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METROD (MALAYSIA) BERHAD(66954 H)

Metrod

AnnualReport2006

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C o n t e n t s

METROD (MALAYSIA) BERHAD (66954 H)

22

B O A R D O F D I R E C T O R S

The Lord Bagri CBE (Chairman)

The Hon. Apurv Bagri (Vice Chairman)

The Lady Bagri

Y.Bhg. Dato’ Azlan Hashim

Y.Bhg. Dato’ Gumuri bin Hussain

Y.Bhg. Datuk Abu Hassan Kendut

Ashari bin Ayub

Pratik Basu

S E C R E T A R Y

Yeap Kok Leong (MAICSA No: 0862549)

A U D I T O R S

PricewaterhouseCoopers, Chartered Accountants

P R I N C I P A L B A N K E R S

RHB Bank BerhadCIMB Bank Berhad

HSBC Bank Malaysia BerhadStandard Chartered Bank Malaysia Berhad

Hong Leong Bank Berhad

R E G I S T R A R S

TENAGA KOPERAT SDN BHD20th Floor, Plaza Permata

Jalan Kampar, Off Jalan Tun Razak50400 Kuala LumpurTel: (03) 40416522Fax: (03) 40426352

R E G I S T E R E D O F F I C E

20th Floor, East Wing, Plaza PermataJalan Kampar, Off Jalan Tun Razak

50400 Kuala LumpurTel: (03) 40439411Fax: (03) 40431233

W E B S I T E

www.metrod.com

S T O C K E X C H A N G E L I S T I N G

Bursa Malaysia Securities Berhad, Main Board

C o r p o r a t e I n f o r m a t i o n


33

NOTICE IS HEREBY GIVEN that the Twenty-Sixth Annual General Meeting of the Company will beheld at Cobalt 7, Level 1, The Ritz-Carlton, 168 Jalan Imbi, 55100 Kuala Lumpur on Wednesday,30 May 2007 at 2.00 p.m. to transact the following business:-

A G E N D A

1. To receive the Statutory Financial Statements for the financial year ended 31 December 2006 togetherwith the Reports of the Directors and Auditors thereon. (Resolution 1)

2. To approve first and final dividend of 12 sen per share (tax-exempt) for the year ended 31 December2006. (Resolution 2)

3. To approve payment of Directors' fees amounting to RM132,000 for the financial year ended31 December 2006. (Resolution 3)

4. To re-elect the following Directors who retire in accordance with the Articles of Association of theCompany and who, being eligible, offer themselves for re-election:

Article 65a) The Hon. Apurv Bagri (Resolution 4)b) Y.Bhg. Dato’ Azlan Hashim (Resolution 5)

Article 70a) Y.Bhg. Dato’ Gumuri bin Hussain (Resolution 6)

5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise theDirectors to fix their remuneration. (Resolution 7)

A S S P E C I A L B U S I N E S S

To consider and if thought fit, to pass the following resolutions:

6. Ordinary ResolutionRe-appointment of Lord Bagri CBE as a Director pursuant to section 129(6) of the CompaniesAct, 1965

“THAT The Lord Bagri CBE being over the age of 70 years and retiring in accordance with section129(6) of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to holdoffice until the conclusion of the next Annual General Meeting of the Company”. (Resolution 8)

7. Ordinary ResolutionAllotment of shares pursuant to section 132D of the Companies Act, 1965

“THAT subject always to the Companies Act, 1965 and the approvals of the regulatory authorities, theDirectors be and are hereby empowered pursuant to section 132D of the Companies Act, 1965 to issueshares in the Company, at any time and upon such terms and conditions and for such purposes as theDirectors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issuedpursuant to this resolution does not exceed 10% of the issued capital of the Company for the time beingand that the Directors be and are also empowered to obtain the approval for the listing of and quotationfor the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shallcontinue in force until the conclusion of the next Annual General Meeting of the Company.”

(Resolution 9)

N o t i c e O f A n n u a l G e n e r a l M e e t i n g


4

8. Ordinary ResolutionProposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(a) of Part A of the Circular toshareholders dated 30 April 2007

“THAT the mandate granted by the shareholders of the Company on 25 May 2006 pursuant toparagraph 10.09 of the Listing Requirements of the Bursa Malaysia Securities Berhad, authorising theCompany and/or its subsidiaries to enter into the recurrent transactions of a revenue or trading nature asset out in section 2.4(a) of Part A of the Circular to Shareholders dated 30 April 2007 (“Circular”) withthe related parties mentioned therein which are necessary for the Company and/or its subsidiaries' day-to-day operations, be and is hereby renewed.

THAT the Company and/or its subsidiaries is hereby authorised to enter into the recurrent transactionswith the related parties mentioned therein provided that:

(a) the transactions are in the ordinary course of business and on normal commercial terms which arenot more favourable to the related parties than those generally available to the public and are not tothe detriment of the minority shareholders of the Company; and

(b) disclosure of the breakdown of the aggregate value of the transactions conducted during a financialyear including the type of the RRPT made, the names of the related parties involved in each typeof the RRPT made and their relationship with the Company will be disclosed in the AnnualReport for the said financial year.

THAT the authority conferred by such renewed mandate shall continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following theforthcoming AGM at which the Proposed Renewal of the Recurrent Related Party TransactionMandate is approved, at which time it will lapse, unless by a resolution passed at the next AGM,the mandate is again renewed;

(b) the expiration of the period within which the next AGM of the Company after the forthcomingAGM is required to be held pursuant to section 143(1) of the Companies Act, 1965 (“Act”) (butshall not extend to such extension as may be allowed pursuant to section 143(2) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in a general meeting,

whichever is earlier;

THAT the Directors of the Company be and are hereby authorised to complete and do all such acts andthings as they may consider expedient or necessary to give effect to the Proposed Renewal of theRecurrent Related Party Transactions Mandate.

AND THAT, the estimates given of the RRPT specified in section 2.4(a) of Part A of the Circular beingprovisional in nature, the Directors of the Company and/or any of them be and are hereby authorised toagree to the actual amount or amounts thereof provided always that such amount or amounts complywith the procedures set out in section 2.5 of Part A of the Circular.” (Resolution 10)


5

9. Ordinary ResolutionProposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(b) of Part A of the Circular toshareholders dated 30 April 2007

“THAT the mandate granted by the shareholders of the Company on 25 May 2006 pursuant toparagraph 10.09 of the Listing Requirements of the Bursa Malaysia Securities Berhad, authorising theCompany and/or its subsidiaries to enter into the recurrent transactions of a revenue or trading nature asset out in section 2.4 (b) of Part A of the Circular to Shareholders dated 30 April 2007 (“Circular”) withthe related parties mentioned therein which are necessary for the Company and/or its subsidiaries' day-to-day operations, be and is hereby renewed.




THAT the authority conferred by such renewed mandate shall continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following theforthcoming AGM at which the Proposed Renewal of the Recurrent Related Party TransactionMandate is approved, at which time it will lapse, unless by a resolution passed at the next AGM,the mandate is again renewed;




THAT the Directors of the Company be and are hereby authorised to complete and do all such acts andthings as they may consider expedient or necessary to give effect to the Proposed Renewal of theRecurrent Related Party Transactions Mandate.

AND THAT, the estimates given of the RRPT specified in section 2.4(b) of Part A of the Circular beingprovisional in nature, the Directors of the Company and/or any of them be and are hereby authorised toagree to the actual amount or amounts thereof provided always that such amount or amounts complywith the procedures set out in section 2.5 of Part A of the Circular.” (Resolution 11)


6

10. Ordinary ResolutionProposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(c) of Part A of the Circular toshareholders dated 30 April 2007

“THAT the mandate granted by the shareholders of the Company on 25 May 2006 pursuant toparagraph 10.09 of the Listing Requirements of the Bursa Malaysia Securities Berhad, authorising theCompany and/or its subsidiaries to enter into the recurrent transactions of a revenue or trading nature asset out in section 2.4 (c) of Part A of the Circular to Shareholders dated 30 April 2007 (“Circular”) withthe related parties mentioned therein which are necessary for the Company and/or its subsidiaries' day-to-day operations, be and is hereby renewed.




THAT the authority conferred by such mandate shall continue to be in force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following theforthcoming AGM at which the Proposed Recurrent Related Party Transaction Mandate isapproved, at which time it will lapse, unless by a resolution passed at the next AGM, the mandateis again renewed;




THAT the Directors of the Company be and are hereby authorised to complete and do all such acts andthings as they may consider expedient or necessary to give effect to the Proposed Renewal of RecurrentRelated Party Transactions Mandate.

AND THAT, the estimates given of the RRPT specified in section 2.4(c) of Part A of the Circular beingprovisional in nature, the Directors of the Company and/or any of them be and are hereby authorised toagree to the actual amount or amounts thereof provided always that such amount or amounts complywith the procedures set out in section 2.5 of Part A of the Circular.” (Resolution 12)

11. Special ResolutionProposed Amendments to the Articles of Association of the Company

“THAT alterations, modifications, additions or deletions to the Articles of Association of the Companycontained in Part B of the Circular to the Shareholders dated 30 April 2007 be and are herebyapproved.”

(Resolution13)


7

NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of Members at the Twenty-SixthAnnual General Meeting of the Company to be held on 30 May 2007, a first and final dividend of 12 senper share (tax-exempt), for the financial year ended 31 December 2006 will be paid on 17 July 2007 toDepositors whose names appear in the Record of Depositors on 29 June 2007.

A depositor shall qualify for entitlement only in respect of:-

a) Securities transferred into the Depositor's Securities Account before 4.00 p.m. on 29 June 2007 inrespect of ordinary transfer; and

b) Securities bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to therules of the Bursa Malaysia Securities Berhad.

BY ORDER OF THE BOARD

YEAP KOK LEONGCompany Secretary

Kuala Lumpur30 April 2007

Notes:-

i) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. Aproxy may but need not be a member of the Company.

ii) The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or ifthe appointer is a Corporation either under seal or under the hand of an officer or attorney duly authorised.

iii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, itmay appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit ofthe said securities account.

iv) An authorised nominee with more than one securities account must submit separate instrument of proxy for each securities account.

v) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certifiedcopy of that power or authority shall be deposited at the registered office of the Company at 20th Floor, East Wing Plaza Permata, JalanKampar off Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting oradjourned meeting at which the person named 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.

vi) Explanatory Notes on Special Business:-

Section 129(6) of the Companies Act, 1965Pursuant to Section 129(6) of the Companies Act, 1965, the proposed Ordinary Resolution under item 6, is to seek shareholders' approvalon the re- appointment of Director who is over the age of seventy years.

Section 132D of the Companies Act, 1965In accordance with the Companies Act, 1965, the Directors would have to call a general meeting to approve the issue of new shares eventhough the number of shares involved is less than 10% of the issued capital. In order to avoid any delay and cost involved in conveningsuch a general meeting, it is considered appropriate to seek the shareholders' approval for the Directors to issue shares in the Company upto an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being. This authority, unless revokedor varied at a general meeting, will expire at the next Annual General Meeting of the Company.

Recurrent Related Party TransactionFor further information, please refer to the Circular to shareholders dated 30 April 2007 accompanying the Company's Annual Report forthe year ended 31 December 2006.

Proposed Amendments to The Articles of Association of The CompanyThe proposed amendments will bring the Articles of Association of the Company in line with the amendments to Listing Requirements ofBursa Malaysia Securities Bhd, the Companies Act, 1965 and to enhance administrative efficiency.

vii) The particulars of all Directors seeking re-election are set out on pages 8 to 10 of this Annual Report and the attendance of directors atboard meetings is set out in the Corporate Governance Statement on pages 14 to 21.


8

The Lord Bagri CBE (Rajkumar Bagri)Non-Independent, Non-Executive Director

The Chairman of the Board of Directors, The Lord Bagri who is 76 years old and of British nationality wasappointed to the Board of Metrod on 28 October 1981. He has been actively involved in the Metal Tradeand Industry for over 60 years. He began his career in India and moved to London in 1959. He startedMetdist Limited, in London in 1970. He also started Metdist Trading Limited which is one of the 11 RingDealing Members of the London Metal Exchange (“LME”). The LME is largest base metals futures marketin the world.

He was responsible for the setting up of Metrod in 1981. This was followed by the establishment of MetTubeSdn Bhd in 1989. MetTube Sdn Bhd is a leading producer of thin wall and inner grooved copper tubes forthe air conditioning industry.

He was elected to the Management Committee of LME in 1973 and appointed Vice-Chairman of the LMEin 1990. In 1993, he took over as the Chairman of LME, the first person of non-British origin to hold thisprestigious appointment in 124 years of the Exchange’s history. Lord Bagri stepped down as Chairman of theLondon Metal Exchange in December 2002 having served for an unprecedented 10 years. Thereafter heserved until December 2006 as “Honorary President of The London Metal Exchange” and in recognition ofhis contribution, the Exchange has made him an Honorary Life Member.

He was named 2002 Copper Man of the Year in recognition of his lifelong service to the international coppercommunity by The Copper Club, Inc.

Lord Bagri was made a Life Peer in 1997 and was previously awarded with the honour of the Commander ofMost Excellent Order of the British Empire (CBE) in 1995 for his services to the metals industry.

The Lord Bagri CBE was conferred with a Degree of Doctor of Science (Honoris Causa) by the CityUniversity, London in May 1999 and in July 2000 he received from the University of Nottingham a Degreeof Doctor of Science (Honoris Causa). In July 2004 he was awarded an Honorary Fellowship by LondonBusiness School.

Lord Bagri is actively involved in a number of charitable and cultural organisations.

The Hon. Apurv Bagri (Apurv Bagri)Non-Independent, Non-Executive Director

The Hon. Apurv Bagri who is 47 years old and of Indian nationality was appointed to the Board of Metrodon 28 October 1981. He is an Honours Graduate in Business Administration from the City UniversityBusiness School in London which he obtained in 1980 and is a Alumnus of the Wharton Business School.

He has been with the Metdist Group of Companies for 27 years and has overall responsibility for most of theGroup’s activities.

The Hon. Apurv Bagri has been a member of the Board of The Dubai Financial Services Authority (DFSA).He is in addition a past Chairman and a current member of the Board of the International Wrought CopperCouncil (IWCC) which represents the Global Copper fabricating industry. He is a member of the SouthAsia Committee of IFSL (formerly British Invisibles) and a member of the Board of the Indo-BritishPartnership. Amongst his non-business responsibilities, he is Deputy Chairman and a member of theGoverning Body and Chair of the Asia Pacific Board of the London Business School, a member of theGoverning Council of the City University, London, and a Member of the Corporation, University CollegeSchool. He is a Member of the Advisory and Management Boards of The Royal Parks, a Trustee of TheRoyal Parks Foundation, a Commissioner of the Crown Estate Paving Commission and a Trustee of AsiaHouse.

He is also Chairman and Trustee of TiE Inc. The Indus Entrepreneurs (TiE) is a global non-profitorganisation with over 40 chapters and 10,000 members worldwide, which promotes entrepreneurship andwealth creation.

The Hon. Apurv Bagri was conferred with a Degree of Doctor of Science (Honoris Cause) by the CityUniversity, London in March 2006.

D i r e c t o r s ’ P r o f i l e


9

The Lady Bagri (Usha Bagri)Non-Independent, Non-Executive Director

The Lady Bagri who is 68 years old and of Indian nationality was appointed to the Board of Metrod on13 March 1985. She has for many years been a Director and Secretary of a number of the Metdist Group ofcompanies and is a keen observer of metal trade and industry internationally. She is also actively involved invarious cultural and charitable organisations.

Y.Bhg. Dato' Azlan HashimIndependent Non-Executive Director

Dato’ Azlan Hashim who is 65 years old and of Malaysian nationality was appointed to the Board of Metrodon 24 May 1991. He also sits on the Board Audit Committee of Metrod. Dato’ Azlan is a Fellow of theInstitute of Chartered Accountants (Ireland), Economic Development Institute (World Bank, Washington)and Institute of Bankers Malaysia. Dato’ Azlan Hashim, a qualified Chartered Accountant, served with theMalayan Railways from 1966 to 1971 and was its Chief Accountant for two years. In 1972, he became apartner of a public accounting firm, Azman Wong Salleh & Co. and was a Senior Partner of the firm prior tojoining the board of AMDB Berhad in 1982.

He is the Deputy Chairman of AMDB Berhad, AMMB Holdings Berhad and AmInternational (L) Limited.He also sits on the Boards of Kumpulan Perangsang Selangor Berhad, Paramount Corporation Berhad,Sapura Industrial Berhad, Kesas Holdings Berhad and Syarikat Permodalan & Perusahaan Selangor Berhad.He is also Executive Chairman of Global Carriers Berhad.

Y.Bhg. Dato’ Gumuri bin Hussain (Non-Independent, Non-Executive Director)

Dato’ Gumuri who is 61 years old and of Malaysian nationality was appointed to the Board of Metrod on29 November 2006. He is the Chairman of SME Bank. Dato’ Gumuri was the Managing Director andChief Executive Officer of Penerbangan Malaysia Berhad from August 2002 to August 2004. Dato’ Gumuristarted his career with Pricewaterhouse, the predecessor firm of PricewaterhouseCoopers, in 1975 as aQualified Assistant. He has held various positions in the firm and retired in June 2002 as a Senior Partnerand Deputy Chairman of Governance Board. Dato’ Gumuri sits on the Board of Kurnia Setia Berhad andRangkaian Hotel Seri Malaysia Berhad. He is also a member of the Securities Commission. He has alsoserved as Non-Executive Director of Bank Industri & Teknologi Malaysia Berhad, Malaysian Airline SystemBerhad and Sabah Bank Berhad. He is a Fellow of the Institute of Chartered Accountants in England andWales, a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified PublicAccountants.

Y.Bhg. Datuk Abu Hassan KendutIndependent Non-Executive Director

Datuk Abu Hassan who is 64 years old and of Malaysian nationality was appointed to the Board of Directorsand Board Audit Committee of Metrod on 28 December 2001. He is a member of the Malaysian Instituteof Certified Public Accountants (“MICPA”) and the Malaysian Institute of Accountants. Currently he is theDirector of Manulife Insurance (Malaysia) Berhad, Standard Chartered Bank Malaysia Berhad, RatingAgency Malaysia Berhad, and several other private limited companies. He was a past President of MICPAand the ASEAN Federation of Accountants and was formerly the Senior Partner of Coopers & Lybrand(currently known as PricewaterhouseCoopers). He had also served as a member of the Corporate DebtRestructuring Committee of Bank Negara Malaysia and board member of the Employees Provident FundBoard.

