director)

Not Applicable

The meetings were appropriately structured through the use of agenda, which were distributed to members with sufficient notice.

2. TERMS OF REFERENCE

a) 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.

b) Secretary

The Secretary to the Audit Committee is the Company Secretary.

c) 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.

d) Quorum of Meetings

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

e) 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.


AUDIT COMMITTEE REPORTcont’d

2. TERMS OF REFERENCE cont’d e) 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.

f) 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 :

• anychangeinaccountingpoliciesandpractices;• significantadjustmentsresultingfromtheaudit;• thegoingconcernassumption;and• compliancewithaccountingstandardsandotherlegalrequirements.

iv. To review the external auditors’ management letter and management’s response;

v. To do the following, in relation to the internal audit function:

• reviewtheadequacyofthecompetencyandtherelevanceofthescope,functionsandresourcesoftheinternal audit function, and that it has the necessary authority to carry out its work;

• reviewtheinternalauditprogrammeandresultsoftheinternalauditprocessand,wherenecessary,ensurethat appropriate actions are taken on the recommendations of the internal audit function;

• reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;• takecognisanceofresignationsofinternalauditstaffmembersandprovidetheresigningstaffmemberan

opportunity to submit his reasons for resigning; and • ensurethattheinternalauditfunctionreportsdirectlytotheAuditCommitteeandshallhaveaccessto

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.

g) Reporting Procedures

The Audit Committee shall report to the Board.

3. SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE

During the financial year ended 31 December 2010, subsequent to being listed on the Main Market of Bursa Securities, the Audit Committee held a total of two (2) meetings. The principal activities undertaken by the Audit Committee were summarised as follows:-

a) Recommended the Audit Committee’s terms of reference for the Board’s approval;

b) Reviewed the establishment of internal audit function;


AUDIT COMMITTEE REPORTcont’d

3. SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE cont’d

During the financial year ended 31 December 2010, subsequent to being listed on the Main Market of Bursa Securities, the Audit Committee held a total of two (2) meetings. The principal activities undertaken by the Audit Committee were summarised as follows:- cont’d

c) Reviewed the quarterly unaudited financial results announcement before recommending them for the Board’s consideration and approval for announcement to the public;

d) Reviewed with the external auditors the audited financial statements of the Group prior to submission to the Board for their consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provision of the Companies Act 1965 and applicable Financial Reporting Standards (“FRS”) in Malaysia;

e) Review the external auditors’ management letter and management’s response;

f ) Discussed and reviewed with the external auditors the audit plans and approaches, results of their examinations, auditors report and management issues highlighted and updates on FRS; and

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

h) Conducted meetings with external auditors without the presence of the Executive Directors and employees of the Company.

4. INTERNAL AUDIT FUNCTION

The internal audit function is essential in assisting the Audit Committee in reviewing the state of the systems of internal control maintained by the management.

The Group had established an internal audit function upon listing. Currently, this function is outsourced to an internal audit services company and functionally, the internal auditor reports to the Audit Committee directly.

5. EMPLOYEES’ SHARE OPTIONS SCHEME (“ESOS“)

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


STATEMENT ON INTERNAL CONTROL

This Statement on Internal Control is made pursuant to Paragraph 15.26(b) of the Listing Requirements for the MAIN Market (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) with regards to the Group’s compliance with the Principles and Best Practices provisions relating to internal control as provided in the Malaysia Code on Corporate Governance (“the Code”). The Board of Directors (“the Board”) of SIG Gases Berhad (“SIGGAS”) is pleased to present below its Statement on Internal Control as a group for the financial year under review, prepared in accordance with the Statement on Internal Control: Guidance for Directors of Public Listed Companies (“the Guidance”).

BOARD RESPONSIBILITY

The Board of SIGGAS recognizes the importance of sound internal control and risk management practices for good corporate governance and endeavours to maintain an appropriate group-wide system of internal control and risk management. The Board is ultimately responsible for the Group’s system of internal control which includes the establishment of appropriate control environment and framework as well as reviewing its adequacy and integrity. However, due to the inherent limitations in any system of internal control, such system of internal control put into effect by Management can only manage but not eliminate all risks that may impede the achievement of the Group’s business objectives. Therefore, the internal control system can only provide reasonable and not absolute assurance against material misstatement, error or loss.

RISK MANAGEMENT FRAMEWORK

The Board acknowledges that the Group’s business activities involve some degree of risk that may affect the achievement of its business objectives and an effective risk management framework should be an integral part of the Group’s daily operations. It is the responsibility of key management and Heads of Department to identify, evaluate and manage risks faced by the Group on an ongoing basis within defined parameters. The deliberation of risks and related mitigating responses are carried out at the periodic management meetings which are attended by the Executive Directors and key management staff. Significant risks are then communicated to the Board at their scheduled meetings.

The abovementioned practices and initiatives serve as an on-going process adopted by the Group to identify, evaluate and manage risks faced by the Group.

MANAGEMENT STYLE AND CONTROL ENVIRONMENT

Enhancing the Group’s ability to achieve its business objectives remains as the Board’s primary objective and direction in managing the Group. In ensuring that this objective is achieved, the Board will continue to rely on the Senior Management, which consists of General Managers and Senior Managers, to ensure that the performances of their businesses are within the agreed business strategies. The Board will in turn monitor the performances and profitability through the reports it received and its involvement in operational and strategic meetings. Matter arising which are significant in nature are brought to the attention of the Executive Directors, who in turn, will direct these matters, if necessary, to the Board for its attention.

In monitoring the performance of the Group, an elaborate annual budgetary planning and review process is practiced. This is to ensure that the performance of the various business units can be monitored and benchmarked, and the interests of all its stakeholders are addressed.

The Group continues to maintain its proven ‘open-door’ and ‘hands-on’ approach to allow for the efficient resolution of matters arising and drawing on the experience and knowledge of employees throughout the Group for issue resolution.

INTERNAL CONTROL MECHANISM

The review of the adequacy and integrity of the Group’s internal control system is the delegated responsibility of the Audit Committee. On a periodic basis, the Audit Committee assesses the adequacy and integrity of the internal control system through independent reviews conducted by external auditors, the internal audit function and management. Significant internal control matters which are brought to the attention of the Audit Committee will be highlighted to the Board.

As at the date of this annual report, the Group has outsourced its internal audit function to a professional service provider firm as part of its strategy to provide the Board with assurance on the adequacy and integrity of its systems of internal control. The outsourced internal audit function focuses on the review of areas which are related to the significant risks of the Group. The areas of review are set out in an internal audit plan which has been approved by the Audit Committee. Since the appointment of the outsourced internal audit function, periodic internal audit visits have been scheduled for execution.


OTHER KEY ELEMENTS OF INTERNAL CONTROL

The other key elements of the Group’s internal control systems are:-

• The Group has a well defined organisation structure with clear lines of accountability to provide a sound framework within the organisation in facilitating proper decision making at the appropriate authority levels including matters that require the Board’s approval.

• The Executive Directors are closely involved in the running of the business and operations of the Group and they report to the Board on significant changes in the business and external environment, which affect the operations of the Group at large.

• Management meetings are conducted regularly with the Executive Directors, Senior Management and/or Head of Departments in attendance.

• A comprehensive business planning and budgeting process which establishes plans and targets for the Group, is performed on a periodic basis. The business planning process of the Group determines business objectives, examines strengths, weaknesses, opportunities, threats and key business risks of the Group.

• Formal internal policies and procedures for key business units within the Group.

CONCLUSION

The Board is committed towards operating a sound system of internal control and risk management practices throughout the Group. 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. As such, the Board will, when necessary, put in place appropriate action plans to rectify any potential weaknesses or further enhance the system of internal control.

This statement was approved by the Board of Directors on 1 April 2011.

STATEMENT ON INTERNAL CONTROLcont’d


ADDITIONAL COMPLIANCE INFORMATION

UTILISATION OF PROCEEDS

The status of utilisation of proceeds from the Initial Public Offering during the financial year ended 31 December 2010 is as follows:-

No.

Description

Estimatedtimeframe

forutilisations

upon Listing

ProposedUtilisations

(RM’000)

ActualUtilisations

(RM’000)Amendment

(RM’000)Reclassification

(RM’000)

Balancesto be

utilised (RM’000)

1 Purchase of land and

building its facilities24 months

1.1 Sarawak - Samalaju Industrial Park

9,736 - (2,500) 667 7,903

1.2 Sarawak - Kemena Industrial Park, Bintulu

- (325) 2,500 - 2,175

1.3 Kuantan 2,500 (965) - - 1,535

1.4 Melaka 2,500 (843) - - 1,657

14,736 (2,133) - 667 13,270

2 Purchase of property, plant & equipment

12 months

2.1 Cylinders 5,400 (5,056) - - 344

2.2 Hydrogen long tube 1,000 (752) - - 248

6,400 (5,808) - - 592

3 Repayment of term loan 12 months 4,200 (4,200) - - -

4 Listing expenses Immediately 3,200 (2,533) - (667) -

Total 28,536 (14,674) - - 13,862

The gross proceeds arising from the Offer for Sale, net of the relevant fees, accrued entirely to the Offeror and no part of the proceeds was received by the Company.

The excess of provision for Listing expenses of RM0.67 Million will be ultilised in the purchase of land and building its facilities as indicated in Section 2.8 (iv) of the Prospectus.

SHARE BUY-BACKS

The Company did not engage in any share buy-backs arrangement during the financial year ended 31 December 2010.

OPTIONS OR CONVERTIBLE SECURITIES

The Company has not issued any options or convertible securities during the financial year ended 31 December 2010.


DEPOSITORY RECEIPT PROGRAM

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

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.

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 2010 amounted to RM246,750.00.