Ashari bin AyubIndependent Non-Executive Director

En. Ashari bin Ayub who is 65 years old and of Malaysian nationality was appointed to the Board ofDirectors and Board Audit Committee of Metrod on 28 December 2001. He is a member of MalaysianInstitute of Accountant and Malaysian Association of Certified Public Accountants. He was previously aSenior Partner in one of the leading audit firm since 1974 until 1994. En. Ashari also holds non-executivedirectorships in AV Ventures Corporation Berhad, Ranhill Utilities Berhad and BCB Berhad.


10

Pratik Basu Managing Director

Mr. Pratik Basu, who is 62 years old and of Indian nationality is a member of the Institute of CharteredAccountants, India since 1967 and also of the Institute of Cost and Management Accountants, London since1969. He graduated from the University of Calcutta in 1965 with first class honours. He served withPriceWaterhouse and Co. from 1964 to 1967. He worked as the Group Finance Manager with Andrew Yule& Co. Ltd. from 1967 to 1969. In 1969, he joined ICI (India) Ltd as Corporate Finance Manager andthereafter held several responsibilities in finance, planning, supply management, human resources, IT andmanagement service functions during 14 years. In 1983, he joined TVS-Suzuki Ltd. as General Manager,Finance and Administration to set up the first Japanese venture in the Indian automobile industry. He servedAsea Brown Boveri Ltd (ABB) for 12 years as the Corporate Vice-President responsible for PowerTransmission and Generation segments and Corporate Finance during 1986 to 1997. Mr. Basu was trained inInternational Management at the Swedish Institute of Management, Stockholm. He joined Metrod(Malaysia) Berhad in 1997 as the Managing Director and Chief Executive Officer. He was also appointed amember of the Audit Committee of Metrod on 20 November 1997.

Family RelationshipNone of the Directors has any family relationship with other Directors except for The Lord Bagri and LadyBagri who are husband and wife and their son The Hon. Apurv Bagri.

Conflict of interestThe Company and/or its subsidiaries have entered into recurrent related party transactions of a revenue ortrading nature with Metdist Limited (as disclosed in Corporate Governance Statement) in which theDirectors of the Company, namely The Lord Bagri, The Lady Bagri and The Hon. Apurv Bagri are deemedto have an interest. By virtue of their deemed interest, they are deemed to be interested in the recurrentrelated party transactions.

The Company and/or its subsidiaries have also entered into recurrent related party transactions of a revenueor trading nature with MetTube Sdn Bhd in which the Directors of the Company, Y.Bhg. Dato’ AzlanHashim, Y.Bhg. Datuk Abu Hassan Kendut, Mr. Pratik Basu are also the directors. MetTube Sdn Bhd iswholly owned by MetTube Malaysia Holdings S.A. which is in-turn wholly owned by Metdist S.A. MetdistS.A. has substantial shareholding of 42.14% in the Company.

The Company and/or its subsidiaries have also entered into recurrent related party transactions of a revenueor trading nature with AM SGB Sdn Bhd in which a Director of the Company, namely Y.Bhg. Dato’ AzlanHashim is also the director.

Save for the above, none of the Directors have any conflict of interest with the Company.

Securities holdings in the company and its subsidiariesY.Bhg. Dato’ Azlan Hashim is deemed interest in 1,377,000 shares in the Company by virtue of hisshareholdings of 99.99% and his sister’s shareholdings of 0.01% in Infinitive Growth Sdn Bhd, a shareholderof the Company.

Save for the above, none of the Directors hold any shares in the Company and its subsidiaries.

Convictions for offencesNone of the Directors has been convicted for any offence within the past (10) years.


11

5 Y e a r G r o u p F i n a n c i a l H i g h l i g h t s

2002 2003 2004 2005 2006

RM’000

Revenue 504,866 534,106 964,587 1,382,377 1,999,788

Profit after Tax 10,029 8,615 17,220 22,031 31,024

Shareholders’ Funds (Net Assets) 139,473 143,504 160,792 169,117 194,134

Issued and Paid-up Capital 60,000 60,000 60,000 60,000 60,000

Net Assets per Share (RM) 2.33 2.39 2.68 2.82 3.24

Earnings per Share (sen) 16.7 14.4 28.7 36.7 51.7

Gross Dividend Rate (%) (Tax Exempt) 8.0 8.0 10.0 11.0 12.0

Profit After Tax RM’000Shareholders’ Funds(Net Assets) RM’000Revenue RM’000

Earnings Per Share senDividend Per Share (sen) (tax exempt)Net Assets Per Share RM

2005 2006200420032002 2005 2006200420032002

139,

473

143,

504

160,

792

169,

117 194,134

2005 2006200420032002

10,0

29

8,61

5

17,2

20

22,0

31

31,024

2005 2006200420032002

2.33 2.39

2.68

2.82

3.24

2005 2006200420032002

8.0

8.0

10.0

11.0

12.0

2005 2006200420032002

16.7

14.4

28.7

36.7

51.7

504,

866

534,

106

964,

587 1,

382,

377

1,999,788


12

O V E R V I E W

I am glad to report that the Group made good progress during 2006. Pre-tax profit increased by 37% toRM41.0 million in 2006 as compared to RM29.9 million in the previous year. Net profit after tax increasedby 41% to RM31.0 million as compared to RM22.0 million in the previous year.

Turnover increased from RM1,382.4 million to RM1,999.8 million mainly due to high copper prices. TheGroup registered a full year EPS of 51.7 sen for 2006, as compared to 36.7 sen for 2005.

The strong performance of the Group was driven by overall better operating performance of all the unitsacross the Group. ASTA, both in Austria and China, performed well on the back of an improved order bookfrom the electrical transformer industry though margins came under pressure. The Malaysian constructionsector continued to perform poorly largely due to lower public sector spending in infrastructure projects.This adversely impacted the demand for copper rod and wires. As a consequence, the hope for improvementin this area did not materialise in any significant way. Flat products production and off-take was maintainedat high levels.

The Group’s encouraging performance reflects steps taken to make strategic investments, enhance operatingefficiencies and optimise product-mix. The year’s results were also favourably impacted by exceptionalbusiness circumstances and opportunities. The unprecedented surge and high volatility in copper pricespresented major challenges in risk management in addition to increasing working capital needs and financingcosts.

D I V I D E N D

Your Board proposes to increase the dividend to 12% for the year ending 31 December 2006 as compared to11% for the previous year, subject to the approval of shareholders in the forthcoming Annual GeneralMeeting on 30 May 2007. The dividend is tax-exempt in the hands of shareholders and upon approval willbe paid on 17 July 2007.

The Group has been consistently prudent in maintaining a sound balance sheet to support the on-goingsearch for new opportunities and the need to upgrade technology while improving shareholder returnsthrough a higher dividend.

O n b e h a l f o f t h e B o a r d o f

D i r e c t o r s , I a m p l e a s e d t o

p r e s e n t t h e A n n u a l R e p o r t o f

M e t r o d ( M a l a y s i a ) B e r h a d

a n d G r o u p f o r t h e f i n a n c i a l

y e a r e n d e d 3 1 D e c e m b e r

2 0 0 6 .

C h a i r m a n ’ s S t a t e m e n t


13

P R O S P E C T S

The Malaysian economy is projected to grow at a modest rate this year. The domestic construction sector isexpected to see accelerating activities over the next few quarters, particularly with the progressive roll-out ofapproved projects under the Ninth Malaysian Plan. This might boost the demand for copper rod and wirethough the impact and timing thereof still remains uncertain. Competition in these products is intense dueto over capacity in the region.

The Group’s new subsidiary, Metrod Flat Products Sdn Bhd will increasingly focus on flat copper productsbusiness to cater mainly to the needs of electrical transformer industry in the region.

Production volumes have been optimised in the Group’s subsidiary in Thailand. Uncertain business andpolitical developments make operating conditions difficult.

The demand from the power transmission sector remains good world-wide. Currently, ASTA has a strongorder book and its production facilities are operating at full capacity. Certain investments in equipments arebeing made to de-bottleneck and optimise capacity.

ASTA’s production facilities in China are also operating at full capacity. The new capacity expansion projectis expected to be completed by the end of this year.

High copper prices continue to require higher working capital and impose higher financing costs across theGroup. High volatile copper prices have also increased the credit and pricing risks on copper booked bycustomers. The Group has a policy of not exposing itself to copper price fluctuations.

The recent rise in the fuel prices and increased security risks are affecting costs. Every effort is being made tomitigate the impact of these and the other cost increases that we face.

The Group’s strategy is to remain focussed, upgrade technology and pursue viable opportunities for growth invarious parts of the world to meet the challenging market conditions in which it operates.

B O A R D A P P O I N T M E N T

On behalf of the Board, I welcome Y.Bhg. Dato’ Gumuri bin Hussain, who was appointed on 29 November2006 as a non-executive director on the Board in place of Y.Bhg. Datuk Haji Abdul Rahim bin Mohd. Zin,who resigned on 29 November 2006 due to transfer of shares from Bank Pembangunan Malaysia Berhad toBank Perusahaan Kecil & Sederhana Malaysia Berhad (SME Bank). I take this opportunity on behalf of theBoard to thank Y.Bhg. Datuk Haji Abdul Rahim bin Mohd. Zin for his contribution during his term as adirector.

A C K N O W L E D G E M E N T

As always, our success would not have been possible without the support of our valued customers, businesspartners and associates, bankers and the relevant government authorities. We sincerely thank them and lookforward to their continued support in the coming years.

The overall excellent performance of the Group was due to the concerted effort, dedication and contributionof the entire management team. I take this opportunity to thank them all, as well as my fellow directors, andall members of the Metrod family for their valuable contribution.

On behalf of the Board of Directors, I would also like to express our sincere thanks to our shareholders fortheir continued support to the Company.

THE LORD BAGRI CBEChairman


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I N T R O D U C T I O N

The Malaysian Code on Corporate Governance was formalised in March 2000 which sets out the broadprinciples and best practices for public listed companies.

The Board of Directors is committed to ensure that the highest standard of corporate governance arepracticed throughout the Group in discharging its responsibilities with the objective of safeguardingshareholders’ investment and ultimately enhancing shareholders value. To this end, the Board fully supportsgood Corporate Governance.

T H E B O A R D O F D I R E C T O R S

An effective Board leads and controls the Group. The Board of Metrod takes full responsibility in ensuringthe effective performance of the Company and Group in all areas of operation, finance, businessdevelopment, research and development, administration as well as customer and shareholders’ satisfaction.The Board recognises that it has overall responsibility for corporate governance and strategic direction andhas adopted all the six (6) specific responsibilities as listed in the Code.

(a) Composition

The Board of Directors of Metrod is made up of eight (8) members comprising a Non-IndependentNon-Executive Chairman, three (3) Non-Independent Non-Executive Directors, three (3) IndependentNon-Executive Directors and a Managing Director. The number of independent directors representsone-third of total directors on the Board satisfying the requirement of the Code for Independent Non-Executive Directors. The Board is satisfied with the Board’s composition in respect of minorityrepresentation, as well as with regards to representation of the largest shareholder and other shareholders.

The current Directors with their diverse wealth of skills, experience and knowledge of finance, bankingand general management contribute significantly towards the objectives and advancement of theCompany.

Y.Bhg. Dato’ Azlan Hashim (Independent non-executive director and chairman of Audit Committee)serves as senior independent non-executive Director of the Board to whom any concerns may beconveyed.

The roles of the Chairman and Managing Director are separate with clear responsibilities dividedbetween them to ensure balance of power and authority. Formal position descriptions for the Chairmanand the Managing Director outlining their respective roles and responsibilities are in place.

The Managing Director implements the policies and decisions of the Board, overseeing both operationsand business development. Independent Directors together with other Non-Executive Directors alsocontribute significantly in the areas of policy, performance monitoring and allocation of resources andenhancements of control and governance.

The Company provides orientation and education program for new recruits to the Board.

The profile of each of the Director is set out on pages 8 to 10 of this Annual Report. All Directors haveserved for the full year except Y.Bhg. Datuk Haji Abdul Rahim bin Mohd. Zin representing BankPembangunan Malaysia Berhad, who resigned on 29 November 2006 and was replaced by Y.Bhg. Dato’Gumuri bin Hussain.

(b) Board Meetings

The Board meets ordinarily four times per financial year, with additional meetings being convened asnecessary.

During the financial year ended 31 December 2006, four (4) Board Meetings were held. During themeetings, the Board reviewed the Group’s finance and business performance, draft announcements onthe quarterly results, major investments decisions and other matters raised in relation to the business ofthe Group.

C o r p o r a t e G o v e r n a n c e S t a t e m e n t


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Details of the attendance of each Director are as follows:

Director Status No. of Meetings Total No. ofAttended Board Meetings

The Lord Bagri CBE Non-Independent 4 4Non-Executive Chairman

The Hon. Apurv Bagri Non-Independent 4 4Non-Executive Director& Vice-Chairman

The Lady Bagri Non-Independent 4 4Non- Executive Director

Y.Bhg. Dato’ Azlan Hashim Independent 4 4Non-Executive Director

Y.Bhg. Datuk Haji Abdul Rahim Non-Independent 3 4bin Mohd. Zin Non-Executive Director(resigned w.e.f. 29/11/06)

Y.Bhg. Dato’ Gumuri Non-Independent 0 0bin Hussain Non-Executive Director(appointed w.e.f. 29/11/06)

Y.Bhg. Datuk Abu Hassan Independent 4 4Kendut Non-Executive Director

Encik Ashari bin Ayub Independent 4 4Non-Executive Director

Mr Pratik Basu Managing Director 4 4

The Chairman undertakes primary responsibility for organising information necessary for the Board todeal with the agenda and for providing this information to Directors on a timely basis.

There is a schedule of matters reserved specifically for the Board’s decision, to ensure that the directionand control of the Company is firmly in its hands.

The Directors are notified well in advance of every meeting and Board papers issued are circulatedsufficiently prior to the Meetings to enable Directors to deliberate on the issues to be raised at themeetings and to obtain further explanations, where necessary, in order to be briefed properly before themeeting. Minutes of the Board Meetings are maintained by the Company Secretary.

All Directors have access to the advice and services of the Company Secretary. Where necessary, theDirectors, whether as a Board or in their individual capacity, may engage independent professionals atthe Company’s expense in the furtherance of their duties. All Directors also have access to allinformation within the Company whether as a full board or in their individual capacity.


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(c) Appointment and Re-election of the Board

In accordance with Article 65 of the Company’s Articles of Association, one third (1/3) of the Directorsincluding Managing Director shall retire from office at each Annual General Meeting. Thereafter, theymay offer themselves for re-election.

The Company’s Articles of Association takes into account the Listing Requirements of Bursa MalaysiaSecurities Berhad requiring all Directors to offer themselves for re-election once every three years. TheArticles of Association also requires independent directors to retire from office once every two years toenhance the Company’s Corporate Governance practice.

At the forthcoming AGM, The Hon. Apurv Bagri and Y.Bhg. Dato’ Azlan Hashim shall retire byrotation and have offered themselves for re-election. Y.Bhg. Dato’ Gumuri bin Hussain shall be retiringin accordance with Article 70 of the Company’s Articles of Association and being eligible has offeredhimself for re-election.

Directors over 70 years are required to submit themselves for re-appointment annually in accordance toSection 129(6) of Companies Act, 1965. The Lord Bagri CBE is seeking re-appointment under thissection at the forthcoming Annual General Meeting.

The Board has access to the services of the Company Secretary who ensures that all appointments areproperly made, that all necessary information is obtained from Directors, both for the Company’s ownrecords and for the purposes of meeting statutory obligations, as well as obligations arising from theListing Requirements of Bursa Malaysia Securities Berhad or other regulatory requirements.

(d) Directors’ Remuneration

The remuneration of the Directors is determined at a level which enables the Group to attract and retainDirectors with relevant experience and expertise needed to assist in managing the Group effectively.Currently, the Board undertakes the process of determining the fee, remuneration and otherremuneration packages payable to executive and non-executive directors on a competitive scale withother organisations within the same industry. The determination of the remuneration of all directors isa matter for the Board as a whole.

In the case of the Managing Director, remuneration is linked to individual performance. Performance ismeasured against profits and targets set in the Group’s annual plan having regard to prevailing marketand economic conditions. In the case of non-executive directors, the level of remuneration reflects thelevel of responsibilities undertaken by the particular Non-Executive Director concerned.

During the financial year ended 31 December 2006, the remuneration of the Directors were as follows:-

Salary and other Benefitsentitlements Fees * in kind Total

Nos. RM RM RM RM

DirectorNon-ExecutiveRM50,000 and below 4 – 132,000 – 132,000

ExecutiveRM1,100,000 to RM1,150,000 1 990,974 – 158,762 1,149,736

5 990,974 132,000 158,762 1,281,736

* To be approved by shareholders at forthcoming AGM.

The Board is of the view that the transparency and accountability aspects of corporate governance asapplicable to Director’s remuneration are appropriately served by the ‘band disclosure’ as required by theBursa Malaysia Securities Listing Requirements.


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(e) Directors’ Training

All members of the Board have completed their Mandatory Accreditation Programme (“MAP”) asprescribed by Bursa Securities. The Directors have undergone and will continue to undergo relevantprogrammes and seminars to further enhance their knowledge to enable them to discharge their dutiesand responsibilities more effectively. An in-house training programme was also organised for the Boardduring the year. All the Directors have also completed the prescribed Continuous EducationProgramme (“CEP”) of clocking at least 72 CEP points for continuous education within the datelinegiven by Bursa Securities.

T H E B O A R D C O M M I T T E E S

Audit Committee

The Board has delegated specific responsibilities to an Audit Committee, the details of which are set out onpages 24 to 27. The terms of reference of the Committee are consistent with the Bursa Malaysia SecuritiesListing Requirements. The Committee has the authority to examine particular issues and report back to theBoard with their recommendation. The ultimate responsibility for the final decision on all matters, however,lies with the entire board.

Nomination and Remuneration Committees

In the context of the present nature and size of the activities of the Company, the Board feels that the needfor formation of these committees should be reviewed at a later date. The Board considers that matters suchas appointments to the Board, annual review of required mix, skills and experience of the Board, process forannual assessment of the effectiveness of the Board as a whole and contribution of each individual directorand the remuneration paid to all directors including executive director are matters to be considered by theBoard as a whole.

S H A R E H O L D E R S

(a) Dialogue with Investors

The Company recognises the importance of timely dissemination of information to shareholders andother stakeholders. The Board is committed to ensure that they are well informed of all majordevelopments of the Company and the information is communicated to them through the following:

(i) the Annual Report;(ii) quarterly financial statements to provide an overview of the Group’s business activities and

performance;(iii) the various disclosures and announcements made to the Bursa Malaysia; and(iv) Metrod’s website at www.metrod.com. (v) The Bursa Malaysia also provides for the Company to electronically publish all its announcements,

including full versions of its quarterly results and Annual Reports. These can be accessed at anytime through the Bursa Malaysia internet website at http://announcements.bursamalaysia.com

Enquiries by shareholders are dealt with as promptly as practicable. Shareholders are advised to directtheir enquiries to the Company Secretary at: [email protected] (detailed contact particulars areprovided at page 2 of this annual report ).

The Company has also participated in Bursa Malasyia’s CMDF-Bursa Research Scheme (CBRS). Tworesearch firms M/s : CIMB Securities Sdn Bhd and Standard & Poor’s Malaysia Sdn Bhd were assignedto the Company. Both the research houses have initiated their coverage and their reports are availableon Bursa’s website as per the provisions of the Scheme.


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(b) General Meetings

The Company’s Annual General Meeting serves as a principal forum for dialogue with shareholders.Shareholders are encouraged to attend and opportunity is given to them to ask questions and to seekclarifications on the business and performance of the Group. Suggestions from shareholders are reviewedand implemented, if possible. Directors and senior management staff are present at the AGM to attendto shareholders’ questions. The Chairman of the Audit Committee is also usually available to respond toshareholders’ questions.

Where appropriate, the Chairman of the Board will undertake to provide the questioner with a writtenanswer to any significant question that cannot be readily answered on the spot.

Each item of special business included in the notice of the meeting will be accompanied by a fullexplanation of the effects of a proposed resolution.

A C C O U N T A B I L I T Y A N D A U D I T

(a) Director’s Responsibility Statement

The Group and Company’s financial statements are prepared in accordance with the requirements of theapplicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.The Board of Directors is responsible to ensure that the financial statements of the Group and theCompany give a true and fair view of the state of affairs of the Group and the Company at the end ofthe financial year and of the results and cash flows of the Group and Company for the financial year.The Statement by Directors’ pursuant to Section 169(15) of the Companies Act, 1965 is set out onpage 31 of this Annual Report. The Directors have prepared these financial statements on an on-goingconcern basis as the Directors have a reasonable expectation, having made enquiries, that the Group andCompany have adequate resources to continue in operational existence for the foreseeable future.

(b) Financial Reporting

In presenting the annual financial statements and quarterly announcements to the shareholders, theDirectors aim to present a balanced and understandable assessment of the Group’s position andprospects. The Audit Committee of the Board assists by scrutinising the information to be disclosed, toensure accuracy, adequacy and transparency. This also applies to other price-sensitive public reports andreports to regulators.

The Audit Committee and the Board approve all statutory financial statements before releasing to BursaMalaysia.

(c) Statement on Internal Control

The Board acknowledges its responsibility for establishing a sound system of internal control tosafeguard shareholders’ investment and Group’s assets, and to provide reasonable assurance on thereliability of the financial statements. In addition, equal priority is given to internal control of itsbusiness management and operational techniques. While the internal control system is devised to caterfor the particular needs of the Group and the risks to which it is exposed, such controls by their naturecan only provide reasonable assurance but not absolute assurance against material misstatement or loss.

The Group’s Statement on Internal Control is set out on pages 22 to 23 of this Annual Report.


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(d) Audit Committee

The Audit Committee meets regularly with the chief financial officer, and the external auditors to reviewthe Group’s financial reporting, the nature and scope of audit review.

The composition and terms of reference are in line with the revamped Bursa Malaysia Securities ListingRequirements. The Audit Committee met four (4) times during the financial year. The activities of theCommittee during the financial year ended 31 December 2006 and terms of reference are set out underthe Audit Committee Report on pages 24 to 27 of this Annual Report.

(e) Relationship with Auditors

The Company, through the Audit Committee, maintains a transparent relationship with the externalauditors in seeking their professional advice and towards ensuring compliance with applicableaccounting standards and all statutory requirements.

The external auditors attended Audit Committee Meetings which deliberated on the audit plan andannual financial results.

From time to time, the external auditors highlight to the Audit Committee and the Board on mattersthat require the Board’s attention.

(f ) Corporate Social Responsibility

The Board has taken note of Bursa’s letter dated 11 September 2006 regarding the Corporate SocialResponsibility. The matter is under deliberations by the Board.

(g) Compliance with the Code

Save as set out below, the Group has substantially compiled with the Principles and Best Practices of theCode:

i. The establishment of Nomination and Remuneration Committees has not been undertakenbecause the Board is primarily responsible for making recommendations for any new appointmentsto the Board and assessment of directors on an on-going basis. In addition, the full Boardrecommends the Directors’ fees to be approved at the AGM and determines the other emolumentsof the Directors with the individual Director affected abstaining from decisions in respect of theirindividual remuneration.

ii. The present management information system and internal controls have been designed withconsiderable professional expertise by the internal management team with external consultants andis comprehensive. These are reviewed regularly by the Managing Director along with themanagement team. Improvements in controls are made regularly, wherever risks are perceived andappropriate measures taken to manage these risks. An enterprise-wide risk management frameworkis being set up that will result in a systematic and periodical review and mitigation of the risksaffecting the business. In view of the adequacy of the present internal controls and managementinformation system, the Committee would like to review the need for establishing a separateinternal audit function at a later date.


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O T H E R I N F O R M A T I O N

(a) Non-audit fees

The amount of non-audit fees paid to the external auditors by the Group for the financial yearamounted to RM324,538.

(b) Recurrent Related Party Transactions Statement

The Company entered into Recurrent Related Party Transactions of revenue nature as set out in Circularto Shareholders dated 28 April 2006 which was approved in the Annual General Meeting on 25 May2006.

a) Purchase of copper raw materials:

Metdist Limited is a transacting party in which certain directors of the Company namely The LordBagri CBE and The Hon. Apurv Bagri are the Directors and indirectly hold 100% shares inMetdist Limited. The Lady Bagri who is the Director of the Group, is also deemed to have aninterest of 100% in Metdist Limited through her husband, The Lord Bagri and her son, The Hon.Apurv Bagri.

The total value of the transactions for the financial year 2006 in pursuance to the shareholders’mandate amounted to RM1,135,532,802.

b) Sales of copper goods:

(i) MeTube Sdn Bhd (“MetTube”) is a transacting party in which certain directors of theCompany namely The Lord Bagri CBE, The Hon. Apurv Bagri, Y.Bhg. Dato’ Azlan Hashim,Datuk Abu Hassan Kendut and Mr. Pratik Basu are also the directors.

MetTube is wholly owned by MetTube Malaysia Holdings S.A., which is in-turn whollyowned by Metdist S.A. which has substantial shareholding of 42.14% in Metrod.

The total value of the transactions for the financial year 2006 in pursuance to theshareholders’ mandate amounted to RM255,027.

(ii) AM SGB Sdn Bhd is a transacting party in which Y.Bhg. Dato’ Azlan Hashim, a Director ofthe Company, is also a Director. He is also deemed interested in 1,377,000 shares in Metrod(Malaysia) Bhd by virtue of his shareholdings of 99.99% and his sister’s shareholdings of0.01% in Infinitive Growth Sdn Bhd, a shareholder of the Company.

The total value of the transactions for the financial year 2006 in pursuance to theshareholders’ mandate amounted to RM3,662,313.

The Directors are satisfied that all the transactions were carried out in the ordinary course ofbusiness in accordance with the established procedures to ensure that the related party transactionswere carried out on normal commercial terms not more favourable to the related parties than thosegenerally available to the public and were not to the detriment of the minority shareholders of theCompany. The Directors agreed that the transactions remained essential to the smoothfunctioning of the operations of the Company.


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(c) Sanctions/Penalties

During the financial year, there were no sanctions and/or penalties imposed on the company and itssubsidiaries, directors or management by the relevant regulatory bodies.

(d) Material Contracts

During the year, there were no material contracts entered into by the Company and its subsidiaries (notbeing contracts entered into the ordinary course of business) involving directors and substantialshareholders.

(e) Share Buybacks

There was no share buybacks effected for the financial year.

(f ) Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued by the Company in respect of thefinancial year.

(g) American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

During the financial year, the Company did not sponsor any ADR or GDR programme.

(h) Profit Guarantees

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

(i) Contracts Relating to Loans

There were no contracts relating to loans by the Company.

(j) Revaluation of Landed Properties

The Company does not have a policy on revaluation of landed properties.

This statement was made in accordance with a resolution of the Board dated 21 February 2007.



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I N T R O D U C T I O N

Paragraph 15.27(b) of the Bursa Malaysia Securities Listing Requirements requires the Board of Directors ofpublic listed companies to include in its annual report a “statement about the state of internal control of thelisted issuer as a group.”

Set out below is the Board’s Internal Control Statement which outlines the nature and state of internalcontrol of the Group during the year.

B O A R D R E S P O N S I B I L I T Y

The Board acknowledges its responsibility for the Group’s system of internal control which includes theestablishment of an appropriate control environment and framework as well as reviewing its adequacy andintegrity.

In view of the limitations that are inherent in any system of internal control, this system is designed tomanage, rather than eliminate the risk of failure to achieve corporate objectives. Accordingly, the system canprovide only reasonable but not absolute assurance against material misstatement, operational failures, fraudor loss. The system of internal control encompasses risk management and financial, organisational,operational and compliance controls.

R I S K M A N A G E M E N T F R A M E W O R K

The Board fully supports the contents of the Statement on Internal Control : Guidance for Directors ofPublic Listed Companies (“Internal Control Guidance”). The Board confirms that the Group has an on-going process for identifying, evaluating and managing significant risks faced by the Group, that has been inplace throughout the year and that this process is regularly reviewed by the Board.

A Risk Management Committee oversees and provides guidance to various business process owners on RiskPolicy and Procedures. Risk management training for selected management and staff has been conducted andis continued on an on-going basis. Discussions have been conducted during the year involving differentlevels of management to identify and address risks faced by the Group.

Action plan for various management actions has been formulated to strengthen the risk profile and managethe risks involved especially with respect to major risks such as credit risks, preventive maintenance etc.While these action plans are being reviewed on an on-going basis, action plans for certain managementactions in respect of other risks are being formulated to manage the risks involved.

The Group has a set of well-established operating procedures that cover all critical and significant facets of theGroup business processes. Procedures are mostly geared towards prevention of asset loss but also cover othermajor functional aspects of the Group’s business operations. These functions include cost control, assetsecurity, occupational safety procedures, people management, productivity measurement, product qualityassurance, compliance with regulatory standards and disciplines etc. The procedures are also subject to reviewas processes change, or to meet new business requirements. Compliance with these procedures is an essentialelement of the internal control and risk management framework.

The Group also maintains an annual business planning and review process to ensure that the interest of itsstakeholders are well-balanced.

Formal periodic reviews by the Board on the adequacy and integrity of the system of internal control will beconducted with the assistance of the Audit Committee.

These initiatives would ensure that the Group has in place a formalised ongoing process to identify, measureand manage the significant risks affecting the achievement of its business objectives.

S t a t e m e n t O n I n t e r n a l C o n t r o l


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I N T E R N A L A U D I T F U N C T I O N

The present management information system and internal controls have been designed with considerableprofessional expertise by the internal management team with external consultants and is comprehensive.These are reviewed regularly by the Managing Director along with the management team. Improvements incontrols are made regularly, wherever risks are perceived and appropriate measures taken to manage theserisks. A risk management committee has been set-up that will assist in a systematic and periodical review andmitigation of the risks affecting the business. In view of the adequacy of the present internal controls andmanagement information systems, the Audit Committee would like to review the need for establishing aseparate internal audit function at a later date.

O T H E R K E Y C O M P O N E N T S O F I N T E R N A L C O N T R O L S Y S T E M

The other key components of the Group’s internal control systems are described below:-

• The Board meets at least quarterly and has a formal agenda on matters for discussion. The Chairmanleads the presentation of board papers and provides comprehensive explanation of pertinent issues. Inarriving at any major decision, a thorough deliberation and discussion by the Board is undertaken. Inaddition, the Board is updated on the Group’s activities and operations at every board meeting.

• There is in place an organisational structure with formally defined responsibility lines and authorities tofacilitate quick response to the changes in the evolving business environment and accountability foroperation performance. Capital and non-capital expenditures and acquisition and disposal of anyinvestment interests are subject to appropriate approval processes.

• Comprehensive management reports are generated on a regular and consistent basis to facilitate theBoard, the Group’s Management to perform financial and operating reviews on the various operatingunits. The reviews encompass areas such as financial and non-financial key performance indicators,operating results and compliance with laws and regulations.

• The Group has in place a detailed and well-controlled budgeting process that provides a responsibleaccounting framework.

• The documented policies and procedures form an integral part of the internal control system tosafeguard the Group’s assets against material losses and ensure complete and accurate financialinformation. The documents consists of memoranda, circulars, manuals and handbooks that arecontinuously being revised and updated to meet operational needs.

• There were no material losses incurred during the financial year as a result of weaknesses in internalcontrol. The Board, together with Management, continues to take measures to strengthen the controlenvironment.

M O N I T O R I N G A N D R E V I E W

As mentioned in the Statement of Corporate Governance, the Board has delegated day-to-day functions tothe Managing Director, who is aided by a team of corporate officers to assist with the carrying out of hisduties. Part of his role is to drive each area of the business operations in a manner to ensure the integrity ofthe internal control framework and that effective risk management practice is in place throughout the year.

From a process viewpoint, the Managing Director preside over all regular management meetings in each ofthe business operations. These meetings review financial performance, business issues including internalcontrol matters and risk management.

This statement is made in accordance with a resolution of the Board of Directors dated 21 February 2007.


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The Board of Directors of Metrod (Malaysia) Berhad is pleased to present the following report on the AuditCommittee and its activities for the financial year ended 31 December 2006.

The Audit Committee was established by a resolution of the Board on 6 October 1995.

C O M P O S I T I O N O F T H E A U D I T C O M M I T T E E

The present Audit Committee consists of four (4) members of the Board out of which three (3) members areindependent directors. The Committee has two (2) directors who are also members of the Malaysian Instituteof Accountants (“MIA”). The Chairman of the Committee is an independent Director.

The Audit Committee comprises of the following:-

Audit Committee Designation

Y.Bhg. Dato’ Azlan Hashim (Chairman) Independent Non-Executive Director

Y.Bhg. Datuk Abu Hassan Kendut Independent Non-Executive Director

Encik Ashari bin Ayub Independent Non-Executive Director

Mr. Pratik Basu Managing Director

M E E T I N G S O F T H E A U D I T C O M M I T T E E A N D A T T E N D A N C E

The Audit Committee met four times in year 2006 and all the members attended all the meetings heldduring the financial year.

A C T I V I T I E S O F T H E A U D I T C O M M I T T E E

During the financial year, the Audit Committee’s activities included review of:

• the unaudited quarterly financial results;• the audit plan presented by external auditors;• the annual audited financial statements with the external auditors as well as review of their findings and

recommendations; • the recurrent related party transactions undertaken by the Group in the ordinary course of business

which were carried out on an arm’s length basis;• compliance with accounting standards and other legal requirements and any changes in accounting

policies and practices;• appointment of external auditors and fixation of audit fees;• risk management framework and status reports thereon;• the Audit Committee Report and its recommendation to the Board for inclusion in the Annual Report;• the Statement on Internal Control and its recommendation to the Board for inclusion in the Annual

Report; and• new development and updates on accounting standards issued by MASB.

A u d i t C o m m i t t e e R e p o r t


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I N T E R N A L A U D I T F U N C T I O N

The present management information system and internal controls have been designed with considerableprofessional expertise by the internal management team with external consultants and is comprehensive.These are reviewed regularly by the Managing Director along with the management team. Improvements incontrols are made regularly, wherever risks are perceived, and appropriate measures taken to manage theserisks. An enterprise-wide risk management framework has been set-up that will result in a systematic andperiodic review and mitigation of the risks affecting the business. In view of the adequacy of the presentinternal controls and management information system, the Committee would like to review the need forestablishing a separate internal audit function at a later date.

T E R M S O F R E F E R E N C E O F T H E A U D I T C O M M I T T E E

Membership

1. The Committee shall be appointed by the Board of Directors amongst the Directors of the Companywhich fulfils the following requirements:-

(a) the Committee must be composed of no fewer than 3 members;(b) a majority of the Committee must be independent directors; and(c) at least one member of the Committee:

i) must be a member of the Malaysian Institute of Accountants; or ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’

working experience and:

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

(bb) he must be a member of one of the associations of accountants specified in Part II of the1st Schedule of the Accountants Act 1967

2. The members of the Committee shall elect a Chairman from among themselves who shall be anindependent director.

3. No alternate director should be appointed as a member of the Committee.

4. In the event of any vacancy in the Committee resulting in the non-compliance of the listingrequirement of the Exchange pertaining to composition of audit committee, the Board of Directors shallwithin three months of that event fill the vacancy.

5. The terms of office and performance of the Committee and each of its members must be reviewed bythe Board of Directors at least once every 3 years to determine whether the Committee and its membershave carried out their duties in accordance with their terms of reference.


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M E E T I N G S

1. Secretary

The Company Secretary shall be the Secretary of the Committee or in his absence, another personauthorised by the Chairman of the Committee.

2. Frequency

(a) Meetings shall be held not less than four times a year.

(b) Upon the request of the external auditor, the Chairman of the Committee shall convene a meetingof the Committee to consider any matter the external auditor believes should be brought to theattention of the Directors or shareholders.

3. Quorum

A quorum shall consist of a majority of independent directors.

4. Attendance

(a) The Financial Director, the Head of Internal Audit (where such a function exists) and arepresentative of the external auditor shall normally attend meetings.