VARIATION IN RESULTS

No variances of 10% or more between the audited results for the financial year ended 31 December 2010 and the unaudited results previously announced.

PROFIT GUARANTEE

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

MATERIAL CONTRACT

There were no material contracts involving Directors or Major Shareholders other than those entered in the ordinary course of business by the Group as disclosed in the financial statements.

RECURRENT RELATED PARTY TRANSACTIONS (“RRPT”) OF REVENUE NATURE

Bursa Securities had vide its letter dated 9 August 2010 approved SIG Gases Berhad’s application to seek its shareholders’ ratification for the RRPTs entered into from the date of SIG Gases Berhad’s admission and listing on Bursa Securities up to the date of the forthcoming 2nd AGM or Extraordinary General Meeting, whichever is held earlier.

The Company will seek its shareholders’ approval to ratify the RRPT at the forthcoming 2nd AGM and to seek its shareholders’ approval for a mandate for recurrent related party transactions of a revenue or trading nature, which are necessary for its day-to-day operations.

The details of the shareholders’ ratification and the shareholders’ mandate to be sought will be furnished in the Circular to Shareholders dated 25 April 2011 attached to this Annual Report.

REVALUATION POLICY

The Group has not adopted any regular revaluation policy on landed properties.

CORPORATE SOCIAL RESPONSIBILITIES (“CSR”)

The Company recognises the importance of giving back to the employees, business partners and the community, as a crucial part of the business feasibility. The Group endeavours to undertake a regular and sustainable CSR programme towards this objective in the near future.

ADDITIONAL COMPLIANCE INFORMATIONcont’d


Directors' Report • 24

Statement by Directors • 27

Statutory Declaration • 27

Independent Auditors' Report • 28

Statements of Comprehensive Income • 30

Statements of Financial Position • 31

Statements of Changes in Equity • 33

Statements of Cash Flow • 35

Notes to the Financial Statements • 38

FIN

AN

CIA

L ST

ATEM

ENTS


The directors have the pleasure in presenting their report together with the audited financial statements of the Company for the financial year ended 31 December 2010.

PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities of the subsidiaries are as disclosed in Note 13 to the financial statements. There have been no significant changes in the nature of the Group’s activities during the financial year.

RESULTS

Group Company

RM RM

Profit net of tax 6,005,116 1,999,815

Profit attributable to:

Owners of the parent 6,005,116 1,999,815 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.

DIVIDENDS

At the forthcoming Annual General Meeting, a final tax exempt (single-tier) dividend in respect of the financial year ended 31 December 2010, of 2.6 % on 150,000,000 ordinary shares, amounting to a dividend payable of RM1,950,000 (1.30 sen per ordinary share) 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 2011.

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

Peh Lam Hoh Lau Cheng Ming Datuk Syed Ahmad Bin Alwee Alsree Diong Tai Pew Lee Ting Kiat (appointed on 15 March 2011)Michael Ong Kee Tuan (resigned on 1 April 2011)

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.

DIRECTORS’ REPORT


DIRECTORS’ BENEFITS cont’d 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 8 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 25 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 RM1 each

1 January 31 December

The Company 2010 Bought Sold 2010

Direct interest :

Peh Lam Hoh 10 6,029,734 - 6,029,744

Lau Cheng Ming 10 1,990,654 - 1,990,664

Datuk Syed Ahmad Bin Alwee Alsree - 200,000 (200,000) -

Diong Tai Pew - 200,000 - 200,000

Michael Ong Kee Tuan - 133,000 (133,000) -

Indirect interest :

Peh Lam Hoh - 66,361,858 - 66,361,858

Datuk Syed Ahmad Bin Alwee Alsree - 57,527,393 - 57,527,393

ISSUE OF SHARES During the financial year, the Company increased its issued and paid-up ordinary share capital from RM10 to RM75,000,000 by way of issuance of 149,999,980 ordinary shares of RM0.50 each as disclosed in Note 20 to the financial statements.

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 that all known bad debts had been written off and that adequate provision has been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the

ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company 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.

DIRECTORS’ REPORTcont’d


OTHER STATUTORY INFORMATION cont’d

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

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

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

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

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

(f ) In the opinion of the directors :

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

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

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 1 April 2011.

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 30 to 72 are drawn up in accordance with Financial Reporting Standards and the Companies Act,1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2010 and of their financial performance and cash flows for the year then ended.

The information set out in Note 31 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 1 April 2011.

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 30 to 72 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 1 April 2011 ) PEH LAM HOH Before me,

CHANG EE PENG @ CHANG IK PENG (No. J148)Commissioner for Oaths

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

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


INDEPENDENT AUDITORS’ REPORT to 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 2010 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 30 to 72.

Directors’ Responsibility For The Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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

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.


INDEPENDENT AUDITORS’ REPORT to the Members of SIG Gases Berhad

(Incorporated in Malaysia)cont’d

OTHER MATTERS The supplementary information set out in Note 31 to the financial statements on page 73 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. 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.

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 1821/12/12(J) Chartered Accountants Chartered Accountant

Johor Bahru, Malaysia 1 April 2011


Group Company

2010 2009 2010 2009

Note RM RM RM RM

Revenue 4 55,260,944 54,567,891 - -

Cost of goods sold 5 (36,398,285) (35,291,558) - -

Gross profit 18,862,659 19,276,333 - -

Other items of income 847,959 441,058 2,317,802 -

Other items of expenses

Administration expenses (10,514,191) (9,254,852) (317,868) (39,054)

Finance cost (1,255,881) (1,070,757) (119) -

Profit before tax 6 7,940,546 9,391,782 1,999,815 (39,054)

Income tax expense 9 (1,935,430) (2,279,870) - -

Profit net of tax and total comprehensive income for the year 6,005,116 7,111,912 1,999,815 (39,054)

Profit attributable to:

Owners of the parent 6,005,116 7,111,912 1,999,815 (39,054)

Total comprehensive income attributable to:

Owners of the parent 6,005,116 7,111,912 1,999,815 (39,054)

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

Basic/Diluted 10 5.12 7.06

STATEMENTS OF COMPREHENSIVE INCOMEfor the financial year ended 31 December 2010

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


Group

Note 2010

RM

2009 RM

(restated)

As at 1.1.2009

RM (restated)

Non-current assets

Property, plant and equipment 11 76,784,096 68,927,169 58,644,803

Intangible assets 12 195,080 227,929 255,402

76,979,176 69,155,098 58,900,205

Current assets

Inventories 14 2,487,238 3,518,550 2,684,923

Trade and other receivables 15 18,431,800 15,619,048 14,809,643

Other current assets 16 1,122,162 1,249,215 650,848

Cash and bank balances 17 15,885,494 1,381,405 188,815

37,926,694 21,768,218 18,334,229

Total assets 114,905,870 90,923,316 77,234,434

Equity and liabilities

Current liabilities

Short term borrowings 18 7,157,206 8,518,164 8,677,165

Trade and other payables 19 9,775,299 12,368,009 9,478,070

Tax payable - 57,972 -

16,932,505 20,944,145 18,155,235

Net current assets 20,994,189 824,073 178,994

Non-current liabilities

Long term borrowings 18 5,794,967 11,580,755 7,355,695

Deferred tax liabilities 23 7,872,000 6,246,000 4,383,000

13,666,967 17,826,755 11,738,695

Total liabilities 30,599,472 38,770,900 29,893,930

Net assets 84,306,398 52,152,416 47,340,504

Equity attributable to equity holders

Share capital 20 75,000,000 50,400,000 50,400,000

Reserves 21 9,306,398 1,752,416 (3,059,496)

Total equity 84,306,398 52,152,416 47,340,504

Total equity and liabilities 114,905,870 90,923,316 77,234,434

STATEMENTS OF FINANCIAL POSITION as at 31 December 2010



Company

2010 2009

Note RM RM

Non-current assets

Property, plant and equipment 11 12,682 -

Investments in subsidiaries 13 50,399,994 -

50,412,676 -

Current assets

Trade and other receivables 15 15,970,722 -

Other current assets 16 2,083 475,550

Cash and bank balances 17 12,297,271 10

28,270,076 475,560

Total assets 78,682,752 475,560

Equity and liabilities

Current liabilities

Trade and other payables 19 173,125 514,604

Net current assets/(liabilities) 28,096,951 (39,044)

Total liabilities 173,125 514,604

Net assets/(liabilities) 78,509,627 (39,044)

Equity attributable to equity holders

Share capital 20 75,000,000 10

Reserves 21 3,509,627 (39,054)

Total equity 78,509,627 (39,044)

Total equity and liabilities 78,682,752 475,560

STATEMENTS OF FINANCIAL POSITION as at 31 December 2010cont’d



Total equity

Share capital

Non- Distributable

Share premium

Distributable Retained

profits Merger reserve

Group RM RM RM RM RM

Opening balance at 1 January 2010 52,152,416 50,400,000 4,526,000 24,626,406 (27,399,990)

Total comprehensive income 6,005,116 - - 6,005,116 -

Transactions with owners

Issuance of ordinary shares 28,536,000 24,600,000 3,936,000 - -

Listing expenses (2,387,134) - (2,387,134) - -

Merger deficit offset - - - (27,399,990) 27,399,990

Total transactions with owners 26,148,866 24,600,000 1,548,866 (27,399,990) 27,399,990

Closing balance at 31 December 2010 84,306,398 75,000,000 6,074,866 3,231,532 -

Opening balance at 1 January 2009 47,340,504 50,400,000 4,526,000 19,814,494 (27,399,990)

Total comprehensive income 7,111,912 - - 7,111,912 -


Dividend on ordinary shares (2,300,000) - - (2,300,000) -

Total transactions with owners (2,300,000) - - (2,300,000) -

Closing balance at 31 December 2009 52,152,416 50,400,000 4,526,000 24,626,406 (27,399,990)

STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2010



Total equity

Share capital

Non- Distributable

Share premium

Distributable Retained

profits

Company RM RM RM RM

Opening balance at 1 January 2010 (39,044) 10 - (39,054)

Total comprehensive income 1,999,815 - - 1,999,815


Issuance of ordinary shares pursuant to acquisition of subsidiaries 50,399,990 50,399,990 - -

Public issue 28,536,000 24,600,000 3,936,000 -

Listing expenses (2,387,134) - (2,387,134) -

Total transactions with owners 76,548,856 74,999,990 1,548,866 -

Closing balance at 31 December 2010 78,509,627 75,000,000 1,548,866 1,960,761

Opening balance at 14 October 2009 (date of incorporation) 10 10 - -

Total comprehensive income (39,054) - - (39,054)

Closing balance at 31 December 2009 (39,044) 10 - (39,054)


STATEMENTS OF CHANGES IN EQUITYfor the financial year ended 31 December 2010cont’d


Group

2010 2009

RM RM

Operating activities

Profit before tax 7,940,546 9,391,782

Adjustments for :

Amortisation of intangible assets 32,849 32,473

Depreciation of property, plant and equipment 3,303,198 2,778,608

Gain on disposal of property, plant and equipment (294,247) (137,773)

Bad debts recovered (27,714) (175,546)

Property, plant and equipment written off 20,230 8,588

Interest expense 1,130,033 1,070,757

Impairment of debts no longer required (103,553) (208,217)

Impairment of debts 337,224 160,059

Unrealised foreign exchange gain (4,365) (17,648)

Total adjustments 4,393,655 3,511,301

Operating cash flows before changes in working capital 12,334,201 12,903,083

Changes in working capital

Inventories 1,031,312 (833,627)

Receivables (2,850,045) (1,199,017)

Payables (2,588,345) 3,642,410

Total changes in working capital (4,407,078) 1,609,766

Cash flows from operating activities 7,927,123 14,512,849

Income taxes paid (409,012) (357,153)

Interest paid (1,130,033) (1,070,757)

Net cash flows generated from operating activities 6,388,078 13,084,939

Investing activities

Purchase of property, plant and equipment (10,764,364) (11,201,336)

Purchase of intangible assets - (5,000)

Proceeds from disposal of property, plant and equipment 592,995 176,637

Net cash flows used in investing activities (10,171,369) (11,029,699)

STATEMENTS OF CASH FLOWfor the financial year ended 31 December 2010



Group

2010 2009

RM RM

Financing activities

Repayment of obligations under finance leases (1,528,456) (2,335,275)

Proceeds from issuance of shares 28,536,000 -

Payment of listing expenses (2,387,134) -

Repayment of borrowings (6,509,809) (3,436,488)

Proceeds from trade facilities/term loans 181,076 8,015,101

Dividend - (2,300,000)

Net cash flows generated from/(used in) financing activities 18,291,677 (56,662)

Net increase in cash and cash equivalents 14,508,386 1,998,578

Cash and cash equivalents at beginning of the year 1,377,108 (621,470)

Cash and cash equivalents at end of the year (Note 17) 15,885,494 1,377,108

STATEMENTS OF CASH FLOWfor the financial year ended 31 December 2010cont’d



Company

2010 2009

RM RM

Operating activities

Profit/(Loss) before tax 1,999,815 (39,054)

Adjustment for :

Depreciation of property, plant and equipment 243 -

Total adjustment 243 -

Operating cash flows before changes in working capital 2,000,058 (39,054)

Changes in working capital

Receivables (15,497,255) (475,550)

Payables (341,479) 514,604

Total changes in working capital (15,838,734) 39,054

Net cash flows used in operating activities (13,838,676) -

Investing activities

Purchase of property, plant and equipment (12,925) -

Acquisition of subsidiaries (4) -

Net cash flows used in investing activities (12,929) -

Financing activities

Proceeds from issuance of shares 28,536,000 10

Payment of listing expenses (2,387,134) -

Net cash flows generated from financing activities 26,148,866 10

Net increase in cash and cash equivalents 12,297,261 10

Cash and cash equivalents at beginning of the year 10 -

Cash and cash equivalents at end of the year (Note 17) 12,297,271 10


STATEMENTS OF CASH FLOWfor the financial year ended 31 December 2010

cont’d


1. CORPORATE INFORMATION The principal activity of the Company is investment holding. The principal activities of the subsidiaries are as disclosed in

Note 13. 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

The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting

Standards and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 January 2010 as described fully in Note 2.2.

The financial statements have been prepared on the historical convention.

The financial statements are presented in Ringgit Malaysia (RM).

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 2010, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2010.

FRS 7: Financial Instruments: Disclosures FRS 8: Operating Segments FRS 101: Presentation of Financial Statements (Revised) FRS 123: Borrowing Costs FRS 139: Financial Instruments: Recognition and Measurement Amendments to FRS 1: First-time Adoption of Financial Reporting Standards and FRS 127: Consolidated and Separate

Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2: Share-based Payment – Vesting Conditions and Cancellations Amendments to FRS 132: Financial Instruments: Presentation Amendments to FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial Instruments:

Disclosures and IC Interpretation 9: Reassessment of Embedded Derivatives Improvements to FRSs issued in 2009 IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 10: Interim Financial Reporting and Impairment IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions IC Interpretation 13: Customer Loyalty Programmes IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their

Interaction FRS 4 Insurance contracts and TRi-3 Presentation of financial statements of Islamic Financial Institutions will also be

effective for annual periods beginning on or after 1 January 2010. These FRS are, however, not applicable to the Group or the Company.

NOTES TO THE FINANCIAL STATEMENTSfor the financial year ended 31 December 2010


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES cont’d

2.2 Changes in Accounting Policies cont’d

Adoption of the above Standards and Interpretations did not have any effect on the financial performance or position of the Group and of the Company except for those discussed below :

(i) FRS 7 Financial Instruments: Disclosures

Prior to 1 January 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group and the Company have applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s financial statements for the year ended 31 December 2010.

(ii) FRS 8 Operating Segments FRS 8, which replaces FRS 114 Segment Reporting, specifies how an entity should report information about

its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The Standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers. The Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 114. The Group has adopted FRS 8 retrospectively. These revised disclosures, including the related revised comparative information, are shown in Note 29 to the financial statements.

(iii) FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as one single statement.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements.

The revised FRS 101 also requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital (see Note 28).

The revised FRS 101 was adopted retrospectively by the Group and the Company.


cont’d




(iv) FRS 139 Financial Instruments: Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in accordance with the transitional provisions. The effects arising from the adoption of this Standard has been accounted for by adjusting the opening balance of retained earnings as at 1 January 2010. Comparatives are not restated. The details of the changes in accounting policies and the effects arising from the adoption of FRS 139 are discussed below:

- Impairment of trade receivables

Prior to 1 January 2010, provision for doubtful debts was recognised when it was considered uncollectible. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of the estimated future cash flows discounted at the receivable’s original effective interest rate. As at 1 January 2010, the Group has remeasured the allowance for impairment losses as at that date in accordance with FRS 139. No adjustments were made to the opening balance of retained earnings as at 1 January 2010.

(v) Amendments to FRS 117 Leases

Prior to 1 January 2010, for all leases of land and buildings, if title is not expected to pass to the lessee by the end of the lease term, the lessee normally does not receive substantially all of the risks and rewards incidental to ownership. Hence, all leasehold land held for own use was classified by the Group as operating lease and where necessary, the minimum lease payments or the up-front payments made were allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represented prepaid lease payments and were amortised on a straight-line basis over the lease term.

The amendments to FRS 117 Leases clarify that leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. They also clarify that the present value of the residual value of the property in a lease with a term of several decades would be negligible and accounting for the land element as a finance lease in such circumstances would be consistent with the economic position of the lessee. Hence, the adoption of the amendments to FRS 117 has resulted in certain unexpired land leases to be reclassified as finance leases. The Group has applied this change in accounting policy retrospectively and certain comparatives have been restated. The following are effects to the statement of financial position as at 31 December 2010 arising from the above change in accounting policy:

Group

2010

RM

Increase/(decrease) in:

Property, plant and equipment 4,290,533

Prepaid lease payments (4,290,533)

NOTES TO THE FINANCIAL STATEMENTSfor the financial year ended 31 December 2010cont’d




(v) Amendments to FRS 117 Leases cont’d

The following comparatives have been restated:

As previously stated

Adjustments

As restated

RM RM RM

Consolidated statement of financial position

31 December 2009

Property, plant and equipment 66,416,885 2,510,284 68,927,169

Prepaid lease payments 2,510,284 (2,510,284) -

1 January 2009

Property, plant and equipment 56,082,963 2,561,840 58,644,803

Prepaid lease payments 2,561,840 (2,561,840) -

2.3 Standards Issued But Not Yet Effective

The Group and the Company have not adopted the following standards and interpretation that have been issued but not yet effective : Effective for Financial Periods Beginning On or After 1 March 2010 Amendments to FRS 132: Classification of Rights Issues

Effective for Financial Periods Beginning On or After 1 July 2010 FRS 1: First-time Adoption of Financial Reporting Standards FRS 3: Business Combinations (revised) Amendments to FRS 127: Consolidated and Separate Financial Statements Amendments to FRS 2: Share-based Payment Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS138: Intangible Assets Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 12: Service Concession Arrangements IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation IC Interpretation 17: Distributions of Non-cash Assets to Owners

Effective for Financial Periods Beginning On or After 1 January 2011 Amendment to FRS 1: Limited Exemption for Comparative FRS 7 Disclosures for First-time Adopters Amendments to FRS 7: Improving Disclosures about Financial Instruments Additional Exemptions for First-Time Adopters (Amendments to FRS 1) Group Cash-settled Share-based Payment Transactions (Amendments to FRS 2) IC Interpretation 4: Determining whether on Arrangement contains a Lease IC Interpretation 18: Transfers of Assets from Customers TR 3: Guidance on Disclosures of Transition to IFRSs TR i - 4: Shariah Compliant Sale Contracts

Effective for Financial Periods Beginning On or After 1 January 2012 IC Interpretation 15: Agreements for the Construction of Real Estate FRS 124: Related Party Disclosures

The directors expect that the adoption of the Standards and Interpretations above will have no material impact on the

financial statements in the period of initial application.


cont’d



2.4 Basic of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions

are eliminated in full.