(b) Other Directors and employees may attend any particular meeting only at the Committee’sinvitation, specific to the relevant meeting.

(c) At least once a year, the Committee shall endeavor to meet with the external auditors without anyexecutive Board member present.

5. Reporting Procedure

The minutes of each meeting shall be circulated to all members of the Board.

6. Meeting Procedure

The Committee shall regulate its own procedure, in particular:-

(a) the calling of meetings;(b) the notice to be given of such meetings;(c) the voting and proceedings of such meetings;(d) the keeping of minutes; and(e) the custody, production and inspection of such minutes.

R I G H T S

The Committee in performing its duties shall in accordance with a procedure to be determined by the Boardof Directors:

(a) have authority to investigate any matter within its terms of reference;(b) have the resources which are required to perform its duties;(c) have full and unrestricted access to any information pertaining to the Company;(d) have direct communication channels with the external auditor and person(s) carrying out the internal

audit function or activity (if any);(e) be able to obtain independent professional or other advice; and(f ) be able to convene meetings with external auditors, excluding the attendance of the executive members

of the committee, whenever deemed necessary.


27

F U N C T I O N S

1. The Committee shall, amongst others, discharge the following functions:

To review:

(a) the quarterly results and year end financial statements, prior to the approval by the Board ofDirectors, focusing particularly on:-

i) the going concern assumption;ii) changes in or implementation of major accounting policy changes;iii) significant and unusual events; and iv) compliance with accounting standards and other legal requirements.

(b) any related party transaction and conflict of interest situation that may arise within the Companyor Group including any transaction, procedure or course of conduct that raises questions ormanagement integrity.

(c) with the external auditor:

i) the audit plan;ii) his evaluation of the system of internal controls;iii) his audit report;iv) his management letter and management’s response; and v) the assistance given by the Company’s employees to the external auditor.

2. In respect of the appointment of external auditors:

a) to review whether there is reason (supported by grounds) to believe that the external auditor is notsuitable for re-appointment;

b) to consider the nomination of a person or persons as external auditors and the audit fee;c) to consider any questions of resignation or dismissal of external auditors.

3. In respect of the internal audit function:

a) to review the adequacy of the scope, functions and resources of the internal audit function and thatit has the necessary authority to carry out its work;

b) to review the internal audit programme, processes, the results of the internal audit programme,processes or investigation undertaken and whether or not appropriate action is taken on therecommendations of the internal audit function;

c) to review any appraisal or assessment of the performance of members of the internal auditfunction;

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

e) to be informed of any resignation of internal audit staff member and provide the resigning staffmember an opportunity to submit his reasons for resigning.

4. To promptly report such matter to the Exchange if the Committee is of the view that the matterreported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of theBursa Malaysia Securities Listing Requirements.

5. To carry out such other functions as may be agreed to by the Committee and the Board of Directors.

This report is made in accordance with a resolution of the Board of Directors dated 21 February 2007.


28

The Directors have pleasure in submitting their report to the members together with the audited financial statementsof the Group and the Company for the financial year ended 31 December 2006.

P R I N C I P A L A C T I V I T I E S

The principal activities of the Group consist of procurement of raw materials, manufacturing and marketing ofelectrical conductivity grade copper wires, rods, strips, and high-quality flat copper winding wire systems.

The principal activities of the Company are investment holding and manufacturing of electrical conductivity gradecopper wires, rods and strips.

There were no significant changes in the nature of the activities of the Group during the financial year.

F I N A N C I A L R E S U L T S

Group CompanyRM RM

Profit for the financial year 31,023,591 353,295

D I V I D E N D S

The dividend on ordinary shares paid or declared by the Company since 31 December 2005 was as follows:

RMIn respect of the financial year ended 31 December 2005:First and final tax exempt dividend of 11 sen per share on 60,000,000 ordinary shares,paid on 18 July 2006 6,600,000

The Directors now recommend the payment of a final tax exempt dividend of 12 sen per share on 60,000,000ordinary shares amounting to RM7,200,000 which is subject to the approval of members at the forthcoming AnnualGeneral Meeting of the Company.

R E S E R V E S A N D P R O V I S I O N S

All material transfers to or from reserves or provisions during the financial year are shown in the financial statements.

D i r e c t o r s ’ R e p o r tfor the financial year ended 31 December 2006


29

D I R E C T O R S

The Directors who have held office during the period since the date of the last report are as follows:

The Lord Bagri CBE (Chairman)The Hon. Apurv Bagri (Vice Chairman)The Lady BagriY.Bhg. Dato' Azlan HashimY.Bhg. Datuk Abu Hassan KendutAshari bin AyubPratik BasuY.Bhg. Dato’ Gumuri bin Hussain (appointed on 29 November 2006)Y.Bhg. Datuk Haji Abdul Rahim bin Mohd. Zin (resigned on 29 November 2006)

D I R E C T O R S ' I N T E R E S T S I N S H A R E S

According to the register of Directors' shareholdings, none of the Directors holding office at the end of the financialyear held any interests in the shares in the Company and its subsidiaries during the financial year except as follows:

Number of ordinary shares of RM1.00 each in the CompanyAt At

1.1.2006 Addition Disposal 31.12.2006

Shareholdings in which the Directoris deemed to have an interest

Y.Bhg. Dato’ Azlan Hashim 1,377,000 0 0 1,377,000

D I R E C T O R S ' B E N E F I T S

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, beingarrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of theacquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (otherthan directors’ remuneration as disclosed in Note 7 to the financial statements) by reason of a contract made by theCompany or a related corporation with the Director or with a firm of which he is a member, or with a company inwhich he has a substantial financial interest, other than by virtue of transactions entered into in the ordinary courseof business as disclosed in Note 26 to the financial statements.

S T A T U T O R Y I N F O R M A T I O N O N T H E F I N A N C I A L S T A T E M E N T S

Before the income statements and balance sheets were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofallowance for doubtful debts and satisfied themselves that all known bad debts had been written off and thatadequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course ofbusiness their values as shown in the accounting records of the Group and the Company had been writtendown to an amount which they might be expected so to realise.


30

S T A T U T O R Y I N F O R M A T I O N O N T H E F I N A N C I A L S T A T E M E N T S

( C O N T I N U E D )

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

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts inthe financial statements of the Group and the Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and theCompany misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of theGroup and the Company misleading or inappropriate.

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

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

(a) any charge on the assets of the Group or the Company which has arisen since the end of the financial yearwhich secures the liability of any other person; or

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

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report orthe financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the Directors:

(a) the results of the Group's and the Company's operations during the financial year were not substantiallyaffected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to affect substantially the results of the operations ofthe Group or the Company for the financial year in which this report is made.

A U D I T O R S

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with their resolution dated 21 February 2007.


PRATIK BASUManaging Director and Chief Executive Officer


31

We, The Lord Bagri CBE and Pratik Basu, two of the Directors of Metrod (Malaysia) Berhad, state that, in theopinion of the Directors, the financial statements set out on pages 33 to 75 are drawn up so as to give a true and fairview of the state of affairs of the Group and the Company as at 31 December 2006 and of the results and cash flowsof the Group and the Company for the financial year ended on that date in accordance with the provisions of theCompanies Act, 1965 and the Financial Reporting Standards, MASB Approved Accounting Standards in Malaysiafor Entities Other than Private Entities.

Signed on behalf of the Board of Directors in accordance with their resolution dated 21 February 2007.



I, Pratik Basu, the Director primarily responsible for the financial management of Metrod (Malaysia) Berhad, dosolemnly and sincerely declare that the financial statements set out on pages 33 to 75 are, in my opinion, correct,and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions ofthe Statutory Declarations Act, 1960.


Subscribed and solemnly declared by the abovenamed Pratik Basu at Klang on 21 February 2007.

P. DEV ANAND PILLAI (B 253)Commissioner for Oaths

S t a t e m e n t B y D i r e c t o r spursuant to Section 169(15) of the Companies Act, 1965

S t a t u t o r y D e c l a r a t i o npursuant to Section 169(16) of the Companies Act, 1965


32

We have audited the financial statements set out on pages 33 to 75. These financial statements are the responsibilityof the Company’s Directors. It is our responsibility to form an independent opinion, based on our audit, on thesefinancial statements and to report our opinion to you, as a body, in accordance with Section 174 of the CompaniesAct 1965 and for no other purpose. We do not assume responsibility to any other person for the content of thisreport.

We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the Directors, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 andthe Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other thanPrivate Entities so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

(ii) the state of affairs of the Group and the Company as at 31 December 2006 and of the results and cashflows of the Group and the Company for the financial year ended on that date;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and itssubsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of theAct.

The names of the subsidiaries of which we have not acted as auditors are indicated in Note 14 to the financialstatements. We have considered the financial statements of these subsidiaries and the auditors’ reports thereon.

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

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did notinclude any comment made under subsection (3) of Section 174 of the Act.

PRICEWATERHOUSECOOPERS JAYARAJAN A/L U. RATHINASAMY(No. AF: 1146) (No. 2059/06/08 (J))Chartered Accountants Partner of the firm

Kuala Lumpur21 February 2007

R e p o r t O f T h e A u d i t o r sto the members of Metrod (Malaysia) Berhad


33

Group CompanyNote 2006 2005 2006 2005

RM RM RM RM

Revenue 4 1,999,788,446 1,382,376,890 39,117,072 42,447,659

Cost of sales (1,895,120,357) (1,300,799,083) (32,494,913) (33,853,172)

Gross profit 104,668,089 81,577,807 6,622,159 8,594,487

Other operating income 10,688,773 10,860,726 3,060,182 6,424,644

Selling and distribution costs (30,183,155) (27,970,854) (90,850) (62,497)

Administrative expenses (23,021,752) (16,839,124) (4,080,161) (5,283,797)

Other operating expenses (6,095,419) (10,055,810) (1,426,454) (4,712,438)

Profit from operations 5 56,056,536 37,572,745 4,084,876 4,960,399

Finance costs 8 (15,066,909) (7,703,827) (1,278,581) (988,354)

Profit before tax 40,989,627 29,868,918 2,806,295 3,972,045

Tax expense 9 (9,966,036) (7,838,034) (2,453,000) (1,709,394)

Profit for the financial year 31,023,591 22,030,884 353,295 2,262,651

Earnings per share (sen)– basic 10 51.71 36.72

Dividend per ordinary sharein respect of the financialyear (sen) (tax exempt) 11 12 11 12 11

I n c o m e S t a t e m e n t sfor the financial year ended 31 December 2006


34


RM RM RM RM

Non-current assetsProperty, plant and equipment 12 129,585,723 141,091,805 22,470,015 30,445,656Intangible assets 13 30,539,315 31,398,016 0 0Investments in subsidiaries 14 0 0 60,646,117 59,546,117Loan to a subsidiary 14 0 0 9,430,824 10,615,403Deferred tax assets 15 8,708,216 7,162,813 1,485,000 681,000

168,833,254 179,652,634 94,031,956 101,288,176

Current assetsInventories 16 216,231,516 182,461,286 3,939,517 4,642,748Receivables, deposits and prepayments 17 276,520,815 189,449,288 1,383,835 1,048,330Amounts due from subsidiaries 14 0 0 14,315,342 9,720,647Tax recoverable 4,957,350 2,838,248 0 0Deposits, bank and cash balances 18 68,075,261 57,868,840 40,922,149 41,003,919

565,784,942 432,617,662 60,560,843 56,415,644

Current liabilitiesPost-employment benefit obligations 19 704,180 530,410 554,053 296,526Provision for warranties 20 7,140,635 6,245,046 0 0Borrowings (interest bearing):– bank overdraft 21 1,668,320 0 0 0– others 21 297,252,889 181,738,236 0 0Payables 22 91,469,371 142,652,670 3,957,668 4,467,220Amounts due to subsidiary 22 0 0 1,883,208 0Current tax liabilities 11,039,594 8,677,943 1,862,487 1,340,469

409,274,989 339,844,305 8,257,416 6,104,215

Net current assets 156,509,953 92,773,357 52,303,427 50,311,429

Less: Non-current liabilities

Post-employment benefit obligations 19 21,795,698 21,707,184 1,259,749 1,546,489Borrowings (interest bearing) 21 106,236,830 81,601,856 37,017,005 35,747,782Deferred income 23 3,176,335 0 0 0

131,208,863 103,309,040 38,276,754 37,294,271

194,134,344 169,116,951 108,058,629 114,305,334

Capital and reserves attributable toequity holders of the Company

Share capital 24 60,000,000 60,000,000 60,000,000 60,000,000Share premium 17,386 17,386 17,386 17,386Currency translation reserve (2,028,240) (2,622,042) 0 0Retained earnings 25 136,145,198 111,721,607 48,041,243 54,287,948

Total equity 194,134,344 169,116,951 108,058,629 114,305,334

B a l a n c e S h e e t sas at 31 December 2006


35

Issued and fully paid ordinaryshares of RM1.00 each

CurrencyNumber Nominal Share translation Retained

Note of shares value premium reserve earnings TotalRM RM RM RM RM

At 1 January 2006 60,000,000 60,000,000 17,386 (2,622,042) 111,721,607 169,116,951Net profit for thefinancial year 0 0 0 0 31,023,591 31,023,591

Currency translationdifferences arising inthe financial year 0 0 0 593,802 0 593,802

Net gain not recognisedin the income statement 0 0 0 593,802 0 593,802

Dividend for financialyear ended31 December 2005 11 0 0 0 0 (6,600,000) (6,600,000)

At 31 December 2006 60,000,000 60,000,000 17,386 (2,028,240) 136,145,198 194,134,344

At 1 January 2005 60,000,000 60,000,000 17,386 5,084,343 95,690,723 160,792,452Net profit for thefinancial year 0 0 0 0 22,030,884 22,030,884

Currency translationdifferences arising inthe financial year 0 0 0 (7,706,385) 0 (7,706,385)

Net loss not recognisedin the income statement 0 0 0 (7,706,385) 0 (7,706,385)Dividend for financialyear ended31 December 2004 11 0 0 0 0 (6,000,000) (6,000,000)

At 31 December 2005 60,000,000 60,000,000 17,386 (2,622,042) 111,721,607 169,116,951

C o n s o l i d a t e d S t a t e m e n t O f C h a n g e s I n E q u i t yfor the financial year ended 31 December 2006


36

Issued and fully paid ordinary Non-shares of RM1.00 each distributable DistributableNumber Nominal Share Retained

Note of shares value premium earnings TotalRM RM RM RM

At 1 January 2006 60,000,000 60,000,000 17,386 54,287,948 114,305,334Net profit for thefinancial year 0 0 0 353,295 353,295Dividend for financialyear ended31 December 2005 11 0 0 0 (6,600,000) (6,600,000)

At 31 December 2006 60,000,000 60,000,000 17,386 48,041,243 108,058,629

At 1 January 2005 60,000,000 60,000,000 17,386 58,025,297 118,042,683Net profit for thefinancial year 0 0 0 2,262,651 2,262,651Dividend for financialyear ended31 December 2004 11 0 0 0 (6,000,000) (6,000,000)

At 31 December 2005 60,000,000 60,000,000 17,386 54,287,948 114,305,334

C o m p a n y S t a t e m e n t O f C h a n g e s I n E q u i t yfor the financial year ended 31 December 2006


37


RM RM RM RM

Operating activitiesCash receipts from customers 1,972,964,017 1,338,787,228 36,917,005 39,075,746Cash paid to suppliers andemployees (2,059,055,037) (1,329,768,620) (27,593,897) (28,546,701)

Cash from operations (86,091,020) 9,018,608 9,323,108 10,529,045Tax refunded 66,481 1,996,770 0 0Tax paid (8,986,104) (6,059,658) (2,734,983) (4,039,394)Interest expense paid (14,082,237) (6,939,686) (1,225,971) (995,064)

Net cash flow from operatingactivities (109,092,880) (1,983,966) 5,362,154 5,494,587

Investing activitiesInvestments in subsidiaries 3 0 (18,372,084) (1,100,000) 0Loan to subsidiary 0 0 0 (781,000)Repayment of loan by subsidiary 0 0 897,419 0Purchase of property, plant andequipment 12, 17 (21,232,939) (10,721,810) (818,892) (3,277,643)

Proceeds from disposal ofproperty, plant and equipment 3,533,716 66,140 958,922 347,301

Interest income received 2,562,354 2,902,814 1,218,627 1,190,152

Net cash flow from investingactivities (15,136,869) (26,124,940) 1,156,076 (2,521,190)

Financing activitiesProceeds from short term bankborrowings (net) 114,220,610 56,803,696 0 0

Proceeds from long term bankborrowings 33,608,235 0 0 0

Repayments of borrowings (11,870,530) (57,295,159) 0 0Cash grant received 3,354,074 0 0 0Dividends paid to shareholders (6,600,000) (6,000,000) (6,600,000) (6,000,000)

Net cash flow from financingactivities 132,712,389 (6,491,463) (6,600,000) (6,000,000)

(Decrease)/increase in cashand cash equivalents 8,482,640 (34,600,369) (81,770) (3,026,603)

Currency translation differences 55,461 (2,511,979) 0 0Cash and cash equivalents– at start of year 17,368,840 54,481,188 503,919 3,530,522

– at end of year 18 25,906,941 17,368,840 422,149 503,919

C a s h F l o w S t a t e m e n t sfor the financial year ended 31 December 2006


38

The following accounting policies have been applied consistently in dealing with items that are considered materialin relation to the financial statements. These policies have been consistently applied to all the years presented, unlessotherwise stated.

A B A S I S O F P R E P A R A T I O N

The financial statements of the Group and the Company have been prepared under the historical costconvention unless otherwise indicated in this summary of significant accounting policies.

The financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 andthe Financial Reporting Standards, MASB Approved Accounting Standards in Malaysia for Entities Other thanPrivate Entities.

The preparation of financial statements in conformity with the Financial Reporting Standards, MASBApproved Accounting Standards for Entities Other than Private Entities requires the use of estimates andassumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during thefinancial year. Although these estimates are based on the Directors’ best knowledge of current events andactions, actual results may differ from those estimates.

(1) Standards, amendments to published standards and interpretations that are effective

The new accounting standards, amendments to published standards and IC Interpretations to existingstandards effective for the Group’s financial year beginning on or after 1 January 2006 are as follows:

Applicable to the Group’s financial statements

FRS 3 Business CombinationsFRS 101 Presentation of Financial StatementsFRS 102 InventoriesFRS 108 Accounting Policies, Changes in Accounting Estimates and ErrorsFRS 110 Events After the Balance Sheet DateFRS 116 Property, Plant and EquipmentFRS 121 The Effect of Changes in Foreign Exchange RatesFRS 127 Consolidated and Separate Financial StatementsFRS 132 Financial Instruments: Disclosure and PresentationFRS 133 Earnings Per ShareFRS 136 Impairment of AssetsFRS 138 Intangible Assets

Except for the adoption of FRS 3, FRS 136 and FRS 138 the adoption of the above standards did nothave significant financial impact on the Group and Company and did not result in substantial changes inthe accounting policies of the Group and Company.

The adoption of FRS 3, FRS 136 and FRS 138 resulted in a change in accounting policy for goodwillprospectively from 1 January 2006. Until 31 December 2005, goodwill was amortised on a straight linebasis over a period of 15 years and assessed for an indication of impairment at each balance sheet date.

In accordance with FRS 3;

• the Group ceased amortisation of goodwill from 1 January 2006;• accumulated amortisation as at 31 December 2005 has been eliminated with a corresponding

decrease in the cost of goodwill; and• from the period ended 31 December 2006 onwards, goodwill is stated at cost less accumulated

impairment, and is tested annually for impairment, as well as when there are indications ofimpairment.

S u m m a r y O f S i g n i f i c a n t A c c o u n t i n g P o l i c i e sfor the financial year ended 31 December 2006


39

A B A S I S O F P R E P A R A T I O N ( C O N T I N U E D )

(1) Standards, amendments to published standards and interpretations that are effective (continued)

As this standard is applied prospectively, there is no impact of this change in accounting policy on prioryear consolidated financial statements. The impact of non-amortisation of goodwill on the current yearconsolidated financial statements has been a reduction in the other operating expenses by RM 1.8 million.There were no effects on separate financial statements of the Company.

Not applicable to the Group’s financial statements

FRS 2 Share-based PaymentsFRS 5 Non-Current Assets Held for Sale and Discontinued OperationsFRS 128 Investments in AssociatesFRS 131 Interests in Joint VenturesFRS 140 Investment PropertyIC 107 Introduction to EuroIC 110 Government Assistance – No specific relation to Operating ActivitiesIC 112 Consolidation – Special Purpose EntitiesIC 113 Jointly Controlled Entities – Non-Monetary Contributions by VenturersIC 115 Operating Leases – IncentivesIC 121 Income Taxes – Recovery of Revalued Non-Depreciable AssetsIC 125 Income Taxes – Changes in the Tax Status of an Entity or its ShareholdersIC 127 Evaluating the Substance of Transactions Involving the Legal Form of a

Lease.IC 129 Disclosure – Service Concession ArrangementsIC 131 Revenue – Barter Transactions Involving Advertising ServicesIC 132 Intangible Assets – Web Site Costs

(2) Standards, amendments to published standards and interpretations that are not yet effective andhave not been early adopted

Certain new standards and amendments to existing standards have been published that are effective foraccounting periods beginning on or after 1 January 2007 as follows:

Applicable to the Group’s financial statements

• FRS 117 Leases. This standard requires the classification of leasehold land as prepaid lease payments.The Group will apply this standard from financial years beginning on 1 January 2007.

• FRS 124 Related party disclosures. This standard will affect the disclosure of related parties andcertain other related party disclosures. The Group will apply this standard from financial yearsbeginning on 1 January 2007.

• Amendment to FRS 119 Employee Benefits – Actuarial Gains and Losses, Group Plans andDisclosures (effective for accounting periods beginning on or after 1 January 2007). This amendmentintroduces the option of an alternative recognition approach for actuarial gains and losses. It alsoadds new disclosure requirements. As the Group does not intend to change the accounting policyadopted for recognition of actuarial gains and losses, adoption of this amendment will only impactthe format and extent of disclosures presented in the financial statements. The Group will apply theamendment from the financial years beginning 1 January 2007.


40

A B A S I S O F P R E P A R A T I O N ( C O N T I N U E D )

(2) Standards, amendments to published standards and interpretations that are not yet effective andhave not been early adopted (continued)

Not applicable to the Group’s financial statements

• FRS 6 Exploration for and Evaluation of Mineral Resources (effective for accounting periodsbeginning on or after 1 January 2007). FRS 6 is not relevant to the Company’s operations as theCompany does not carry out exploration for and evaluation of mineral resources.

(3) Standards that are not yet effective

• FRS 139 Financial Instruments: Recognition and Measurement (effective date yet to be determinedby Malaysian Accounting Standards Board). This new standard establishes principles for recognisingand measuring financial assets, financial liabilities and some contracts to buy and sell non-financialitems. Hedge accounting is permitted only under strict circumstances. The Group will apply thisstandard when effective.

B B A S I S O F C O N S O L I D A T I O N

The consolidated financial statements include the financial statements of the Company and all of itssubsidiaries made to the end of the financial year.

Subsidiaries are all entities (include special purpose entities) in which the Group has power to exercise controlover the financial and operating policies so as to obtain benefits from their activities.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method ofaccounting, subsidiaries are consolidated from the date on which control is transferred to the Group and are nolonger consolidated from the date that control ceases. The cost of an acquisition is the amount of cash paid andthe fair value at the date of acquisition of other purchase consideration given by the acquirer, together withdirectly attributable expenses of the acquisition (other than costs of issuing shares). At the date of acquisition,the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidatedfinancial statements. The excess of the cost of acquisition over the fair value of the Group’s share of theidentifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of thenet assets of the subsidiary acquired, the difference is recognised directly in the income statement.

All intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses arealso eliminated unless cost cannot be recovered. Accounting policies of subsidiaries have been changed wherenecessary to ensure consistency with the policies adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’sshare of its net assets together with any unamortised balance of goodwill on acquisition and exchangedifferences which were not previously recognised in the consolidated income statement.

C I N V E S T M E N T S

Investments in subsidiaries are stated at cost. Where an indication of impairment exists, the carrying amount ofthe investment is assessed and written down immediately to its recoverable amount. See accounting policyNote G on impairment of non-financial assets.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount ischarged/credited to the income statement.


41

D P R O P E R T Y , P L A N T A N D E Q U I P M E N T

Property, plant and equipment are initially stated at cost. The cost of property, plant and equipment comprisepurchase cost, together with any incidental costs of acquisition.

Long-term leasehold land of the Company was subsequently revalued in 1985 and is stated at revalued amountless subsequent depreciation and impairment losses. The Directors have applied the transitional provision ofInternational Accounting Standards No 16 (Revised) “Property, Plant and Equipment”, as adopted by theMASB, which allows the carrying value of leasehold land to be retained on the basis of previous revaluationswithout update, subject to continuity in the depreciation policy. Accordingly, the valuation of the long-termleasehold land of the Company has not been updated. All other property, plant and equipment are stated athistorical cost less accumulated depreciation and impairment losses.

Freehold land is not amortised as it has an infinite life. Leasehold land is amortised in equal instalments overthe lease period.

Other property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset toits estimated residual value over their expected economic useful lives at the following annual rates:

%

Buildings 3 – 5Plant, machinery and equipment 81/3 – 10Furniture, fixtures and fittings 10 – 20Motor vehicles 121/2 – 20Computers 20 – 331/3

Depreciation on assets under construction commences when the assets are ready for their intended use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to the Group and thecost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All otherrepairs and maintenance are charged to income statement during the financial year in which they are incurred.

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.

At each balance sheet date, the Group assesses whether there is any indication of impairment. If suchindications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable.A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy Note Gon impairment of non-financial assets.

Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included inprofit/(loss) from operations.


42

E I N T A N G I B L E A S S E T S

(i) Goodwill

Goodwill represents the excess of the cost of acquisition of subsidiaries over the Group’s share of the fairvalue of their identifiable net assets at the date of acquisition. Goodwill of subsidiaries is included in thebalance sheet as intangible assets. Capitalised goodwill on consolidation is tested annually for impairmentand stated at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill isallocated to each of the Group’s cash-generating units expected to benefit from the synergies of thecombination. If the recoverable amount of the cash-generating unit is less than the carrying amount of theunit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset inthe unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

(ii) Other intangible assets

Patents

Expenditure on acquired patents is capitalised and amortised over its estimated useful life of 5 years.

Brand name

Brand name is capitalised using the income approach valuation method and is amortised over its estimateduseful life of 7 years.

F I N V E N T O R I E S

Inventories comprising raw materials, work-in-progress and finished goods are stated at the lower of cost andnet realisable value. Cost is determined on a first in first out basis. The cost of finished goods and work-in-progress comprises raw materials, direct expenditure and an appropriate proportion of production overheadsbased on the normal level of activity.

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completionand selling expenses.

G I M P A I R M E N T O F N O N - F I N A N C I A L A S S E T S

Property, plant and equipment, intangible assets and investments in subsidiaries are reviewed for impairmentlosses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.Impairment loss is recognised in the income statement for the amount by which the carrying amount of theasset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sellor value in use. For purposes of assessing impairment, assets are grouped at the lowest level for which there areseparately identifiable cash flows (cash generating units). Non financial assets other than goodwill that sufferedan impairment are reviewed for possible reversal of the impairment at each reporting date.

H T R A D E R E C E I V A B L E S

Trade receivables are carried at invoiced amount less an allowance for doubtful debts. Known bad debts arewritten off and an estimated allowance is made for any doubtful debts.


43

I C A S H A N D C A S H E Q U I V A L E N T S

For purposes of the cash flow statements, cash and cash equivalents comprise cash on hand, bank balances,deposits held at call with banks (excluding deposits which are pledged for banking facilities,) bank overdraftsand short-term, highly liquid investments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value. Bank overdrafts are included within borrowings in currentliabilities on the balance sheet date.

J E M P L O Y E E B E N E F I T S

(i) Short-term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in theperiod in which the associated services are rendered by employees of the Group and the Company.

A defined contribution plan is a pension plan under which the Group and the Company pay fixedcontributions into a separate entity (a fund) and will have no legal or constructive obligations to payfurther contributions if the fund does not hold sufficient assets to pay all employees benefits relating toemployee service in the current and prior period.

(ii) Defined contribution plan

The Group and the Company’s contributions to the defined contribution plan are charged to the incomestatement in the period to which they relate. Once the contributions have been paid, the Group and theCompany have no further payment obligations.

(iii) Defined benefit plan

A defined benefit plan is a retirement plan that defines an amount of retirement benefits to be paid,usually as a function of one or more factors such as age, years of service of compensation.

The Group and the Company operate non-funded defined benefit plans. Under the plans, retirementbenefits are determinable by reference to employees’ earnings and years of service and payable uponattaining the normal retirement age. The liabilities in respect of defined benefit plans are the present valueof the defined benefit obligations at the balance sheet date together with adjustments for actuarialgains/losses and past service cost. The Group and the Company determine the present value of the definedbenefit obligations with sufficient regularity such that the amounts recognised in the financial statementsdo not differ materially from the amounts that would be determined at the balance sheet date.

The defined benefit obligations, calculated using the projected unit credit method, are determined byindependent actuaries, considering the estimated future cash outflows using market yields at balance sheetdate of government securities which have currency and terms to maturity approximating the terms of therelated liabilities.

Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. Theamount of net actuarial gains and losses recognised in the income statement are determined by thecorridor method in accordance with FRS 119 “Employee Benefits” and are charged or credited to incomeover the average remaining service lives of the related employees participating in the defined benefit plans.


44

K P R O V I S I O N S

Provision for liabilities is recognised when the Group and the Company have a present legal or constructiveobligations as a result of past events, when it is probable that an outflow of resources will be required to settlethe obligation and when a reliable estimate of the amount can be made. Provisions are reviewed at each balancesheet date and adjusted to reflect the current best estimate.

Warranties

Provision for warranties provided to customers within the contractual period where a constructive obligationexists due to quality reasons, arising from the Group’s complex manufacturing processes. The amount of theprovision is determined by the probable outflow of resources in terms of monetary values (for example, cost ofreplacement or additional expenses incurred by customers) based on past experience, product nature and theinherent quality risk of manufacturing process in the context of customer expectations.

L I N C O M E T A X E S

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group and theCompany operate and include all taxes based upon the taxable profits, including real property gains taxespayable on disposal of properties.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between theamounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financialstatements. However, deferred tax assets and liabilities are not recognised on temporary differences arising fromgoodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is nota business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available againstwhich the deductible temporary differences or unused tax losses can be utilised.

Tax rates enacted, or substantively enacted, by the balance sheet date are used to determine deferred tax.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when they relate to income taxes levied by the same taxation authority and theGroup intends to settle its current tax assets and liabilities on a net basis.

M S H A R E C A P I T A L

(i) Classification

Ordinary shares are classified as equity.

(ii) Dividends to shareholders of the Company

Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. Adividend declared after the balance sheet date, but before the financial statements are authorised for issue,is not recognised as a liability at the balance sheet date. Upon the dividend becoming payable, it will beaccounted for as a liability.


45

N B O R R O W I N G S

Borrowings are recorded at the amount of proceeds received.

Interest expense relating to borrowings is reported within finance costs in the income statement.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defersettlement of the liability for at least 12 months after the balance sheet date.

O R E V E N U E R E C O G N I T I O N

(i) Revenue

Revenue from the sale of goods is recognised upon delivery of products when significant risks and rewardsof ownership of the goods are transferred to the buyer.

(ii) Dividend income

Dividend income from investments in subsidiaries is recognised when the Company’s rights to receivepayment is established.

(iii) Interest income

Interest income is recognised on a time proportion basis taking into account the principal outstanding andthe effective rate over the period to maturity, when it is determined that such income will accrue to theGroup.

P F O R E I G N C U R R E N C I E S

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currencyof the primary economic environment in which the entity operates (‘the functional currency’). Theconsolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functionaland presentation currency.

(ii) Foreign currency transactions and balances

In preparing the financial statements of the individual entities foreign currency transactions are translatedinto the functional currency using the exchange rates prevailing at the dates of the transactions. Foreignexchange gains and losses resulting from the settlement of such transactions and from the translation offoreign currency monetary assets and liabilities at year-end exchange rates are recognised in the incomestatement.

(iii) Group companies

The results and financial position of all the group entities that have a functional currency different fromthe presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date ofthat balance sheet;

• income and expenses for each income statement are translated at average exchange rates; and• all resulting exchange differences are recognised as a separate component of equity.


46

P F O R E I G N C U R R E N C I E S ( C O N T I N U E D )

On consolidation, exchange differences arising from the translation of the net investment in foreign operationsare taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differencesthat were recorded in equity are recognised in the income statement as part of the gain or loss on the sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and are translated at the closing rate.

Q F I N A N C I A L I N S T R U M E N T S

(i) Description

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and afinancial liability or equity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset fromanother enterprise, a contractual right to exchange financial instruments with another enterprise underconditions that are potentially favourable, or an equity instrument of another enterprise.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial assetto another enterprise, or to exchange financial instruments with another enterprise under conditions thatare potentially unfavourable.

(ii) Financial instruments recognised on the balance sheet

The particular recognition method adopted for financial instruments recognised on the balance sheet isdisclosed in the individual policy statements associated with each item.

(iii) Financial instruments not recognised on the balance sheet

Foreign currency forward contracts

The Group is a party to financial instruments that comprise foreign currency forward contracts. TheGroup enters into foreign currency forward contracts to protect the Group from movements in exchangerates by establishing the rate at which a foreign currency asset or liability will be settled.

Forward copper contracts

In a subsidiary company, for sales to customers entered into where copper price is fixed on a forward basis,the subsidiary company enters into forward copper contracts to establish back-to-back hedging to protectagainst risk arising from the volatility of copper price movements.

Gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferreduntil the date of such transactions, at which time they are included in the measurement of suchtransactions. All other gains and losses relating to hedge instruments are recognised in the incomestatement in the same period as the differences on the underlying hedged items. Gains and losses oncontracts that are no longer designated as hedges are included in the income statement.

These instruments are not recognised in the financial statements on inception.


47

Q F I N A N C I A L I N S T R U M E N T S ( C O N T I N U E D )

(iv) Fair value estimation for disclosure purpose

The fair values of forward foreign exchange contracts and copper forward contracts are determined usingforward market rates at the balance sheet date.

In assessing the fair value of forward foreign exchange contracts and copper forward contracts, the Groupuses assumptions that are based on market conditions existing at each balance sheet date.

The fair value of financial assets is estimated by discounting the future contractual cash flows using currentmarket interest rates available to the Group.

The fair value of financial liabilities is estimated by discounting the future contractual cash flows at thecurrent market rate available to the Group for similar financial instruments.

The face values of other financial assets (less any estimated credit adjustments) and financial liabilities witha maturity period of less than one year are assumed to approximate their fair values.

R S E G M E N T R E P O R T I N G

Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segmentsprovide products or services that are subject to risks and returns that are different from those of other businesssegments. Geographical segments provide products or services within a particular economic environment that issubject to risks and returns that are different from those components operating in other economicenvironments.

Segment revenue, expenses, assets and liabilities are those amounts resulting from the operating activities of asegment that are directly attributable to the segment and the relevant portion that can be allocated on areasonable basis to the segment. Segment revenue, expenses, assets and liabilities are determined beforeintragroup balances and intra group transactions are eliminated as part of the consolidated process, except tothe extent that such intragroup balances and transactions are between group enterprises within a single segment.

S G O V E R N M E N T G R A N T S

Government grants relating to purchase of assets are included in non-current liabilities as deferred income andare credited to the income statement on a straight line basis over the expected life of the related assets.


48

1 G E N E R A L I N F O R M A T I O N

The principal activities of the Group consist of procurement of raw materials, manufacturing and marketing ofelectrical conductivity grade copper wires, rods, strips and high-quality flat copper winding wire systems. Theprincipal activities of the Company are investment holding and manufacturing of electrical conductivity gradecopper wires, rods and strips.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on theMain Board of Bursa Malaysia Securities Berhad.

The address of the registered office of the Company is 20th Floor, East Wing, Plaza Permata, Jalan Kampar, OffJalan Tun Razak, 50400 Kuala Lumpur, Malaysia.

The address of the principal place of business of the Company is No.3, Lengkuk Keluli 2, Bukit Raja PrimeIndustrial Park, 41720 Klang, Selangor Darul Ehsan, Malaysia.