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.

2.5 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.




2.6 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 appropariate, 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 depreciation and any accumulated impairment losses.

Depreciation 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.

2.7 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.

2.8 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.


cont’d



2.9 Impairment of Financial Assets

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

(i) Trade and Other Receivables and Other Financial Assets Carried at Amortised Cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

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

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

2.10 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.

2.11 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to

obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.12 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.




2.13 Income Tax

(i) Current Tax

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

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

(ii) Deferred Tax

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

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

Deferred tax liabilities are recognised for all temporary differences.

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

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

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

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

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

2.14 Provisions

(i) General

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.


cont’d



2.15 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 FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

Other Financial Liabilities

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

borrowings.

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

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

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

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

2.16 Employee Benefits

(i) Defined Contribution Plan

The Group make 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.

2.17 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.




2.17 Foreign Currencies cont’d

(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.

2.18 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 consolidation received or receivable.

(i) Sale of Goods

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

(ii) Cylinder Rental Income

Cylinder rental is recognised based on the accrual basis.

(iii) Cryogenic Storage Tank Rental Income

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

2.19 Impairment of Non-Financial Assets

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

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

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

Impairment losses are recognised in profit or loss 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.


cont’d



2.19 Impairment of Non-Financial Assets cont’d

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.

2.20 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.

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.

2.21 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 29, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.22 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.

2.23 Contingencies

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

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



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.

(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 loan and receivable at the reporting date is disclosed in Note 15.

4. REVENUE

Group Company

2010 2009 2010 2009

RM RM RM RM

Sales of goods 52,357,597 51,927,497 - -

Cylinder rental income 2,709,301 2,452,500 - -

Rental income from cryogenic storage tank 194,046 187,894 - -

55,260,944 54,567,891 - -

5. COST OF SALES

Cost of sales represents cost of inventories sold.


cont’d


6. PROFIT BEFORE TAX The following items have been included in arriving at profit before tax:

Group Company

2010 2009 2010 2009

RM RM RM RM

Auditors’ remuneration

- statutory audits 52,400 28,900 20,800 800

- other services 2,400 - 800 -

Employee benefits expense (Note 7) 7,151,154 6,667,122 154,000 -

Amortisation of intangible assets (Note 12) 32,849 32,473 - -

Bad debts recovered (27,714) (175,546) - -

Depreciation of property, plant and equipment (Note 11) 3,303,198 2,778,608 243 -

Gain on disposal of property, plant and equipment (294,247) (137,773) - -

Rental expenses 267,969 179,186 - -

Property, plant and equipment written off 20,230 8,588 - -

Impairment loss on financial assets:

- Trade receivables 337,224 160,059 - -

Reversal of impairment loss on financial assets:

- Trade receivables (103,553) (208,217) - -

Foreign exchange gain

- realised (342,347) (34,443) - -

- unrealised (4,365) (17,648) - -

Interest expense 1,130,033 1,070,757 - -

7. EMPLOYEE BENEFITS EXPENSES

Group Company

2010 2009 2010 2009

RM RM RM RM

Wages and salaries 6,487,370 6,039,236 154,000 -

Contributions to defined contribution plan 599,028 571,226 - -

Social security contributions 64,756 56,660 - -

7,151,154 6,667,122 154,000 -



8. DIRECTORS’ REMUNERATION

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

Group Company

2010 2009 2010 2009

RM RM RM RM

Directors of the Company

Executive:

Salaries and other emoluments 1,349,490 922,715 4,000 -

Fees 64,000 24,000 40,000 -

Bonus

- current year’s provision - 417,000 - -

- under provision in prior year - 403,500 - -

Defined contribution plan 125,280 169,380 - -

1,538,770 1,936,595 44,000 -

Non-Executive:

Fees 105,000 - 105,000 -

Other emoluments 5,000 - 5,000 -

110,000 - 110,000 -

Total 1,648,770 1,936,595 154,000 -

Other directors of subsidiaries

Executive:

Salaries and other emoluments 73,465 15,000

Fees 12,000 12,000

Defined contribution plan 8,640 1,440

94,105 28,440

Non-Executive:

Fees 12,000 12,000

Other emoluments 1,000 2,000

13,000 14,000

Total 107,105 42,440

Total executive directors’ remuneration 1,632,875 1,965,035 44,000 -

Total non-executive directors’ remuneration 123,000 14,000 110,000 -

Grand total directors’ remuneration 1,755,875 1,979,035 154,000 -


cont’d


8. DIRECTORS’ REMUNERATION cont’d

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

2010 2009

RM RM

Executive Directors:

RM150,001 - RM200,000 1 1

RM1,300,001-RM1,350,000 1 -

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

Non-Executive Directors:

RM1 – RM50,000 3 -

9. INCOME TAX EXPENSE

The major components of income tax expense for the years ended 31 December 2010 and 2009 are:

Group Company

2010 2009 2010 2009

RM RM RM RM

Statement of comprehensive income:

Current income tax

- Malaysian income tax 325,051 405,281 - -

- (Over)/Underprovision in respect of previous years (15,621) 11,589 - -

309,430 416,870 - -

Deferred income tax (Note 23)

- Origination and reversal of temporary differences 1,173,000 586,000 - -

- Underprovision in respect of previous years 453,000 1,277,000 - -

1,626,000 1,863,000 - -

Income tax 1,935,430 2,279,870 - -



9. INCOME TAX 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 2010 and 2009 are as follows :

Group Company

2010 2009 2010 2009

RM RM RM RM

Profit/(loss) before tax 7,940,546 9,391,782 1,999,815 (39,054)

Taxation at Malaysian statutory tax rate of 25% (2009 : 25%) 1,985,137 2,347,946 499,954 (9,764)

Expenses not deductible for tax purposes 101,711 93,581 45,046 9,764

Income not subject to tax - - (545,000) -

Utilisation of current year’s reinvestment allowances (588,797) (945,656) - -

Deferred tax assets recognised on reinvestment allowances - (504,590) - -

(Over)/Underprovision of income tax in respect of previous years (15,621) 11,589 - -

Underprovision of deferred tax in respect of previous years 453,000 1,277,000 - -

Tax expense for the year 1,935,430 2,279,870 - -

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2009: 25%) of the estimated assessable profit for the year.

10. 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

2010 2009

RM RM

Profit net of tax attributable to owners of the parent (RM) 6,005,116 7,111,912

Weighted average number of ordinary shares in issue 117,200,000 100,800,000

Basic earnings per share (sen) 5.12 7.06

Diluted earnings per share is equal to basic earnings per share as there is no potential dilutive ordinary shares as at 31 December 2010.


cont’d


11. PROPERTY, PLANT AND EQUIPMENT

Freehold land

and buildings

Long term

leasehold land

Plant and

machinery Cylinders Other assets

Construction- in-progress Total

Group RM RM RM RM RM RM RM

Cost:

At 1 January 2009 11,303,700 - 22,218,688 32,644,090 5,422,877 1,994,771 73,584,126

Effects of adopting the amendments to FRS 117 - 3,093,386 - - - - 3,093,386

As restated 11,303,700 3,093,386 22,218,688 32,644,090 5,422,877 1,994,771 76,677,512

Additions 983,370 - 2,229,052 4,013,127 838,146 5,044,731 13,108,426

Write off - - (5,564) - (27,302) - (32,866)

Disposals - - - (85,792) (83,876) - (169,668)

Reclassification 4,844,140 - 2,173,842 30,620 (9,100) (7,039,502) -

At 31 December 2009 (restated) 17,131,210 3,093,386 26,616,018 36,602,045 6,140,745 - 89,583,404

At 1 January 2010:

As previously stated 17,131,210 - 26,616,018 36,602,045 6,140,745 - 86,490,018

Effects of adopting the amendments to FRS 117 - 3,093,386 - - - - 3,093,386

As restated 17,131,210 3,093,386 26,616,018 36,602,045 6,140,745 - 89,583,404

Additions 169,218 1,831,805 2,248,139 5,879,459 1,350,482 - 11,479,103

Write off - - (4,085) (14,708) (60,040) - (78,833)

Disposals - - (207,857) (148,284) (531,260) - (887,401)

At 31 December 2010 17,300,428 4,925,191 28,652,215 42,318,512 6,899,927 - 100,096,273



11. PROPERTY, PLANT AND EQUIPMENT cont’d

Freehold land

and buildings

Long term

leasehold land

Plant and

machinery Cylinders Other assets

Construction- in-progress Total

Group RM RM RM RM RM RM RM

Accumulated depreciation:

At 1 January 2009 1,045,983 - 5,371,558 7,570,346 3,513,276 - 17,501,163

Effects of adopting the amendments to FRS 117 - 531,546 - - - - 531,546

As restated 1,045,983 531,546 5,371,558 7,570,346 3,513,276 - 18,032,709

Change for the year (Note 6) 171,312 51,556 939,711 1,331,028 285,001 - 2,778,608

Write off - - (1,249) - (23,029) - (24,278)