2 F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S

The Group’s activities expose it to a variety of financial risks, including foreign currency exchange risk, marketrisk, credit risk, interest rate risk, liquidity and cash flow risk. The Group’s overall financial risk managementobjective is to ensure that the Group creates value for its shareholders. The Group focuses on theunpredictability of financial markets and seeks to minimise potential adverse effects on the financialperformance of the Group. Financial risk management is carried out through risk reviews, internal controlsystems, a comprehensive insurance programme and adherence to Group financial risk management policies.The Board reviews these risks and approves the treasury policies, which covers the management of these risks.The Group uses derivative financial instruments such as foreign exchange contracts to hedge certain exposures.It does not trade in derivative financial instruments.

Foreign currency exchange risk

The foreign exchange risk of the Group arises as a result of the foreign currency transactions entered into byGroup companies in currencies other than their functional currencies. Foreign currency trade transactionsentered into by the Group are mainly in US Dollar and Euro. The Group enters into forward foreign currencyexchange contracts to limit its exposure on foreign currency receivables and payables, and on cash flowsgenerated from anticipated transactions denominated in foreign currencies.

Market risk

Copper raw material costs represent a significant part of total cost over the Group’s product range. Copper,being a traded commodity, is by nature highly volatile and fluctuates significantly. The Group purchases copperraw material from its suppliers on the basis of London Metal Exchange (LME) copper price plus premiumaccording to trade practice. These suppliers provide back-to-back hedging for the Group’s sales to customers. Asubsidiary company also enteres into forward copper contracts to ensure back to back copper pricing for sales toits customers. Therefore, pricing risk is optimally managed allowing the Group to concentrate on itsmanufacturing activities without any market exposure in terms of copper price itself.

Through the facility made available from its suppliers and market, the Group is able to manage various risks ofquantity, delivery, pricing, currency and payment on a cost effective basis.

N o t e s T o T h e F i n a n c i a l S t a t e m e n t sfor the financial year ended 31 December 2006


49

2 F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S A N D P O L I C I E S

( C O N T I N U E D )

Credit risk

Credit risk arises when sales are made on credit terms. The Group has a credit policy in place and the exposureto credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit.The Board of Directors approves the credit policy and reviews credit limits periodically. The Group managesthe overall credit risk by limiting the aggregate exposure to any individual customer.

Cash assets are invested safely and profitably.

The Group considers the risk of material loss in the event of non-performance by a financial counter party to beunlikely.

Interest rate risk

The Group’s and the Company’s income and operating cash flows are dependent on changes in market interestrates. Interest rate exposure arises from the Group’s and the Company’s borrowings and deposits.

Liquidity and cashflow risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through anadequate amount of committed credit facilities, and the ability to meet financial obligations. Due to thedynamic nature of the underlying business, the Group aims at maintaining flexibility in funding by keepingcommitted credit lines available.

3 S I G N I F I C A N T A C Q U I S I T I O N S

Year 2006

There was no significant acquisition during the financial year.

Year 2005

On 21 December 2005, ASTA Holdings GmbH, a wholly-owned subsidiary, acquired the entire equity interestin Insulated Conductors and Enameled Wires N.V. Netherlands (“ICEW”) and its subsidiary, Invex InsulatedConductors (Baoying) Co. Ltd., China, for a cash consideration of Euro4.5 million (equivalent to RM20.2million).

The effect of this acquisition on the financial results of the Group during the financial year ended 31 December2005 is shown below.

RM

Revenue 545,754Expenses (473,175)

Profit from operations 72,579Finance cost (11,311)

Profit before tax 61,268Tax expense 0

Net profit 61,268


50

3 S I G N I F I C A N T A C Q U I S I T I O N S ( C O N T I N U E D )

The effect of the acquisition on the Group’s financial position at the end of the financial year ended31 December 2006 is as follows:

RM

Non-current assets (including goodwill on consolidation) 16,868,726Current assets 19,184,908Current liabilities (including borrowings to finance the acquisition) (35,995,307)

Increase in Group’s net assets 58,327

Details of net assets acquired, goodwill and cash flow arising from the acquisitions are as follows:

At dateof acquisition

RM

Property, plant and equipment (Note 12) 14,828,440Deferred tax assets (Note 15) 831,897Inventories 3,490,858Receivables and deposits 12,808,990Deposits, bank and cash balances 2,826,733Payables (3,815,979)Current tax liabilities (48,212)Borrowings (interest bearing) – current (10,932,299)

Fair value of net assets acquired on 21 December 2005 19,990,428Goodwill (Note 13) 1,208,389

Cost of acquisition (comprising purchase consideration andexpenses directly attributable to the acquisition) 21,198,817

Purchase consideration 20,190,150Add: Expenses directly attributable to the acquisition paid in cash 1,008,667

Cost of acquisition 21,198,817Less: Cash and cash equivalents of subsidiaries acquired (2,826,733)

Cost of acquisition financed by borrowings 18,372,084

Cash flows on acquisitions of subsidiaries

The impact of the acquisitions during the financial year on the cash flows of the Group and the Company is asfollows:

Group Company2006 2005 2006 2005RM RM RM RM

Cash outflows from investing activities– ASTA Holdings GmbH 0 18,372,084 0 0

0 18,372,084 0 0


51

4 R E V E N U E

Revenue of the Company represents invoiced value of goods processed. Revenue of the Group representsinvoiced value of goods sold, net of returns and discounts, after eliminating sales within the Group.

5 P R O F I T F R O M O P E R A T I O N S

The following amounts have been charged/(credited) in arriving at profit from operations:


Property, plant and equipment– depreciation charge 25,482,409 24,741,000 7,623,153 9,304,463– impairment losses (included under

other operating expenses) 0 5,482,000 0 0– written off 1,385,852 0 947,610 0Impairment of investment in a subsidiary(included under other operating expenses) 0 0 0 4,487,000

Rental of premises 814,576 394,700 315,450 290,400Staff cost (including Directors’ otheremoluments) (Note 6) 80,982,569 74,361,945 8,567,420 9,052,374

Allowance for doubtful debts 7,003,648 2,038,913 0 0Recovery of bad debts (3,328,913) 0 0 0Inventories written off 572,236 393,210 572,236 393,210Amortisation of intangible assets 1,960,979 3,762,398 0 0Provision for warranties 2,830,547 5,301,819 0 0Reversal of provision for warranties (1,907,255) 0 0 0Foreign exchange gains (1,360,917) (5,649,611) (772,922) (5,539,848)Foreign exchange losses 1,771,022 1,192,030 1,286,324 405,909Insurance claim received (2,641,331) (492,645) (283,868) (8,795)Interest income (2,816,952) (2,919,284) (1,492,008) (1,129,533)Loss/(gain) on disposal of property, plantand equipment (1,375,050) 16,609 (735,152) (109,782)

Auditors' remuneration:Statutory audit– PricewaterhouseCoopers, Malaysia 120,744 100,000 58,000 53,000– Affiliates of PricewaterhouseCoopers

Malaysian firm 275,551 251,654 0 0– Other non-affiliated audit firms 121,221 35,872 0 0

517,516 387,526 58,000 53,000

Non-audit fees– PricewaterhouseCoopers, Malaysia 5,000 5,000 5,000 5,000– Affiliates of PricewaterhouseCoopers

Malaysian firm 312,620 245,143 53,744 64,700– Other non-affiliated audit firms 6,918 3,291 0 0

324,538 253,434 58,744 69,700


52

6 S T A F F C O S T


Wages, salaries and bonus 63,473,041 57,775,230 7,699,280 7,977,008Social contribution cost 14,126,538 13,109,826 51,645 49,830Defined benefit plan (Note 19) 1,503,070 1,948,747 23,792 171,567Defined contribution plan 1,879,920 1,528,142 792,703 853,969

80,982,569 74,361,945 8,567,420 9,052,374

7 D I R E C T O R S ’ R E M U N E R A T I O N


Directors’ fees 132,000 126,000 132,000 126,000Other emoluments 990,974 943,398 990,974 943,398Estimated monetary value ofbenefits-in-kind 158,762 141,046 158,762 141,046

1,281,736 1,210,444 1,281,736 1,210,444

8 F I N A N C E C O S T


Interest expense on borrowings 15,066,909 7,703,827 1,278,581 988,354


53

9 T A X E X P E N S E


Current tax– Malaysian income tax 4,360,000 4,373,394 3,257,000 3,367,394– Foreign tax 7,014,470 5,620,958 0 0Deferred tax (Note 15) (1,408,434) (2,156,318) (804,000) (1,658,000)

9,966,036 7,838,034 2,453,000 1,709,394

Current year income tax 11,428,446 9,263,475 3,257,000 2,558,000Utilisation of reinvestment allowances 0 (394,000) 0 (394,000)Under/(over) accrual of income tax inprior year (53,976) 1,124,877 0 1,203,394

Origination and reversal of temporarydifferences (1,408,434) (2,156,318) (804,000) (1,658,000)

9,966,036 7,838,034 2,453,000 1,709,394

The explanation of the relationship between tax expense and profit from ordinary activities before tax is asfollows:


Numerical reconciliation between taxexpense and the product of accountingprofit multiplied by the Malaysian tax rate

Profit from ordinary activities before tax 40,989,627 29,868,918 2,806,295 3,972,045

Tax calculated at the Malaysian tax rateof 28% (2005: 28%) 11,477,096 8,363,297 785,763 1,112,173

Tax effects of:– income not subject to tax (1,331,460) (1,574,543) (288,460) (1,574,543)– expenses not deductible for tax purposes 2,686,216 2,168,254 1,900,697 2,790,370– subsidiaries’ profits not subject to tax (2,187,242) 0 0 0– different tax rates in other countries (697,874) (595,833) 0 0– change in deferred tax recognition rate 65,000 0 55,000 0– under/(over) over accrual of tax in prior year (53,976) 1,124,877 0 1,203,394– deductible temporary differencespreviously not recognised (129,000) (1,494,395) 0 (1,428,000)

– utilisation of reinvestment allowances 0 (394,000) 0 (394,000)– others 137,276 240,377 0 0

Tax expense 9,966,036 7,838,034 2,453,000 1,709,394


54

10 E A R N I N G S P E R S H A R E

Basic earnings per share of the Group is calculated by dividing the profit attributable to equity holders of theCompany by the number of ordinary shares in issue during the financial year.

Group2006 2005

Profit attributable to equity holders of the Company (RM) 31,023,591 22,030,884Number of ordinary shares in issue 60,000,000 60,000,000Basic earnings per share (sen) 51.71 36.72

11 D I V I D E N D S I N R E S P E C T O F O R D I N A R Y S H A R E S

Group and Company2006 2005

Gross Amount of Gross Amount ofper share dividend per share dividendsen RM sen RM

Proposed/declared first and final taxexempt dividend 12 7,200,000 11 6,600,000


55

12 P R O P E R T Y , P L A N T A N D E Q U I P M E N T

Plant, Furniture,Long term machinery fixtures Aset

Freehold leasehold and and Motor underland land Buildings equipment fittings vehicles Computers construction TotalRM RM RM RM RM RM RM RM RM

GroupNet book valueAt 1 January 2006 19,013,017 1,825,125 23,528,336 82,321,780 9,335,852 1,061,735 2,057,996 1,947,964 141,091,805Additions 0 3,270,686 0 3,305,507 2,523,915 321,683 510,937 4,258,687 14,191,415Disposals (1,902,905) 0 0 (273,334) (1,482) (1,083) (22,357) 0 (2,201,161)Reclassifications 0 0 0 1,127,866 374,063 0 520,352 (2,022,281) 0Depreciation charge 0 (41,048) (1,930,597) (18,986,233) (2,863,916) (432,640) (1,227,975) 0 (25,482,409)Write-off 0 0 (947,610) (438,242) 0 0 0 0 (1,385,852)Currency translationdifferences 253,689 350 643,443 2,024,086 303,331 22,944 49,765 74,317 3,371,925

At 31 December 2006 17,363,801 5,055,113 21,293,572 69,081,430 9,671,763 972,639 1,888,718 4,258,687 129,585,723

At 31 December 2006Cost 20,802,229 3,296,406 37,501,285 176,400,650 18,892,606 2,231,469 5,582,715 4,258,687 268,966,047Valuation 0 2,287,000 0 0 0 0 0 0 2,287,000Accumulated depreciation 0 (528,293) (14,637,263) (104,381,716) (9,220,843) (1,258,830) (3,693,997) 0 (133,720,942)Accumulated impairmentlosses (3,438,428) 0 (1,570,450) (2,937,504) 0 0 0 0 (7,946,382)

Net book value 17,363,801 5,055,113 21,293,572 69,081,430 9,671,763 972,639 1,888,718 4,258,687 129,585,723

The net book value of property, plant and equipment under held hire-purchase arrangements at the balance sheet date was RM2,234,365(31-12-2005: RM 2,427,474).

Net book valueAt 1 January 2005 20,727,672 1,849,469 25,843,084 98,367,501 10,362,822 1,235,814 2,195,252 1,071,814 161,653,428Acquisition ofsubsidiaries (Note 3) 0 0 869,280 13,566,143 140,855 0 252,162 0 14,828,440

Additions 0 0 2,491,075 3,539,080 2,372,142 373,579 566,664 1,379,270 10,721,810Disposals 0 0 0 0 (2,634) (65,712) (10,432) 0 (78,778)Reclassifications 0 0 0 121,872 0 0 237,436 (359,308) 0Depreciation charge 0 (24,344) (1,848,691) (19,211,582) (2,298,382) (388,874) (969,127) 0 (24,741,000)Impairment losses (995,000) 0 (1,570,450) (2,916,550) 0 0 0 0 (5,482,000)Currency translationdifferences (719,655) 0 (2,255,962) (11,144,684) (1,238,951) (93,072) (213,959) (143,812) (15,810,095)

At 31 December 2005 19,013,017 1,825,125 23,528,336 82,321,780 9,335,852 1,061,735 2,057,996 1,947,964 141,091,805

At 31 December 2005Cost 24,198,090 25,720 38,073,377 172,300,529 16,028,749 1,758,323 4,535,763 1,947,964 258,868,515Valuation 0 2,287,000 0 0 0 0 0 0 2,287,000Accumulated depreciation 0 (487,595) (12,974,591) (87,062,199) (6,692,897) (696,588) (2,477,767) 0 (110,391,637)Accumulated impairmentlosses (5,185,073) 0 (1,570,450) (2,916,550) 0 0 0 0 (9,672,073)

Net book value 19,013,017 1,825,125 23,528,336 82,321,780 9,335,852 1,061,735 2,057,996 1,947,964 141,091,805

The net book value of property, plant and equipment under held hire-purchase arrangements at the balance sheet date was RM2,427,474(31-12-2004: RM 3,115,175).


56

12 P R O P E R T Y , P L A N T A N D E Q U I P M E N T ( C O N T I N U E D )

Plant,Long term machinery Furniture,leasehold Freehold and fixtures Motorland land Buildings equipment fittings vehicles Computers TotalRM RM RM RM RM RM RM RM

CompanyNet book valueAt 1 January 2006 1,825,125 6,985,044 11,774,846 9,165,819 169,439 416,311 109,072 30,445,656Additions 0 0 0 378,211 194,794 163,747 82,140 818,892Disposal 0 0 0 (223,770) 0 0 0 (223,770)Depreciation charge (24,346) 0 (1,193,947) (5,971,693) (107,637) (222,440) (103,090) (7,623,153)Write-off 0 0 (947,610) 0 0 0 0 (947,610)

At 31 December 2006 1,800,779 6,985,044 9,633,289 3,348,567 256,596 357,618 88,122 22,470,015

At 31 December 2006Cost 25,720 6,985,044 18,133,822 75,072,824 1,750,753 1,112,199 1,140,141 104,220,503Valuation 2,287,000 0 0 0 0 0 0 2,287,000Accumulated depreciation (511,941) 0 (8,500,533) (71,724,257) (1,494,157) (754,581) (1,052,019) (84,037,488)

Net book value 1,800,779 6,985,044 9,633,289 3,348,567 256,596 357,618 88,122 22,470,015

At 1 January 2005 1,849,469 6,985,044 10,477,718 16,758,268 93,598 429,063 116,835 36,709,995Additions 0 0 2,491,075 350,942 147,296 176,940 111,390 3,277,643Inter-company transfers 0 0 0 (237,519) 0 0 0 (237,519)Depreciation charge (24,344) 0 (1,193,947) (7,705,872) (71,455) (189,692) (119,153) (9,304,463)

At 31 December 2005 1,825,125 6,985,044 11,774,846 9,165,819 169,439 416,311 109,072 30,445,656

At 31 December 2005Cost 25,720 6,985,044 19,426,827 77,953,154 1,555,959 948,452 1,063,651 107,958,807Valuation 2,287,000 0 0 0 0 0 0 2,287,000Accumulated depreciation (487,595) 0 (7,651,981) (68,787,335) (1,386,520) (532,141) (954,579) (79,800,151)

Net book value 1,825,125 6,985,044 11,774,846 9,156,819 169,439 416,311 109,072 30,445,656

The long-term leasehold land of the Company stated at valuation was revalued by the Directors in 1985 basedon a valuation carried out by an independent qualified valuer using the “Fair Market Value Approach.


Net book value of revalued long-termleasehold land of the Company, hadthis asset been carried at cost lessaccumulated depreciation 19,317 19,588 19,317 19,588


57

13 I N T A N G I B L E A S S E T S

Goodwill Patents Brand name TotalRM RM RM RM

GroupNet book valueAt 1 January 2006 23,652,561 4,433,309 3,312,146 31,398,016Amortisation charge 0 (1,332,865) (628,114) (1,960,979)Currency translation differences 843,104 146,646 112,528 1,102,278

At 31 December 2006 24,495,665 3,247,090 2,796,560 30,539,315

At 31 December 2006Cost 24,495,665 6,718,116 4,432,284 35,646,065Accumulated amortisation 0 (3,471,026) (1,635,724) (5,106,750)

Net book value 24,495,665 3,247,090 2,796,560 30,539,315

Net book valueAt 1 January 2005 27,853,674 6,618,969 4,556,926 39,029,569Acquisition of subsidiaries (Note 3) 1,208,389 0 0 1,208,389Amortisation charge (1,757,125) (1,362,971) (642,302) (3,762,398)Currency translation differences (3,652,377) (822,689) (602,478) (5,077,544)

At 31 December 2005 23,652,561 4,433,309 3,312,146 31,398,016

At 31 December 2005Cost 26,300,259 6,487,768 4,280,312 37,068,339Accumulated amortisation (2,647,698) (2,054,459) (968,166) (5,670,323)

Net book value 23,652,561 4,433,309 3,312,146 31,398,016

The carrying amount of the goodwill has been allocated to the cash generating units(CGUs) as follows:

RMAustria OperationsASTA Elektrodraht GmbH & Co. and ASTA Elektrodraht GmbH 23,244,372

China OperationsASTA Conductors Co. Ltd 1,251,293

24,495,665

The recoverable amount of a CGU is determined based on value in use calculations. These calculations use pre-tax cash flow projections derived from the most recent financial budgets approved by management for the nextfive years. A pre-tax discount rate of 6.7% for Austrian operations and 7.8% for China operations has beenused for discounting the cash flow projections. The discount rate reflects the specific risks relating to the CGUs.Based on these parameters the recoverable amounts of the CGUs were higher than their carrying amounts afterallocation of goodwill to the CGUs. The Group therefore did not recognise any impairment loss on goodwill.


58

14 I N T E R E S T I N S U B S I D I A R I E S

Company2006 2005RM RM

Non-current assetsUnquoted shares at cost 66,879,762 65,779,762Accumulated impairment losses (6,233,645) (6,233,645)

Investments in subsidiaries 60,646,117 59,546,117Loan to a subsidiary 9,430,824 10,615,403

70,076,941 70,161,520

Current assetsAmounts receivable from subsidiaries 12,353,122 8,818,509Loan to a subsidiary 1,962,220 902,138

14,315,342 9,720,647

Loan to a subsidiary is unsecured and interest is charged at the rate of 5% per annum (2005: Nil). Therepayment of the loan outstanding at balance sheet date is as follows:

2006 2005RM RM

Repayments due:– less than 1 year 1,962,220 902,138– later than 1 year and not later than 2 years 2,943,330 2,435,000– later than 2 years and not later than 5 years 6,487,494 8,180,403

11,393,044 11,517,541

Amounts due from subsidiaries are trade in nature and are repayable based on normal credit terms. The loan tothe subsidiary is denominated in Thai Baht.

2006 2005RM RM

The currency exposure profile of amounts due fromsubsidiaries is as follows:– US Dollars 393,042 27,025– Euro 64,802 1,050,667– Indonesian Rupiah 0 224,969

457,844 1,302,661


59

14 I N T E R E S T I N S U B S I D I A R I E S ( C O N T I N U E D )

Details of the subsidiaries are as follows:

Group’s effective interestCountry of 2006 2005

Name incorporation Direct Indirect Direct Indirect Principal activities% % % %

* Metrod (OFHC) Sdn Bhd Malaysia 100 – 100 –

ø,1 P.T. Metrod Indonesia Indonesia 99 1 99 1

ø Metrod Industries Limited Thailand 99.99 – 99.99 –

∞ Metrod (Singapore) Pte Ltd Singapore 100 – 100 –

∞,2 ASTA Holdings GmbH Austria – 100 – 100

∞,3 ASTA Elektrodraht GmbH Austria – 100 – 100

∞,4 ASTA Elektrodraht GmbH Austria – 100 – 100& Co.(Limited Partnership)

ø,5 Insulated Conductors & Netherlands – 100 – 100Enameled Wires N.V.

Procurement of rawmaterials and marketingof electrical conductivitygrade copper wires, rodsand strips. Providingapproved OHQ servicesto related companies.

Dormant. Underliquidation.

Manufacturing of copperproducts.

Investment holding andtrading of copper wires,rods, strips and relatedproducts.

Investment holding

To function as a generalpartner of the limitedcommercial partnership,ASTA ElektrodrahtGmbH & Co. and theleasing of premises toASTA ElektrodrahtGmbH & Co.

Production of highquality flat copperwinding wire systems foruse in heavy electricalmachinery, specificallyproducts such asContinuously TransposedConductors (“CTC”),machine made RoebelBars and EnameledMultiple Conductors.

Investment holding.


60

14 I N T E R E S T I N S U B S I D I A R I E S ( C O N T I N U E D )

Details of the subsidiaries are as follows:

Group’s effective interestCountry of 2006 2005

Name incorporation Direct Indirect Direct Indirect Principal activities% % % %

ø,5 ASTA Conductors China – 100 – 100Co. Ltd.(Formerly known as InvexInsulated Conductors(Baoying) Co. Ltd)

* Metrod Flat Products Malaysia 100 – – –Sdn Bhd(Acquired on 18-9-2006)

* Audited by PricewaterhouseCoopers, Malaysia∞ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and

independent legal entity from PricewaterhouseCoopers Malaysiaø Audited by a firm other than member firm of PricewaterhouseCoopers International Limited1 Indirect interest is held through Metrod (OFHC) Sdn. Bhd.2 Indirect interest is held through Metrod (Singapore) Pte Ltd.3 Indirect interest is held through ASTA Holdings GmbH and Metrod (Singapore) Pte Ltd.4 Indirect interest is held through ASTA Holdings GmbH and Asta Elektrodraht GmbH.5 Indirect interest is held through ASTA Holdings GmbH.6 Indirect interest is held through Insulated Conductors & Enameled Wires N.V.

Production of highquality flat copperwinding wire systems foruse in heavy electricalmachinery, specificallyproducts such asContinuously TransposedConductors (“CTC”),Enameled MultipleConductors & otherancillary products.

Manufacturing ofinsulated and noninsulated copper strips.The company wasdormant sinceincorporation.


61

15 D E F E R R E D T A X

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when the deferred taxes relate to the same tax authority. The followingamounts, determined after appropriate offsetting, are shown in the balance sheet:


Deferred tax assets (8,708,216) (7,162,813) (1,485,000) (681,000)

(8,708,216) (7,162,813) (1,485,000) (681,000)

At 1 January (7,162,813) (4,918,364) (681,000) 977,000

Charged/(credited) to income statement(Note 9)

– property, plant and equipment (1,023,349) (430,011) (810,000) (1,555,000)– post-employment benefit obligations 65,268 (257,460) 25,000 (48,000)– accruals and provisions (460,353) (1,508,847) (19,000) (55,000)– unrealised profit on inventories 10,000 40,000 0 0

(1,408,434) (2,156,318) (804,000) (1,658,000)Acquisitions of subsidiaries (Note 3) 0 (831,897) 0 0Currency translation differences (136,969) 743,766 0 0

At 31 December (8,708,216) (7,162,813) (1,485,000) (681,000)

Subject to income taxDeferred tax assets (before offsetting)Property, plant and equipment 1,102,404 229,115 814,000 4,000Post-employment benefit obligations 6,006,881 5,882,388 408,000 433,000Accruals and provisions 4,251,548 3,686,613 263,000 244,000Unrealised profit on inventories 133,000 143,000 0 0

11,493,833 9,941,116 1,485,000 681,000Offsetting (2,785,617) (2,778,303) 0 0

Deferred tax assets (after offsetting) 8,708,216 7,162,813 1,485,000 681,000

Deferred tax liabilities (before offsetting)Property, plant and equipment 2,785,617 2,778,303 0 0Offsetting (2,785,617) (2,778,303) 0 0

Deferred tax liabilities (after offsetting) 0 0 0 0


62

16 I N V E N T O R I E S


Finished goods 62,934,023 55,805,633 0 0Raw materials 57,476,638 49,812,970 0 0Raw materials in transit 65,852,819 54,536,468 0 0Work-in-progress 25,433,547 16,899,111 0 0Spares and consumables 4,534,489 5,407,104 3,939,517 4,642,748

216,231,516 182,461,286 3,939,517 4,642,748

17 R E C E I V A B L E S , D E P O S I T S A N D P R E P A Y M E N T S


Trade receivables 267,854,826 189,871,034 0 0Allowance for doubtful debts (9,112,338) (5,376,987) 0 0

258,742,488 184,494,047 0 0Other receivables 3,841,931 3,081,056 1,083,219 838,227

262,584,419 187,575,103 1,083,219 838,227Deposits 6,480,979 1,559,577 266,266 186,576Prepayments 7,455,417 314,608 34,350 23,527

276,520,815 189,449,288 1,383,835 1,048,330

Prepayments include advances of RM7,041,524 (2005: Nil) for puchase of property, plant and equipment.


The currency exposure profile of trade andother receivables excluding deposits andprepayments is as follows:

– US Dollar 66,241,837 34,027,568 70,574 42,991– Euro 6,737 13,401 6,737 13,401– Singapore Dollar 2,527,595 2,543,711 1,875 0– Others 11,285 99,322 11,285 99,322

68,787,454 36,684,002 90,471 155,714


63

17 R E C E I V A B L E S , D E P O S I T S A N D P R E P A Y M E N T S ( C O N T I N U E D )

Credit terms of sales range from payment in advance to 180 days (2005: in advance to 180 days).

Concentration of credit risk with respect to trade receivables is limited due to Group’s large number ofcustomers and the policy of limiting the aggregate risk to any individual customer. The Group’s historicalexperience in collection of accounts receivable falls within the amounts allowed for. Due to these factors, theGroup believes that no additional credit risk beyond amounts already allowed for doubtful debts is likely in theGroup’s trade receivables.

18 C A S H A N D C A S H E Q U I V A L E N T S

Cash and cash equivalents included in the cash flow statements of the Group and the Company comprise thefollowing:


Deposits with licensed banks 50,541,697 41,756,275 40,500,000 40,500,000Bank and cash balances 17,533,564 16,112,565 422,149 503,919

68,075,261 57,868,840 40,922,149 41,003,919Less: Deposit pledged as security for

foreign currency term loan (Note 21) (40,500,000) (40,500,000) (40,500,000) (40,500,000)Bank overdrafts (Note 21) (1,668,320) 0 0 0

Cash and cash equivalents 25,906,941 17,368,840 422,149 503,919

The currency exposure of deposits,bank and cash balances is as follows:– US dollar 1,968,546 1,209,594 65,143 65,807– Euro 7,912 0 7,912 0– Australian dollar 4,474 0 4,474 0– Others 20,762 0 20,762 0

2,001,694 1,209,594 98,291 65,807

Weighted average interest rate per annumof deposits effective at financial year end 3.16% 2.63% 3.25% 2.65%

Average maturity period of depositsoutstanding as at year-end 48 days 57 days 59 days 57 days

Deposits with a licensed bank amounting to RM40,500,000 (2005: RM40,500,000) have been pledged assecurities for the Company’s foreign currency term loan (Note 21). Bank balances are deposit held on call andearn no interest.


64

19 P O S T - E M P L O Y M E N T B E N E F I T S O B L I G A T I O N S


CurrentDefined benefit plans 251,026 89,908 251,026 0Defined contribution plan 453,154 440,502 303,027 296,526

704,180 530,410 554,053 296,526

Non currentDefined benefit plans 21,795,698 21,707,184 1,259,749 1,546,489

TotalDefined benefit plans 22,046,724 21,797,092 1,510,775 1,546,489Defined contribution plan 453,154 440,502 303,027 296,526

22,499,878 22,237,594 1,813,802 1,843,015

The movements during the financial year in the amounts recognised in the balance sheets of the Group and theCompany in respect of the defined benefit plans are as follows:


At 1 January 21,797,092 25,100,229 1,546,489 1,374,922Charged to income statement (Note 6) 1,503,070 1,948,747 23,792 171,567Benefits paid (1,953,292) (2,141,603) (59,506) 0Currency translation differences 699,854 (3,110,281) 0 0

At 31 December 22,046,724 21,797,092 1,510,775 1,546,489

The amount recognised in the balance sheet may be analysed as follows:


Present value of unfunded obligations 22,512,072 22,579,700 1,510,775 1,546,489Unrecognised actuarial loss (465,348) (782,608) 0 0

Net liability recognised in the balance sheet 22,046,724 21,797,092 1,510,775 1,546,489


65

19 P O S T - E M P L O Y M E N T B E N E F I T S O B L I G A T I O N S ( C O N T I N U E D )

The expense recognised in the income statements of the Group and the Company may be analysed as follows:


Current service cost 991,106 983,286 88,344 94,857Interest cost 1,036,628 1,138,338 82,810 83,137Actuarial gain recognised (370,230) (166,450) 0 0Reversal of amounts in respect of employeeswho left during the financial year (154,434) (6,427) (147,362) (6,427)

Expense recognised in the income statement 1,503,070 1,948,747 23,792 171,567

The charge to the income statements of the Group and the Company is included in the following line items:


Cost of sales 1,194,864 1,580,296 (9,994) 141,131Selling and distribution cost 129,508 161,117 0 0Administrative expenses 178,698 207,334 33,786 30,436

1,503,070 1,948,747 23,792 171,567

The principal actuarial assumptions used in respect of the Group’s defined benefit plans are as follows:

2006 2005% %

Discount rate 5 – 7 4.5 – 7Expected rate of salary increases 3 – 6 3 – 6

20 P R O V I S I O N F O R W A R R A N T I E S

2006 2005RM RM

Group

At 1 January 6,245,046 4,752,350Provision during the financial year 2,830,547 2,423,185Unused amount reversed (1,907,255) 0Charged/(credited) to income statement 923,292 2,423,185Utilised during the financial year (234,680) (185,434)Currency translation differences 206,977 (745,055)

At 31 December 7,140,635 6,245,046

Comparative figures for 2005 have been amended due to certain reclassification carried out in 2006.


66

21 B O R R O W I N G S ( I N T E R E S T B E A R I N G )


CurrentSecuredExport financing 39,491,000 26,920,200 0 0Term loans 23,741,060 22,927,037 0 0

63,232,060 49,847,237 0 0UnsecuredBank overdrafts (Note 18) 1,668,320 0 0 0Bankers’ acceptance 95,302,302 5,800,000 0 0Foreign currency trade loan 105,730,000 65,805,000 0 0Bridge financing 0 22,433,500 0 0Working capital loan 32,988,527 37,852,499 0 0

235,689,149 131,890,999 0 0

298,921,209 181,738,236 0 0Non-currentSecuredForeign currency term loan 37,017,005 35,747,782 37,017,005 35,747,782Term loan 35,611,590 45,854,074 0 0

UnsecuredTerm loans 33,608,235 0 0 0

106,236,830 81,601,856 37,017,005 35,747,782

Total borrowings 405,158,039 263,340,092 37,017,005 35,747,782

The currency exposure ofborrowings is as follows:– US Dollar 105,730,000 65,805,000 0 0– Euro 37,017,005 35,747,782 37,017,005 35,747,782

142,747,005 101,552,782 37,017,005 35,747,782

Repayments due:– less than 1 year 298,921,210 181,738,236 0 0– later than 1 year and not later than 2 years 23,741,060 22,927,037 0 0– later than 2 years and not later than 5 years 82,495,770 58,674,819 37,017,005 35,747,782

405,158,039 263,340,092 37,017,005 35,747,782


67

21 B O R R O W I N G S ( I N T E R E S T B E A R I N G ) ( C O N T I N U E D )

The effective interest rates per annum of bank borrowings at balance sheet date are as follows:

Group Company2006 2005 2006 2005% % % %

Bank overdrafts 8.50 N/A N/A N/AExport financing 3.18 1.93 N/A N/ABridge financing 0 2.87 N/A N/AWorking capital loan 4.76 3.31 N/A N/ABankers’ acceptance 4.10 – 7.00 3.58 – 3.75 N/A N/AForeign currency trade loan 5.61 – 5.76 2.63 – 4.83 N/A N/AForeign currency term loans 3.91– 4.07 2.91 – 3.21 4.07 2.91

The export financing facility of a subsidiary company is secured by way of assignment of its trade receivables.The foreign currency term loan of a subsidiary is secured by pledge of shares of related companies and isrepayable by semi annual instalments up to November 2008. Foreign currency term loan of the Company issecured by deposits pledged with a licenced bank of the Company (Note 18) and is repayable in full in May2009.

22 P A Y A B L E S


Trade payables 41,015,197 100,609,432 0 0Accrued liabilities 50,454,174 42,043,238 3,957,668 4,467,220Amount due to subsidiary company 0 0 1,883,208 0

91,469,371 142,652,670 5,840,876 4,467,220

Credit terms of copper raw material suppliers vary from 3 to 14 days. (2005: 3 to 7 days). The credit terms ofthe other trade payables and accrued liabilities granted to the Group vary from no credit to 60 days (2005: nocredit to 60 days).


The currency exposure of trade payablesand accrued liabilities is as follows:– US Dollar 15,957,812 85,752,868 34,611 106,206– Euro 1,466,910 61,711 142,219 61,711– Others 93,841 76,005 3,644 44,621

17,518,563 85,890,584 180,474 212,538


68

23 D E F E R R E D I N C O M E

The subsidiary ASTA Conductors Co. Ltd., China received a cash grant of RMB 7,237,235 (equivalent toRM3,354,074) from the Government of China for the purchase of land use rights. The grant received is shownunder non-current liabilities as deferred income. The grant shall be recognised as income over the period oflease of 50 years.

2006Group RM

At 1 January 0Grant received during the year 3,354,074Amortisation (16,770)Currency translation differences (95,813)

At 31 December 3,241,491

Current (Shown under accrued liabilities Note 22) 65,156Non current 3,176,335

3,241,491

24 S H A R E C A P I T A L

Group and Company2006 2005RM RM

Authorised ordinary shares of RM1.00 each:At 1 January/31 December 150,000,000 150,000,000

Issued and fully paid ordinary shares of RM1.00 each:At 1 January/31 December 60,000,000 60,000,000

25 R E T A I N E D E A R N I N G S

The Company has sufficient tax credit balance under Section 108(6) of the Income Tax Act, 1967 to frankpayment of dividends out of all its retained earnings as at 31 December 2006. The Company also has exemptprofits as at 31 December 2006 amounting to RM44,196,000 (2005: RM50,796,000) available for distributionas tax exempt dividends to shareholders, subject to the approval of Inland Revenue Board.


69

26 S I G N I F I C A N T R E L A T E D P A R T Y D I S C L O S U R E S

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are othersignificant related party transactions and balances. The related party transactions described below were carriedout on normal commercial terms not more favourable to the related parties than those generally available tounrelated parties unless otherwise stated.