Disposals - - - (49,724) (81,080) - (130,804)

Reclassification - - (4,005) 4,005 - - -

At 31 December 2009 (restated) 1,217,295 583,102 6,306,015 8,855,655 3,694,168 - 20,656,235

At 1 January 2010:

As previously stated 1,217,295 - 6,306,015 8,855,655 3,694,168 - 20,073,133

Effects of adopting the amendments to FRS 117 - 583,102 - - - - 583,102

As restated 1,217,295 583,102 6,306,015 8,855,655 3,694,168 - 20,656,235

Change for the year (Note 6) 259,233 51,556 1,067,551 1,546,755 378,103 - 3,303,198

Write off - - (128) (9,233) (49,242) - (58,603)

Disposals - - (183,522) (28,586) (376,545) - (588,653)

At 31 December 2010 1,476,528 634,658 7,189,916 10,364,591 3,646,484 - 23,312,177

Net carrying amount:

At 31 December 2009 15,913,915 2,510,284 20,310,003 27,746,390 2,446,577 - 68,927,169

At 31 December 2010 15,823,900 4,290,533 21,462,299 31,953,921 3,253,443 - 76,784,096


cont’d


11. PROPERTY, PLANT AND EQUIPMENT cont’d

Computer, furniture

and fitting

RM

Company

Cost :

At 1 January 2010 -

Additions 12,925

At 31 December 2010 12,925

Accumulated depreciation :

At 1 January 2010 -

Charge for the year (Note 6) 243

At 31 December 2010 243

Net carrying amount :

At 31 December 2009 -

At 31 December 2010 12,682

Assets held under finance leases During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM714,739 (2009 : RM1,907,090) by means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to RM10,764,364 (2009 : RM11,201,336). The carrying amount of property, plant and equipment held under finance leases at the reporting date were as follows:

Group

2010 2009

RM RM

Plant and machinery 4,976,908 5,207,835

Other assets - motor vehicles 1,592,283 1,310,892

6,569,191 6,518,727 Assets pledged as security Certain property, plant and equipment of the Group are pledged to secure bank facilities as stated in Note 18 to the financial statements.



11. PROPERTY, PLANT AND EQUIPMENT cont’d Capitalisation of borrowing costs The Group’s property, plant and equipment include borrowing costs arising from bank loans borrowed specifically for the purpose of the construction of a plant. During the financial year, the borrowing costs capitalised as cost of plant and equipment amounted to RMNil (2009 : RM61,133).

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

Group

2010 2009

RM RM

Freehold land 4,265,543 4,265,544

Long term leasehold land 4,290,533 2,510,284

Factory buildings 11,558,357 11,648,371

20,114,433 18,424,199

12. INTANGIBLE ASSETS

Group

2010 2009

RM RM

Cost

At 1 January 328,480 323,480

Additions - 5,000

At 31 December 328,480 328,480

Accumulated amortisation

At 1 January 100,551 68,078

Amortisation (Note 6) 32,849 32,473

At 31 December 133,400 100,551

Net carrying amount 195,080 227,929 Amortisation expense The amortisation of intangible assets, comprising software, are included in the “Administrative expenses” line items in the statement of comprehensive income.


cont’d


13. INVESTMENT IN SUBSIDIARIES

Company

2010 2009

RM RM

Unquoted shares, at cost 50,399,994 - The subsidiaries, all of which were incorporated in Malaysia, are as follows :

Equity Interest Held Proposed Principal

Name of Subsidiaries 2010 2009 Activities

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

gases

Southern Oxygen Sdn Bhd 100% - Manufacturing and distribution of

liquid oxygen, liquid nitrogen and liquid argon.

Southern Carbon Dioxide Sdn Bhd 100% - Manufacturing and distribution of liquid

carbon dioxide.

On 8 December 2009, SIG Gases Berhad entered into share sale agreement with the vendors of Southern Industrial Gas Sdn Bhd for the acquisition of the entire equity interest in Southern Industrial Gas Sdn Bhd comprising 23,000,000 ordinary shares of RM1.00 each (the Acquisition). The purchase consideration of the Acquisition was RM50,399,990, which was satisfied by the issuance of 100,799,980 shares to the vendors of Southern Industrial Gas Sdn Bhd at an issue price of RM0.50 per share. The Acquisition was completed on 12 May 2010.

On 31 May 2010, Southern Industrial Gas Sdn Bhd transferred the 2 existing ordinary shares of RM1.00 each in Southern Oxygen Sdn Bhd and Southern Carbon Dioxide Sdn Bhd respectively, for a nominal value of RM1.00 per share to SIG Gases Berhad.

14. INVENTORIES

Group

2010 2009

RM RM

At cost:

Raw materials 498,549 943,952

Consumables 1,151,153 1,951,742

Finished goods 837,536 622,856

2,487,238 3,518,550



15. TRADE AND OTHER RECEIVABLES

Group Company

2010 2009 2010 2009

RM RM RM RM

Trade receivables

Third parties 21,001,062 18,171,544 - -

Amounts due from director related companies 202,819 48,416 - -

21,203,881 18,219,960 - -

Less: Allowance for impairment

Third parties (2,859,445) (2,653,488) - -

Trade receivables, net 18,344,436 15,566,472 - -

Other receivables

Refundable deposit 45,753 52,576 2,625 -

Amount due from subsidiaries - - 15,968,097 -

Tax recoverable 41,611 - - -

87,364 52,576 15,970,722 -

Total trade and other receivables 18,431,800 15,619,048 15,970,722 -

Add: Cash and bank balances (Note 17) 15,885,494 1,381,405 12,297,271 10

Total loans and receivables 52,836,458 32,672,077 60,209,437 10

Trade receivables

The amounts due from director related companies are unsecured, non-interest bearing and are repayable upon demand. The Group’s normal trade credit term ranges from 90 to 120 days. Other credit terms are assessed and approved on a case-by-case basis. Trade receivables are recognised at their original invoice amounts which represent their fair values on initial recognition. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.

Ageing analysis of trade receivables

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

2010 2009

RM RM

Neither past due nor impaired 14,120,493 13,127,309

1 to 30 days past due not impaired 690,791 698,395




More than 121 days past due not impaired 622,893 1,162,669

2,083,144 2,242,301

Impaired 5,000,244 2,850,350

21,203,881 18,219,960


cont’d


15. TRADE AND OTHER RECEIVABLES cont’d

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 65% (2009 : 72%) of the Group’s trade receivables arise 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 RM2,083,144 (2009 : RM2,242,301) 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

2010 2009

RM RM

Trade receivables - nominal amounts 5,000,244 2,850,350

Less: Allowance for impairment (2,859,445) (2,653,488)

2,140,799 196,862

Movement in allowance accounts :

2010 2009

RM RM

At 1 January 2,653,488 2,877,193

Charge for the year 337,224 160,059

Reversal of impairment losses (103,553) (383,764)

Bad debts recovered (27,714) -

At 31 December 2,859,445 2,653,488 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 repayble on demand.



16. OTHER CURRENT ASSETS

Group Company

2010 2009 2010 2009

RM RM RM RM

Prepayment 206,940 964,125 2,083 475,550

Non refundable deposit paid for purchase of property, plant and equipment 915,222 285,090 - -

1,122,162 1,249,215 2,083 475,550

17. CASH AND CASH EQUIVALENTS

Group Company

2010 2009 2010 2009

RM RM RM RM

Cash on hand and at banks 15,885,494 1,381,405 12,297,271 10

Less: Bank overdrafts (Note 18) - (4,297) - -

15,885,494 1,377,108 12,297,271 10

18. BORROWINGS

Group

2010 2009

Maturity RM RM

Current

Secured:

Bank overdrafts (BLR +0.75% p.a.) on demand - 4,297

Bankers’ acceptances (COF +0.75% p.a.) 2011 4,184,000 3,379,000

Term loans (BLR -1.80% p.a.) 2011 1,604,438 3,744,516

Obligations under finance leases (Note 24) (2.75% -4.50% p.a.) 2011 1,368,768 1,390,351

7,157,206 8,518,164

Non-current

Secured:

Term loans (BLR -1.80% p.a.) 2012 - 2016 5,187,861 10,181,516

Obligations under finance leases (Note 24) (2.75% -4.50% p.a.) 2012 - 2014 607,106 1,399,239

5,794,967 11,580,755

Total borrowings

Bank overdrafts on demand - 4,297

Bankers’ acceptances 2011 4,184,000 3,379,000

Term loans 2011 - 2016 6,792,299 13,926,032

Obligations under finance leases 2011 - 2014 1,975,874 2,789,590

12,952,173 20,098,919


cont’d


18. BORROWINGS cont’d

The remaining maturities of the loan and borrowings as at 31 December 2010 are as follows:

On demand or within one year 7,157,206 8,518,164

More than 1 year and less than 2 years 2,030,781 4,988,890

More than 2 years and less than 5 years 3,764,186 6,028,793

5 years or more - 563,072

12,952,173 20,098,919 As at the reporting date, base lending rate (“BLR”) is 6.30% (2009 : 5.5%) and the cost of fund (“COF”) is 3.45% (2009 : 3.40%).

The above banking facilities are secured by way of personal guarantee from certain directors and specified debenture on certain property, plant and equipment of the Group, both present and future. The term loans are repayable over a period of 4 years to 7 years. The bankers’ acceptances are repayable upon maturity. The bank overdrafts are repayable on demand.