Group 2006 2005RM RM

1 Purchases of raw materials from Metdist Ltd. 1,135,532,802 808,976,3192 Sale of goods to AM SGB Sdn Bhd 3,662,313 1,562,2543 Sale of goods to MetTube Sdn Bhd 255,027 221,078

1. Metdist Ltd. is a company in which The Lord Bagri CBE and The Hon. Apurv Bagri, are directorsand have an indirect interest of 0.1% and 99.9% respectively. The Lady Bagri is deemed to have aninterest of 100% in the company through her husband, The Lord Bagri CBE and her son, The Hon.Apurv Bagri. The credit term granted to the Group and the Company is consistent as disclosed inNote 22 to the financial statements.

2. AM SGB Sdn Bhd is a company in which Y.Bhg. Dato’ Azlan Hashim is a Director. He is alsodeemed interested in 1,377,000 shares in Metrod (Malaysia) Bhd by virtue of his shareholdings of99.99% and his sister’s shareholdings of 0.01% in Infinitive Growth Sdn Bhd.

3. MetTube Sdn Bhd is a company under common significant shareholding in which certain Directorsof the Company, The Lord Bagri CBE and The Hon. Apurv Bagri, Pratik Basu, Y.Bhg. Dato’ AzlanHashim and Y.Bhg. Datuk Abu Hassan Kendut are directors.

27 C A P I T A L C O M M I T M E N T S

Capital expenditure not provided for in the financial statements are as follows:


Property, plant and equipment:– Authorised and contracted 43,049,880 2,446,339 0 278,000– Authorised but not contracted 20,417,523 130,114 0 0

63,467,403 2,576,453 0 278,000


70

28 S E G M E N T R E P O R T I N G

(a) Primary reporting format – geographical segment by location

EuropeanMalaysia * Rest of Asia Union Eliminations Group

Segment reporting RM RM RM RM RM

Financial year ended31 December 2006

RevenueExternal 1,329,286,634 135,857,199 534,644,613 0 1,999,788,446Inter segment revenue 59,014,820 1,019,858 0 (60,034,678) 0

Total revenue 1,388,301,454 136,877,057 534,644,613 (60,034,678) 1,999,788,446

ResultsSegment results 19,667,752 5,961,119 30,107,147 320,518 56,056,536Finance cost (15,066,909)Tax expense (9,966,036)

Net profit for thefinancial year 31,023,591

As at 31 December 2006Net assetsSegment assets 426,237,169 131,435,222 275,581,488 (112,301,249) 720,952,630Unallocated assets 13,665,566

Total assets 734,618,196

Segment liabilities 39,175,264 25,149,403 80,764,032 (20,802,480) 124,286,219Unallocated liabilities 416,197,633

Total liabilities 540,483,852

Other informationDepreciation 3,847,611 3,220,719 18,957,220 (543,141) 25,482,409Amortisation ofintangible assets 0 0 (1,891,758) 0 (1,891,758)

Impairment losses 0 1,514,368 0 (1,514,368) 0Capital expenditure 1,670,687 4,158,124 8,362,304 0 14,191,415

* Company’s home country.


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28 S E G M E N T R E P O R T I N G ( C O N T I N U E D )

(a) Primary reporting format – geographical segment by location (continued)

EuropeanMalaysia * Rest of Asia Union Eliminations Group

Segment reporting RM RM RM RM RM

Financial year ended31 December 2005

RevenueExternal 944,834,098 41,510,877 396,031,915 0 1,382,376,890Inter segment revenue 42,292,316 3,101,413 0 (45,393,729) 0

Total revenue 987,126,414 44,612,290 396,031,915 (45,393,729) 1,382,376,890

ResultsSegment results 14,855,995 (817,933) 23,694,619 (159,936) 37,572,745Finance cost (7,703,827)Tax expense (7,838,034)

Net profit for thefinancial year 22,030,884

As at 31 December 2005Net assetsSegment assets 361,683,597 110,938,718 272,650,720 (143,003,800) 602,269,235Unallocated assets 10,001,061

Total assets 612,270,296

Segment liabilities 98,752,653 39,120,862 71,384,395 (38,122,600) 171,135,310Unallocated liabilities 272,018,035

Total liabilities 443,153,345

Other informationDepreciation 5,248,657 1,163,172 18,574,854 (245,683) 24,741,000Amortisation ofintangible assets 0 0 3,762,398 0 3,762,398

Impairment losses 995,000 4,487,000 0 0 5,482,000Capital expenditure 3,292,315 792,763 6,921,732 (285,000) 10,721,810

* Company’s home country


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28 S E G M E N T R E P O R T I N G ( C O N T I N U E D )

The Group’s revenue by geographical location of customers is as follows:

2006 2005RM RM

Malaysia 1,008,419,601 690,400,235Other Asian countries 470,343,769 302,980,287Europe 407,589,009 333,853,630Others 113,436,067 55,142,738

1,999,788,446 1,382,376,890

Intersegment revenue comprises sale of copper products to other segments. These transactions are conducted onan arms length basis under terms, conditions and prices not materially different from transactions withunrelated parties.

(b) Secondary reporting format – business segment

The Group is principally engaged in one business segment, which is the manufacturing and marketing ofelectrical conductivity grade copper wires, rods, strips and high-quality flat copper winding wire systems.

29 F I N A N C I A L I N S T R U M E N T S

The Group’s activities expose it to a variety of financial risks as mentioned in Note 2 to the financial statements.

(a) Forward foreign exchange contracts

The Group uses derivative financial instrument such as foreign exchange contracts to hedge the foreigncurrency exchange risk. It does not trade in derivative financial instruments.


73

29 F I N A N C I A L I N S T R U M E N T S ( C O N T I N U E D )

(a) Forward foreign exchange contracts (continued)

At 31 December 2006, the settlement dates on open forward contracts ranged between 1 and 12 months(2005: 1 and 12 months). The foreign currency amounts to be received and contractual exchange rates ofthe Group’s outstanding forward contracts as balance sheet date are as follows:

Currency Currency Foreignto be to be currency Contractual rates Totalreceived paid amount range amount

RM

GROUPAt 31 December 2006Future sales RM USD USD 5,000,000 3.5685 to 3.6165 17,963,300Trade receivables EURO USD USD 970,000 0.7686 3,463,966Trade payables USD THB USD 752,000 35.20 to 36.60 2,661,824Trade Accruals YEN RM YEN 7,702,300 3.2833 to 3.3314 255,208

24,344,298

At 31 December 2005Trade receivables RM SGD SGD 315,776 2.2250 to 2.2255 702,722Trade Accruals YEN RM YEN 28,639,556 3.1791 to 3.3588 929,941

1,632,663

COMPANYAt 31 December 2006Trade Accruals YEN RM YEN 7,702,300 3.2833 to 3.3314 255,208

At 31 December 2005Trade Accruals YEN RM YEN 28,639,556 3.1791 to 3.3588 929,941

The fair value of the outstanding forward contracts of the Group at the balance sheet date was a favourablenet position of RM557,149 (2005: unfavourable RM11,773). The fair value of the outstanding forwardcontracts of the Company at the balance sheet date was an unfavourable net position of RM24,426 (2005:favourable RM4,709). The net exchange gain/loss is deferred until the related transactions take place, atwhich time they are included in the measurement of such transactions.


74

29 F I N A N C I A L I N S T R U M E N T S ( C O N T I N U E D )

(b) Forward copper contracts

For the financial year ended 31 December 2006, a subsidiary company entered into forward coppercontracts to hedge against risk arising from the volatility of copper price movements. Such forward coppercontracts were denominated in Renminbi and with maturities less than a year. As at balance sheet date,the Group’s outstanding forward copper contracts are as follows:

As at As at31.12.2006 31.12.2005

RM RM

Purchase contracts 33,466,899 4,492,379Favourable/(unfavourable) position (net) (4,014,615) 240,714

The net position is recoverable from the customers.

30 F A I R V A L U E S

The carrying amounts of financial assets and liabilities of the Group and the Company at the balance sheet dateapproximated their fair values except as set out below:


Loan to a subsidiaryCarrying value 0 0 11,393,044 11,517,541Fair value 0 0 11,126,857 11,296,050

Foreign currency term loansCarrying value 96,369,655 104,528,893 37,017,005 35,747,782Fair value 94,658,997 102,219,092 36,152,147 34,585,648

The carrying amount of the loan to a subsidiary company at balance sheet date was not reduced to its estimatedfair value as the Directors are of the opinion that the amounts are fully recoverable.


75

31 C O M P A R A T I V E S

Certain comparative amounts as at 31 December 2005 have been reclassified to conform with current year’spresentation as follows:

Aspreviously Asreported restatedRM RM RM

Group and Company

2005Provision for warranties 8,985,519 (2,740,473) 6,245,046Accrued liabilities 39,302,767 2,740,473 42,043,238

32 A P P R O V A L O F F I N A N C I A L S T A T E M E N T S

The financial statements have been approved for issue in accordance with a resolution of the Board of Directorson 21 February 2007.


76

Analysis Of Shareholdings By Range GroupSize of Shareholdings No. of Shares % No. of Holders %

1 – 99 99 0.00 2 0.10100 – 1000 195,901 0.33 229 11.531,001 – 10,000 4,732,800 7.89 1,570 79.0510,001 – 100,000 4,214,600 7.02 163 8.21100,001 – 2,999,999 6,017,100 10.03 18 0.913,000,000 and above 44,839,500 74.73 4 0.20

60,000,000 100.00 1,986 100.00

Thirty (30) Largest Securities Account HoldersName No. of Shares % of Total

1. Metdist S.A. 25,281,000 42.142. HLG Nominee (Asing) Sdn Bhd 7,200,000 12.00

Commerzbank (SEA) Ltd for Tieton Group Ltd3. Bank Perusahaan Kecil & Sederhana Malaysia Berhad 6,759,000 11.274. Bank Perusahaan Kecil & Sederhana Malaysia Berhad 5,599,500 9.335. Infinitive Growth Sdn Bhd 1,412,500 2.356. Quarry Lane Sdn Bhd 700,000 1.177. Mayban Securities Nominees (Tempatan) Sdn Bhd 562,300 0.94

Pledged Securities Account for Siva Kumar A/L M. Jeyapalan (REM 118-Margin)8. Citigroup Nominees (Tempatan) Sdn Bhd 400,000 0.67

Citigroup GM Inc For Siva Kumar A/L M. Jeyapalan9. Neoh Choo Ee & Company Sdn Bhd 400,000 0.6710. Alliancegroup Nominees (Tempatan) Sdn Bhd 361,000 0.60

Pledged Securities Account for Muhammad Marzuki Bin A.Samad (100537)11. Amanah Raya Nominees (Tempatan) Sdn Bhd 341,100 0.57

Public Smallcap Fund12. Axa Affin General Insurance Berhad 260,000 0.4313. HSBC Nominees (Asing) Sdn Bhd 253,000 0.42

BNY Brussels for HMG Globetrotter14. Hwang Yung Sung 233,000 0.3915. Lim Kew Seng 189,600 0.3216. HLB Nominees (Tempatan) Sdn Bhd 171,800 0.29

Pledged Securities Account for Chen Khai Voon17. Amanah Raya Nominees (Tempatan) Sdn Bhd 149,800 0.25

Public Islamic Opportunities Fund18. Tai Chin Hin 132,000 0.2219. Yeoh Kean Hua 129,000 0.2220. Fam Keat Hong 110,000 0.1821. Gau Ngoo Jin @ Goh Ngoo Jin 110,000 0.1822. John Chia Sin Tet 102,000 0.1723. Citigroup Nominees (Tempatan) Sdn Bhd 100,000 0.17

Pledged Securities Account for Siva Kumar A/L M. Jeyapalan (474111)24. Chua Hin Bee 96,000 0.1625. Dynaquest Sdn Bhd 95,000 0.1626. Soh Kon Leong 92,000 0.1527. Yong Cheau Chin 89,900 0.1528. Mayban Nominees (Tempatan) Sdn Bhd 73,000 0.12

Pledged Securities Account for Teo Kok Wah29. Ong Beng Kee 70,000 0.1230. Chan Hong Ee 60,000 0.10

TOTAL 51,532,500 85.91

Substantial ShareholdersDirect Holding Indirect Holding

No. of Shares % of Total No. of Shares % of Total

1. Metdist S.A. 25,281,000 42.14 – –2. Bank Perusahaan Kecil & Sederhana Malaysia Berhad 12,358,500 20.60 – –3. HLG Nominee (Asing) Sdn Bhd 7,200,000 12.00 – –

Commerzbank (SEA) Ltd for Tieton Group Ltd4. Bank Pembangunan Malaysia Berhad – – * 12,358,500 20.60

TOTAL 44,839,500 74.74 12,358,500 20.60

* Deemed interest by virtue of its wholly-owned subsidiary, Bank Perusahaan Kecil & Sederhana Malaysia Berhad.

A n a l y s i s O f S h a r e h o l d i n g sas at 30 March 2007


77

Description/ Land area/ Net bookexisting use (built-up value as Date of

Registered owner (age of area) Tenure/ at 31.12.2006 Valuation (V) orand location building) Sq. Ft. Expiring date (‘000) Acquisition (A)

Metrod (Malaysia) Berhad

2 Solok Waja Satu Factory 152,460/ Unexpired RM1,989 31-12-1985 (V)Bukit Rajah (24 years old) (70,000) leasehold of (Note 12,Industrial Estate approximately Page 56)Klang 82 years

(22-10-2088)

3 Lengkuk Keluli 2 Factory 283,139/ RM10,744 16-06-1993 (A)Bukit Raja Prime (12 years old) (107,500) FreeholdIndustrial Park Warehouse41720 Klang (2 years old) (22,217) RM2,389 19-08-2005 (A)

Metrod (OFHC) Sdn Bhd

Lot 48, Bukit Raja Vacant land 141,569 Freehold RM4,670 19-09-2005 (V)Prime Industrial Park41720 Klang

Metrod Industries Ltd.

Eastern Seaboard Industrial Factory 162,704/ Freehold THB 57,150 24-12-2003 (A)Estate (Rayong) (3 years old) (44,073)64/145 Moo 4Tambun Pluak DaengAmphur Pluak DaengRayong, Thailand

ASTA ElektrodrahtGmbH

A-2761 Reichental Vacant Land 52,304 Freehold EUR 276 04-06-2004 (A)crossing Reichental-federal road B21, Austria

A-2755 Oed, Austria Factory 434,958/ Freehold EUR 2,884 04-06-2004 (A)(more than (207,001)31 years old)

A-2753 Markt Piesting Apartment (581) Freehold EUR 9 04-06-2004 (A)(more than31 years old)

L i s t O f P r o p e r t i e sowned by the Metrod Group

}


78

Description/ Land area/ Net bookexisting use (built-up value as Date of

Registered owner (age of area) Tenure/ at 31.12.2006 Valuation (V) orand location building) Sq. Ft. Expiring date (‘000) Acquisition (A)

ASTA ElektrodrahtGmbH & Co.

A-2755 Oed, Austria Office building * (2,766) Freehold EUR 249 04-06-2004 (A)(6 years old)

ASTA ConductorsCo. Ltd. (ASTA China)

No. 1 Suzhong Road Office & factory (5,457) RMB 1,649 21-12-2005 (A)Buyong building **Jiangsu China (5 years only)

No. 62 Taishan East Road Vacant land *** 651,071 Unexpired RMB 7,230 14-10-2006 (A)Buyong leaseholdJiangsu China period approx.

50 years(13-10-2056)

* Built on land owned by ASTA Elektrodraht GmbH.** Buildings are built on land which is not owned by ASTA China.*** The land was acquired and paid by way of goverment grant.

I/We NRIC No. (New) (Old)ofbeing a member of Metrod (Malaysia) Berhad hereby appoint * the Chairman of the meeting or

NRIC No. (New) (Old)ofor failing him/her NRIC No. (New) (Old)of

as my/our proxy to vote for me/us on my/our behalf at the Twenty-Sixth (26th) Annual General Meeting of the Company to be held at Cobalt 7,Level 1, The Ritz-Carlton, 168 Jalan Imbi, 55100 Kuala Lumpur on Wednesday, 30 May 2007 at 2.00 p.m. and at any adjournment thereof.

* Delete if not applicable

My/Our proxy is to vote as indicated with an “X” below:If no specific direction as to voting is given, the proxy will vote or abstain from voting at his discretion.

No. Resolutions For Against

1. To receive the statutory financial statements for the financial year ended 31 December 2006and the directors’ and auditors’ report thereon.

2. To approve first and final dividend of 12 sen per share (tax-exempt) for the year ended31 December 2006.

3. To approve payment of directors' fees amounting to RM132,000 for the financial year ended31 December 2006.

4. To re-elect The Hon. Apurv Bagri as a Director of the Company.

5. To re-elect Y.Bhg. Dato’ Azlan Hashim as a Director of the Company.

6. To re-elect Y.Bhg. Dato’ Gumuri bin Hussain as a Director of the Company.

7. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorisethe Directors to fix their remuneration.

8. To re-appoint Lord Bagri CBE as a Director of the Company.

9. To allot shares pursuant to section 132D of the Companies Act, 1965.

10. Proposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(a) of Part A of the Circularto shareholders dated 30 April 2007.

11. Proposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(b) of Part A of the Circularto shareholders dated 30 April 2007.

12. Proposed Renewal of Shareholders' Mandate for Recurrent Related Party Transactions of aRevenue or Trading Nature (“RRPT”) as set out under section 2.4(c) of Part A of the Circularto shareholders dated 30 April 2007.

13. Proposed Amendments to the Articles of Association of the Company.

Dated this day of 2007

Witness by:Signature:Address:Company Stamp:Occupation: Signature of Shareholder or Common Seal

Notes:i) A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not

be a member of the Company.ii) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if the appointor is a

Corporation either under seal or under the hand of an officer or attorney duly authorised.iii) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least

one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.iv) An authorised nominee with more than one securities account must submit separate instrument of proxy for each securities account.v) The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power

or authority shall be deposited at the registered office of the Company at 20th Floor, East Wing Plaza Permata, Jalan Kampar Off Jalan Tun Razak, 50400Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in theinstrument 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 defaultthe instrument of proxy shall not be treated as valid.

FORM OF PROXY

MetrodMETROD (MALAYSIA) BERHAD

(66954 H)

No. of Shares held

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