19. TRADE AND OTHER PAYABLES

Group Company

2010 2009 2010 2009

RM RM RM RM

Trade payables

Third parties 2,541,584 3,583,612 - -

Amounts due to director related companies 2,147,849 3,586,077 - -

4,689,433 7,169,689 - -

Other payables

Cylinder deposits payable 1,221,619 1,107,319 - -

Accruals 1,154,046 1,653,046 165,000 221,953

Sundry payables 2,710,201 2,437,955 8,125 292,651

5,085,866 5,198,320 173,125 514,604

Total trade and other payables 9,775,299 12,368,009 173,125 514,604

Add: Borrowings (Note 18) 12,952,173 20,098,919 - -

Total financial liabilities carried at amortised cost 22,727,472 32,466,928 173,125 514,604 Trade Payables These amounts owing are unsecured and interest free except for certain director related companies who charge interest at 7.50% (2009 : 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 (2009: average term of two months).



20. SHARE CAPITAL

Number of ordinary shares of RM0.50 each Amount

2010 2009 2010 2009

Company RM RM

Authorised

At 1 January 200,000 200,000 100,000 100,000

Created during the year 399,800,000 - 199,900,000 -

At 31 December 400,000,000 200,000 200,000,000 100,000

Issued and fully paid

At 1 January 20 20 10 10

Issued for acquisition of subsidiary 100,799,980 - 50,399,990 -

Public issue 49,200,000 - 24,600,000 -

At 31 December 150,000,000 20 75,000,000 10 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 residual assets. During the financial year, the Company has listed on the Main Market of Bursa Malaysia Securities Berhad through the Restructuring and Listing Scheme as set out below. (i) Restructuring

Acquisition of Southern Industrial Gas Sdn. Bhd. (Southern Industrial Gas)

On 8 December 2009, the SIG Gases Berhad entered into share sale agreement with the vendors of Southern Industrial Gas for the acquisition of the entire equity interest in Southern Industrial Gas comprising 23,000,000 ordinary shares of RM1.00 each. The purchase consideration for the Acquisition is RM50,399,990, which was satisfied by the issuance of 100,799,980 shares to the vendors of Southern Industrial Gas at an issue price of RM0.50 per share. The Acquisition was completed on 12 May 2010.

On 31 May 2010, Southern Industrial Gas transferred the 2 existing ordinary shares of RM1.00 each in Southern Oxygen Sdn. Bhd. and Southern Carbon Dioxide Sdn. Bhd. respectively for a nominal value of RM1.00 per share to SIG Gases Berhad.

(ii) Initial Public Offering

(a) Public Issue

Public issue of 49,200,000 ordinary shares of RM0.50 each at an issue price of RM0.58 per share.

(b) Offer for Sale

3,000,000 ordinary shares of RM0.50 each representing 2.00% of the enlarged issued and paid up share capital of SIG Gases Berhad at RM0.58 per share.

(iii) Listing

The Company’s entire enlarged issued and paid-up share capital after the public issue and offer for sale, comprising of 150 million ordinary shares of RM0.50 each were listed on the Main Market of Bursa Malaysia Securities Berhad on 9 August 2010.


cont’d


21. RESERVES

Group Company

2010 2009 2010 2009

RM RM RM RM

Non-distributable

Share premium 6,074,866 4,526,000 1,548,866 -

Distributable

Retained earnings/(Accumulated losses) 3,231,532 24,626,406 1,960,761 (39,054)

Merger reserve - (27,399,990) - -

9,306,398 1,752,416 3,509,627 (39,054) 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.

The merger reserve arises from the difference between the nominal value of shares issued by the Company and the nominal value of shares of the subsidiary acquired under the pooling method of accounting.

22. RETAINED PROFITS

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007. The Company has elected for the irrevocable option under the Finance Act 2007 to disregard the 108 balance as at 31 December 2009. Hence, the Company will be able to distribute dividends out of its entire retained earnings as at 31 December 2010 under the single tier system.

23. DEFERRED TAXATION

Group

2010 2009

RM RM

At 1 January 6,246,000 4,383,000

Recognised in the profit or loss (Note 9) 1,626,000 1,863,000

At 31 December 7,872,000 6,246,000

Presented after appropriate offsetting as follows :

Deferred tax assets (1,833,000) (2,184,000)

Deferred tax liabilities 9,705,000 8,430,000

7,872,000 6,246,000



23. DEFERRED TAXATION cont’d 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

Unrealised foreign

exchange gain Total

RM RM RM

At 1 January 2010 8,425,000 5,000 8,430,000

Recognised in profit or loss 1,280,000 (5,000) 1,275,000

At 31 December 2010 9,705,000 - 9,705,000

At 1 January 2009 6,896,000 2,000 6,898,000

Recognised in profit or loss 1,529,000 3,000 1,532,000

At 31 December 2009 8,425,000 5,000 8,430,000

Deferred Tax Assets of the Group :

Unabsorbed reinvestment

allowances

Unrealised foreign

exchange loss Total

RM RM RM

At 1 January 2010 (2,184,000) - (2,184,000)

Recognised in profit or loss 354,000 (3,000) 351,000

At 31 December 2010 (1,830,000) (3,000) (1,833,000)

At 1 January 2009 (2,515,000) - (2,515,000)

Recognised in profit or loss 331,000 - 331,000

At 31 December 2009 (2,184,000) - (2,184,000)

24. COMMITMENTS (a) Capital Commitments

Capital expenditure as at the reporting date is as follows:

Group

2010 2009

RM RM

Capital expenditure :

Approved and contracted for :

Property, plant and equipment 7,461,330 150,000


cont’d


24. COMMITMENTS cont’d

(b) Finance Lease Commitments

The Group has finance leases for certain items of plant and equipment (Note 11). These leases do not have terms of renewal, but have purchase options at nominal value at the end of the lease terms.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

2010 2009

RM RM

Minimum lease payments:

Not later than 1 year 1,451,837 1,536,801

Later than 1 year and not later than 2 years 440,405 1,239,631

Later than 2 years and not later than 5 years 194,873 210,813

Total minimum lease payments 2,087,115 2,987,245

Less: Amounts representing finance charges (111,241) (197,655)

Present value of minimum lease payments 1,975,874 2,789,590

Present value of payments:

Not later than 1 year 1,368,768 1,390,351

Later than 1 year and not later than 2 years 418,070 1,187,003

Later than 2 years and not later than 5 years 189,036 212,236

Present value of minimum lease payments 1,975,874 2,789,590

Less: Amount due within 12 months (Note 18) (1,368,768) (1,390,351)

Amount due after 12 months (Note 18) 607,106 1,399,239

25. 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

2010 2009

RM RM

To/from related companies :

Sales of finished goods 2,036,232 1,962,002

Transport income 9,763 14,972

Purchases 8,276,043 7,174,625

Purchase of property, plant and equipment 5,536,944 5,654,962

Purchase of spare parts 478,476 604,846

Rental paid 205,352 94,897

Interest paid 320,193 241,015

Travelling expenses paid on behalf 44,789 18,502

Transport charges paid 94,298 58,459



25. 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., SSB Cryogenic Equipment Pte. Ltd. and Sing Swee Bee Industries Pte. Ltd., being related parties which the Group has transacted with during the year.

A director of a subsidiary company, namely Mr. Kong Khim Tuck is a director of WSW Marketing & Services., being a related party which the Group has transacted with during the year.

(b) Compensation of Key Management Personnel

Group Company 2010 2009 2010 2009

RM RM RM RM

Short-term employee benefits 2,317,845 2,455,614 154,000 -

Post-employment benefits:

Defined contribution 218,618 250,128 - -

2,536,463 2,705,742 154,000 -

Included in the total key management personnel are:

Directors’ remuneration (Note 8) 1,632,875 1,965,035 44,000 -

26. FAIR VALUE (a) Fair Value of Financial Instruments by Classes that are Not 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, bank overdrafts, 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 charge on these loan and borrowings are pegged to or close to market interest rates near or at reporting date.

(b) Fair Value of Financial Instruments by Classes that are Not Carried at Fair Value and Whose Carrying Amounts

are Not Reasonable Approximation of Fair Value

The fair values of financial assets and liabilities by classes that are not carried at fair values and whose carrying amounts are not reasonable approximation of fair values are as follows:

2010 2009 Carrying

value Fair value Carrying

value Fair value Group RM RM RM RM

Financial liabilitesObligation under finance lease 1,975,874 1,929,833 2,789,590 2,786,108


cont’d


27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Management. The audit committee provides independent oversight to the effectiveness of the risk management process.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial

risks and the objectives, policies and processes for the management of these risks. (a) Credit Risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its

obligations. The Group’s and the Company’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:

2010 2009

RM % of total RM % of total

By country:

Malaysia 17,688,055 96.42 15,385,469 98.84

Indonesia 58,396 0.32 53,392 0.34

Singapore 597,985 3.26 127,611 0.82

18,344,436 100.00 15,566,472 100.00%

2010 2009

RM % of total RM % of total

By industry sectors:

Dealers 6,556,059 35.74 6,008,780 38.60

Shipbuilding 3,119,771 17.01 2,143,758 13.77

Fabrication work 1,911,639 10.42 1,970,357 12.66

Construction and engineering 1,075,384 5.86 956,949 6.15

Refrigerant 1,303,342 7.10 899,279 5.78

Others 4,378,241 23.87 3,587,349 23.05

18,344,436 100.00 15,566,472 100.00 At the reporting date, approximately 35.74% (2009: 38.60%) of the Group’s trade receivables were due from dealers who are located in Malaysia.



27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d

(a) Credit Risk cont’d

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 15. Deposits with banks that are neither past due nor impaired are placed with or entered into with reputable banks with high credit ratings and no history of default. Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in Note 15.

(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’s and the Company’s liquidity risk management policy is that not more than 30% (2009: 30%) of loans and borrowings (including overdrafts) should mature in the next one year period, and to maintain sufficient liquid financial assets and stand-by credit facilities with three different banks. At the reporting date, approximately 28% (2009: 29%) of the Group’s loans and borrowings (Note 18) will mature in less than one year based on the carrying amount reflected in the financial statements. 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.

2010

On demand or within one year

One to five years

Over five years Total

RM RM RM RM

Group

Financial liabilities:

Trade and other payables 9,775,299 - - 9,775,299

Loans and borrowings 7,157,206 2,030,781 3,764,186 12,952,173

Total undiscounted financial liabilities 16,932,505 2,030,781 3,764,186 22,727,472

Company

Financial liabilities:

Trade and other payables 173,125 - - 173,125

Total undiscounted financial liabilities 173,125 - - 173,125 (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.


cont’d


27. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES cont’d (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 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. Sensitivity analysis of foreign exchange rate changes

As at 31.12.2010

As at 31.12.2009

MYR/SGD exchange rate +/- 3.00% +/- 3.00%

SGD denominated accounts receivable (RM) 475,716 15,001

Net income (RM) +/- 14,271 +/- 4,590

MYR/SGD exchange rate +/- 3.00% +/- 3.00%

SGD denominated accounts payable (RM) 1,821,119 3,648,556

Net income (RM) +/- 54,634 +/- 109,457

MYR/USD exchange rate +/- 3.00% +/- 3.00%

USD denominated accounts payable (RM) 47,412 39,284

Net income (RM) +/- 1,422 +/- 1,179

28. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes during the years ended 31 December 2010 and 31 December 2009.



28. CAPITAL MANAGEMENT cont’d

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio between 30% and 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

2010 2009 2010 2009

Note RM RM RM RM

Borrowings 18 12,952,173 20,098,919 - -

Trade and other payables 19 9,775,299 12,368,009 - -

Less: Cash and bank balances 17 (15,885,494) (1,381,405) (12,297,271) (10)

Net debt 6,841,978 31,085,523 (12,297,271) (10)

Equity 84,306,398 52,152,416 78,509,627 (39,044)

Total capital 84,306,398 52,152,416 78,509,627 (39,044)

Capital and net debt 91,148,376 83,237,939 66,212,356 (39,054)

Gearing ratio 8% 37% N/A N/A

29. SEGMENT INFORMATION The Group is organized into the following operating segments: (1) Manufacturing (2) Refilling and distribution (3) Other products and services

Group

2010

Manu- facturing

Refilling and

Distribution

Other Products

and Services Total

RM RM RM RM

Revenue 27,571,382 26,025,535 1,664,027 55,260,944

Results

Profit for reportable segment 10,305,960 8,391,851 164,848 18,862,659

Other income 847,959

Selling and administrative expenses (10,514,191)

Finance costs (1,255,881)

Profit before tax 7,940,546

Income tax expense (1,935,430)

Total comprehensive income 6,005,116


cont’d


29. SEGMENT INFORMATION cont’d

The Group is organized into the following operating segments: cont’d

Group

2009

Manufacturing

Refilling and

Distribution

Other Products

and Services Total

RM RM RM RM

Revenue 29,506,748 23,968,243 1,092,900 54,567,891

Results

Profit for reportable segment 9,840,251 9,292,582 143,500 19,276,333

Other income 441,058

Selling and administrative expenses (9,254,852)

Finance costs (1,070,757)

Profit before tax 9,391,782

Income tax expense (2,279,870)

Total comprehensive income 7,111,912

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.

30. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE The financial statements for the year ended 31 December 2010 were authorised for issue in accordance with a resolution of the directors on 1 April 2011.



31. 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 2010 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

2010 2010

RM RM

Total retained profits

- Realised 11,099,167 1,960,762

- Unrealised (7,867,635) -

3,231,532 1,960,762

Less: Consolidation adjustments - -

Retained profits as per financial statements 3,231,532 1,960,762


cont’d


As at 31 December 2010, we own the following properties:-

No. LocationDescription/ Existing Use

Date of acquisition

Approximate Land Area/

Built-up Area

Approximate Age of

Building/ Tenure

Audited NBV as at

31December 2010 (RM) Encumbrances

1. PLO 137, Kawasan Perindustrian Senai III, 81400 Senai, Johor

Double storey detached office and factory/ Manufacturing of liquid oxygen, liquid nitrogen and Acetylene gas, and refilling of industrial gas such as oxygen, nitrogen, Argon, carbon dioxide and Gas Mixture

05/12/1996 14,516 square meter/4,359

square meter

13 years/60 years lease

expiring on 13.02.2060

4,738,318 Charged to RHB Bank Bhd

2. No. 17, Jalan BP 4/1, Bandar Bukit Puchong, 47100 Puchong, Selangor

Double storey detached office and refilling plant/ Refilling of industrial gases such as oxygen, nitrogen, Argon, carbon dioxide and Gas Mixture

12/05/2000 4,679 square meter/1,427

square meter

10 years/ Freehold


3. Plot 235, Taman Perindustrian Bukit Minyak, Penang

Single storey detached office and refilling plant/Refilling of industrial gases such as oxygen and carbon dioxide

20/11/2006 5,192 square meter/943

square meter

2 years/60 years lease

expiring on 08.08.2067

2,206,004 Nil

4. Lot 6215 and Lot 6216, Krubong Industrial Park, 75250 Mukim Krubong, Malacca

Office cabin and refilling plant/Refilling of industrial gases such as oxygen and carbon dioxide

06/04/2006 1,904 square meter/149

square meter

6 years/ Freehold

309,362 Nil

5. 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 12,536 square meter/1,977

square meter

1 year/ Freehold


6. Lot 8392 & 8393 (PN 49651 & 49648), Mukim Krubong, Daerah Melaka Tengah, Melaka

Vacant land 29/05/2010 4,218 square meter

N/A/99 years 866,646 Nil

7. Lot 41/129 & 42/129, Lot 129, Kawasan Perindustrian Gebeng Fasa II, Kuantan, Pahang

Vacant land 31/05/2010 8,094 square meter

N/A/99 years 965,159 Nil

Total 20,114,434

LIST OF PROPERTIES


ANALYSIS OF SHAREHOLDINGS as at 31 March 2011

Authorised Share Capital : RM200,000,000.00Issued And Fully Paid-Up Capital : RM75,000,000.00Class of Shares : Ordinary Shares of RM0.50 eachVoting Rights : One vote per ordinary share

ANALYSIS BY SIZE OF HOLDINGS

Size of Holdings No. of Holders % No. of Shares %

1-99 2 0.08 22 0.00

100 -1,000 338 13.15 258,500 0.17

1,001 -10,000 1,574 61.22 9,157,700 6.10

10,001 -100,000 577 22.44 18,190,025 12.13

100,001 -7,499,999 (*) 78 3.03 61,028,295 40.69

7,500,000 and above (**) 2 0.08 61,365,458 40.91

Total 2,571 100.000 150,000,000 100.00

Remark :

* Less Than 5% Of Issued Shares** 5% And Above Of Issued Shares

DIRECTORS SHAREHOLDINGS

Direct Indirect

No. of Shares % No. of Shares %

Peh Lam Hoh 6,029,744 4.02 66,361,858 (a) 44.24

Lau Cheng Ming 1,990,664 1.33 - -

Datuk Syed Ahmad Bin Alwee Alsree - - 57,527,393 (b) 38.35

Diong Tai Pew 200,000 0.13 - -

Michael Ong Kee Tuan - - - -Lee Ting Kiat - - - -

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: 52,500,000 shares By virtue of his interest in Sing Swee Bee Enterprise Pte. Ltd. pursuant to Section 6A of the Companies Act, 1965 : 8,865,458 shares By virtue of his interest in SSB Cryogenic Equipment Pte. Ltd. pursuant to Section 6A of the Companies Act, 1965: 4,500,000 shares By virtue of his spouse, Mdm Ng Swee Gek shareholding: 296,400 shares By virtue of his son, Mr Peh Kiat Yong shareholding: 150,000 shares By virtue of his daughter-in-law, Ms Lee Si Yun shareholding: 50,000 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: 52,500,000 shares By virtue of his spouse, Datin Hanifah Hajar Taib shareholding: 5,027,393


LIST OF SUBSTANTIAL SHAREHOLDERS

Direct Indirect

No. of Shares % No. of Shares %

Phoenix SIG Holdings Sdn. Bhd. 52,500,000 35.00 - -

Sing Swee Bee Enterprise Pte. Ltd. 8,865,458 5.91 - -

Peh Lam Hoh 6,029,744 4.02 66,361,858 (a) 44.24

Datin Hanifah Hajar Taib 5,027,393 3.35 52,500,000 (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: 52,500,000 shares By virtue of his interest in Sing Swee Bee Enterprise Pte. Ltd. pursuant to Section 6A of the Companies Act, 1965 : 8,865,458 shares By virtue of his interest in SSB Cryogenic Equipment Pte. Ltd. pursuant to Section 6A of the Companies Act, 1965: 4,500,000 shares By virtue of his spouse, Mdm Ng Swee Gek shareholding: 296,400 shares By virtue of his son, Mr Peh Kiat Yong shareholding: 150,000 shares By virtue of his daughter-in-law, Ms Lee Si Yun shareholding: 50,000 shares

(c) Deemed interest by virtue of her interest in Phoenix SIG Holdings Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965: 52,500,000

LIST OF TOP 30 HOLDER

(Without Aggregating Securities from Different Securities Accounts Belonging to the Same Registered Holder)

No. Name Holdings %

1 PHOENIX SIG HOLDINGS SDN. BHD. 52,500,000 35.00

2 SING SWEE BEE ENTERPRISE PTE. LTD. 8,865,458 5.91

3 PEH LAM HOH 6,029,744 4.02

4 LOH PEI YON 5,960,564 3.97

5 DATIN HANIFAH HAJAR TAIB 5,027,393 3.35

6 KONG KHIM TUCK 4,758,192 3.17

7 SSB CRYOGENIC EQUIPMENT PTE. LTD. 4,500,000 3.00

8 FAHAD MOHD F S BUZWAIR 3,000,000 2.00

9 SYED ZAFILEN BIN SYED ALWEE 2,500,000 1.67

10 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN. BHD.PLEDGED SECURITIES ACCOUNT FOR ONG SIEW ENG @ ONG CHAI (8040800)

2,040,900 1.36

11 LAU CHENG MING 1,990,664 1.33

12 CHEN CHIN PENG 1,560,000 1.04

13 LEW BOK HOA 1,530,000 1.02

14 VOON CHEE KEEN 1,212,782 0.81

15 KWA LI DA, ALEX (KE LIDA) 1,201,100 0.80

16 PEH HOCK SOON 1,065,042 0.71

17 NG CHENG GUAN 1,052,508 0.70

18 KHONG KAR YOW 791,878 0.53

19 PROMSERV SDN. BHD. 650,000 0.43

20 TAN CHIN PENG 550,261 0.37

21 PROMSERV SDN. BHD. 550,000 0.37

ANALYSIS OF SHAREHOLDINGS as at 31 March 2011cont’d


ANALYSIS OF SHAREHOLDINGS as at 31 March 2011

cont’d

LIST OF TOP 30 HOLDER cont’d

(Without Aggregating Securities from Different Securities Accounts Belonging to the Same Registered Holder) cont’d

No. Name Holdings %

22 HUANG BING 546,400 0.36

23 NELTY AGUSTINA SUSANTO 530,000 0.35

24 PEMBINAAN MUSALI SDN. BHD. 500,000 0.33

25 PROMSERV ENGINEERING SDN. BHD. 500,000 0.33

26 CHEW POK FAH 486,000 0.32

27 ADNAN EL OSMAN 455,000 0.30

28 HDM NOMINEES (ASING) SDN. BHD.UOB KAY HIAN PTE. LTD. FOR WEE SOH JOON

450,000 0.30

29 LUCAS LIM TEE KIAT 435,000 0.29

30 CHEN CHIN PENG 390,000 0.26

111,628,886 74.40


NOTICE IS HEREBY GIVEN THAT the Second Annual General Meeting of SIG Gases Berhad will be held at Perwira 1, Le Grandeur Palm Resort Johor, Jalan Persiaran Golf, Off Jalan Jumbo, 81250 Senai, Johor, Malaysia on Thursday, 19 May 2011 at 11.00 a.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 2010 and the Reports of the Directors and Auditors thereon.

2. To approve the payment of a final dividend of 1.3 sen per share in respect of the financial year ended 31 December 2010 under single-tier system.

3. To approve the following Directors’ fees:- (i) Directors’ fees of RM145,000 for the year ended 31 December 2010. (ii) Directors’ fees of RM190,000 for the year ending 31 December 2011.

4. To re-elect Datuk Syed Ahmad Bin Alwee Alsree who retires by rotation in accordance with Article 103 of the Company’s Articles of Association and being eligible, offers himself for re-election.

5. To re-elect Mr Lee Ting Kiat who retires in accordance with Article 110 of the Company’s Articles of Association and being eligible, offers himself for re-election.

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. 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. PROPOSED SHAREHOLDERS’ RATIFICATION FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

“THAT all the recurrent related party transactions entered into by the Company and its subsidiaries with the related parties, as set out in Section 2.1 of the Circular to Shareholders dated 25 April 2011, from the listing date of the Company on 9 August 2010, up to the date of the Second Annual General Meeting, which were undertaken in the ordinary course of business, on arms length basis, on normal commercial terms which were not more favorable to the related party than those generally available to the public and were not detrimental to the minority shareholders of the Company, be hereby approved and ratified.

AND THAT all the actions taken and the execution of all necessary documents by the Directors of the

Company as they had considered expedient or deemed fit in the interest of the Company, be hereby approved and ratified.”

NOTICE OF ANNUAL GENERAL MEETING

(Please refer Explanatory

Note 1)

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

Resolution on Proxy Form


9. PROPOSED SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

“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 to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.2 of the Circular to Shareholders dated 25 April 2011, 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 which are not more favorable to the related party than those generally available to the public and are not detrimental to the minority shareholders of the Company (“the Shareholders’ Mandate”).

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 Shareholders’ Mandate is passed, at which time it will lapse, unless the authority is renewed by a resolution passed at the next AGM;

(b) the expiration of the period within which the next AGM after that date 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) is 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 Shareholders’ Mandate.”

10. To transact any other business of which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT the final dividend of 1.3 sen per share for the financial year ended 31 December 2010 under the single-tier system, if approved by the shareholders at the Second Annual General Meeting, will be payable on 15 June 2011 to shareholders whose names appear in the Record of Depositors on 1 June 2011.

A Depositor shall qualify for entitlement to the dividend only in respect of:

(a) Shares transferred into the Depositor’s securities account before 4.00 p.m. on 1 June 2011 in respect of ordinary 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 Bahru25 April 2011

Resolution 9

NOTICE OF ANNUAL GENERAL MEETINGcont’d


NOTES:

1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies to attend and vote in its stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

2. Where a member appoints two (2) proxies, the appointments shall be invalid unless the member specifies the proportion of his/her/their shareholding to be represented by each proxy.

3. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, 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 i.e before 11.00 a.m., 17 May 2011 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.

4. The instrument appointing a proxy, in the case of an individual shall be signed by the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under seal or under the hand of an officer 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.

5. Explanatory Notes on Ordinary and Special Business

(i) 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.

(ii) Item 7 of the Agenda The proposed resolution 7 is a new mandate 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, expires at the conclusion of the next Annual General Meeting of the Company.

(iii) Item 8 of the Agenda The proposed resolution 8, if passed, will ratify all recurrent related party transactions of a revenue or trading nature pursuant to the

provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, from the listing of the Company on 9 August 2010 up till the date of the Second Annual General Meeting.

Please refer to the Circular to Shareholders dated 25 April 2011 for further information.

(iv) Item 9 of the Agenda The proposed resolution 9, if passed, will allow the Company to enter into recurrent related party transactions of a revenue or trading

nature pursuant to the provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Please refer to the Circular to Shareholders dated 25 April 2011 for further information.

NOTICE OF ANNUAL GENERAL MEETINGcont’d

STATEMENT ACCOMPANYINGNOTICE OF ANNUAL GENERAL MEETING

1. Directors who are standing for re-election at the Second Annual General Meeting of SIG Gases Berhad:-

(i) in accordance with Article 103 of the Company’s Articles of Association:• DatukSyedAhmadBinAlweeAlsree

(ii) in accordance with Article 110 of the Company’s Articles of Association:• Mr.LeeTingKiat

2. Further details of the Directors who are standing for re-election are as per the Profile of Directors stated on pages 8 to 10 of this Annual Report.

3. Particulars of Directors’ shareholdings are set out on page 75 of this Annual Report.

I/We NRIC No/Passport No./Company No.

of being a member/members of SIG GASES BERHAD, hereby appoint

NRIC No./Passport No.

of

or failing him/her NRIC No./Passport No.

of

or failing him/her, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Second Annual General Meeting of the Company to be held at Perwira 1, Le Grandeur Palm Resort Johor, Jalan Persiaran Golf, Off Jalan Jumbo, 81250 Senai, Johor, Malaysia on Thursday, 19 May 2011 at 11.00 a.m or any adjournment thereof and my/our proxy is to vote as indicated below:-

Item Agenda

1. To receive the Audited Financial Statements for the financial year ended 31 December 2010 and the Reports of the Directors and Auditors thereon.

Resolution FOR AGAINST

Ordinary Business:

2. To approve the payment of a final dividend of 1.3 sen per share in respect of the financial year ended 31 December 2010 under the single-tier system.

1

3. To approve the following Directors’ fees:-

(i) Directors’ fees of RM145,000 for the year ended 31 December 2010 2

(ii) Directors’ fees of RM190,000 for the year ending 31 December 2011 3

4. To re-elect Datuk Syed Ahmad Bin Alwee Alsree who retires as a Director of the Company in accordance with Article 103 of the Company’s Articles of Association.

4

5. To re-elect Mr. Lee Ting Kiat who retires as a Director of the Company in accordance with Article 110 of the Company’s Articles of Association.

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. 7

8. Proposed shareholders’ ratification for recurrent related party transactions of a revenue or trading nature.

8

9. Proposed shareholders’ mandate for recurrent related party transactions of a revenue or trading nature.

9

Please indicate with an “X” in the appropriate space how you wish your proxy to vote. If you do not indicate how you wish your proxy to vote on any resolution, the proxy shall vote as he/she thinks fit or, at his/her discretion or, abstain from voting.

Dated this……………………day of…………………………2011

……………………………….……….……….……….Signature/Common Seal of Shareholder

*Delete if not applicable

NOTES:-1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy/proxies to attend and vote in its stead. A proxy may but need

not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. 2. Where a member appoints two (2) proxies, the appointments shall be invalid unless the member specifies the proportion of his/her/their

shareholding to be represented by each proxy.3. The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office

copy of such power or authority, 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 i.e before 11.00 a.m., 17 May 2011 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.

4. The instrument appointing a proxy, in the case of an individual shall be signed by the appointor or his/her attorney duly authorised in writing and in the case of a corporation, either under seal or under the hand of an officer 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.

No. of Ordinary Shares Held

SIG GASES BERHAD (875083-W)FORM OF PROXY

Affix Stamp

THE COMPANY SECRETARYSIG GASES BERHAD

(Company No. 875083-W)

Suite 1301, 13th FloorCity Plaza, Jalan Tebrau

80300 Johor Bahru, Johor

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